GENERAL METAL FABRICATING CORPORATION, GMF Leasing, Inc., and Arnold Curry, Appellants v. John STERGIOU and Main Marine Repair Industrial Cleaning Company, Appellees.
-- May 24, 2012
Paul V. Simon, Shane A. McClelland, Simon, Herbert, McClelland & Stiles, LLP, Houston, TX, for Appellants.Andrew Caplan, Tanya N. Garrison, Weycer, Kaplan, Pulaski & Zuber P.C., Houston, TX, for Appellees.
This is an agreed interlocutory appeal of two summary judgment orders:one concluding that the rule 11 agreement executed by appellants/cross-appellees—Arnold Curry, General Metal Fabricating Corporation, and GMF Leasing, Inc. (collectively the GMF Companies)—and appellees/cross-appellants—John Stergiou and Main Marine Repair and Industrial Cleaning Company (collectively, Stergiou)—was an enforceable settlement agreement, and the other finding that the rule 11 agreement did not confer any right to prepay the future payments owed under that agreement.1 Stergiou appeals the first order on the issue of enforceability, and the GMF Companies appeal the second order on the issue of prepayment.
We affirm both summary judgment orders.
The GMF Companies and Stergiou have been embroiled in litigation over the ownership of certain shares of the GMF Companies' stock for more than a decade. This case has been tried, appealed, reversed and remanded, and tried again. See Stergiou v. General Metal Fabricating Corp., 123 S.W.3d 1 (Tex.App.-Houston [1st Dist.] 2003, pet. denied); see also General Metal Fabricating, Inc. v. Stergiou, No. 01–08–00921–CV, 2009 WL 3673112, at *1 (Tex.App.-Houston [1st Dist.] Nov. 5, 2009, no pet.) (mem.op.).
While the jury deliberated during the second trial, Curry, as the representative of the GMF Companies, announced to the trial court that the parties had reached a settlement, put the settlement terms on the record, and executed a rule 11 agreement. After counsel for Stergiou read the rule 11 agreement on the record, the trial court inquired of each party whether he understood and approved the terms of the “proposed settlement.” Each party indicated his agreement, and the trial court approved the settlement.
The specific details of the rule 11 agreement were contingent upon the jury's answers. If the jury found in favor of the GMF Companies, Stergiou would assign all of the stock at issue to Curry and the parties would execute a mutual release of all claims.If the jury found in Stergiou's favor, however, Curry would pay Stergiou$300,000 for the return of the stock.Payment would be in the form of a promissory note, with a $20,000 down payment being due “on or before May 3, 2006” and, “[c]ommencing on June 1, 2006” and “continuing monthly on the same day of each month thereafter,” an “installment of $4,000.00 of principal and interest [would be] due and payable until the Note ha[d] been paid in full.”
The note would be “secured by a first lien Deed of Trust and Security Agreement covering all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies' known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’)of General Metal Fabrication, Inc. and GMF Leasing, Inc.” The parties agreed “to execute all documents necessary to effectuate [their] agreement including all financing statements and deed(s) of trust” and to file a joint notice of non-suit with prejudice within ten days of the trial court's acceptance of the jury's verdict.
The jury returned a verdict for Stergiou. Although drafts of the additional documents contemplated by the rule 11 agreement (i.e., the promissory note, the deeds of trust, the security agreements, and the financing statements) were circulated between them, the GMF Companies and Stergiou did not agree as to the specific terms to be included in those documents.The agreed deadline for dismissing the case pursuant to the settlement was twice extended to allow the parties additional time to agree on the additional documents, but the additional documents were never consummated. The GMF Companies eventually tendered to Stergiou an executed motion to dismiss the lawsuit, one cashier's check in the amount of $20,000 for the down payment required by their settlement, and a second cashier's check for the remaining $280,000 owed.Stergiou rejected the tender and moved for entry of judgment on the jury's verdict.
After the trial court entered judgment on the verdict, the parties continued to dispute the effect and terms of the rule 11 agreement.They sought to resolve their dispute by summary judgment.The GMF Parties and Stergiou each filed motions asserting their competing interpretations of the agreement.The first set of summary judgment motions concerned the enforceability of the rule 11 agreement. The GMF Companies contended the rule 11 agreement was an enforceable contract; Stergiou contended it was not.The second set of summary judgment motions addressed the issue of prepayment.The GMF Companies asked the trial court to find that Curry could pay the entire amount owed under the rule 11 agreement at once; Stergiou asked the trial court to require Curry to make monthly installment payments.After the trial court determined that the rule 11 agreement was enforceable but did not permit prepayment, the parties agreed to this interlocutory appeal to resolve the controlling questions of law.
Both the trial court's order permitting this interlocutory appeal and the parties' joint notice of appeal raise two issues:(l) whether the rule 11 agreement is an enforceable agreement and (2) whether Curry had the right to prepay his debt under the rule 11 agreement.
Standard of Review
Our review of a summary judgment is de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 192 (Tex.2007); City of Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex.App.-Houston [1st Dist.] 2006, pet. denied).Under the traditional summary judgment standard, the movant must show that no genuine issue of material fact exists and judgment should be rendered as a matter of law. Tex.R. Civ. P. 166a(c); City of Galveston, 196 S.W.3d at 221.We view all evidence in a light favorable to the nonmovant and indulge every reasonable inference in the nonmovant's favor. City of Galveston, 196 S.W.3d at 221.When both parties move for summary judgment and the trial court grants one motion and denies the other, we consider both motions, their evidence, and their issues, and we may render the judgment that the trial court should have rendered. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009); City of Galveston, 196 S.W.3d at 221.
Enforceability of the Rule 11 Agreement
In his sole issue on appeal, Stergiou challenges the trial court's determination that the rule 11 agreement was enforceable.He asserts three reasons why the trial court erred:(1) he and the GMF Companies never achieved anything more than an “agreement to agree,” (2)compliance with the agreement could not be ordered because its terms are too indefinite, and (3) the agreement does not satisfy the statute of frauds.2 Finding these reasons unpersuasive, we hold that the rule 11 agreement was enforceable and the trial court did not err in rendering summary judgment against Stergiou on this issue.
A. Agreement to Agree
None of the parties dispute that the rule 11 agreement required them to execute additional documents—i.e., a promissory note, deed of trust, security agreement, and any necessary financing statement. Stergiou argues in his first sub-issue that, because the rule 11 agreement does not supply any information as to the specific terms of those documents (e.g., information with respect to any right or obligation to inspect, insure, maintain, or repair the collateral, the notice and cure periods in the event of default, and any right of or prohibition against prepayment), as a matter of law, it is nothing more than an unenforceable “agreement to agree” and not a valid contract.3
The GMF Companies dispute that these particular additional terms are material to the issue of whether the parties intended to be immediately bound by the rule 11 agreement. They argue instead that the rule 11 agreement is enforceable because it contains all terms necessary to resolve the gravamen of the parties' dispute and the parties indicated their intent to be bound by it when they asked the trial court to approve it, twice extended the deadline for dismissing the case, and attempted to negotiate the terms of the additional documents.According to the GMF Companies, that the rule 11 agreement contemplates the execution of additional, more formal documents at a later date does not preclude its enforcement.
Contract law governs agreements made in open court pursuant to rule 11. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex.App.-Houston [1st Dist.] 1999, no pet.).A contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties' obligations. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex.2000). “Each contract should be considered separately to determine its material terms.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992). Although the contract's material terms must be agreed upon before a court may enforce the contract, a binding settlement contract may exist even if the parties contemplate that a more formal document memorializing their agreement will be executed at a later date. See City of Fort Worth, 22 S.W.3d at 846; Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744, 745–46 (Tex.1988); see also McLendon v. McLendon, 847 S.W.2d 601, 606–07 (Tex.App.-Dallas 1992, writ denied) (“[T]he attempts by the parties to reduce the rule 11 stipulations to writing do not affect the nature and effect of the stipulations dictated at the [hearing in open court.]”). When an agreement leaves material matters open for future adjustment and agreement on the additional matters never occurs, however, the agreement is not binding upon the parties. City of Fort Worth, 22 S.W.3d at 846.
Whether the rule 11 agreement is an enforceable settlement agreement—or whether it fails for lack of an essential term—is a question of law. See Ronin, 7 S.W.3d at 888; see also Martin v.. Martin, 326 S.W.3d 741, 746 (Tex.App.-Texarkana 2010, pet. denied) (“The question of whether an agreement is an unenforceable agreement to agree is a question of law, not a question for the jury .”).The parties' intent to be bound, however, generally is a question of fact. See Herring v. Herron Lakes Estates Owners Ass'n, Inc., No. 14–09–00772–CV, 2011 WL 2739517, at *3 (Tex.App.-Houston [14th Dist.] Jan. 4, 2011, no pet.) (mem.op.) (citing Foreca, 758 S.W.2d at 746).We may determine the issue as a matter of law only if an unambiguous writing shows that the parties intended to be bound by the agreement. Herring, 2011 WL 2739517 at *3 (citing Padilla v. LaFrance, 907 S.W.2d 454, 461–62 (Tex.1995)).
We begin by noting that nothing in the rule 11 agreement indicates the parties did not intend to be bound.Like most settlement agreements, the rule 11 agreement included essential terms for the payment of money in exchange for the performance of some act:Stergiou would return his shares of the GMF Companies' stock, Curry would pay $300,000, and together the parties would dismiss the lawsuit with prejudice. See Padilla, 907 S.W.2d at 460–61 (noting that material terms of rule 11 settlement agreement include payment and release of claims); see also CherCo Props., Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex.App.-Fort Worth 1999, no pet.) (holding settlement agreement that included terms of payment and statement that parties would execute mutual releases contained all material terms).The rule 11 agreement further detailed when the stock would be returned (“upon payment of the $20,000 down payment ․ and the execution of all documents necessary to provide the security described therein”), how and when the money would be paid (in the form of a “promissory note” with “$20,000 of principal ․ paid on or before May 3, 2006” and monthly installments of $4,000 thereafter), the interest that would accrue (“6.5% per annum”), and the nature of the collateral (“all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’ ”)). See T.O. Stanley Boot Co., 847 S.W.2d at 221 (noting that material terms of contract to loan money are amount to be loaned, maturity date of loan, interest rate, and repayment terms).
We acknowledge that the rule 11 agreement required the parties to execute a promissory note, a deed of trust, a security agreement, and a financing statement, and that, as an affidavit included in Stergiou's summary judgment evidence suggests, the “forms” for those documents include certain standard provisions for things like collateral descriptions; defaults; inspection rights; insurance, maintenance, and repair of collateral; and prepayment of the debt.However, to the extent these particular provisions are missing from the rule 11 agreement, the two cases on which Stergiou primarily relies do not persuade us that those provisions were essential to an enforceable settlement of this case.4 See Martin, 326 S.W.3d at 741; see also DKH Homes, LP v. Kilgo, No. 03–10–00656–CV, 2011 WL 1811435, at *3–4 (Tex.App.-Austin May 11, 2011, no pet.) (mem.op.).
In Martin, two brothers had a dispute over the management of their closely-held corporation.326 S.W.3d at 743.In an effort to settle their dispute over “corporate control,” the brothers reached a “settlement agreement” that, among other things, required them to negotiate a shareholder agreement. Id. at 743–44.They never agreed as to the terms of the shareholder agreement.The court of appeals concluded that their settlement was not an enforceable agreement because the to-be-negotiated shareholder agreement “would be the foundational document of [the company] and would define the [brothers'] rights vis-a-vis each other and [the company].” Id. at 754.Here, the additional documents do not have the same “foundational” importance to the underlying dispute.The essence of Stergiou and Curry's rule 11 agreement is the promise to pay $300,000in exchange for the return of the GMF Companies' stock and the dismissal of the lawsuit.Although the rule 11 agreement requires Curry to make installment payments for a number of years, it does not require Stergiou and Curry to have a relationship akin to the parties in Martin, who continued to be involved in the operation of the same closely-held corporation.
In Kilgo, a homebuilder alleged that the Kilgos failed to comply with a contractual obligation to build a new home. 2011 WL 1811435, at *l.The court of appeals determined that the parties' agreement did not include terms essential to a contract for the construction of a new home. Id at *3.The agreement did not include any information defining the undertaking, such as the size of the house contemplated, the price of the house on a per-square-foot or other basis, or the time for completing construction. Id. Here, unlike in Kilgo, the terms that Stergiou asserts are essential—i.e., those terms describing the parties' obligations to insure, maintain, and repair the collateral, the notice and cure periods for default, and the right of prepayment—do not define the undertaking in the rule 11 agreement to pay for the return of Stergiou's stock in the GMF Companies.
Instead, this case is more analogous to Montanaro v. Montanaro, 946 S.W.2d 428 (Tex.App.-Corpus Christi 1997, no writ). Montanaro was a suit for an accounting, dissolution of a family-owned partnership, fraud, and breach of fiduciary duties.The parties agreed on the general terms of their settlement, including payment obligations and the release of claims. Id. at 429.The payment obligations were to be secured by a to-be-drafted promissory note, but despite having exchanged drafts, the parties could not agree on the promissory note's terms. Id. at 431.The court of appeals concluded that the record nevertheless established the essential terms of a settlement agreement because, like Stergiou and the GMF Companies, the parties agreed as to the exact amount of the payments and the period over which they were to be made. Id. “Additional terms regarding overdue, or post-maturity, interest and acceleration upon default were not necessary to enable the parties to comply with the terms of the note, or the underlying settlement agreement.” Id. Likewise here, we conclude that the particular terms of the additional documents were not material and therefore did not destroy the rule 11 agreement's effectiveness, and we hold that the rule 11 agreement is not an unenforceable “agreement to agree.”
To hold otherwise would undermine well-established policy favoring the peaceable resolution of disputes by agreement and would encourage continued litigation of disputes that have already been decided by agreement. See Kennedy v. Hyde, 682 S.W.2d 525, 529 (Tex.1984) (noting that “[i]n a day of burgeoning litigation and crowded dockets, the amicable settlement of lawsuits is greatly to be desired”). Moreover, the parties behaved as though their settlement was binding. The transcript of the trial court's proceedings reflects that the parties were entering into a settlement agreement. Stergiou's counsel dictated the terms of the agreement into the record. Each party, on the record, appeared in open court and expressed under oath that they had reached an agreement, had reviewed and understood its terms, had authority to enter into that agreement, and wished the trial court to approve it. The trial court did so. At no time did either Stergiou or Curry state on the record that the rule 11 agreement was only a preliminary agreement. See Ronin, 7 S.W.3d at 888 (considering lack of statement on record that rule 11 agreement was only preliminary a factor in enforcing the agreement).
The timing and circumstances under which the rule 11 agreement was executed also indicate the parties' intent to be bound. The specific terms of the settlement were contingent on the jury's verdict. If the rule 11 agreement was only preliminary, and not intended to be final until the details of the additional documents were agreed upon, the party that prevailed before the jury would prefer the “win” over the compromised settlement and would have little incentive to agree to those details. Stergiou did not present any summary judgment evidence establishing that his intent was otherwise. And, after the trial court approved the rule 11 agreement, the parties exchanged drafts of the additional documents contemplated by the rule 11 agreement, and they twice extended the agreed deadline for dismissing the lawsuit in order to continue negotiating the terms of the additional documents.
On this record, we overrule Stergiou's first sub-issue.
B. Definiteness of Terms
Stergiou's next complaint—that the rule 11 agreement cannot be enforced as written—is closely related to the issue already decided. Stergiou contends that the rule 11 agreement cannot be enforced until the additional documents are actually executed, which is not possible because there has not been any agreement as to the terms of those additional documents and a reviewing court cannot supply the terms not agreed upon.That is, a court cannot force Stergiou or Curry to accept one or the other's version of the additional documents.
In support of his contention, Stergiou argues this case is analogous to Nash v. Conatser, 410 S.W.2d 512 (Tex.App.-Dallas 1966, no writ).There, the court observed that specific performance of a contract cannot be ordered when the contract is unenforceable for lack of material terms. Id. at 519–21.We have already disapproved of Stergiou's assertion that the rule 11 agreement lacked material terms by overruling Stergiou's first issue, so Nash is not controlling here.
Because the rule 11 agreement set out the amounts to be paid for the return of the GMF Companies' stock and the dismissal of the lawsuit, how those amounts were to be paid and when, and the interest rate, the parties' obligations are sufficiently defined.We hold that the terms of the rule 11 agreement are not so indefinite so as to preclude its enforcement, and we overrule Stergiou's second sub-issue.
C. Statute of Frauds
Part of the dispute on appeal concerns the description of the security for Curry's promise to pay Stergiou $300,000 for the return of his stock.The rule 11 agreement provides that the promissory note “will be secured by a first lien Deed of Trust and Security Agreement covering all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’) of General Metal Fabrication, Inc. and GMF Leasing, Inc.”
Stergiou argues that we should reverse the trial court's summary judgment and render judgment that the rule 11 agreement is not enforceable because it does not sufficiently describe the real property offered as security.This argument rests on the premise that the rule 11 agreement is a contract for the sale of real estate and thus subject to the statute of frauds. See Tex. Bus. & Comm.Code Ann. § 26.01(b)(4) (West 2009) (statute of frauds). Without deciding whether that premise is sound, we conclude that the rule 11 agreement, together with the writings referenced by it, describes the property in a manner sufficient to satisfy the statute of frauds.
The statute of frauds does not require that a complete description of the land to be conveyed appear in a single document. See Padilla, 907 S.W.2d at 460 (holding that series of letters between parties satisfied statute of frauds).A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. See AIC Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex.2008).The description of the land may be obtained from documents that are prepared in the course of the transaction, even if those documents are prepared after the parties' contract for sale. See Porter v. Reaves, 728 S.W.2d 948, 949 (Tex.App.-Fort Worth 1987, no writ) (description of land as “1/2 of 20–acre tract” satisfied statute of frauds because location of tract was not disputed, the parties referenced a drawing of the tract in their contract, and seller was required to furnish “current survey” of land after contract was executed); see also Adams v. Abbott, 254 S.W.2d 78, 80 (Tex.1952) (description furnished by exchange of correspondence between the parties)
The GMF Companies' summary judgment evidence included Curry's affidavit testimony that they owned three tracts of land, which were commonly referred to as the “Blue Building,” the “White Buildings,” and the “empty lot.” Stergiou's attorney drafted the rule 11 agreement using those same terms. Although the rule 11 agreement describes the property to be secured by the deed of trust only as the “White Buildings” and “empty lot,” but not “the four lots the ‘Blue Building’ resides upon and the ‘Blue Building,’ “ the various deeds of trust and the security agreements circulated as drafts between the parties contain sufficient legal descriptions of those properties.The “White Buildings” are described as:
Lots Five (5), Six (6), Fifteen (15) and Sixteen (16), in Block Fifty–Four (54), of KING'S COURT, an addition in Harris County, Texas, according to the map of the plat thereof recorded in Volume 7, Page 65 of the Map Records of Harris County, Texas.
The “empty lot” is described as:
Lots 7, 8, 9 and 10, in Block 54 of KING'S COURT, an addition in Harris County, Texas, according to the map or plat thereof recorded in Volume 7, Page 65 of the Map of Records of Harris County, Texas.
These same legal descriptions appear in the drafts prepared by Stergiou and in the drafts prepared by the GMF Companies.Thus, there was no dispute between the parties regarding the identification of the real estate.
For this reason, we hold that the statute of frauds does not bar enforcement of the rule 11 agreement, and we overrule Stergiou's third sub-issue.
Interpretation of the Rule 11 Agreement
Having determined that the rule 11 agreement is enforceable, we now consider whether, as argued by the GMF Companies in their appeal, the agreement authorized Curry to pay the entire amount owed under the agreement at one time.In four issues, the GMF Companies contend (1) the rule 11 agreement included a right of prepayment, (2) Curry's tender of the full $300,000 constituted substantial performance of the rule 11 agreement, (3) by refusing that tender, Stergiou waived his right to interest under the rule 11 agreement, and (4) Stergiou's failure to mitigate his damages by accepting the tender relieves Curry of any continuing burden to make interest payments.For reasons discussed below, only the GMF Companies' first issue is properly within the scope of this agreed interlocutory appeal.
A. Right to Prepay
The rule 11 agreement provided that the GMF Companies will pay Stergiou $300,000, in the form of a promissory note and on the following terms:
• Interest shall accrue on the Note commencing on the date thereof at 6.5% per annum.
• $20,000 of principal will be paid on or before May 3, 2006;
• Commencing on June 1, 2006, and continuing monthly on the same day of each month thereafter and installment of $4,000.00 of principal and interest shall be due and payable until the Note has been paid in full. Each installment shall be applied first to the accrued interest and the balance, if any, shall be applied to the reduction of the principal balance.
There is no dispute that, pursuant to these provisions, the GMF Companies tendered the full $300,000 owed to Stergiou before the down-payment deadline.
In their first issue, the GMF Companies argue that the trial court erred in determining that they had no right to prepay the full $300,000 because the agreement included language permitting payment of the $20,000 down “on or before” a certain date.They assert that, “when an instrument permits a payment “on or before” a certain date, the maker—while required to make the minimum payment due by that date—also has the right to prepay any other amount, so long as he does so by the due date.And, the right to prepay is not simply a right to pay early, but a right to avoid paying unearned interest.” Stergiou responds that the “on or before” language applied only to the $20,000 down payment and did not confer any general right to prepay the future payments owed. According to Stergiou, the interpretation urged by the GMF Companies would vitiate his right to receive interest and a long-term payout under the settlement.
None of the parties argue that the rule 11 agreement's payment provisions are ambiguous. When a contract is not ambiguous, we construe it according to the plain meaning of its express wording and enforce it as written. Chapman v. Abbot, 251 S.W.3d 612, 616–17 (Tex.App.-Houston [1st Dist.] 2007, no pet.).Extrinsic evidence may not be used to create an ambiguity. See Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 745.We may, however, examine the contract as a whole in light of the circumstances present when the contract was entered. See Transcontinental Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 666 (Tex.App.-Houston [1st Dist.] 2000, pet. denied).
The words “on or before” have a particular meaning in Texas case law.Over one hundred years ago the Texas Supreme Court wrote: “The words ‘on or before’ are of such common use in promissory notes as to be well understood to mean, ‘immediately or at any time in advance of,’ ‘a period named.’ “ Lovenberg v. Henry, 140 S.W. 1079, 1080 (Tex.1911).The GMF Companies rely on this well-established definition to support their assertion of a right to prepay the entire amount owing under the rule 11 agreement.But there is a critical distinction in the authorities cited by the GMF Companies:in each case the “on or before” language immediately preceded the payment at issue or the contract included an express right of prepayments. See Cmty. Sav. & Loan Ass'n v. Fisher, 409 S.W.2d 546, 547 (Tex.1966) (note included express provision for prepayment of “entire balance before maturity”); Novosad v. Svrcek, 102 S.W.2d 393, 394 (Tex.1937) (involving three payment obligations, each using “on or before” language); Lovenberg, 140 S.W. at 1080 (involving single payment obligation using “on or before” language); Karam v. Ballou, 673 S.W.2d 643, 643 (Tex.App.-Texarkana 1984, writ refd n.r.e.) (involving two payment obligations, each using “on or before” language); Fortson v. Burns, 479 S.W.2d 722, 723 (Tex.App.-Waco 1972, writ ref'd n.r.e.) (involving monthly installment obligations, each installment being due “on or before” certain date).
To apply these authorities here, we would have to presume that, by including the “on or before” language in the down payment provision, the parties intended it to apply to all of the payment provisions even though that language is not included in the provision for the future payments that are at issue. We note that the structure of the rule 11 agreement counsels against making such a presumption.The down-payment provision and the future-payment provision are separately stated in separate bullet-pointed paragraphs using complete punctuation.
The GMF Companies argue that giving too much weight to the structure of the rule 11 agreement ignores their undisputed intent to provide a mechanism by which they could avoid paying Stergiou interest on the balance owed. Curry explained in his affidavit that “[he] did not believe [he] would have access to $300,000, which would be required in the event the jury's verdict went against GMF.[He] therefore sought to include a provision in the [rule 11 agreement] that would allow GMF to pay the $300,000 settlement amount if the jury's verdict required GMF to pay that amount.” But this is evidence that Curry was concerned the GMF Companies could pay the $300,000 owed at all, not that his concern was for the avoidance of interest.
A plain, literal reading of the words used in the rule 11 agreement compels a conclusion that the agreement did not confer any right of prepayment with respect to the GMF Companies' future payment obligations.Consequently, the trial court did not err in granting summary judgment against the GMF Companies on this issue, and we overrule their first issue.
B. Substantial Performance, Waiver, and Mitigation
In their remaining issues, the GMF Companies argue that they substantially performed under the rule 11 agreement, that Stergiou waived his right to collect interest on the settlement amount by refusing the GMF Companies' tender of full payment under the rule 11 agreement, and that Stergiou failed to mitigate his damages. The trial court, however, authorized this interlocutory appeal only from to “two orders ․ on the parties' cross motions for summary judgment on the issues of whether (1) their Rule 11 settlement agreement is enforceable, granted in favor of [the GMF Companies], and (2) [the GMF Companies] had the right to prepay the amount due under the Rule 11 settlement agreement, granted in favor of [Stergiou].” See Act of May 27, 2005, 79th Leg., R.S., ch. 1051, § 1, 2005 Tex. Gen. Laws 3512, 3513, amended by Act of May 25, 2011, 82nd Leg., R.S., ch. 203, § 3.01, 2011 Tex. Gen. Laws 759, 761 (current version at Tex. Civ. Prac. & Rem.Code § 51.014(d) (West Supp.2011).5 The two orders referenced were attached to the joint notice of appeal signed by counsel for the GMF Companies and Stergiou.Consistent with the trial court's order permitting the appeal, the summary judgment orders make clear that they are decisions on the issues of enforceability and prepayment.The joint notice of appeal raises these same two issues, and only these two issues.
Given that the trial court's orders and the parties' joint notice of appeal frame the issues to be decided in the same narrow manner, we conclude that the GMF Companies' arguments regarding their substantial performance of the rule 11 agreement, Stergiou's waiver of the right to receive interest, and Stergiou's alleged failure to mitigate damages are outside the scope of this appeal.We therefore overrule the GMF Companies' second, third, and fourth issues.
Having concluded that the trial court did not err in determining that the Rule 11 Agreement was enforceable but that it did not provide for prepayment of the obligations thereunder, we affirm the trial court's summary judgments.
1. See Tex. Civ. Prac. & Rem.Code Ann. § 51.014(d) (West 2011).
2. Although Stergiou frames his appeal as raising a single issue challenging the trial court's enforceability ruling, we consider each of the reasons he asserts for error as a separate sub-issue in the order set out above.
3. In the alternative, Stergiou asserts that there is a fact issue as to whether the execution of the additional documents was a condition precedent to the formation of a binding rule 11 agreement. Stergiou did not make this argument in either his motion for summary judgment on enforceability or his response to Curry's competing motion on that issue, so we cannot conclude that the trial court should have rendered summary judgment in his favor on that ground. Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex.1992) (issues on appeal “must have been actually presented to and considered by the trial court”). But we note that nothing in the rule 11 agreement indicates that the parties did not intend to be bound by the terms of their settlement until such time as the additional documents were actually executed. At the most, the language providing that Stergiou was to return his shares of the stock upon “execution of all documents necessary to provide the security described” can be construed as a condition precedent to Stergiou's performance under the agreement, not as a condition precedent to the formation of a binding contract. If we were to hold as Stergiou suggests, trial courts would have difficulty approving settlements entered on the eve of trial or, as here, during the jury's deliberations because the parties generally will require additional time to prepare the formal documents memorializing their agreement.
4. We do not agree that all of the “standard” terms noted by Stergiou's real estate expert were missing from the rule 11 agreement. For instance, Stergiou complains that the rule 11 agreement does not identify the specific personal and real property that is collateral, but the agreement does. It specifically identified the security as being “all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’)[.]”
5. The former version of section 51.014(d) is still in effect as to cases filed in the trial court before September 1, 2011. Act of May 25, 2011, 82nd Leg., R.S., ch. 203, § 6.01, 2011 Tex. Gen. Laws 758, 761.
HARVEY BROWN, Justice.
Justice SHARP, dissenting.