estate-of-branch-archer-by-richard-k-archer-as-personal-representative ( 2008 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-07-243-CV
ESTATE OF BRANCH ARCHER, APPELLANTS
BY RICHARD K. ARCHER
AS PERSONAL REPRESENTATIVE,
AND RICHARD K. ARCHER, INDIVIDUALLY
AND AS TRUSTEE OF THE
RICHARD K. ARCHER, M.D., P.A.
PROFIT SHARING PLAN & TRUST
V.
RICHARD O. HARRIS, INDIVIDUALLY APPELLEE
AND AS TRUSTEE OF THE
RICHARD O. HARRIS PROFIT SHARING TRUST
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FROM THE 89TH DISTRICT COURT OF WICHITA COUNTY
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MEMORANDUM OPINION 1
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1
… See Tex. R. App. P. 47.4.
Introduction
This is a partnership dispute. In six issues, Appellant Richard K. Archer
(Archer)2 complains of a summary judgment in favor of Appellee Richard O.
Harris, Individually and as Trustee of the Richard O. Harris Profit Sharing Trust
(Harris) on Archer’s claims for breach of covenant against encumbrances and
for money had and received. We affirm.
Background
Archer and Harris formed a limited liability partnership with Steve
Sterquell in early 1993 to purchase land and a building near the Amarillo airport
(the “Property”). Archer, individually, signed a promissory note, secured by a
deed of trust executed by all three partners, for $185,000 to purchase the
Property.
In late 1993, Harris told Archer that Harris thought he and Archer should
no longer do business with Sterquell. Shortly thereafter, Branch (Archer’s
brother) offered to purchase Harris’s interests in the partnership and in the
Property. Harris agreed to sell to Branch and, in December 1993, Harris
executed instruments transferring his interests in the partnership and in the
2
… Archer filed suit in three different capacities–individually, as Trustee
of the Richard K. Archer, M.D., P.A. Profit Sharing Plan & Trust, and as
personal representative of the Estate of Branch Archer. Branch Archer, who
passed away before this suit was filed, was Richard Archer’s brother and shall
be referred to in this opinion as “Branch.”
2
Property to Randall Kubiak as trustee for Branch. Branch tendered a check to
Harris that, at Archer’s urging, Harris endorsed, placing the funds in a bank.
Sterquell did not consent to this sale.
In late June 1994, the Amarillo Economic Development Corporation
(AEDC) approached Archer about AEDC’s interest in purchasing the Property.
Archer did not tell Harris or Sterquell about AEDC’s interest.
On July 1, 1994, Archer, Harris, and Sterquell met to discuss resolving
their differences. After a full day of negotiations, the parties entered into a
Mutual Compromise Settlement and Partition Agreement (the Mutual Release). 3
The Mutual Release effectively transferred Harris’s and Sterquell’s interests in
the Property and the partnership to Archer. The Mutual Release also contained
a broad, reciprocal release of all claims by any of the partners against one
another, whether known or unknown.
Four days later, on July 5, 1994, Archer agreed to sell the Property to
AEDC for $515,000, and the sale closed a few days later on July 13. When
Harris and Sterquell learned about the sale, they each demanded one-third of
the profits from the sale. Archer refused, and Harris and Sterquell sued Archer
in Randall County, alleging among other things that Archer breached his
3
… The parties also entered into another settlement agreement that is not
at issue in this appeal.
3
fiduciary duty. That suit culminated in a judgment on a jury verdict awarding
Sterquell damages and a judgment notwithstanding the verdict that Harris take
nothing.
On appeal, the Amarillo Court of Appeals affirmed the judgment as to
Sterquell after Sterquell accepted a remittitur and reversed and rendered
judgment for Harris awarding him the same damages as Sterquell.4 Archer had
argued, among other things, that the broad release language in the Mutual
Release barred Harris’s and Sterquell’s claims as a matter of law, but the court
of appeals disagreed, concluding that the Mutual Release did not bar Harris’s
and Sterquell’s claim that Archer breached his fiduciary duty when he failed to
disclose the AEDC offer to purchase the Property.5
While the Randall County case was pending, Archer, in various
capacities, 6 sued Harris in Wichita County (Harris’s place of residence). 7
Archer’s claims were predicated on Harris’s purported sale of his interests to
Branch. At Harris’s request, the trial court abated this suit pending the
outcome of the Randall County action.
4
… Archer v. Harris, 134 S.W.3d 411 (Tex. App.—Amarillo 2004, pet.
denied).
5
… Id. at 430–34.
6
… See supra n.2.
7
… Sterquell has never been a party to the Wichita County action.
4
After the Randall County action became final, Harris moved for summary
judgment on Archer’s two pending claims for breach of the covenant against
encumbrances and for money had and received. One of the grounds Harris
asserted was that Archer’s claims were barred by the Mutual Release. In
response, Archer asserted, among other things, that Harris was precluded from
relying on the Mutual Release because of Archer’s affirmative defenses of
collateral estoppel and judicial estoppel. Without specifying the grounds, the
trial court granted summary judgment for Harris, and this appeal followed.
Standard of Review
Citing the Mutual Release, Harris’s motion for summary judgment
asserted the affirmative defense of release.8 A defendant is entitled to
summary judgment on an affirmative defense if the defendant conclusively
proves all the elements of the affirmative defense.9 To accomplish this, the
defendant-movant must present summary judgment evidence that establishes
each element of the affirmative defense as a matter of law.10 When reviewing
a summary judgment, we take as true all evidence favorable to the nonmovant,
8
… See Tex. R. Civ. P. 94.
9
… Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); see
Tex. R. Civ. P. 166a(b), (c).
10
… Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996).
5
and we indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. 11
Archer concedes that if the Mutual Release is valid, it would bar all his
claims.12 To avoid this result, Archer asserts that Harris cannot use the Mutual
Release as a defense in this action because of the doctrines of collateral
estoppel and judicial estoppel. Like release, collateral estoppel and judicial
estoppel are affirmative defenses.13 Accordingly, we must review Archer’s
summary judgment evidence to determine whether it raised a fact issue as to
each element of at least one of the defenses he asserted.14
Analysis
Collateral estoppel applies when three elements are present: (1) the facts
sought to be litigated in the second action were fully and fairly litigated in the
first action; (2) those facts were essential to the judgment in the first action;
11
… IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143
S.W.3d 794, 798 (Tex. 2004).
12
… After quoting the release on page 2 of his brief, Archer states, “If this
mutual release is valid, it would indeed bar [Archer’s] claims.”
13
… See Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550, 553
(Tex. 2002); Equitable Recovery, L.P. v. Heath Ins. Brokers of Tex., L.P., 235
S.W.3d 376, 383–84 (Tex. App.—Dallas 2007, pet. dism’d).
14
… See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) (“If
the party opposing a summary judgment relies on an affirmative defense, he
must come forward with summary judgment evidence sufficient to raise an
issue of fact on each element of the defense to avoid summary judgment.”).
6
and (3) the parties were in an adversarial posture in the first action.1 5 The
doctrine is designed to promote judicial efficiency and to prevent inconsistent
judgments by preventing re-litigation of an ultimate issue of fact. 16 When the
party against whom collateral estoppel is asserted had a full and fair opportunity
to litigate the issue in the prior suit, that party may not re-litigate the issue.17
Judicial estoppel bars a party who has made a sworn statement in a
pleading, a deposition, oral testimony, or affidavit in a judicial proceeding from
maintaining a contrary position in a subsequent proceeding.18 The elements of
judicial estoppel are (1) a sworn, inconsistent statement made in a previous
judicial proceeding; (2) the party who made the statement successfully
maintained the previous position; (3) the previous statement was not made
15
… See Tex. Dep’t of Public Safety v. Petta, 44 S.W.3d 575, 579 (Tex.
2001); Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d
507, 521 (Tex. 1998).
16
… See Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex.
1994).
17
… See Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex.
1990).
18
… See Dallas Sales Co. v. Carlisle Silver Co., 134 S.W.3d 928, 930
(Tex. App.—Waco 2004, pet. denied); Andrews v. Diamond, Rash, Leslie &
Smith, 959 S.W.2d 646, 649 (Tex. App.—El Paso 1997, writ denied).
7
inadvertently or by mistake, fraud, or duress; and (4) the statement was
deliberate, clear, and unequivocal.19
Archer argues that Harris is precluded from relying on the Mutual Release
to defeat his claims because Harris prevailed in the Randall County suit in part
because Harris asserted that the Mutual Release was invalid and because the
validity of the Mutual Release was fully and fairly litigated in the prior action,
culminating in a determination that the release was invalid. Harris responds
that he did not challenge the validity of the Mutual Release in the Randall
County suit and that nothing in that suit estops Harris from relying on the
Mutual Release in defense against Archer’s claims in this action. We agree with
Harris.
Harris claimed in the Randall County suit that Archer owed him a fiduciary
duty as his partner to reveal AEDC’s offer to purchase the Property before the
parties entered into the Mutual Release. 20 Because Archer failed to do so,
Harris asserted claims for fraud and breach of fiduciary duty in the procurement
19
… See In re Estate of Loveless, 64 S.W.3d 564, 579–80 (Tex.
App.—Texarkana 2001, no pet.) (citing Am. Sav. & Loan Ass'n v. Musick, 531
S.W.2d 581, 589 (Tex. 1975)); see also Dallas Sales, 134 S.W.3d at 930.
20
… Archer, 134 S.W.3d at 424.
8
of the Mutual Release. 2 1 If Harris prevailed on his contention that Archer
fraudulently induced him to enter into the Mutual Release, he had a choice:
[I]t is well settled that one who is induced by fraud to enter into a
contract has his choice of remedies. “He may stand to the bargain
and recover damages for the fraud, or he may rescind the contract,
and return the thing bought, and receive back what he paid.” 22
Upon the jury’s finding that Archer defrauded Harris, then, Harris could either
rescind the Mutual Release or “stand to the bargain” by affirming the Mutual
Release and recovering damages for Archer’s fraud in procuring it.23 Harris
chose the latter.
Archer did not, and could not, produce summary judgment evidence that
the issue of the Mutual Release’s validity was adjudicated in the Randall County
suit and that it was held invalid, nor could Archer raise a fact issue that Harris
deliberately, clearly, and unequivocally asserted that the Mutual Release was
invalid. To the contrary, the court of appeals’s opinion in the Randall County
suit establishes that Harris and Sterquell did not disclaim the Mutual Release or
seek to have it set aside in that action but affirmed the Mutual Release’s
21
… Id.
22
… Dallas Farm Mach. Co. v. Reaves, 158 Tex. 1, 10, 307 S.W.2d 233,
238–39 (1957).
23
… See id.; see also Foley v. Parlier, 68 S.W .3d 870, 882 (Tex.
App.—Fort Worth 2002, no pet.) (“[I]n a fraud case, the plaintiff can either
claim rescission for fraud and get his property back or he can sue for damages
and affirm the transaction.”).
9
validity by seeking to recover damages based on it.24 The court of appeals
variously noted, for example, that “Harris did not seek rescission of the [Mutual
Release]”;25 “Harris [did not] release[] his claims for breach of fiduciary duty
[against Archer] by execution of the [Mutual Release]”;26 and “Sterquell [and
Harris] did not disclaim or seek to set aside the [Mutual Release]; [they] claimed
damages because of the [Mutual Release’s] existence.” 27
Thus, Harris’s “deliberate, clear, and unequivocal” position regarding the
Mutual Release in the Randall County suit was that Archer fraudulently induced
him to sign the Mutual Release, not that the release was invalid. Accordingly,
because the court of appeals’s opinion establishes that Harris did not try to
have the Mutual Release declared invalid, and certainly cannot be said to have
“deliberately, clearly, and unequivocally” made a sworn statement that the
release was not valid, judicial estoppel does not apply.28
Similarly, Harris is not collaterally estopped from obtaining summary
judgment in this action based on the Mutual Release. There is nothing
24
… 134 S.W.3d at 434.
25
… Id. at 439.
26
… Id. at 446.
27
… Id. at 434.
28
… See Dallas Sales, 134 S.W.3d at 930; Loveless, 64 S.W.3d at
579–80; Andrews, 959 S.W.2d at 649.
10
inconsistent between the judgment in the Randall County suit—that Harris and
Sterquell shall recover damages from Archer for his fraudulent inducement in
procuring the Mutual Release—and the trial court’s summary judgment in this
action that the Mutual Release bars Archer’s claims. Harris and Sterquell did
not elect to rescind the Mutual Release in the Randall County suit. They chose
to “stand by” the Mutual Release by recovering damages for having been
fraudulently induced by Archer to enter into it.29 Because the release was not
found to be invalid in the earlier suit, collateral estoppel does not preclude
Harris from arguing that the release bars Archer’s claims in this action.30
Conclusion
We, therefore, conclude that Harris was entitled to summary judgment in
this action based on the Mutual Release.31 We affirm the trial court’s judgment.
PER CURIAM
PANEL: CAYCE, C.J.; HOLMAN and WALKER, JJ.
DELIVERED: December 4, 2008
29
… See Reaves, 158 Tex. at 10, 307 S.W.2d at 238–39.
30
… See Petta, 44 S.W.3d at 579; Sysco Food Servs., 890 S.W.2d at
801.
31
… Because of our disposition of this issue, we need not address
Archer’s remaining issues. See Tex. R. App. P. 47.1.
11