Leonard v. Sargent

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-96-00010-CV

Robert W. Leonard, Jr., Appellant

v.

Harrison James Sargent, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT

NO. 94-12327, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING

In his only point of error, Robert W. Leonard, Jr., appellant, challenges the trial court's grant of summary judgment in favor of Harrison James Sargent, appellee. Because the trial court correctly concluded as a matter of law that Leonard's counterclaims are barred by his release of Sargent, we find his point to be without merit. We will affirm the judgment of the trial court.

THE CONTROVERSY

In July of 1991, Sargent approached Leonard about a capital investment opportunity in Rochelle Communications, Inc. Leonard eventually invested $200,000 through his contacts with Sargent. In January of 1992, Sargent entered into an employment contract with Rochelle Communications under which his primary responsibility was raising capital funds. Nine months later, Rochelle Communications terminated Sargent's employment. Following Sargent's termination, Sargent, Rochelle Communications, and Leonard entered into a settlement agreement and release in full. Sargent agreed to release Rochelle Communications and its investors from any claims pertaining to Sargent's employment and termination by Rochelle Communications. Rochelle Communications and Leonard agreed to release Sargent from any claims "arising from any alleged misrepresentations" made by Sargent "as an inducement to employment."

Sargent later sued Leonard ⁽¹⁾ claiming that Leonard tortiously interfered with the employment contract between Sargent and Rochelle Communications. Leonard raised the release as an affirmative defense and counterclaimed against Sargent alleging frivolous filing, fraud, and fraud in stock transaction. Leonard also sought a declaratory judgment. Both parties moved for summary judgment and the trial court granted a take-nothing summary judgment as to all claims of both parties. Only Leonard appeals.

THE STANDARD OF REVIEW

In an appeal of a summary judgment we must determine whether the movant has carried his burden of showing that no genuine issue of material fact exists and that he is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether the movant has carried this burden, we accept as true all evidence favorable to the nonmovant, indulge every reasonable inference in favor of the nonmovant, and resolve any doubts in his favor. Nixon, 690 S.W.2d at 548-49.

As a counter-defendant to Leonard's counterclaims, Sargent must meet a defendant's summary judgment burden. A defendant must disprove at least one essential element of each of the plaintiff's causes of action or conclusively establish all essential elements of his affirmative defense as a matter of law. See Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex. 1990); Young v. Fontenot, 888 S.W.2d 238, 240 (Tex. App.--El Paso 1994, writ denied). Sargent's motion for summary judgment contended that Sargent was released as a matter of law according to the settlement agreement. ⁽²⁾ The trial court rendered a take-nothing summary judgment as to all claims including all of Leonard's counterclaims. The crucial issue presented here is whether the release barred Leonard's counterclaims against Sargent. ⁽³⁾

THE RELEASEThis summary judgment is based on uncontroverted facts and presents only questions of law. We must decide whether the trial court correctly concluded that the release is unambiguous and reached a proper legal conclusion as to the content of the release. See Asset Restructuring Fund., L.P. v. Liberty Nat'l Bank and Resolution Trust Corp., 886 S.W.2d 548, 550 (Tex. App.--Austin 1994, writ denied).

A release is a contract governed by the law of contracts and the rules of contract construction. See Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990). Whether a contract is ambiguous is a question of law. R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980). When a contract can be given certain definite legal meaning or interpretation, it is not ambiguous and summary judgment is proper. Derr Constr. Co. v. City of Houston, 846 S.W.2d 854, 862 (Tex. App.--Houston [14th Dist.] 1992, no writ). When construing a contract, the court's primary responsibility is to ascertain and give effect to the intention of the parties to the contract by considering the instrument as a whole, such that no provision will be rendered meaningless. R & P Enters., 596 S.W.2d at 518-19.

The settlement agreement entered into by Leonard, Sargent, and Rochelle Communications contains fourteen numbered paragraphs, the majority of which pertain to the final business affairs between Sargent and Rochelle Communications arising out of Sargent's termination. However, one subparagraph entitled "Limited Release" is designed to protect Sargent from any claim that Leonard or Rochelle Communications might have against him; notably, it is the only part of the agreement in which Leonard is mentioned by name. It states:

ROCHELLE and Bob Leonard, Jr., release SARGENT from all claims they might have against SARGENT arising from any alleged misrepresentations that SARGENT made to ROCHELLE and Leonard as an inducement to employment of SARGENT by ROCHELLE.

Leonard argues that the release is limited in scope and does not apply to his counterclaims. ⁽⁴⁾ Sargent contends that Leonard's counterclaims arise out of alleged misrepresentations made by Sargent in an effort to raise funds for his employer, Rochelle Communications, and thus the release applies.

The clause at issue releases Sargent from "any alleged misrepresentations" made to Leonard. The only allegation of misrepresentation set forth in Leonard's counterclaims is that Sargent misled Leonard about his "management ability and ability to raise investment monies for Rochelle Communications." The uncontroverted facts establish that Sargent's primary employment duty was to raise capital funds and solicit investment in the company. Leonard contends that the inducement language contained in the release limits its effect; however, the only inducement to Sargent's employment was his money-raising ability. Thus, any potential misrepresentations arise solely out of Sargent's assertions as to his ability to solicit investment, the very foundation of Leonard's counterclaims. In addition, Leonard was specifically included in the provision of the agreement releasing Sargent even though he was not at any time in a position to hire Sargent. To limit the release strictly to an employment context would make Leonard's inclusion in the agreement a nullity.

In context, all of Leonard's complaints about Sargent's solicitation of Leonard for investment in Rochelle Communications fall within the scope of the release; to find otherwise would render the release meaningless. See R & P Enters., 596 S.W.2d at 518-19. The trial court correctly concluded as a matter of law that the release was unambiguous and that Leonard had effectively released Sargent from liability for the conduct made the basis of Leonard's counterclaims. Therefore, summary judgment was proper. See Derr Constr., 846 S.W.2d at 862.

CONCLUSION

Accordingly, we overrule Leonard's point of error. We affirm the judgment of the trial court.

Mack Kidd, Justice

Before Chief Justice Carroll, Justices Kidd and B. A. Smith

Affirmed

Filed: October 23, 1996

Do Not Publish

1.   The original defendants were Leonard, Robert W. Leonard, Jr. d/b/a Leonard Capital, Inc., Robert F. Donathan, and Leonard Enterprises, Inc. Sargent non-suited Donathan prior to judgment.

2. Leonard asserts that Sargent failed to present any evidence in support of his motion; however, Sargent's summary judgment proof consisted of Leonard's counterclaim and motion for summary judgment. The release upon which Sargent relied was attached to Leonard's motion as an exhibit and was properly before the trial court as summary judgment evidence. See Tex. R. Civ. P. 166a.

3.   Although Leonard appeals the denial of all of his counterclaims, the only pertinent counterclaims are his allegations of fraud. Leonard's declaratory judgment counterclaim did not raise any issues not already raised in his affirmative defense. A party may not obtain a declaratory judgment on the basis of an affirmative defense. Howell v. Mauzy, 899 S.W.2d 690, 706 (Tex. App.--Austin 1994, writ denied). Additionally, the trial court's order contained a Mother Hubbard clause, which disposed of Leonard's frivolous filing counterclaim. Because the granting of this type of relief and the determination of any applicable sanctions is within the discretion of the trial court, no error is presented.

4.   Leonard argues that Sargent's motion failed to address Leonard's counterclaims for fraud and fraud in securities transactions. Because the release encompassed all claims arising out of Sargent's fundraising activities for Rochelle Communications, Leonard's counterclaims were properly disposed of by summary judgment.

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Leonard argues that the release is limited in scope and does not apply to his counterclaims. ⁽⁴⁾ Sargent contends that Leonard's counterclaims arise out of alleged misrepresentations made by Sargent in an effort to raise funds for his employer, Rochelle Communications, and thus the release applies.

The clause at issue releases Sargent from "any alleged misrepresentations" made to Leonard. The only allegation of misrepresentation set forth in Leonard's counterclaims is that Sargent misled Leonard about his "management ability and ability to raise investment monies for Rochelle Communications." The uncontroverted facts establish that Sargent's primary employment duty was to raise capital funds and solicit investment in the company. Leonard contends that the inducement language contained in the release limits its effect; however, the only inducement to Sargent's employment was his money-raising ability. Thus, any potential misrepresentations arise solely out of Sargent's assertions as to his ability to solicit investment, the very foundation of Leonard's counterclaims. In addition, Leonard was specifically included in the provision of the agreement releasing Sargent even though he was not at any time in a position to hire Sargent. To limit the release strictly to an employment context would make Leonard's inclusion in the agreement a nullity.

In context, all of Leonard's complaints about Sargent's solicitation of Leonard for investment in Rochelle Communications fall within the scope of the release; to find otherwise would render the release meaningless. See R & P Enters., 596 S.W.2d at 518-19. The trial court corre