Mary M. Rawls v. Jeffrey Clark Rawls ( 2015 )

Opinion issued August 27, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00568-CV
———————————
MARY M. RAWLS, Appellant
V.
JEFFREY CLARK RAWLS, Appellee
On Appeal from the 246th District Court
Harris County, Texas
Trial Court Case No. 2007-61678
MEMORANDUM OPINION
When Mary Rawls and Jeffrey Rawls divorced in 2008, their Divorce
Decree incorporated their agreement to divide bonus compensation that would be
paid to Jeffrey in 2008 and for the following six years. Mary later sued Jeffrey to
recover her share of bonus compensation that Jeffrey received from 2008 through
2011. She also brought a bill of review attacking the 2008 Decree and a petition
for enforcement, in which she requested that the trial court hold Jeffrey in
contempt for violating the Decree by failing to pay Mary her share of his bonus
compensation for those years, among other things, and enter an order awarding
Mary the withheld money to which she was entitled. The trial court granted
Jeffrey’s partial motion for summary judgment, held a bench trial on Mary’s
remaining claims, and then entered a final judgment denying all of Mary’s
requested relief. In four issues, Mary contends that the trial court’s judgment
should be reversed. Jeffrey did not file an appellate brief but conceded that
“certain procedural issues raised within [Mary’s] briefing have merit and that a
remand of this case for a new trial as requested by Appellant would be the proper
remedy.” We affirm the trial court’s judgment with respect to Mary’s breach of
fiduciary duty claim and Counts Two, Seven, and Eight in Mary’s enforcement
petition. We reverse the judgment in all other respects and remand for a new trial.
Background
Collaborative Law Agreement, Settlement Agreement and Divorce Decree
After Mary filed for divorce, the parties entered into a “Collaborative Law
Participation Agreement” on October 23, 2007. Under the collaborative law
agreement, both parties agreed to “full disclosure of the nature, extent, value of—
and all developments affecting—the parties’ income, assets and liabilities.” They
2
also agreed that “[a]ny material change in information previously provided must be
promptly updated.”
The parties entered into a settlement agreement on June 9, 2008 which was
incorporated into a Final Decree of Divorce entered on June 16, 2008. The Decree
included a section entitled “Allocation of Future Bonuses Anticipated To Be
Received by Jeffrey Rawls.” It stated that Jeffrey and Mary:
shall share the net after tax amount of any Bonus Compensation or to
be received by Jeffrey Rawls pursuant to his employment as follows:
It is the intention of the parties that the bonus received by Jeffrey
Rawls in 2008 was shared equally between the parties. Given the
timing of this divorce, the 2008 bonus was received and all tax cash
proceeds were deposited . . . Additionally, with regards to the 2008
bonus, Jeffrey Rawls is to receive 100% of any Bear Stearns stock.
The Decree stated that Jeffrey and Mary would each receive “50% of the net after
tax bonus” for 2009. And for 2010 through 2014, Jeffrey would receive 75% and
Mary would receive 25% “of the net after tax bonus.”
The Decree defined “Bonus Compensation” as
[A]ny form of compensation, including but not limited to equity
ownership, cash, or stock in excess of Jeffrey Rawls’ annual salary-
based compensation. Bonus compensation will be determined at that
point in time when such compensation is transferred from the
employer to Jeffrey Rawls. Bonus compensation may be in the form
of cash, stock, or other forms of equity . . . .
The Decree incorporated the parties’ agreement and included the following
merger clause:
3
The agreements in this Final Decree of Divorce were reached
pursuant to the collaborative law process. This Final Decree of
Divorce is stipulated to represent a merger of any and all agreements
reached between the parties in the collaborative law process. To the
extent there exist any differences between the collaborative law
agreements and this Final Decree of Divorce, this Final Decree of
Divorce shall control in all instances.
Jeffrey’s Job Offer and Job Resignation
Jeffrey worked for Bear Energy, a subsidiary of Bear Stearns. On April 25,
2008, more than a month before the parties signed the settlement agreement, NGP
MR Management, LP offered him a job. The written job offer stated that it would
expire on May 2, 2008. Jeffrey resigned from Bear Energy on April 28th, but his
contract with Bear Energy prohibited him from taking the NGP job within 90 days
of ending his employment with Bear Energy. The summary-judgment evidence
showed that Jeffrey asked NGP whether it would hold the offer open until the 90-
day waiting period lapsed, and that NGP responded that it could not, but agreed to
consider Jeffrey for the job after the 90-day period if the opening had not already
been filled. NGP hired Jeffrey on July 28, 2008, 90 days after he resigned from
Bear Energy.
Mary’s claims
In 2011, Mary sued Jeffrey for failing to disclose the NGP job offer to her
before the Decree was entered and for failing to share cash bonuses, incentive units
in NGP, and SEP IRA contributions, as required by the Decree. Mary requested
4
that the trial court enforce the bonus compensation sharing provision of the Decree,
among other things, and hold Jeffrey in contempt.
Nearly a year later, on November 5, 2012, Jeffrey filed a motion seeking
partial traditional summary judgment on Mary’s breach of contract, breach of
fiduciary duty, and fraud claims related to his non-disclosure of the NGP job offer.
In it, Jeffrey argued that he was not required by the terms of the Decree to disclose
any 2008 bonus compensation he could receive from NGP because he did not
know whether he would be hired by NGP at the time.
In response, Mary averred that she and Jeffrey “always intended to share all
compensation Jeff received in excess of his annual salary based compensation,”
and that they “intended to share Jeff’s ‘bonus compensation equally in 2008 . . . .’”
Mary averred that Jeffrey received NGP’s employment offer letter during their
divorce negotiations and that Jeffrey “never disclosed the existence of this letter or
informed [her] of the existence of the promised Incentive Units despite his
obligation to disclose this information under the terms of our Collaborative Law
Agreement.” Mary also averred that:
[A]fter Jeff received the Offer Letter from NGP, he began making
subtle changes to the language of [the bonus-sharing provision in the
Decree]. Prior to April 25, 2008, the drafts of the Decree clearly
stated that the parties will share all 2008 bonus equally. After April
25, 2008, Jeff changed the decree to say that the 2008 bonus “was”
shared equally between the parties. The change made by Jeff was so
subtle that I was unable to understand its potential impact on my
receipt of additional 2008 Bonus Compensation. Jeff used his
5
knowledge of the Offer Letter and Incentive Units to try to exclude
me from receiving what we agreed.
The trial court granted Jeffrey’s motion for summary judgment without
specifying its reasons. Mary then amended her enforcement petition to request that
the court enforce the bonus-sharing provision of the Decree for the years 2008
through 2011 by ordering Jeffrey to pay her share of bonus compensation for those
years.
Jeffrey filed a motion to dismiss, arguing that the summary judgment
disposed of all of Mary’s claims in her petition for post-divorce division of
undisclosed property and all of her claims in her petition for breach of contract,
breach of fiduciary duty and fraud, and bill of review. Jeffrey also argued that the
summary judgment disposed of most of the counts in Mary’s enforcement
petition—including Counts One, Three, Four, Five, Nine, and Ten, which were
based on Mary’s allegations regarding Jeffrey’s non-disclosure and her claim that
certain items, like incentive units and SEP IRA contributions, were included in the
definition of bonus compensation in the Decree. Jeffrey argued that only four
counts from the enforcement petition remained after the grant of summary
judgment—Counts Two, Six, Seven, and Eight. Count Two alleged that Jeffrey
paid the June 2009 alimony payment 30 days late. Count Six alleged that Jeffrey
paid Mary only 25% of his 2009 bonus when the Decree obligated him to pay her
50%. Count Seven alleged that Jeffrey failed to execute a special warranty deed
6
pertaining to the residence granted to Mary by the decree. Count Eight alleged that
Jeffrey violated the Decree by failing to timely notify Mary regarding an
employment change after the Decree was entered. Jeffrey’s motion argued that
Mary could not prevail on these four claims and that accordingly, her entire case
should be dismissed.
The parties proceeded to a bench trial on February 25, 2013. Mary
nonsuited some of her claims but argued that the trial court had not ruled on her
claims regarding the division of Jeffrey’s bonus compensation for 2008 through
2011. The trial court disagreed, stating that the summary judgment covered those
issues. The trial court also agreed with Jeffrey that the summary judgment disposed
of all of Mary’s claims save for Count Two, Six, Seven, and Eight in the
enforcement petition.
Nevertheless, Mary sought to introduce evidence regarding a variety of her
enforcement claims, including her claim that Jeffrey did not pay her what she was
owed out of his 2009 bonus because he applied the incorrect tax rate. The trial
court excluded this evidence on the grounds that the enforcement petition was not
specific enough to support a finding of contempt on this claim. Because the trial
court would not allow argument or admit evidence relating to some of her
enforcement claims, Mary made an offer of proof. Among other things, she
presented evidence that she would have testified at trial that the effective tax rate
7
that should have been applied to the 2009 bonus, based on Jeffrey’s tax returns,
would have resulted in her receiving an additional $44,338.34 from Jeffrey from
the 2009 bonus.
After the trial court heard some evidence regarding the four claims it had
determined remained pending (Counts Two, Six, Seven, and Eight), the trial court
stated “I’m going to grant the Motion to Dismiss.” On April 5, 2013, the trial court
signed the Final Judgment, which states that the summary judgment disposed of all
of Mary’s claims in her petition for breach of contract, breach of fiduciary duty and
fraud, and bill of review, all of her claims in her petition for post-divorce division
of undisclosed property, and all of her claims in her enforcement petition except
for Counts Two, Six, Seven, and Eight. With respect to these four claims, the
Final Judgment states that “[t]he Court heard and considered evidence of these
remaining counts and after both parties rested, finds that such claims are denied.”
The judgment also states that Jeffrey’s motion to dismiss the claims was granted.
The judgment denied all relief sought by Mary, and Mary’s motion for new trial
was overruled by operation of law.
Summary Judgment on Claims Relating to 2008 Bonus Compensation
A. Standard of Review
We review a trial court’s summary judgment de novo. Travelers Ins. Co. v.
Joachim, 315 S.W.3d 860, 862 (Tex. 2010). If a trial court grants summary
8
judgment without specifying the grounds for granting the motion, we must uphold
the trial court’s judgment if any of the grounds are meritorious. Beverick v. Koch
Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied). When reviewing a summary judgment, we take as true all evidence
favorable to the nonmovant, and we indulge every reasonable inference and
resolve any doubts in the nonmovant’s favor. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005).
In a traditional summary-judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and that the trial court should
grant judgment as a matter of law. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick
v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). A
defendant moving for traditional summary judgment must conclusively negate at
least one essential element of each of the plaintiff’s causes of action. D. Houston,
Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). If the defendant conclusively
negates at least one element of a cause of action, the burden shifts to the plaintiff to
raise a fact issue to preclude summary judgment. See Hahn v. Love, 321 S.W.3d
517, 523–24 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). Generally,
granting a summary judgment on a claim not addressed in a summary-judgment
motion constitutes reversible error. G & H Towing Co. v. Magee, 347 S.W.3d 293,
297 (Tex. 2011).
9
B. Analysis
1. Did the trial court err in granting summary judgment on
Mary’s claims for breach of contract, breach of fiduciary
duty, and fraud?
In her first issue on appeal, Mary contends that the trial court erred in
granting summary judgment for Jeffrey on her breach of contract, breach of
fiduciary duty, and fraud claims. Those claims were premised on Mary’s
allegation that Jeffrey had a duty to disclose to her—before the Divorce Decree
was entered—that he had received a job offer from NGP on April 25, 2008 and
resigned from his job at Bear Energy shortly thereafter. We conclude that the trial
court improperly granted Jeffrey summary judgment on Mary’s breach of contract
and fraud claims.
The collaborative law agreement required Jeffrey to disclose “the nature,
extent, value of—and all developments affecting—the parties’ income, assets and
liabilities.” (Emphasis added.) The summary-judgment evidence showed that
Jeffrey received a job offer from NGP on April 25, 2008 and resigned from his job
at Bear Energy three days later. Both of these events occurred while the
collaborative law agreement was in effect and before the parties signed the
settlement agreement that was the basis for the Decree. However, the evidence
shows that Jeffrey did not disclose that he had received a job offer or resigned his
job. The Decree states that Jeffrey’s employer is Bear Energy, even though he had
10
resigned from his position there more than a month before the parties signed the
settlement agreement. The evidence also showed that, before the settlement
agreement was signed, Jeffrey was told that he could inquire with NGP after his
90-day non-compete period elapsed, and he apparently intended to do so.
The disclosure provision in the collaborative law agreement was broad. It
required Jeffrey to disclose “all developments affecting . . . [his] income.” The
summary-judgment evidence raised a fact issue regarding whether Jeffrey violated
the collaborative law agreement by failing to disclose that he had received a job
offer, subsequently resigned his job, and intended to inquire about the offered job
after his 90-day waiting period elapsed. A reasonable factfinder could conclude
that these were developments affecting Jeffrey’s income and therefore were
required to be disclosed under the terms of the collaborative law agreement. We
therefore conclude that the summary-judgment evidence raised a genuine issue of
material fact regarding whether Jeffrey breached the collaborative law agreement.
See AMS Constr. Co. v. K.H.K. Scaffolding Houston, Inc., 357 S.W.3d 30, 41 (Tex.
App.—Houston [1st Dist.] 2011, pet. dism’d) (“A breach occurs when a party fails
or refuses to do something he has promised to do.”); cf. GP II Energy, Inc. v.
Chamberlain, Hrdlicka, White, Williams & Martin, No. 14-07-00237-CV, 2008
WL 4354931, at *8 (Tex. App.—Houston [14th Dist.] Aug. 26, 2008, no pet.)
(mem. op.) (summary judgment proper on breach of contract claim where
11
unambiguous language of agreement “imposed no duty on the Escrow Agent to
disclose any knowledge the Escrow Agent might have,” and therefore party “did
not have duty to disclose this information”). Accordingly, the trial court erred in
granting summary judgment on Mary’s breach of contract claim.
Jeffrey also moved for summary judgment on Mary’s breach of fiduciary
duty and fraud claims, which were pleaded in the alternative. Here, Jeffrey owed a
duty to Mary that arose from the collaborative law agreement. See Boyd v. Boyd,
67 S.W.3d 398, 404–06 (Tex. App.—Fort Worth 2002, no pet.) (husband bore duty
to speak when mediated settlement agreement provided that “[e]ach party
represents that they have made a fair and reasonable disclosure to the other of the
property and financial obligations known to them”). A party commits fraud by
nondisclosure if (1) the defendant failed to disclose facts to the plaintiff, (2) the
defendant had a duty to disclose those facts, (3) the facts were material, (4) the
defendant knew the plaintiff was ignorant of the facts and the plaintiff did not have
an equal opportunity to discover the facts, (5) the defendant was deliberately silent
when it had a duty to speak, (6) by failing to disclose the facts, the defendant
intended to induce the plaintiff to take some action or refrain from acting, (7) the
plaintiff relied on the defendant’s nondisclosure, and (8) the plaintiff was injured
as a result of acting without that knowledge. Horizon Shipbldg., Inc. v. Blyn II
12
Holding, LLC, 324 S.W.3d 840, 850 (Tex. App.—Houston [14th Dist.] 2010, no
pet.).
We conclude that the summary-judgment evidence raised a fact issue
regarding fraud by non-disclosure. The evidence showed that Jeffrey did not
disclose that he had received a job offer or resigned his job before signing the
settlement agreement, which stated, erroneously, that his employer was Bear
Energy. The disclosure provision in the collaborative law agreement was broad
and imposed a duty to disclose any development affecting income. Mary averred
in her summary-judgment affidavit that after receiving the April 25, 2008 offer and
resigning from Bear Energy, Jeffrey proposed changes to the settlement agreement
to indicate that he had already shared his 2008 bonus. A reasonable factfinder
could conclude based upon this evidence that Jeffrey concealed his resignation and
job offer and revised the terms of the settlement agreement so as to avoid having to
share with Mary any bonuses earned in a new job in 2008. The merger clause in
the Decree does not foreclose Mary’s fraud claim because the summary-judgment
evidence raised a fact issue regarding whether Jeffrey’s non-disclosure was
fraudulent and intended to induce Mary to sign the settlement agreement. See
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 331–
32 (Tex. 2011). Accordingly, the trial court erred in granting summary judgment
on Mary’s fraud claim. See Boyd, 67 S.W.3d at 404–05 (when spouse is under
13
duty during settlement negotiations in divorce to disclose material information to
other spouse and secretive disclosure leads to reasonable reliance on erroneous
understanding, divorce decree is subject to rescission); cf. Hester v. Prickett, No.
13-11-00677-CV, 2012 WL 3252721, at *5–6 (Tex. App.—Corpus Christi Aug. 9,
2012, pet. denied) (mem. op.) (where ex-husband made threatening phone call and
partially disclosed incorrect information, ex-wife raised fact issue that extrinsic
fraud was committed based on rule that party who voluntarily discloses
information must disclose whole truth to avoid false impression).
With respect to Mary’s breach of fiduciary duty claim, although husbands
and wives generally owe a fiduciary duty to one another, adverse parties who have
retained professional counsel, including husbands and wives in a suit for divorce,
do not owe fiduciary duties to one another. See Boaz v. Boaz, 221 S.W.3d 126,
133 (Tex. App.—Houston [1st Dist.] 2006, no pet.); Boyd, 67 S.W.3d at 405.
Thus, to the extent that Jeffrey owed Mary a duty of disclosure, it arose not from
the nature of their relationship, but instead, from the obligations undertaken in the
collaborative law agreement. Accordingly, the trial court did not err in granting
summary judgment on Mary’s breach of fiduciary duty claim. See Boaz, 221
S.W.3d at 133; Boyd, 67 S.W.3d at 405.
14
We sustain Mary’s first issue with respect to her breach of contract and fraud
claims, and overrule Mary’s first issue with respect to her breach of fiduciary duty
claim.
2. Did the trial court err in granting summary judgment on
claims not addressed by Jeffrey’s motion?
In Mary’s second, third, and fourth issues, she argues that the trial court
erroneously treated the partial summary judgment as dispositive of her bill of
review, petition for post-divorce division of undisclosed property, and Counts One,
Three, Four, Five, Nine, and Ten of the enforcement petition, which were based on
Mary’s allegations regarding Jeffrey’s non-disclosure and her claim that certain
items were included in the Decree’s definition of bonus compensation. We agree.
Although Jeffrey’s summary-judgment motion did not expressly state that
Jeffrey was moving for summary judgment on any of those claims, the trial court’s
final judgment stated that the summary judgment order “disposed of” Mary’s bill
of review, the petition for post-divorce division, and the enforcement claims based
upon non-disclosure and the Decree’s definition of bonus compensation. It was
error for the trial court to treat the summary judgment as disposing of any
unaddressed claim, including Mary’s bill of review, her petition for post-divorce
division of undisclosed property, and the enforcement claims based upon non-
disclosure and the Decree’s definition of bonus compensation. See G & H Towing
15
Co., 347 S.W.3d at 297 (granting summary judgment on claims not addressed in
motion for summary judgment is generally reversible error).
We sustain Mary’s second and third issues and her fourth issue with respect
to Counts One, Three, Four, Five, Nine, and Ten in the enforcement petition, her
enforcement claims based upon Jeffrey’s non-disclosure and the Decree’s
definition of bonus compensation.
Enforcement Claims Remaining After Summary Judgment
In her fourth issue, Mary contends that the trial court erred by dismissing her
enforcement claims. We have already held that the trial court erred in granting
summary judgment on Mary’s enforcement claims that were based upon Jeffrey’s
non-disclosure and the Decree’s definition of bonus compensation (Counts One,
Three, Four, Five, Nine, and Ten). The trial court determined that there were only
four enforcement claims not disposed of by the summary judgment—Counts Two,
Six, Seven, and Eight. Count Six related to Mary’s claim that Jeffrey applied an
incorrect tax rate to his 2009 bonus and thus, paid her less of that bonus than he
was required. The remaining three counts were unrelated to complaints about
bonuses, and pertained to Jeffrey’s untimely alimony payments, refusal to execute
a deed, and untimely notice of employment changes.
On appeal, Mary argues generally that the trial court erred in denying her
enforcement claims, but she does not identify any evidence or provide any
16
argument pertaining to the enforcement claims unrelated to bonuses—Counts Two,
Seven, and Eight—that would permit us to determine whether the denial or
dismissal of these claims was error. She does not address Jeffrey’s arguments in
his motion to dismiss regarding these claims other than his argument that these
claims could not be enforced by contempt. However, that was not the only ground
for dismissal of these claims urged in Jeffrey’s motion, and Mary does not argue
that the other urged grounds were erroneous. Nor does she provide any citation to
the record showing what evidence, if any, was admitted at trial in support of these
claims before the trial court denied them and granted the motion to dismiss.
Accordingly, we hold that Mary has waived her argument with respect to the
enforcement claims unrelated to bonuses. See TEX. R. APP. P. 38.1(i); Bob v.
Cypresswood Cmty. Ass’n, —S.W.3d—, 2015 WL 3423753, at *3 (Tex. App.—
Houston [1st Dist.] May 28, 2015, no pet.) (appellant waives argument regarding
claims if proper citations to the record and authority supporting argument are not
provided).
With respect to Count Six, her claim that Jeffrey applied an incorrect tax rate
to his 2009 bonus and therefore underpaid her from that bonus, Mary argues that
the trial court abused its discretion in excluding her evidence that Jeffrey applied
the wrong tax rate. Mary argues that, had the proper rate been applied, Jeffrey
would have been obligated under the decree to pay Mary more of his 2009 bonus.
17
We review a trial court’s decision to admit or exclude evidence for an abuse of
discretion. Simien v. Unifund CCR Partners, 321 S.W.3d 235, 239 (Tex. App.—
Houston [1st Dist.] 2010, no pet.).
In her petition, Mary alleged that Jeffrey paid her only 25% of the $250,000
bonus he received in 2009, when the Decree required Jeffrey to pay her 50%.
Mary sought, among other things, an order awarding her the additional amount of
the 2009 bonus to which she was entitled. After the trial court excluded evidence
regarding the tax rate applicable to the 2009 bonus, Mary made an offer of proof
that she would have testified at trial that the effective tax rate that should have been
applied to the 2009 bonus, based on Jeffrey’s tax returns, would have resulted in
her receiving an additional $44,338.34 from Jeffrey from the 2009 bonus. The trial
court excluded this evidence on the ground that the petition for enforcement did
not specify the amount that Mary was owed from the 2009 bonus as required to
support an order of contempt. There is no other basis in the record for the
exclusion of this evidence. But as Mary argued at trial, the specific amount owed
to her from the 2009 bonus was a fact issue to be resolved by the parties’
competing evidence regarding the appropriate tax rate to be applied. The exclusion
of this evidence probably resulted in the rendition of an improper judgment,
because this evidence was necessary to show whether Mary’s contention was
correct, and if correct, would have resulted in an award to Mary of the withheld
18
funds. See TEX. R. APP. P. 44.1(a)(1); Interstate Northborough P’ship v. State, 66
S.W.3d 213, 220 (Tex. 2001) (where judgment turns on excluded evidence,
exclusion of evidence is harmful). Accordingly, the trial court erred in excluding
evidence regarding the tax rate applicable to the 2009 bonus. See Simien, 321
S.W.3d at 239 (trial court abuses discretion in excluding evidence if there is no
legitimate basis for the ruling).
We overrule Mary’s fourth issue with respect to Counts Two, Seven, and
Eight, and sustain it with respect to Count Six in the enforcement petition.
Conclusion
We affirm the trial court’s judgment with respect to Mary’s breach of
fiduciary duty claim and Counts Two, Seven, and Eight in Mary’s enforcement
petition. We reverse the trial court’s judgment in all other respects and remand for
a new trial and further proceedings consistent with this opinion.
Rebeca Huddle
Justice
Panel consists of Justices Jennings, Higley, and Huddle.
19