Clarent Energy Services, Inc. and Graham Gilliam v. Leasing Ventures, LLC ( 2020 )

Opinion issued March 12, 2020
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00821-CV
———————————
CLARENT ENERGY SERVICES, INC. AND GRAHAM GILLIAM,
Appellants
V.
LEASING VENTURES, LLC, Appellee
On Appeal from the 127th District Court
Harris County, Texas
Trial Court Case No. 2016-50734
MEMORANDUM OPINION
Appellee Leasing Ventures, LLC, sued appellants Clarent Energy Services,
Inc. and Graham Gilliam (collectively, Clarent) for breach of a lease and guaranty
agreement for certain oilfield equipment. After the trial court rendered summary
judgment finding Clarent liable under the Lease and setting a trial date for
determining the issues of damages and attorney’s fees, the parties engaged in
settlement discussions that resulted in the creation of a purported settlement
agreement, also referred to by the parties as the Rule 11 agreement. Leasing
Ventures moved for traditional summary judgment to enforce the settlement terms,
and the trial court granted judgment in favor of Leasing Ventures, ordered specific
performance of the purported settlement agreement, and ultimately awarded
damages as contemplated in the purported settlement agreement.
On appeal, Clarent asserts that (1) the trial court erred in rendering a
summary judgment incorporating and enforcing only a portion of the purported
Rule 11 Agreement; (2) Leasing Ventures’ summary-judgment evidence was
insufficient to establish its right to summary judgment, including, in part, that
Leasing Ventures had failed to prove as a matter of law that there was a meeting of
the minds on the material terms; and (3) the trial court erred in rendering summary
judgment because Clarent had provided competent proof of Leasing Venutres’
prior material breach.
Because we conclude that Leasing Ventures failed to conclusively establish
a meeting of the minds on the material terms between the parties to the purported
settlement, we reverse the trial court’s judgment in favor of Leasing Ventures’
based on the motion for summary judgment asserting breach of the purported
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settlement agreement, and we remand for further proceedings consistent with this
opinion.
Background
This dispute arises out of a 2016 lease entered into between Leasing
Ventures and Clarent Energy (the Lease). Leasing Ventures agreed to lease various
oilfield equipment1 to Clarent Energy for a period of three years in exchange for
lease payments that would eventually result in Clarent Energy’s owning the
equipment outright. The Lease was signed by Gilliam in his capacity as president
of Clarent Energy, and Gilliam signed a personal guaranty, guaranteeing “the full
and punctual payment and performance” of Clarent Energy’s obligations under the
Lease (the Guaranty). Clarent Energy made two payments under the Lease, but
then failed to make any more of the required payments, and Leasing Ventures
sought return of its equipment.
Leasing Ventures eventually sued Clarent for breach of the Lease and
Guaranty. Leasing Ventures alleged that Clarent Energy failed to return all of the
equipment, failed to notify Leasing Ventures of the location of some of the
equipment, and failed to pay invoices from Leasing Ventures for additional
expenses in restoring other equipment under the terms of the Lease. It alleged that
Gilliam failed to pay pursuant to the Guaranty. Clarent denied these allegations,
1
The Lease listed the 89 pieces of equipment by description and serial number, and
it included items like “Frac Tanks,” pumps, motors, and trucks.
3
raising defenses to enforcement of the Lease and asserting that at least some of the
equipment had never been in its possession or had already been taken by agents of
Leasing Ventures.
In February 2017, Leasing Ventures moved for summary judgment on its
claims for breach of the Lease and Guaranty, seeking return of its equipment,
damages from past and future payments due under the Lease, and court costs and
attorney’s fees. After considering this motion, Clarent’s response, and the evidence
submitted by both parties, the trial court granted a partial summary judgment in
favor of Leasing Ventures on April 25, 2017. The April 25, 2017 order granted
Leasing Venture’s motion “in part,” ordering that Leasing Ventures “has
demonstrated its right to possession of certain equipment” identified in the order
and requiring Clarent to deliver the equipment back to Leasing Ventures. The trial
court declined to enter an award for damages, however, stating in the order, “This
is an interlocutory judgment. The issues of damages and fees are to be litigated at
trial.”
The trial court eventually set the case for a bench trial on the issues of
damages and attorney’s fees during the two-week period beginning on September
18, 2017, in the month after Hurricane Harvey had struck Houston and all civil
jury trials were postponed. In addition to preparing for trial in the time leading up
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to this trial setting, Leasing Ventures emailed a settlement offer to the attorney of
record for Clarent, David Ayers.
Leasing Ventures first emailed the settlement offer on September 7, 2017,
stating, “[T]here are some further details that need to be flushed out, but the major
components are in the attached word document” and in “exhibit A to this email,”
which itemized the remaining equipment that needed to be returned. The word
document referenced in the email and attached with Leasing Ventures’ evidence
provided a “proposal outline” of “Agreed Judgment Terms”:
• Damages for past due lease payments (through 12/15/2017):
$211,235.00 (with all credits and payments reflected)
• Damages for future rent, reduced to present Value (1/15/2018-
4/15/2019): $302,500.00
• Attorney’ Fees: $55,000.00
• Post Judgment interest: 6% from the date of entry of the Judgment.
• Costs of Court.
The proposed settlement further stated that the parties would agree to continue the
trial setting for ninety days and would use that time to “work together to locate and
retrieve all of the equipment in exhibit A”:
For each piece of equipment that is confirmed as located and retrieved
in this time period, Mr. Gilliam will receive a direct credit to the
Agreed Judgment for the value of the equipment as listed in Exhibit
A. The value of the equipment on this Exhibit is greater than the
amount of damages in the Agreed Judgment. Mr. Gilliam can reduce
his liability to zero by helping to locate and recover less than all of the
equipment on the list.
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The proposal further stated that if, within the 90-day continuance, the parties had
made “substantial progress”—defined as recovering 48 pieces of equipment (or
75% of the equipment listed in the accompanying exhibit) or equipment totaling at
least $430,000 in value as determined in the accompanying exhibit—they agreed to
“another 90 day period to continue their efforts.” If substantial progress had not
been made, the parties agreed to enter the Agreed Judgment rather than proceed to
trial, but “all credits for equipment recovered in this period shall be reflected in the
Agreed Judgment entered.” Finally, the proposal stated, “If Mr. Gilliam has
reduced his personal liability to zero through the recovery and location of the
equipment in Exhibit A, then the parties agree to dismiss the case with prejudice
and the Agreed Judgment will not be entered.” The proposal also stated that “[a]ny
dismissal with prejudice would not prejudice Leasing Ventures rights to the
remaining equipment” should it be found at a later date. It provided for a release of
any claims against Leasing Ventures by Clarent, and it provided that Leasing
Ventures would “release” both Clarent Energy and Gilliam “upon issuance of any
non-suit with prejudice.”
The list of equipment attached to the September 7, 2017 settlement offer
email specifically identified 65 pieces of equipment by description and serial
number and included a value to each item or group of items. For example, the list
identified five “Used Wichita Frac Tanks” by their serial numbers and asserted a
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value of $30,000 for the five tanks. Leasing Ventures described the 65 items
identified in this list as the equipment that had not yet been accounted for or
returned following the trial court’s April 25, 2017 order requiring Clarent to return
certain property to Leasing Ventures.
Attorneys for Clarent and Leasing Ventures exchanged emails over the next
week, indicating that they hoped to settle the case and addressing concerns. For
example, Ayers and Diane Werlein, who is Gilliam’s wife and an attorney who
acted on behalf of Clarent in connection with the litigation, asked questions
regarding the proposed settlement terms on September 11, 2017, such as, “Why is
the list of ‘lost’ equipment getting smaller but the amount of the past due and
future rent [is] not getting any smaller?” Attorneys for Clarent further stated:
If, as according to Graham [Gilliam], LV already has control of a
bunch of this equipment (ie: through [a third party], etc.) what keeps
them from impeding the retrieval or moving the equipment to a
location where it cannot be found, then [Gilliam] is again stuck with
the $525K Agreed Jdmt? Something doesn’t seem right and it seems
like he is getting set up for disaster. All good for LV—they get the
equipment and the full rental?
Maybe we all need to have a meeting so you can explain to
[Gilliam] why this is a good idea and he can explain his concerns. He
is more than willing to help locate the equipment but it seems like
they are getting the equipment and the rental money—when, from my
understanding, the lease is basically a rent to own scenario?
On September 12, 2017, Werlein emailed Leasing Ventures’ counsel stating:
I would just like to thank you for your efforts and to let you know that
Graham [Gilliam] wants to find a way to settle this matter. He does
not have any problem helping locate the equipment and will do
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anything to that end. He is concerned how he is going to get credited
for the equipment already found as well as equipment found moving
forward.
Leasing Ventures responded the following day reiterating its understanding of the
Lease obligations and the offer to provide a credit against an agreed judgment only
for the still-missing equipment.
Clarent produced an email dated September 12, 2017, from Ayers to Gilliam
and Werlein stating, “I am preparing a motion to withdraw and plan to file around
noon.” On the morning of September 13, 2017, Ayers purportedly sent an email to
Gilliam and Werlein with an attached a letter stating, “This letter will serve as
notice that David Ayers with the firm of Werner Ayers, LLP is withdrawing as
attorney of record for Defendants, Clarent Energy Services, Inc. and Graham
Gilliam (the “Clients”) in the referenced case. The Clients do have the right to
object.” There is no indication that this letter was ever filed with the Court or that
Leasing Ventures was made aware of this email and letter until several weeks later
during the litigation process.
Rather than moving forward with a withdrawal at that time, the record
reflects that Ayers continued to represent Clarent. In an email on September 13,
2017, at 4:38 p.m., Ayers emailed Leasing Ventures regarding settlement
negotiations stating:
[I]t took a lot of tail twisting but we have a deal in principal. As you
mention there are some details we need to work out but so long as our
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folks are committed to working together to maximize the equipment
recovery those should be fairly simple to paper. Let’s talk in the
morning.
The next afternoon Leasing Ventures sent an email to Ayers:
David - I called the coordinator but was unable to reach him. I
propose below email to convey our agreement and request to the
court.
Mr. Syptak [the court coordinator],
I represent the Plaintiff [Leasing Ventures] in this case and have
copied Defendants’ [Clarent’s] counsel to this email. We are currently
set for trial in the two weeks beginning on Monday September 18,
2017. I am emailing you to let you know that we have reached a
settlement agreement and that we would like to request that the Court
retain this case on its docket for an additional 180 days (on or about
March 19, 2018) so that the terms of the settlement agreement may be
effectuated. At the end of the 180 days, or possibly sooner, there will
be either an agreed judgment to be entered by the Court or a dismissal
with prejudice of all claim.
Ayers responded, “That works. Thanks.” Leasing Ventures then sent the proposed
email to the trial court coordinator.
On September 21, 2017, Leasing Ventures sent another email to Ayers with
formalized settlement documents, stating, “This is still in review on my side as
well, but I wanted to send it over to you so you could start working on it. Just a
heads up we may have a few more changes as well. I am trying to get this
accomplished as quickly as possible so our guys have as much time as possible to
work together.” This email had attachments of the proposed Agreed Judgment and
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restated the proposed settlement terms in a document entitled “Settlement
Agreement and Release.”
On September 22, 2017, Diane Werlein notified the parties by email that she
was withdrawing as counsel for Clarent. The attorney for Leasing Ventures
responded, “As far as we are concerned, this matter is settled. So long as David
[Ayers] is still our contact person for settlement and all things case related, and it
doesn’t interfere with our getting this deal executed, we have no objection.”
Werlein responded, “I am also assuming this matter is settled; however, I want to
follow through with the withdrawal. As in the past, David is still the contact person
and my withdrawal should not interfere with anything.”
Also on September 22, 2017, Ayers responded to Leasing Ventures’ email
sending the proposed settlement documents, stating, “I have taken a look and run it
by Diane [Werlein] and Graham [Gilliam]. I’ll get back with you once I have heard
from them. I think this is pretty close though there may be some tweaks and
additional ideas to discuss to refine as you mention.”
On September 26, 2017, Ayers emailed Leasing Ventures with questions
regarding the settlement terms:
OK. I am waiting on Diane for final—been swapping emails with her
today. Here are my two thoughts for you to consider if you have not
already.
1 regarding the court—if it won’t give us time (I really don’t suspect
that will be a problem) and we are still working together towards final
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resolution, can we do a tolling agreement to keep from having to file
the judgment?
2 the cooperation language is a bit confusing. Seems it is in a passive
voice. Don’t know if that is intentional or not. Do we need to discuss?
I prefer something more affirmative that applies to both sides.
Overall I think we are close.
Clarent’s attorney also asked Leasing Ventures for “the current equipment list that
will be exhibit ‘C’” to the settlement agreement, again stating, “We are getting
close.”
Leasing Ventures responded to these emails by sending the requested
exhibit, although it does not appear in the summary-judgment record, and by
answering the concerns regarding the tolling agreement and cooperation language.
Leasing Ventures further stated, “Any other items of concern? Nothing should
really be surprising here, they were mostly laid out prior to acceptance of the offer.
Please let me know.”
The settlement agreement was never executed by the parties. Instead, the
parties and their attorneys met on October 4, 2017. At this meeting, Gilliam
expressed his belief that the parties had never entered into a settlement agreement
and refused to honor the agreement reached though the email exchanges.
Following this conversation, on October 10, 2017, Ayers filed with the trial court a
motion to withdraw as counsel for Clarent.
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On October 16, 2017, Leasing Ventures amended its petition to assert a
claim against Clarent for breach of the purported settlement agreement, also
referred to as a Rule 11 agreement, in addition to its claims for breach of the Lease
and Guaranty. Leasing Ventures also moved again for summary judgment, this
time on its claim for breach of the purported settlement agreement.
As evidence supporting its motion, Leasing Ventures provided “Exhibit A”
which it called the “Rule 11 Agreement.” This exhibit contained 38 pages of
emails and attachments exchanged between the parties between September 7,
2017, when Leasing Ventures made its settlement offer, and September 26, 2017,
when Ayers represented that the parties were “close” to an agreement and Leasing
Ventures sent the updated equipment list that would be incorporated into the final
settlement agreement. Leasing Ventures asserted in its motion for summary
judgment that “[t]he series of emails and their attachments contained the material
terms of the agreement reached between the parties, and has been filed of record in
this proceeding,” and that “[t]he series of emails also confirmed that a settlement
had been reached between the parties.” Leasing Ventures further stated that it had
“tendered performance in that it passed its trial setting and requested a reset of 180
days” and “has also been prepared to work with [Clarent] in locating and retrieving
the equipment under the terms of the Rule 11 Agreement.” It asserted that Clarent
breached the agreement by announcing that it would not honor the settlement terms
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and would not consent to entry of the proposed agreed judgment should it fail to
return enough equipment to reduce the amount of its liability to zero. Leasing
Ventures requested that the trial court grant summary judgment against Clarent on
the claim for breach of the purported settlement agreement and that the court assess
damages based on the proposed agreed judgment referenced in the settlement
discussions. Leasing Ventures also sought additional costs and attorney’s fees
incurred in enforcing the settlement agreement.
Clarent responded and denied agreeing to the settlement. It supported its
response with a series of communications, including some of the emails set out
above and Ayers’ withdrawal emails. Clarent also provided affidavits of Werlein
and Gilliam averring that Clarent had never agreed to the terms of the proposed
settlement. Clarent later supplemented its response, asserting that the purported
settlement agreement was not enforceable as a Rule 11 agreement and that the
evidence did not conclusively establish the existence of an enforceable contract—
specifically arguing that the parties had not had a meeting of the minds on all
material terms. Clarent also asserted that Ayers lacked authority to bind Clarent at
the time of the purported settlement agreement and that Leasing Ventures had
materially breached any purported settlement agreement by failing to cooperate
with Clarent regarding relocation of the missing equipment.
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On October 31, 2017, the trial court granted Ayers’ motion to withdraw as
attorney.
On December 14, 2017, the trial court granted Leasing Ventures summary
judgment on breach of the settlement agreement in part. It ordered the parties to
specifically perform under the settlement by cooperating to return equipment to
Leasing Ventures and stayed the proceedings to allow the parties to effectuate the
agreement. The order further stated that if substantial progress, as defined in the
parties’ settlement agreement, “has not been made on or before December 17,
2017, then all further matters in the case are abated until March 19, 2018, at which
time [Leasing Ventures] may move for entry of a judgment against [Clarent] or the
Parties may enter a non-suit of all claims and causes herein with prejudice.”
Clarent filed a notice of appeal in January 2018, challenging the December
14 order in addition to the trial court’s previous April 25, 2017 order on liability
under the Lease and several other interlocutory orders. This Court subsequently
dismissed this appeal for lack of jurisdiction. See Clarent Energy Servs., Inc. v.
Leasing Ventures, LLC, No. 01-18-00036-CV, 2018 WL 4087003, at *1 (Tex.
App.—Houston [1st Dist.] Aug. 28, 2018, no pet.) (mem. op.).
After allowing the time for performance ordered by the trial court, Leasing
Ventures moved again for summary judgment, asking the trial court to render final
judgment in favor of Leasing Ventures. On August 13, 2018, the trial court
14
rendered its second interlocutory summary judgment, granting this motion for
summary judgment and awarding damages to Leasing Ventures consistent with the
terms of the purported settlement agreement. It awarded $449,735 in actual
damages plus trial-level attorney’s fees. However, the trial court determined that
there were still fact questions remaining regarding conditional appellate-level
attorney’s fees. The parties stipulated to the amount of appellate-level attorney’s
fees, and on November 28, 2018, the trial court rendered final judgment in favor of
Leasing Ventures, including an award of conditional appellate attorney’s fees.
Summary Judgment
Clarent asserts several grounds to support its contention that the trial court
erred in granting summary judgment in favor of Leasing Ventures on its claim for
breach of the purported settlement agreement.
A. Standard of Review
We review the trial court’s grant of a summary judgment de novo. Tex. Mun.
Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007);
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To prevail on
a traditional summary judgment motion, the movant bears the burden of proving
that no genuine issues of material fact exist and that it is entitled to judgment as a
matter of law. TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc.
v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Thus, a plaintiff moving for
15
summary judgment on of its own claim must conclusively establish each element
of that claim. Leonard v. Knight, 551 S.W.3d 905, 909 (Tex. App.—Houston [14th
Dist.] 2018, no pet.). A matter is conclusively established if reasonable people
could not differ as to the conclusion to be drawn from the evidence. See City of
Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); Cleveland v. Taylor, 397
S.W.3d 683, 697 (Tex. App.—Houston [1st Dist.] 2012, pet. denied).
If the movant meets its burden, the burden then shifts to the nonmovant to
raise a genuine issue of material fact precluding summary judgment. See Centeq
Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). To determine if the
nonmovant raised a fact issue, we review the evidence in the light most favorable
to the nonmovant, crediting favorable evidence if reasonable jurors could and
disregarding contrary evidence unless reasonable jurors could not. Fielding, 289
S.W.3d at 848 (citing City of Keller, 168 S.W.3d at 827); Cleveland, 397 S.W.3d at
697. We indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. Dorsett, 164 S.W.3d at 661; Sw. Elec. Power Co. v. Grant, 73
S.W.3d 211, 215 (Tex. 2002) (citing Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d
910, 911 (Tex. 1997)); Cleveland, 397 S.W.3d at 697. A genuine issue of material
fact is raised when the nonmovant produces more than a scintilla of evidence
regarding the challenged element. Neely v. Wilson, 418 S.W.3d 52, 59 (Tex. 2013).
More than a scintilla of evidence exists when reasonable and fair-minded
16
individuals could differ in their conclusions. King Ranch, Inc. v. Chapman, 118
S.W.3d 742, 751 (Tex. 2003).
B. Enforceability of Purported Settlement Agreement
Clarent challenged the trial court’s grant of summary on Leasing Ventures’
claim that it breached the purported Rule 11 settlement agreement. In its second
issue, among other arguments, Clarent asserts that the purported settlement
agreement was not enforceable because Leasing Ventures failed to conclusively
establish a meeting of the minds among the parties as to all essential terms.
Litigants’ Rule 11 agreements are contracts relating to litigation. Shamrock
Psychiatric Clinic, P.A. v. Tex. Dep’t of Health & Human Servs., 540 S.W.3d 553,
560 (Tex. 2018) (per curiam). Texas Rule of Civil Procedure 11 provides that
agreements between attorneys or parties touching any pending suit must be in
writing, signed, and filed with the papers as part of the record, or made in open
court and entered of record. TEX. R. CIV. P. 11. To be effective, a Rule 11
agreement must consist of a written memorandum which is complete within itself
in every material detail and which contains all the essential elements of the
agreement. Shamrock Psychiatric Clinic, 540 S.W.3d at 561. The enforcement of a
written settlement agreement is governed by principles of contract law. TEX. CIV.
PRAC. & REM. CODE ANN. § 154.071(a). Thus, we construe Rule 11 agreements
under the same rules as a contract. Shamrock Psychiatric Clinic, 540 S.W.3d at
17
560; see Gen. Metal Fabricating Corp. v. Stergiou, 438 S.W.3d 737, 744 (Tex.
App.––Houston [1st Dist.] 2014, no pet.) (citing Padilla v. LaFrance, 907 S.W.2d
454, 460 (Tex. 1995)).
A plaintiff claiming breach of contract must prove: (1) the existence of a
valid contract; (2) performance or tendered performance; (3) the defendant’s
breach; and (4) damages as a result of the breach. Tabe v. Tex. Inpatient
Consultants, LLLP, 555 S.W.3d 382, 385 (Tex. App.—Houston [1st Dist.] 2018,
pet. denied). “A breach of contract occurs when a party fails to perform an act that
it has expressly or impliedly promised to perform.” Id. (quoting Case Corp. v. Hi-
Class Bus. Sys. of Am., Inc., 184 S.W.3d 760, 769–70 (Tex. App.—Dallas 2005,
pet. denied)).
Thus, the existence of a valid contract is one of the essential elements of a
breach-of-contract claim. See id. Parties form a binding contract when the
following elements are present: (1) an offer, (2) an acceptance in strict compliance
with the terms of the offer, (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. Winchek v. Am. Express Travel Related Servs. Co., 232
S.W.3d 192, 202 (Tex. App.—Houston [1st Dist.] 2007, no pet.); see David J.
Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (“A meeting of the minds
is necessary to form a binding contract.”).
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While the enforceability of an agreement is generally a question of law, the
issue of whether parties intended to make a contractual agreement is usually a fact
issue. See Gaede v. SK Invs., Inc., 38 S.W.3d 753, 757–58 (Tex. App.—Houston
[14th Dist.] 2001, pet. denied); see also T.O. Stanley Boot Co. v. Bank of El Paso,
847 S.W.2d 218, 221–22 (Tex. 1992) (whether parties formed contract is generally
fact question, although it may be determined as a matter of law); Foreca, S.A. v.
GRD Dev. Co., 758 S.W.2d 744, 746 (Tex. 1988) (whether parties intended to
enter into binding agreement is often question of fact).
An enforceable and legally binding contract exists if it is sufficiently
definite, certain, and clear in its essential terms. Fort Worth Indep. Sch. Dist. v.
City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000); T.O. Stanley Boot Co., 847
S.W.2d at 221. Furthermore, the parties must have a meeting of the minds and
must communicate consent to the essential terms of the alleged agreement. Baroid
Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 17 (Tex. App.—Houston [1st
Dist.] 2005, pet. denied); Angelou v. African Overseas Union, 33 S.W.3d 269, 279
(Tex. App.—Houston [14th Dist.] 2000, no pet.) (“The parties must agree to the
same thing, in the same sense, at the same time.”).
“‘Meeting of the minds’ describes the mutual understanding and assent to
the agreement regarding the subject matter and the essential terms of the contract.”
City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 720 (Tex.
19
App.—Fort Worth 2008, pet. dism’d) (citing Weynand v. Weynand, 990 S.W.2d
843, 846 (Tex. App.—Dallas 1999, pet. denied)). “Mutual assent, concerning
material, essential terms, is a prerequisite to formation of a binding, enforceable
contract.” Id. (citing T.O. Stanley Boot Co., 847 S.W.2d at 221). The determination
of a meeting of the minds, and thus offer and acceptance, is based on the objective
standard of what the parties said and did and not on their subjective state of mind.
Baroid Equip., Inc., 184 S.W.3d at 17; Ishin Speed Sport, Inc. v. Rutherford, 933
S.W.2d 343, 348 (Tex. App.—Fort Worth 1996, no writ) (stating that whether
conduct exhibits acceptance is question of fact for trier of fact). In order to make
this objective determination, we must necessarily review “the communications
between the parties and . . . the acts and circumstances surrounding those
communications.” Copeland v. Alsobrook, 3 S.W.3d 598, 605 (Tex. App.—San
Antonio 1999, pet. denied).
Here, Clarent asserts that movant Leasing Ventures failed to prove that the
purported settlement agreement was enforceable as a matter of law, in part because
“[t]here was no meeting of the minds; further, the purported Rule 11 Agreement
was not agreed to by Clarent Energy, and to the extent, if at all, it was agreed to by
prior counsel [David Ayers], prior counsel had no authority to enter it.” We agree
with Clarent that Leasing Ventures’ summary judgment evidence failed to
20
establish a meeting of the minds as a matter of law; accordingly, we need not
address Clarent’s contention regarding Ayers’ authority to bind it.
Leasing Ventures argues that Clarent and Gilliam accepted the settlement
agreement, pointing to the September 13, 2017 email from Clarent’s counsel at the
time, Ayers:
[I]t took a lot of tail twisting but we have a deal in principal [sic]. As
you mention there are some details we need to work out but so long as
our folks are committed to working together to maximize the
equipment recovery those should be fairly simple to paper. Let’s talk
in the morning.
This email, however, does not conclusively establish Clarent’s “mutual
understanding and assent to the agreement regarding the subject matter and the
essential terms of the contract.” See City of The Colony, 272 S.W.3d at 720. By
stating that the parties had a deal in principle and using other equivocal language,
such as recognizing that there remained details to work out that “should” be simple
to address, counsel’s statement does not demonstrate a meeting of the minds on the
material terms as a matter of law, but could be interpreted as recognizing the
continued negotiations of the parties. This is especially true in light of the standard
of review on summary judgment, which requires that we indulge all reasonable
inferences in favor of Clarent as the nonmovant. See Dorsett, 164 S.W.3d at 661;
City of Keller, 168 S.W.3d at 827.
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Leasing Ventures points to other emails to support its contention that the
parties had mutually agreed to be bound by the proposed settlement agreement. It
cites Leasing Ventures’ email to the trial court coordinator—approved by Ayers—
stating that the parties had “reached a settlement agreement,” and “we would like
to request that the Court retain this case on its docket for an additional 180 days
(on or about March 19, 2018) so that the terms of the settlement agreement may be
effectuated.” It also cites the exchange between Werlein and Leasing Ventures
following Werlein’s notice of withdrawal, in which Leasing Ventures stated, “As
far as we are concerned, this matter is settled. So long as David [Ayers] is still our
contact person for settlement and all things case related, and it doesn’t interfere
with our getting this deal executed, we have no objection,” and Werlein responded,
“I am also assuming this matter is settled. . . .”
However, as stated above, these emails do not communicate assent to the
essential settlement terms as a matter of law. They could also indicate only that
Clarent was still attempting to reach final settlement terms. And any indication of
intent to be bound expressed in these emails is undermined by other
communications in the same chain of emails, such as Ayers’ email on September
22 stating that he was still waiting to hear from his clients, but he thought “they
were pretty close” to an agreement. Similarly, Ayers’ email on September 26
raised concerns about what the parties would do if the trial court refused to allow
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time for them to carry out the proposed settlement and concerns about the
“cooperation language,” again stating, “Overall I think we are close.” And as late
as September 27, Ayers sought clarification from Leasing Ventures regarding the
exact list of equipment that would be included in the proposed settlement.
Taken as a whole and in their context, these emails do not conclusively
establish a meeting of the minds between Leasing Ventures and Clarent Energy.
See Baroid Equip., Inc., 184 S.W.3d at 17 (we consider whether there was a
meeting of the minds by considering what the parties said and did and not on their
subjective state of mind); Copeland, 3 S.W.3d at 605 (holding that we make
objective determination regarding meeting of minds by reviewing “the
communications between the parties and . . . the acts and circumstances
surrounding those communications.”). Clarent asserts in its brief on appeal that
“[t]he slew of emails that Leasing Ventures attached [to its summary judgment
motion] constitute mere negotiations both before and after Leasing Ventures
unilaterally announced to the [trial court] that the case was settled by email on
September 13, 2017.” Construing these emails in the light most favorable to
Clarent as the nonmovant—as we must—we conclude that the trial court erred in
determining that Leasing Ventures had proven, as a matter of law, that the parties
had mutually agreed to the terms of the proposed settlement agreement.
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Leasing Ventures compares its case to Padilla v. LaFrance and Green v.
Midland Mortgage Co. in arguing that, as a matter of law, the settlement
agreement was a valid and enforceable contract. Those cases are distinguishable,
however, on the issue of meeting of the minds. In Padilla, the supreme court held
that a series of letters exchanged between the parties was sufficient to constitute an
agreement in writing satisfying Rule 11. 907 S.W.2d 454, 460–61 (Tex. 1995). In
so holding, the supreme court observed that the letters specifically confirmed a
settlement agreement between the parties and contained all the material terms of
the agreement, observing that
Bradshaw’s letter—faxed to Steidley on the afternoon of April 23—
agreed to pay the $40,000 policy limits, specifically confirming a
“settlement agreement” between the parties. That letter, however,
noted uncertainty as to one detail, payment of the hospital lien. . . .
Steidley responded that same day with a letter indicating that plaintiffs
would pay the hospital lien out of the settlement funds, specifically
stating that “[t]his letter will confirm that the above referenced matter
has been settled for all applicable policy limits.”
See id.
Likewise, in Green, a series of emails between the litigants and a “Rule 11
letter” filed with the court “confirmed a settlement agreement between the parties”
as to all material terms of the agreement. 342 S.W.3d 686, 691 (Tex. App.—
Houston [14th Dist.] 2011, no pet.). The consent to the agreement expressed in the
emails was unequivocal:
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In answer to Weston’s e-mail to Leyh requesting that Leyh “please
confirm that we have a deal to settle this case,” Leyh responded
“[y]es, we have a settlement.” Weston then replied “[g]reat, clients
have agreed to those terms.” Further, the Rule 11 letter signed by
Weston and Leyh, and filed with the court the following day, stated
that the parties had settled the Greens’ claims. Moreover, the e-mail
exchange reflects all the material terms of the agreement: Midland and
Barrett Burke agreed to pay the Greens $40,000 in exchange for the
settlement and release of all claims between the parties.
Id.
Here, by contrast, the emails between the parties do not confirm an
agreement to settle the claims on any specific terms. Clarent stated, at times, that
there was an agreement in principle and that the parties were “close” to an
agreement, and Clarent did not object to Leasing Ventures’ counsel’s attempts to
reset the approaching trial setting based on the settlement negotiations. But this is
not the same as the unequivocal statement, “Yes, we have a settlement” as to
specific terms that was present in the Green case. See id. And unlike the Green
case, the parties here continued to communicate regarding the terms of
settlement—such as the nature of the “cooperation language” and the precise list of
equipment that was subject to the settlement agreement—until the negotiations
between Leasing Ventures and Clarent broke down.
We conclude that Leasing Ventures failed to establish that there was a
meeting of the minds between the parties as to all material terms of the settlement
as a matter of law. See Leonard, 551 S.W.3d at 909. Thus, the trial court erred in
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granting summary judgment in favor of Leasing Ventures on its claim for breach of
the purported settlement agreement. We sustain Clarent’s second issue to the
extent it argues that Leasing Ventures failed to establish as a matter of law a
meeting of the minds between the parties on the material terms. Because none of
Clarent’s remaining issues can afford it any greater relief, we need not address its
remaining contentions on appeal. See TEX. R. APP. P. 47.1.
Conclusion
We reverse the judgment of the trial court and remand for further
proceedings consistent with this appeal.
Richard Hightower
Justice
Panel consists of Justices Keyes, Lloyd, and Hightower.
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