Knapp Medical Center, Inc. v. Javier E. De La Garza and Javier E. De La Garza, M. D., P.A.

• Court: Court of Appeals of Texas
• Decided: May 25, 2006
• Docket: 13-04-00269-CV
• Status: Published

Opinion

                              NUMBER 13-04-269-CV

                         COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI - EDINBURG

KNAPP MEDICAL CENTER, INC.,                                        Appellant,

                                                             v.

JAVIER E. DE LA GARZA AND

JAVIER E. DE LA GARZA, M.D., P.A.,                                           Appellees.

     On appeal from the 332nd District Court of Hidalgo County, Texas.

                               MEMORANDUM OPINION

         Before Chief Justice Valdez and Justices Hinojosa and Yañez

                            Memorandum Opinion by Justice Yañez

After reaching a settlement agreement in the underlying cause,^[1] appellees, Javier E. De La Garza, M.D., and Javier E. De La Garza, M.D., P.A., sued appellant, Knapp Medical Center, Inc., for fraud and breach of the settlement agreement.  Following a bench trial, the trial court rendered judgment in favor of appellees and awarded damages in the amount of $200,000.00, court costs, and $80,000.00 in attorney=s fees to appellees.  In six issues, appellant contends (1) there was no valid rule 11 agreement between the parties by which appellant agreed to pay appellees $200,000.00; (2) the trial court improperly allowed appellees= counsel, Ramon Garcia, to testify; (3) the trial court erred in permitting Garcia=s  testimony because it violated the parol evidence rule; (4) there is no evidence to support the trial court=s finding of fraud because there is no evidence of a material misrepresentation or reliance; (5) appellees= claims are barred by the release; and (6) the trial court erred in awarding attorney=s fees because there was no presentment of the claim.^[2]  We affirm.

                                                                I.  Background 

On September 15, 2000, the parties to the underlying case advised the trial court that a settlement had been reached.  Counsel for the parties explained the terms of the settlement to the court, and the trial court accepted the settlement.  It is undisputed that pursuant to the settlement, appellant=s insurance carrier agreed to pay, and appellees agreed to accept, the sum of one million dollars.  The central issue in the present case, however, is whether the settlement agreement also included appellant=s agreement to pay an additional sum of $200,000.00.  Appellees contend that appellant=s counsel represented that he had authority to offer $200,000.00 towards settlement from appellant (in addition to the one million from the carrier), and that therefore, the settlement agreement included appellant=s agreement to pay $200,000.00.  Appellant contends (1) the settlement agreement did not include appellant=s agreement to pay $200,000.00 to appellees, and (2) that appellees knew  appellant was not going to contribute any monies to the settlement at the time they executed a release of all claims on October 2, 2000.  After appellant refused to pay appellees $200,000.00, appellees filed suit for fraud and breach of the settlement agreement.  As noted, the central issue is whether the September 15, 2000 settlement agreement, disclosed in open court, included appellant=s agreement to pay appellees $200,000.00.  The trial court found that it did and awarded judgment in favor of appellees.  The trial court also issued findings of fact and conclusions of law, which included, among other things:

3.  On or about September 14, 2000, Rex Leach, agent for Knapp Medical Center, Inc., entered into agreement with Ramon Garcia to settle the case for $1,200,000.00.

. . . .

5.  On or about September 14, 2000, Rex Leach, agent for Knapp Medical Center, Inc.[,] made a material representation, that he knew was false or made the representation recklessly, as a positive assertion, and without knowledge of its truth, to Plaintiffs that he had authority for $200,000.00 of Knapp Medical Center monies to contribute towards settlement of the case and that the case would settle for $1,200,000.00 if the Defendant=s insurance carrier tendered its $1,000,000.00 policy limits.

18.  The Settlement Transcript dated September 15, 2000, provides that Rex Leach told Ramon Garcia that he had authority for $200,000.00 of Knapp Medical Center monies to contribute towards settlement of the case. 

21.  A valid contract existed between Plaintiffs and Defendant to settle the case, the Plaintiffs performed or tendered performance, the Defendant breached the contract, and the Plaintiffs were damaged as a result of the breach. 

. . . .

25.  The claims asserted by the Plaintiffs in this cause are not barred by the Full and Complete Release executed by the Plaintiffs on October 2, 2000 in Cause No. C-3066-95-G, in the 370th Judicial District Court of Hidalgo County, Texas, styled Javier E. De La  Garza, et al v. Knapp Medical Center, Inc. 

31.  Plaintiffs incurred reasonable and necessary attorneys= fees in the amount of $80,000.00 in prosecution of this case.

This appeal ensued. 

                        II.  Admission of Counsel=s Testimony

We will review appellant=s issues in a logical rather than sequential order.  Thus, we begin by addressing appellant=s arguments that the trial court improperly permitted appellees= counsel to testify.  In its second issue, appellant contends the trial court erred in permitting appellees= counsel, Ramon Garcia, to testify because under rule 3.08 of the Texas Disciplinary Rules of Professional Conduct,^[3] an attorney who represents a party in a lawsuit is incompetent to testify as a witness unless one of the exceptions to rule 3.08 applies.  Appellees contend appellant waived its right to seek disqualification of appellees= counsel on the basis of rule 3.08.  We agree. 

On March 7, 2002, appellant filed a Motion to Disqualify Counsel on grounds that appellees= counsel was disqualified as a fact witness.  On March 26, 2002, appellees filed a response.  At a  hearing on May 13, 2002, appellant=s counsel stated:

[Appellant=s counsel]: On the Motion to Disqualify, Your Honor, we believe that the Plaintiff=s [sic] argument is valid, and we will not pursue that.

[The Court]: All right.

Accordingly, appellant waived any right to complain of the trial court=s decision to permit appellees= counsel to testify.^[4]  We overrule appellant=s second issue.

In its third issue, appellant complains that the trial court erred in permitting appellees= counsel to testify because such testimony violated the parol evidence rule.  Appellees argue that the trial court did not abuse its discretion in permitting their counsel to testify because (1) they alleged fraud and the trial court concluded they were entitled to judgment on their fraud claim, (2) Garcia=s testimony did not contradict, add to, or vary the terms of the settlement agreement, and (3) to the extent the agreement may have been ambiguous, Garcia=s testimony assisted the trial court in ascertaining the intentions of the parties.

We apply an abuse-of-discretion standard in reviewing whether a trial court erred in admitting or excluding evidence.^[5]  In other words, the trial court commits error only when it acts in an unreasonable and arbitrary manner, or acts without reference to any guiding principles.^[6]  Reversible error does not usually occur in connection with rulings on questions of evidence unless the appellant can demonstrate that the whole case turns on the particular evidence that was admitted or excluded.^[7] 

The parol evidence rule is a rule of substantive law which provides that, in the absence of fraud, accident, or mistake, extrinsic evidence is not admissible to vary, add to, or contradict the terms of a written instrument that is facially complete and unambiguous.^[8]  Parol evidence may be used to explain or clarify a written agreement, but not to supply its essential terms.^[9]  Parol evidence is admissible regarding the intentions of the parties when the writing contained in the document is ambiguous.^[10]

The issue before the trial court was whether the parties= agreement to settle the underlying suit included an agreement that appellant would pay $200,000.00.  The only two witnesses were the two attorneys involved in the settlement, Ramon Garcia for appellees, and Rex Leach for appellant.  At the bench trial, both were permitted to testify and both were cross-examined.  To the extent that the trial court found the September 15, 2000 agreement ambiguous, we hold the trial court did not abuse its discretion in permitting Garcia=s testimony.  We overrule appellant=s third issue.  

                                                      III.  Settlement Agreement

In its first issue, appellant contends no valid rule 11 agreement existed regarding  its agreement to pay $200,000.00 to appellees.  We construe appellant=s complaint as a challenge to the sufficiency of the evidence supporting the trial court=s finding that counsel for the parties entered into an agreement to settle the underlying case for $1,200,000.00 (finding of fact number three).  Citing Bransom v. Standard Hardware, Inc.,^[11] appellees argue that because appellant asserted only a general complaint regarding the sufficiency of the evidence supporting the judgment and failed to challenge specific fact findings, it waived its complaint. 

A.  Standard of Review

We address legal‑sufficiency challenges as either Ano‑evidence@ or Amatter‑of‑law@ issues.^[12]  We analyze the issue as a Ano‑evidence@ challenge when, as here, the party complaining on appeal did not bear the burden of proof at trial.^[13] 

In reviewing the legal sufficiency of the evidence, we view the evidence in the light most favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not.^[14]  We do not disregard contrary evidence if there is no favorable evidence, or if contrary evidence renders supporting evidence incompetent or conclusively establishes the opposite.^[15]  There is legally insufficient evidence or Ano evidence@ of a vital fact when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the opposite of the vital fact.^[16]  More than a scintilla of evidence exists where the evidence supporting the finding, as a whole, Arises to a level that would enable reasonable and fair‑minded people to differ in their conclusions.@^[17]  If the evidence is so weak as to do no more than create a mere surmise or suspicion of its existence, its legal effect is that it is no evidence.^[18]

In reviewing a factual sufficiency issue, we consider all the evidence, whether it supports or is contrary to the finding.^[19]  The party challenging the factual sufficiency of a finding on which an adverse party bore the burden of proof must demonstrate that there is insufficient evidence in the record to support the finding.^[20]  We set aside the finding based on factual insufficiency only if the evidence supporting the jury's verdict is so contrary to the overwhelming weight of the evidence as to be manifestly unjust and clearly wrong.^[21] 

Findings of fact in a bench trial have the same force as a jury's verdict upon jury questions.^[22]  However, the findings are not conclusive when a complete statement of facts appears in the record, if the contrary is established as a matter of law, or if there is no evidence to support the findings.^[23]  Findings of fact are reviewable for factual and legal sufficiency under the same standards that are applied in reviewing evidence supporting a jury's answer.^[24]

Our review of trial court conclusions of law is de novo.^[25]  However, as noted above, although findings of fact are reviewable for legal and factual sufficiency, an attack on the sufficiency of the evidence must be directed at specific findings of fact rather than at the judgment as a whole.^[26]  The rule has often been otherwise stated that if the trial court's findings of fact are not challenged by a point of error on appeal, they are binding upon the appellate court.^[27]  However, a challenge to an unidentified finding of fact may be sufficient for review if it is included in the argument of the issue or point, or if after giving consideration to the nature of the case, the underlying applicable legal theories, and the findings of fact provided, the specific finding(s) of fact which the appellant challenges can be fairly determined from the argument.^[28]     

                                                                   B.  Analysis

Here, appellant=s attack is not directed at specific findings of fact.  Instead, appellant  contends generally that the transcript of the September 15, 2000 hearing does not establish that it agreed to pay appellees $200,000.00.  As noted, we construe appellant=s issue as a challenge to the legal sufficiency of the evidence supporting finding of fact number three:  that on or about September 14, 2000, counsel for the parties agreed to settle the case for $1,200,000.00. 

Appellant argues that the transcript of the September 15, 2000 hearing reflects there were Adiscussions between the attorneys for the parties about the possibility of getting the hospital to pay $200,000.00 on top of the $1,000,000.00 to be paid by the insurance carrier . . . [but] does not reflect a mutual assent by the parties or a meeting of the minds . . . as to the payment of the sum of $200,000.00 . . . .@  Appellant also argues that prior to the statements made at the September 15, 2000 hearing, its counsel had advised appellees= counsel that appellant was not going to pay $200,000.00.

Appellees point to the following testimony provided by appellees= counsel at the  March 25, 2004 bench trial:

Q [by appellees= co-counsel]:  Could you tell us please what your discussions were with Rex Leach on September the 14th dealing specifically with resolution of that case?

A [Garcia]:  Yes. Well, Mr. Leach was the lawyer representing Knapp Hospital; therefore, he was the agent of Knapp Hospital that I had been discussing this case with and that I believed had authority to act for and speak for Knapp Hospital.

Mr. Leach comes and tells usC tells me that, no [the policy limit is] not two million, that it=s a million.  And that he believes that if we go out there and Stowerize [sic] them for a million that, you know, we will get the million.  And at that point I said, well, you know, I don=t want to settle for a million.  We=ve got a good case andC and, you know, we want to be able to get full compensation not partial compensation.  The concern was that they would go ahead andC and not allow themselves to be Stowerized [sic].

And that=s where we came up through this, I guess, the term you used was Acreative settlement discussion.@  And there was another pending case, the Badiga [sic] case, that Mr. Leach and I both agreed we could use as a way of getting the balance ofC of the money that in the event the company paid the million, Knapp Hospital had 200,000.  And Mr. Leach said he wasC well, I agreed to accept the 200,000.  He said he wasC but I told him thatC he said he was going to make an effort to get the 250.

We went ahead and on reliance on that, I went ahead and sent out that Stowers [sic] letter for the million dollars.  And the following dayC and also sent out the letter on the Badiga [sic] case saying that we will agree to settle that case, also.

We also note that the minutes of appellant=s September 15, 2000 Board of Directors meeting were introduced into evidence at the bench trial.  The minutes reflect that A[Appellees] later offered to settle near the policy limits, which are $1 million, provided that the Hospital would contribute approximately $200,000.  [Appellees] would in turn be willing to drop the De la Garza case that is currently on appeal.@

Viewed in the light most favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not,^[29] we conclude that the evidence is legally sufficient to support the trial court=s finding of fact number three.  We overrule appellant=s first issue.

                                                         IV.  Fraud  

In its fourth issue, appellant argues that the Aonly evidence@ of the purported Amaterial misrepresentation@ that Mr. Leach stated that he had authority to offer $200,000.00 to settle the underlying case is Mr. Garcia=s testimony, which the trial court should have disregarded under rule 3.08.^[30]  We construe appellant=s issue as a challenge to the sufficiency of the evidence supporting the trial court=s findings that Mr. Leach made a material misrepresentation that he intended appellees to rely on, and that appellees did rely on the misrepresentation.  However, in its fourth issue, appellant does not specifically cite the findings of fact it seeks to challenge.  Accordingly, we conclude appellant failed to preserve any issue for our review.^[31]  We overrule appellant=s fourth issue. 

                                              V.  Affirmative Defense of Release  

In its fifth issue, appellant contends that appellees= claims were barred by the release executed on October 2, 2000.  Appellant concedes the well-settled principle that  Ato release a claim, the releasing document must >mention= it.@^[32]  However, appellant argues that the release Amentions@ its breach-of-contract claim because it contains language releasing Aall claims, known, present, that [appellees] have against the released parties herein,@ and because appellees knew at the time the release was executed that appellant had refused to pay $200,000.00, the breach-of-contract claim is included in the release.

Again, appellant does not specifically cite the findings of fact it seeks to challenge.  Accordingly, we conclude appellant failed to preserve any issue for our review.^[33]  Moreover, even if appellant had preserved the issue, we agree with appellees that a release may be set aside if induced by fraud.^[34]  Here, appellees pleaded that their Stowers demand to appellant=s carrier was induced by fraud and the trial court concluded appellees were entitled to judgment on their claim of fraud.  We overrule appellant=s fifth issue.

                                                              VI.  Attorney Fees

In its sixth issue, appellant contends the trial court erred in awarding appellees attorney fees because there was no Apresentment@ of the claim pursuant to section 38.002  of the civil practice and remedies code.^[35]  However, the record reflects that appellant did not object at trial to appellees= request for attorney fees.  Accordingly, it has waived its  complaint.^[36]  We overrule appellant=s sixth issue.

We AFFIRM the trial court=s judgment.                  

LINDA REYNA YAÑEZ,

Justice

Memorandum opinion delivered and filed

this the 25th day of May, 2006.

---

^[1] In the underlying cause, cause number C-3066-95-G in the 370th District Court of Hidalgo County, Texas, appellees sued appellant for various causes of action, including defamation and slander.  After the case was presented to a jury, but before closing arguments, the parties notified the trial court that a settlement had been reached.  The parties read the settlement agreement into the record of the trial court and the court dismissed the jurors.  Thereafter, appellees contend that appellant refused to perform pursuant to the settlement agreement.  Appellees sued appellant (in the present cause) for fraud and breach of the settlement agreement. 

^[2] See Tex. Civ. Prac. & Rem. Code Ann. ' 38.002 (Vernon 1997).

^[3] See Tex. Disciplinary R. Prof=l. Conduct 3.08.

^[4] See Tex. R. App. P. 33.1.

^[5] See City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995).

^[6] Pitman v. Lightfoot, 937 S.W.2d 496, 517-18 (Tex. App.BSan Antonio 1996, writ denied) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241‑42 (Tex. 1985)).

^[7] Id. at 518.

^[8] Hayes v. Rinehart, 65 S.W.3d 286, 288 (Tex. App.BEastland 2001, no pet.); Pitman, 937 S.W.2d at 515-16.  

^[9] Tex. Builders v. Keller, 928 S.W.2d 479, 481 (Tex. 1996).

^[10] Pitman, 937 S.W.2d at 517.  

^[11] See Bransom v. Standard Hardware, Inc., 874 S.W.2d 919, 927 (Tex. App.BFort Worth 1994, writ denied). 

^[12] Gooch v. Am. Sling Co., 902 S.W.2d 181, 183‑84 (Tex. App.BFort Worth 1995, no writ).

^[13] Id. at 183.

^[14] Ysleta Indep. Sch. Dist. v. Monarrez, 177 S.W.3d 915, 917 (Tex. 2005); City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005).

^[15] City of Keller, 168 S.W.3d at 812-18.

^[16] Merrell Dow Pharms. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997).

^[17] Id. (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).

^[18] Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 183 (Tex. 1995). 

^[19] Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003); Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406‑07 (Tex. 1998).

^[20] Gooch, 902 S.W.2d at 184.  

^[21] Mar. Overseas Corp., 971 S.W.2d at 407.  

^[22] City of Clute v. City of Lake Jackson, 559 S.W.2d 391, 395 (Tex. Civ. App.BHouston [14th Dist.] 1977, writ ref'd n.r.e.).

^[23] Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 44 (Tex. App.BHouston [14th Dist.] 1985, writ ref'd n.r.e.).

^[24] Zieben v. Platt, 786 S.W.2d 797, 799 (Tex. App.BHouston [14th Dist.] 1990, no writ).

^[25] In re Humphreys, 880 S.W.2d 402, 403 (Tex. 1994).

^[26]  In re M.W., 959 S.W.2d 661, 664 (Tex. App.BTyler 1997, writ denied).

^[27] Northwest Park Homeowners Ass'n, Inc., v. Brundrett, 970 S.W.2d 700, 704 (Tex. App.BAmarillo  1998, pet. denied); Carter v. Carter, 736 S.W.2d 775, 777 (Tex. App.BHouston [14th Dist.] 1987, no writ).

^[28] See Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982).

^[29] See City of Keller, 168 S.W.3d at 807.

^[30] See Tex. Disciplinary R. Prof=l. Conduct 3.08.

^[31] See In re M.W., 959 S.W.2d at 664; Bransom, 874 S.W.2d at 927.

^[32] Mem=l Med. Ctr. v. Keszler, 943 S.W.2d 433, 434-35 (Tex. 1997) (citing Victoria Bank and Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991)).

^[33] See In re M.W., 959 S.W.2d at 664; Bransom, 874 S.W.2d at 927.

^[34] See Deer Creek, Ltd. v. N. Am. Mortg. Co., 792 S.W.2d 198, 201 (Tex. App.BDallas 1990, no writ).

^[35] See Tex. Civ. Prac. & Rem. Code Ann. ' 38.002 (Vernon 1997).

^[36] See Tex. R. App. P. 33.1; Wal-Mart Stores, Inc. v. McKenzie, 997 S.W.2d 278, 280 (Tex. 1999) (ATo preserve a complaint for appellate review, a party must present to the trial court a timely request, motion, or objection, state the specific grounds therefore, and obtain a ruling.@).