Carl Merzi and Thomas Sammons III v. John \"Hal\" Brumfield ( 2023 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-21-00340-CV
__________________
CARL MERZI AND THOMAS SAMMONS III, Appellants
V.
JOHN “HAL” BRUMFIELD, Appellee
__________________________________________________________________
On Appeal from the 457th District Court
Montgomery County, Texas
Trial Cause No. 19-02-03036-CV
__________________________________________________________________
MEMORANDUM OPINION
Carl Merzi and Thomas Sammons III (Plaintiffs or Appellants) appeal the trial
court’s final judgment entering a take-nothing judgment in favor of John “Hal”
Brumfield (Brumfield or Appellee) and dismissing Appellants’ claims. Brumfield
filed a cross-appeal of the trial court’s denial of Brumfield’s request for attorney’s
fees under the Declaratory Judgments Act. See Tex. Civ. Prac. & Rem. Code Ann.
§ 37.009. We affirm.
1
Background
The Plaintiffs filed an Original Petition and Application for Temporary
Restraining Order against Brumfield alleging they were part owners of a company
operating under the name “Tachus,” which was formed to provide residential fiber
optic broadband services. 1 Plaintiffs alleged that Plaintiffs and Brumfield began
work on behalf of the company under an agreement that provided each of them
would own equal interests, along with a fourth owner, Philip Ming who owned 5%
of the company. According to the petition, after Merzi and Sammons had contributed
to the company and its projects (including a Fiber-to-the-Home project with the City
of Shenandoah referred to herein as “the Shenandoah FttH project” or “the
Shenandoah project”), Brumfield was supposed to incorporate the company as
agreed and allocate the ownership as agreed, but Brumfield instead used his own
attorney to set up Tachus LLC, and the LLC’s public filings list only himself and his
wife as members of Tachus LLC. Plaintiffs alleged that once the failure to form the
LLC as agreed was discovered, Brumfield agreed that the equity in Tachus would
be adjusted, but Brumfield never took any action to do so and instead he allowed the
owners to continue to build the company. The petition alleged that in 2018, after the
company successfully reached agreements with the City of Shenandoah, they all
1
Plaintiffs also sued Ana Brumfield, John Brumfield’s wife. Because
Plaintiffs non-suited Ana and she is not a party to the appeal, we only refer to her as
necessary in this opinion.
2
agreed it would be beneficial to form a new company to further define the company’s
business as it existed in and around the City of Shenandoah. According to the
petition, Brumfield converted Tachus LLC into Tachus Shenandoah but once again
failed to list Plaintiffs as owners/members of Tachus Shenandoah LLC. Plaintiffs
alleged that thereafter the Plaintiffs and Brumfield entered into a Letter Agreement
dated September 30, 2018, wherein they agreed to (1) sign and deliver a “Use and
Management Agreement”2 and (2) sign and deliver an Amended Company
Agreement which would document their equal membership interest and provide for
the reimbursement of advances prior to making distributions. According to the
petition, Plaintiffs began to suspect Brumfield was being dishonest and Plaintiffs
learned that Brumfield opened a bank account for the company but failed to make
the Plaintiffs signatories on the account, despite the fact that revenues from company
customers and sources were being deposited into the account. The petition also
alleged that Brumfield improperly used company funds for his own personal use and
improperly obtained credit cards for the company that he used for his own benefit.
Plaintiffs alleged that when they inquired into Brumfield’s questionable activities,
he broke off communications while they were negotiating a more formal company
agreement. According to the petition, Brumfield planned a coup of the company,
2
The parties sometimes refer to this agreement as the “Use Management
Agreement” or “Use-Management Agreement.” Because the document is titled “Use
and Management Agreement,” we will refer to it by the title.
3
used the failure to incorporate the company as agreed upon as leverage to take the
position that he and his wife were the only owners, threatened to take the company
into bankruptcy which would harm the company, and took actions or inactions that
damaged the reputation the company had with the City of Shenandoah.
Plaintiffs sued Brumfield for a declaratory judgment that the Letter
Agreement dated September 30, 2018 is the Company Agreement; that Ming is the
owner of 5% of Tachus Shenandoah LLC and has been since its formation in 2015;
that Merzi, Sammons, and Brumfield each own 31 1/3% of the company and have
since its formation in 2015; and that Merzi, Sammons, and Brumfield are managers
of the company and have been since its formation in 2015. Plaintiffs pled in the
alternative a claim for declaratory judgment that the company was a partnership; that
Ming is a 5% partner in the Company; that Plaintiffs and Brumfield each own 31
1/3% of the partnership and have since its inception in 2015; that all business by
Tachus Shenandoah LLC since its inception in 2015 was for the benefit of the
partnership; and that all assets of Tachus Shenandoah LLC since 2015 are actually
assets of the company. Plaintiffs also sued Brumfield for breach of fiduciary duty,
constructive fraud, conversion, fraud, negligent misrepresentation, promissory
estoppel, attorney’s fees, and equitable relief. Plaintiffs filed an application for
temporary restraining order to prevent Brumfield from denying the Plaintiffs’
ownership rights and from withholding the company’s information and records from
4
Plaintiffs, and Plaintiffs also sought a temporary and a permanent injunction against
Brumfield.
As an exhibit to their petition, Plaintiffs attached a September 30, 2018 “Letter
Agreement” executed by Plaintiffs and Brumfield that stated the following in its
entirety:
This Letter Agreement is executed by and among JOHN H.
BRUMFIELD, an individual residing in Texas (“JHB”), THOMAS W.
SAMMONS III, an individual residing in Texas (“TS”), and CARL
MERZI, an individual residing in Texas (“CM”). JHB, TS and CM are
sometimes referred collectively as the “Parties”.
The Parties hereby agree as follows:
1. Upon the execution hereof, the Parties will execute and deliver to
each other the Use [and] Management Agreement to be effective as
of the date hereof.
2. On or before 5:00 p.m. CST on October 12, 2018, the Parties will
execute and deliver to each other an Amended and Restated
Company Agreement and Joint Consent of Manager and Members
of Tachus Shenandoah, LLC, with the following intent:
a. Regardless of any past time, material, service, or cost claims,
that each Party will own equal Membership interests or units
in Tachus Shenandoah, and;
b. The Parties agree to reimburse any documented cash
advances made directly to Tachus Shenandoah, specifically
for the Shenandoah FttH project, prior to any other
distributions.
Executed as of the date written above.
Plaintiffs also attached as an exhibit a “Use and Management Agreement” executed
in 2018 by Plaintiffs (as “Service Providers”) and Brumfield (as President of Tachus
5
Shenandoah, LLC and as CEO of Tachus Holdings, Inc.) wherein they agreed that
the Service Providers owned a fiber optic network with supporting equipment, that
Brumfield owned the internet domain name and websites for Tachus, that Brumfield
granted Tachus Shenandoah, LLC the non-exclusive right to use Brumfield’s Tachus
internet domain name and branding for a fee per residential customer, and that
Tachus Shenandoah, LLC would pay monthly fees to Tachus Holdings, Inc. and the
Service Providers per internet service customer. Although the Use and Management
Agreement provided a fee-based service agreement, it did not discuss or address the
ownership interests in Tachus Shenandoah.
Brumfield filed an Original Answer and, subsequently, Defendant’s First
Amended Answer and Counterclaim. In Defendant’s First Amended Answer and
Counterclaim, Brumfield generally denied Plaintiffs’ allegations, asserted
affirmative defenses, and pleaded that “[i]n the event that the court finds that the
parties are members of a limited liability company or partners of a general
partnership,” he asserted a counterclaim for “non-monetary relief in the form of a
Court order for termination and winding up of such limited liability company or
partnership pursuant to Section 11.413 of the Texas Business Organizations Code.”
Brumfield filed a Motion for Traditional and No-Evidence Motion for
Summary Judgment, arguing that after Plaintiffs rejected Brumfield’s offer to be
members with him in an LLC, Brumfield formed Tachus Shenandoah in March 2015
6
as the sole member and manager. According to the summary judgment motion, from
2015 to 2018 Brumfield continued to make offers to Plaintiffs to become members
of Tachus Shenandoah, but they never reached a meeting of the minds as to terms.
Brumfield alleged in his summary judgment motion that in September 2018, the
Plaintiffs rejected Brumfield’s final offer for them to become members of Tachus
Shenandoah and instead entered into a “Use and Management Agreement”
governing Plaintiffs’ provision of bandwidth to Tachus Shenandoah in exchange for
Tachus Shenandoah’s payment for that service. Brumfield attached exhibits to his
motion for summary judgment and argued that the evidence conclusively established
that Plaintiffs are not members of Tachus Shenandoah, Plaintiffs were not partners
in a partnership with Brumfield, and there was no evidence of the requisite elements
for each of Plaintiffs’ other causes of action.
Plaintiffs filed a Response to the motion for summary judgment. On April 20,
2020, the trial court signed an Amended Order on Defendant’s Motion for Summary
Judgment, granting Brumfield’s motion on Plaintiffs’ cause of action for conversion
and claim for declaratory relief as to the declarations related to the partnership issue,
but denying his motion as to the declaratory judgment action claim regarding the
membership interest in the limited liability company and the remainder of Plaintiffs’
causes of action.
7
Plaintiffs filed their First Amended Petition, removing the causes of action on
which the trial court granted a take-nothing summary judgment against Plaintiffs and
adding a cause of action for breach of contract. Plaintiffs sought a declaration that
(a) the September 30, 2018 Letter Agreement “is the Company Agreement of Tachus
Shenandoah LLC f/k/a Tachus LLC, with all other provisions of the agreement
supplied by the Texas Organizations Code;” (b) Ming is the owner of 5% of Tachus
Shenandoah LLC f/k/a Tachus LLC and has been since its formation in 2015; (c) the
remaining interest in Tachus Shenandoah LLC f/k/a Tachus LLC is owned by Merzi,
Sammons, and Brumfield at 31 1/3% each, and has been since its formation in 2015,
or alternatively since its formation in 2015, or alternatively since the execution of
the Letter Agreement; and (d) Merzi, Sammons, and Brumfield are managers of
Tachus Shenandoah LLC f/k/a Tachus LLC and have been since its formation in
2015, or alternatively since the execution of the Letter Agreement. According to
Plaintiffs, the September 30, 2018 Letter Agreement is a validly executed contract
between the parties, Brumfield entered into a valid contract with Plaintiffs to create
“Tachus” and to divide ownership equally, Brumfield breached the Letter
Agreement by failing to execute and deliver the Amended and Restated Company
Agreement and Joint Consent of Managers and Members of Tachus Shenandoah,
LLC on or before October 12, 2018, Brumfield breached the contract because he
failed or refused to legally transfer to Plaintiffs the ownership interests as set forth
8
in the contract, and these breaches proximately caused Plaintiffs’ damages.
Brumfield filed a Second Amended Answer and Counterclaim, generally denying
Plaintiffs’ allegations, asserting affirmative defenses, and pleading a counterclaim
“in the event that the Court finds that the parties are members of a limited liability
company or partners of a general partnership[.]”
Brumfield filed Defendant’s Second Traditional and No-Evidence and Motion
for Summary Judgment, attaching certain exhibits and arguing that the Plaintiffs
were not members of the LLC. According to Brumfield, although Plaintiffs’
requested in their First Amended Petition a declaration from the trial court that the
September 30, 2018 Letter Agreement “is the Company Agreement of Tachus
Shenandoah LLC f/k/a/ Tachus LLC, with all other provisions of the agreement
supplied by the Texas Business Organizations Code[,]” the plain language of the
Letter Agreement does not contain any language of assignment of an existing
membership interest. Further, Brumfield argues that it does not contain language to
suggest the actual issuance of new membership interests by the company itself, and,
in fact, expressly states that “the parties must execute an Amended and Restated
Company Agreement and Joint Consent of Manager and Members of Tachus
Shenandoah with the intent of doing certain things.” According to Brumfield, on the
same day the Plaintiffs and Brumfield executed the Letter Agreement and the Use
and Management Agreement but before they were signed, Brumfield had a telephone
9
conversation with Merzi and the Use and Management Agreement was created
because the Shenandoah project had become active and Plaintiffs had not signed the
Amended and Restated Company Agreement. According to Brumfield, the Use and
Management Agreement defined the parties’ relationship as a “vendor-vendee” and
outlined what each party owned and would receive when residents signed up for
internet service. Brumfield alleged that during the telephone call, Brumfield
confirmed Merzi was aware that simply signing the Use and Management
Agreement (which Brumfield asserts he erroneously called the “MSA” during the
call) and Letter Agreement did not make Plaintiffs members of the LLC – the parties
still had to reach an agreement and sign the Amended and Restated Company
Agreement by the deadline. In the Second Motion for Summary Judgment,
Brumfield referenced an exhibit attached to Merzi’s deposition, and that exhibit is a
transcript of a telephone conversation between Merzi and Brumfield which contains
the following:
Hal [Brumfield]: . . . I wanted to make sure you and Tommy
[Sammons] understand that just because we sign
this MSA, it doesn’t make you owners. . . . you’ve
got to sign the company agreement.
Carl [Merzi]: Yeah.
Hal [Brumfield]: We’ve been talking about it for a long time and, you
know, by not signing it, you’re telling me that you
don’t want to be a part of it and that’s why I put the
hard date in the letter agreement, because if, you
know, we can’t get it done by then, I’m just going
to assume that y’all are good with just the MSA and
10
y’all get paid for providing internet service but
that’s it.
Are you and Tommy [Sammons] okay with that?
Carl [Merzi]: Yeah. Yeah, that’s perfect. And -- and I do
appreciate your offer of doing it this way, okay? I
mean, I do appreciate that. And so both -- you know,
Tommy [Sammons] does, too.
According to Brumfield, shortly after that phone conversation, Plaintiffs and
Brumfield signed the Use and Management Agreement as well as the Letter
Agreement. Brumfield alleged in the motion that the Amended and Restated
Company Agreement was never signed, and the parties have continued to operate
under the terms of the Use and Management Agreement.
Brumfield alleged that he did not use the recording of the telephone call as
evidence in his initial motion for summary judgment because he “only recently
located the flash drive it was saved on.” Brumfield argued in his Second Motion for
Summary Judgment that, to the extent Plaintiffs would argue the call was
inadmissible under the parol evidence rule, that rule did not apply because there was
“no agreement.”
After Plaintiffs filed responsive pleadings and Brumfield replied, on March
15, 2021, the trial court signed an Order granting Defendant’s Second Traditional
and No-Evidence Motion for Summary Judgment. As to Plaintiffs’ request for a
declaration that they have a membership or ownership interest in the company and
that the Letter is the company agreement, the trial court made the following findings:
11
The Court agrees that the audio recording is admissible extrinsic
evidence of the existence of a condition precedent to the formation of a
contract to convey an ownership or membership interest in the
Company to the Plaintiffs. The recording conclusively establishes that
the parties understood, intended, and agreed that the execution of the
Amended and Restated Company Agreement and Joint Consent of
Manager and Members of Tachus Shenandoah, LLC “[o]n or before
5:00 CST on October 12, 2018” would be a condition precedent to the
formation of a contract to convey an ownership or membership interest
in the Company to the Plaintiffs. Since the condition precedent never
occurred, no binding contract arose from the Letter Agreement entitling
the Plaintiffs to an ownership or membership interest in the Company.
The trial court also granted the motion as to Plaintiffs’ contract claim because “[n]o
contract was formed that gave the Plaintiffs a membership or ownership interest in
the Company.”
Brumfield then filed Defendant’s Third No-Evidence and Traditional Motion
for Summary Judgment, arguing that Plaintiffs had no evidence of one or more
essential elements of their fraud and negligent misrepresentation claims, and that the
recorded telephone conversation between Brumfield and Merzi conclusively
negated one or more essential elements of Plaintiffs’ causes of action for fraud and
negligent misrepresentation. The trial court initially denied Defendant’s Third
Motion for Summary Judgment, but on June 24, 2021, the trial court signed an Order
granting Defendant’s Motion to Reconsider and ordered Plaintiffs take nothing on
their causes of action for fraud and negligent misrepresentation.
On July 30, 2021, the trial court signed a Final Judgment incorporating the
prior orders of April 20, 2020, March 15, 2021, and June 24, 2021. “Based upon the
12
dismissal of the entirety of Plaintiffs’ claims,” the trial court rendered a take-nothing
judgment in favor of Brumfield and denied any relief not specifically granted in the
judgment. Brumfield filed Defendant’s Amended Motion for Attorney’s Fees and
Costs under Section 37.009 of the Texas Civil Practice and Remedies Code.
Plaintiffs filed a Motion for New Trial, which was overruled by operation of law,
and then filed this appeal. Brumfield filed a notice of cross-appeal of the trial court’s
denial of Brumfield’s request for attorney’s fees.
Parol Evidence
In one issue, Appellants argue that the trial court erred in considering parol
evidence to contradict the terms of a written agreement regarding the parties’
ownership percentages. According to Appellants, the trial court relied exclusively
on a recorded conversation that contradicts the terms of the Letter Agreement in
granting Defendant’s Second Motion for Summary Judgment, in granting
Defendant’s Motion for Reconsideration of Defendant’s Third Motion for Summary
Judgment, and in ordering that Plaintiffs take nothing on their remaining causes of
action for negligent misrepresentation and fraud.
The applicability of the parol evidence rule is a question of law that we review
de novo. Audubon Indem. Co. v. Custom Site-Prep, Inc., 358 S.W.3d 309, 316 (Tex.
App.—Houston [1st Dist.] 2011, pet. denied). The parol evidence rule is not a rule
of evidence, but a rule of substantive contract law. Hubacek v. Ennis State Bank, 317
13
S.W.2d 30, 32 (Tex. 1958). “When parties have entered into a valid, written,
integrated contract, the parol evidence rule precludes enforcement of any prior or
contemporaneous agreement that addresses the same subject matter and is
inconsistent with the written contract.” West v. Quintanilla, 573 S.W.3d 237, 243
(Tex. 2019). In such cases, extrinsic evidence is not admissible to add to, vary, or
contradict the terms of a written contract that is complete on its face. Guisinger v.
Hughes, 363 S.W.2d 861, 865 (Tex. App.—Dallas 1962, writ ref’d n.r.e.).
Appellants assert that the Letter Agreement is a valid, fully integrated contract
because it contains all material terms and that the recording of the telephone
conversation constitutes inadmissible parol evidence that Brumfield used to
contradict the express terms of the enforceable Letter Agreement. We address this
contention first because the parol evidence rule only applies to valid, written,
integrated contracts. See West, 573 S.W.3d at 243. Appellee contends the Letter was
nothing more than an “agreement to agree” and not a valid integrated written
agreement. Appellee contends that because the Appellants failed to execute the
Amended Company Agreement, the Appellants never became owners of Tachus and
the remaining conditions outlined in the Letter Agreement were never met.
In Fischer v. CTMI, L.L.C., the Texas Supreme Court explained contract
enforceability in the context of agreements to agree as follows:
. . . . To be enforceable, a contract must address all of its essential
and material terms with “a reasonable degree of certainty and
14
definiteness.” Although it is difficult to say “just what particularity or
refinement of terms is essential to meet the requirement of ‘reasonable
degree of certainty,’” . . . a contract must at least be sufficiently definite
to confirm that both parties actually intended to be contractually bound.
And even when that intent is clear, the agreement’s terms must also be
sufficiently definite to “enable a court to understand the parties’
obligations,” . . . and to give “an appropriate remedy” if they are
breached[.]
However, a contract need only be definite and certain as to the
terms that are “material and essential” to the parties’ agreement. Other
courts have held that, under Texas law, material and essential terms are
those that parties would reasonably regard as “vitally important
ingredient[s]” of their bargain. We agree but we note that “[t]he
material terms of a contract are determined on a case-by-case basis,”
. . . and “[e]ach contract should be considered separately to determine
its material terms.”
...
“It is well settled law that when an agreement leaves material
matters open for future adjustment and agreement that never occur, it is
not binding upon the parties and merely constitutes an agreement to
agree.” If an agreement to make a future agreement is not sufficiently
definite as to all of the future agreement’s essential and material terms,
the agreement to agree “is nugatory.” Thus to be enforceable, an
agreement to agree, like any other contract, “must specify all its
material and essential terms, and leave none to be agreed upon as the
result of future negotiations.”
Conversely, “[a]greements to enter into future contracts are
enforceable if they contain all material terms.” When an “agreement to
enter into a future contract already contains all the material terms of the
future contract,” courts can determine and enforce the parties’
obligations, and concerns about indefiniteness and reasonable certainty
do not arise. So an agreement that contains all of its essential terms is
not unenforceable merely because the parties anticipate some future
agreement.
479 S.W.3d 231, 237-38 (Tex. 2016) (citations and footnotes omitted). Whether an
agreement is an enforceable contract is generally a question of law. Allamon Tool
Co. v. Derryberry, No. 09-06-200-CV, 2007 Tex. App. LEXIS 8858, at *5 (Tex.
15
App.—Beaumont Nov. 8, 2007, no pet.) (mem. op.) (citing Meru v. Huerta, 136
S.W.3d 383, 390 (Tex. App.—Corpus Christi–Edinburg 2004, no pet.)).
The September 30, 2018 Letter Agreement states that Plaintiffs and Brumfield
agreed that (1) upon the execution of the Letter Agreement they will execute and
deliver to each other the Use and Management Agreement to be effective as of the
date hereof and (2) that on or before 5 p.m. on October 12, 2018 the Plaintiffs and
Brumfield will execute and deliver to each other an Amended and Restated
Company Agreement and Joint Consent of Manager and Members of Tachus
Shenandoah, LLC, with the intent that each party will own equal membership
interests or units in Tachus Shenandoah and that the parties agree to reimburse any
documented cash advances made directly to Tachus Shenandoah, specifically for the
Shenandoah FttH project, prior to any other distributions.
The Use and Management Agreement executed by the parties and referenced
in the Letter Agreement contains language that outlines a contract for services, and
it does not describe or contain terms pertaining to the formation of Tachus or the
parties’ ownership interests in the company. The only “terms” relating to the
formation of the company in the one-page Letter Agreement are found in the clause
stating that the parties, on or before October 12, 2018, would execute and deliver to
each other an Amended and Restated Company Agreement and Joint Consent of
Managers and Members of Tachus Shenandoah, LLC “with the [] intent” that “each
16
Party will own equal Membership interests or units in Tachus Shenandoah[]” and
that “[t]he Parties agree to reimburse any documented cash advances made directly
to Tachus Shenandoah . . . prior to any other distributions.”
As summary judgment evidence, Brumfield attached his deposition transcript
wherein he testified that he presented Plaintiffs with a Company Agreement to form
the company in 2015, but it was never executed. That unexecuted agreement was
thirty-five pages outlining percentage ownership interests and other terms.
Brumfield also attached the thirty-four-page Company Agreement that was in effect
at the time of the Letter Agreement and it listed Brumfield as the sole manager and
member of Tachus, LLC and contained provisions relating to initial membership,
ownership interests, procedures for altering the LLC’s membership and ownership
interests, management duties of the members, and listed Brumfield as owner of 1000
units, with a capital contribution of $1000. The parties do not dispute that the
Amended and Restated Company Agreement and Joint Consent of Managers and
Members of Tachus Shenandoah, LLC was never executed by the parties.
Only two terms relating to formation or ownership and operation of the
company were mentioned in the Letter Agreement, and those two terms were to be
included in the Amended and Restated Company Agreement:
a. Regardless of any past time, material, service, or cost claims, that
each Party will own equal Membership interests or units in Tachus
Shenandoah, and;
17
b. The Parties agree to reimburse any documented case advances made
directly to Tachus Shenandoah, specifically for the Shenandoah
FttH project, prior to any other distributions.
One of the two terms to be included in the Amended and Restated Company
Agreement and Joint Consent of Managers and Members of Tachus Shenandoah,
LLC was that the Plaintiffs and Brumfield should each own “equal” Membership
interests or units, but no percentages were stated. 3 The Letter Agreement could not
have replaced the earlier executed Company Agreement listing Brumfield as sole
member and manager because that Company Agreement included material terms
such as ownership units, capital contributions, and the effective date of the formation
of the company. Clearly on its face, the Letter Agreement anticipated the details
regarding any ownership would be contained in the Amended and Restated
Company Agreement and Joint Consent of Managers and Members of Tachus
Shenandoah, LLC, which was something that had to be prepared and executed later.
On this record, we conclude that the Letter Agreement is merely an agreement to
enter into a future contract (the Amended and Restated Company Agreement and
Joint Consent of Managers and Members of Tachus Shenandoah, LLC) or an
“agreement to agree,” and the Letter Agreement does not address all of the essential
3
By contrast, in Plaintiffs’ declaratory action the Plaintiffs request that the
trial court declare that Ming (who is not mentioned in the Letter Agreement and who
is not a party to the Letter Agreement) has a 5% ownership interest, Merzi a 31 1/3%
ownership interest, Sammons a 31 1/3% ownership interest, and Brumfield a 31
1/3% ownership interest.
18
and material terms with “‘a reasonable degree of certainty and definiteness.’” See
Fischer, 479 S.W.3d at 237 (quoting Pace Corp. v. Jackson, 284 S.W.2d 340, 345
(Tex. 1955)). Under these circumstances, the terms are not sufficiently definite to
“‘enable a court to understand the parties’ obligations,’ . . . and to give ‘an
appropriate remedy’ if they are breached[.]” See id. (quoting Restatement (Second)
of Contracts § 33(2) (1981)). The Letter Agreement is not a written integrated
contract with sufficiently definite terms, nor is it “complete on its face.” So, the parol
evidence rule does not bar the trial court’s consideration of the telephone call. See
West, 573 S.W.3d at 243. We overrule Appellants’ issue on appeal.
Appellee’s Cross-Appeal on Attorney’s Fees
On cross-appeal, Brumfield argues that the trial court abused its discretion in
denying Brumfield’s request for attorney’s fees under section 37.009 of the Texas
Civil Practice and Remedies Code because the award of attorney’s fees was
necessary, reasonable, equitable, and just. He also asserts he was not required to
segregate recoverable from unrecoverable fees, and even if segregation was
required, the district court should have awarded the segregated amount based on the
evidence. Appellants opposed the request for attorney’s fees and argued the award
was not equitable and just. In response to Appellants’ argument that an award of
attorney’s fees to Brumfield was not equitable and just, Brumfield argued that Merzi
knew he had the recorded conversation with Brumfield, both Appellants were aware
19
they held no ownership in Tachus Shenandoah before they brought suit, the lawsuit
should have never been filed, and an award of attorney’s fees “would only be fair
when considering the circumstances.”
We review an award or denial of attorney’s fees under the Declaratory
Judgments Act for an abuse of discretion. Ullrich v. Meijer, No. 09-21-00090-CV,
2022 Tex. App. LEXIS 8805, at *13 (Tex. App.—Beaumont Dec. 1, 2022, no pet.)
(mem. op.) (citing Forest Hills Improvement Ass’n Inc. v. Flaim, No. 09-18-00199-
CV, 2019 Tex. App. LEXIS 8478, at *4 (Tex. App.—Beaumont Sept. 19, 2019, no
pet.) (mem. op.)). Under the Declaratory Judgments Act, a trial court has broad
discretion in deciding whether to award attorney’s fees. See Bocquet v. Herring, 972
S.W.2d 19, 20 (Tex. 1998) (citing Tex. Civ. Prac. & Rem. Code Ann. § 37.009);
Ullrich, 2022 Tex. App. LEXIS 8805, at *13; Anglo-Dutch Petroleum Int’l, Inc. v.
Greenberg Peden, P.C., 522 S.W.3d 471, 494 (Tex. App.—Houston [14th Dist.]
2016, pet. denied). The attorney’s fees must be reasonable, necessary, equitable, and
just. Bocquet, 972 S.W.2d at 21. A reviewing court will reverse an award of
attorney’s fees under the Declaratory Judgment Act only if the lower court abused
its discretion by either (1) awarding fees when there was insufficient evidence that
the fees were reasonable and necessary or (2) acting arbitrarily, unreasonably, or
without regard to guiding legal principles in its determination that the fees awarded
were equitable and just. Id. A trial court may decide that fees should not be awarded
20
if such an award would not be equitable and just, in light of the circumstances.
Ullrich, 2022 Tex. App. LEXIS 8805, at *13. The determination of whether an
award of attorney’s fees would be equitable and just is not susceptible to direct proof
but instead is a matter of fairness, in light of the circumstances. Id. (citing Anglo-
Dutch Petroleum Int’l, Inc., 522 S.W.3d at 494). Even if the evidence is
uncontroverted that the attorney’s fees incurred are reasonable and necessary, a court
may decide it is not equitable or just to award them. Id. Since an award of attorney’s
fees is not dependent on a finding that a party has substantially prevailed, the trial
court is not required to award attorney’s fees to a prevailing party in a declaratory
judgment action. Id.; see also Bocquet, 972 S.W.2d at 20 (“The Declaratory
Judgments Act does not require an award of attorney fees to the prevailing party.”).
Brumfield has the burden of establishing that the trial court abused its
discretion in denying an award of attorney’s fees. See Ullrich, 2022 Tex. App.
LEXIS 8805, at *14 (citing Sanchez v. AmeriCredit Fin. Servs., Inc., 308 S.W.3d
521, 526 (Tex. App.—Dallas 2010, no pet.)). When, as here, no findings of fact and
conclusions of law were requested or filed, we imply all necessary findings and
conclusions to support the trial court’s judgment. See Sixth RMA Partners, L.P. v.
Sibley, 111 S.W.3d 46, 52 (Tex. 2003). Here, the trial court denied Brumfield’s
request for attorney’s fees under the Declaratory Judgments Act, and implicitly
found that it would not be equitable and just to award him attorney’s fees. See
21
Armour Pipe Line Co. v. Sandel Energy, Inc., No. 14-20-00412-CV, 2023 Tex. App.
LEXIS 3300, at *55 (Tex. App.—Houston [14th Dist.] May 16, 2023, no pet. h.)
(op. on reh’g) (noting that in denying the parties’ request for attorney’s fees under
the Declaratory Judgments Act, “[t]he trial court impliedly determined that it would
not be equitable and just to award attorney’s fees to any party.”) (citing Kings River
Trail Ass’n v. Pinehurst Trail Holdings, L.L.C., 447 S.W.3d 439, 451-52 (Tex.
App.—Houston [14th Dist.] 2014, pet. denied)). On this record, the trial court in its
broad discretion could have reasonably concluded that the parties had legitimate
positions and arguments and that it was fair and equitable that Brumfield bear the
cost of his own attorney’s fees. See, e.g., Sunday Canyon Prop. Owners Ass’n v.
Annett, 978 SW.2d 654, 659 (Tex. App.—Amarillo 1998, no pet.) (no error not to
award attorney’s fees under section 37.009 where both parties had “legitimate rights
to pursue”). Accordingly, we conclude there was no abuse of discretion by the trial
court in denying Brumfield attorney’s fees under section 37.009 of the Texas Civil
Practice and Remedies Code.4 We overrule Appellee’s cross-issue. And we affirm
the trial court’s judgment.
4
Based on our disposition of this issue, we need not address Brumfield’s
contention that he was not required to segregate recoverable fees or that they were
discernable from the evidence. See Tex. R. App. P. 47.1.
22
AFFIRMED.
_________________________
LEANNE JOHNSON
Justice
Submitted on October 11, 2022
Opinion Delivered June 22, 2023
Before Golemon, C.J., Johnson and Wright, JJ.
23