Lloyd S. Elliott v. Robert D. Ungerecht

• Court: Court of Appeals of Texas
• Decided: January 30, 2002
• Docket: 12-01-00024-CV
• Status: Published

Opinion

NO. 12-01-00024-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

LLOYD S. ELLIOTT,

§ APPEAL FROM THE 241ST

APPELLANT

V.

§ JUDICIAL DISTRICT COURT OF

ROBERT D. UNGERECHT,

APPELLEE

§ SMITH COUNTY, TEXAS

Lloyd S. Elliott ("Elliott") sued Robert D. Ungerecht ("Ungerecht"), Frank Sturrock, and Cretaceous Investments, Inc. ("Cretaceous") for monies owed under a promissory note and letter agreement. Elliott nonsuited Sturrock and took a default judgment against Cretaceous. The suit against Ungerecht proceeded to a trial before the bench after which the trial court entered judgment in favor of Ungerecht. Elliott advances nine issues for our consideration. We affirm.

Background

Ungerecht and his friends, Frank Sturrock and David Fry, formed Cretaceous in the early 1990s specifically for the purpose of operating ten oil and gas wells in the East Fruitvale Field in East Texas. The three Cretaceous stockholders believed that a horizontal water flooding process could be used for secondary recovery of oil in the East Fruitvale Field, and if the project was successful, they could sell it for a profit. Cretaceous needed more capital to complete the project but could not get it.

Ungerecht had worked in the oil business for many years. During the 1960's, while working in the Venezuelan oilfield, he had befriended Elliott who was also working there. Ungerecht went to Elliott, then based in Oklahoma, to ask for a loan for the Cretaceous project. Elliott agreed.

On June 17, 1994, Elliott and Ungerecht simultaneously executed a promissory note and a letter agreement for a loan of $70,000.00 from Elliott to Ungerecht. The note provided for interest at a rate of ten percent per annum. The letter agreement explained that the loan was for the development of the East Fruitvale oilfield properties of which Ungerecht owned thirty-three percent as one-third owner of Cretaceous. Under the terms of the letter agreement, Ungerecht assigned Elliott an option whereby Elliott could take a ten percent interest in the properties being developed at any time during the one year term in lieu of repayment of the loan.

In October of 1994, a Swiss company bought the majority of Cretaceous' interest in the properties. Cretaceous sent Elliott a check for $80,000.00 to retire the note. After making a trip to East Texas to see the production operation, Elliott returned the check, indicating he did not want the money at that time but wanted to "stay in the project." There were discussions about assigning an interest in the properties to Elliott, and an assignment document was drafted but never executed. The Swiss company did not continue to develop the property as originally intended, and Cretaceous dissolved. Elliott demanded payment of the note after June 17, 1995, but never received payment.

Elliott sued Cretaceous, Ungerecht, and Frank Sturrock. Elliott nonsuited Sturrock and took a default judgment against Cretaceous. The suit against Ungerecht was tried to the court. In his second amended original answer, Ungerecht raised the affirmative defense of waiver contending that Elliott had waived his right to demand payment of the note by accepting the ten percent interest in the properties. In its findings of fact, the trial court found that payment was tendered and rejected and that after rejecting the tender of payment, Elliott accepted the ten percent interest in the properties in lieu of repayment. In its conclusions of law, the trial court concluded that the letter agreement was not ambiguous, that the assignment of option was not an option for lack of essential terms, and that the only cause of action in Elliott's petition was on the note. Based upon its findings and conclusions, the trial court entered a take nothing judgment against Elliott.

Legal and Factual Sufficiency

Elliott briefs his first three issues together. In his first issue, Elliott asserts that the trial court erred in entering a take nothing judgment against him. In his second issue, Elliott contends that he is entitled to payment on the promissory note and letter agreement as a matter of law. In his third issue, Elliott contends that the evidence is legally and factually insufficient to support the trial court's findings of fact, so judgment should be rendered for him. Since these three issues concern, in essence, the sufficiency of the evidence to support the trial court's findings of fact and its judgment, we will address these issues together.

Waiver

Having reviewed the record, we conclude that the trial court's finding that Elliott accepted an interest in the project in lieu of repayment constitutes to a waiver of his right to collect on the promissory note. Waiver is an affirmative defense that must be specifically pled. Tex. R. Civ. P. 94. In his pleadings, Ungerecht contended that Elliott had waived his right to collect on the note because he accepted the ten percent interest in the properties. Waiver is an intentional relinquishment of a known right and is either expressly made [or] indicated by conduct that is inconsistent with an intent to claim the right. United States Fidelity & Guaranty Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971); Cal-Tex Lumber Co., Inc. v. Owens Handle Co., Inc., 989 S.W.2d 802, 812 (Tex. App.-Tyler 1999, no pet.). A waivable right may spring from law or, as in this case, from a contract. Ford v. Culbertson, 158 Tex. 124, 308 S.W.2d 855, 865 (1958); Tenneco Inc. v. Enterprise Products Co., 925 S.W.2d 640, 643 (Tex. 1996). The party asserting a waiver has the burden of proof. Ford v. Culbertson, 308 S.W.2d at 865. A party's intention is a primary factor in determining questions of waiver, and in the absence of a clear intent expressed in words, acts, or conduct, waiver will be implied only to prevent fraud or inequitable consequences. Cal-Tex Lumber Co., Inc., 989 S.W.2d at 812.

Standard of Review

While findings of fact issued in a bench trial have the same force and dignity as a jury's verdict, the trial judge's findings of fact are not conclusive when there is a complete reporter's record before the appellate court. Tucker v. Tucker, 908 S.W.2d 530, 532 (Tex. 1995). In that case, we are not bound by the trial court's findings but will review the findings for legal and factual sufficiency of the evidence by the same standards used in reviewing the evidence supporting a jury's verdict. Id.

When an appellant attacks the legal sufficiency of an adverse finding on an issue on which the other party had the burden of proof, the appellant must demonstrate on appeal that there is no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). In reviewing no evidence points of error, the reviewing court must consider only the evidence and inferences tending to support the trial court's finding, disregarding all contrary evidence and inferences. Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998). If there is any evidence of probative force to support the finding, the no evidence issue must be overruled and the finding upheld. ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997).

When an appellant attacks the factual sufficiency of an adverse finding on an issue on which the other party had the burden of proof, the attacking party must demonstrate that there is insufficient evidence to support the adverse finding. See Croucher, 660 S.W.2d at 58. A factual sufficiency challenge requires us to examine the entire record to determine if there is some probative evidence to support the finding, and if so, whether that evidence is so weak that the finding is clearly wrong and manifestly unjust. See City of Beaumont v. Spivey, 1 S.W.3d 385, 392 (Tex. App.-Beaumont 1999, pet. denied). This court is not a fact finder and may not pass on the credibility of the witnesses or substitute our judgment for that of the trier of fact. Clancy v. Zale Corp., 705 S.W.2d 820, 826 (Tex. App.-Dallas 1986, writ ref'd n.r.e.). Findings of fact are the exclusive province of the jury and/or trial court. Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 744 (Tex. 1986). Accordingly, if there is sufficient competent evidence of probative force to support the finding, it must be sustained. Beall v. Ditmore, 867 S.W.2d 791, 795-96 (Tex. App.-El Paso 1993, writ denied).

The trial court's conclusions of law are not binding on an appellate court and are always subject to de novo review. Shamburger v. Conoco, Inc., 999 S.W.2d 462, 466 (Tex. App.-Amarillo 1999, pet. denied). Although a trial court's conclusions of law may not be challenged for factual insufficiency, the trial court's conclusions drawn from the facts may be reviewed to determine their correctness. Ashcraft v. Lookadoo, 952 S.W.2d 907, 910 (Tex. App.-Dallas), pet. denied by 977 S.W.2d 562 (Tex. 1997); Arthur M. Deck & Assoc. v. Crispin, 888 S.W.2d 56, 60 (Tex. App.-Houston [1st Dist.] 1994, writ denied). Moreover, where the trial court's findings of fact conflict with its conclusions of law, findings of facts will be deemed to control. Brown v. The State Bar of Tex., 960 S.W.2d 671, 674 (Tex. App.-El Paso 1997, no writ); County of El Paso v. Ortega, 847 S.W.2d 436, 441 (Tex. App.-El Paso 1993, no writ).

Analysis

Elliott argues that the evidence is insufficient to support the trial court's findings that he rejected tender of payment of the note and then accepted a ten percent interest in the properties in lieu of repayment of the note. Our review of record reveals more than a scintilla of probative evidence, or reasonable inferences therefrom, which supports these findings. It is undisputed that Elliott returned the $80,000.00 check. The testimony of David Fry that Elliott said he wanted to "stay in the project" just prior to returning the check supports the trial court's findings that Elliott accepted a ten percent interest in the properties in lieu of repayment of the note. Further, Ungerecht testified that after Elliott returned the check, Cretaceous used the money to pay off other debts and put the remainder back into the project. Thus, the evidence is legally sufficient to support the trial court's finding that Elliott waived his right to repayment by accepting a ten percent interest in the project.

Furthermore, our factual sufficiency review of the record reveals that the evidence supporting the trial court's findings is not so weak that the findings are clearly wrong and manifestly unjust. The only evidence that Elliott did not intend to accept an interest in lieu of repayment came in the form of testimony by Elliott himself. As previously noted, the trier of fact is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. See Mayes v. Stewart, 11 S.W.3d 440, 451 (Tex. App.-Houston [14th Dist.] 2000, pet. denied). The factfinder may believe one witness and disbelieve another. McGalliard v. Kuhlman, 722 S.W.2d 694, 697 (Tex. 1986). The factfinder resolves inconsistencies in testimony. Id. Furthermore, the amount of evidence necessary to affirm a judgment is far less than that necessary to reverse a judgment. Mayes, 11 S.W.3d at 451. The evidence is factually sufficient to support the trial court's finding that Elliott waived his right to repayment by accepting a ten percent interest in the project. Elliott's first, second, and third issues are overruled.

Remaining Issues

In his fourth issue, Elliott contends the trial court's findings of fact and conclusions of law fail to conform to the pleadings and, thus, the judgment should be reversed. However, Elliott offers no authority for this proposition. Of course, the judgment must conform to the pleadings, the nature of the case proved and the verdict. See Tex. R. Civ. P. 301; First Nat'l Bank v. Zimmerman, 442 S.W.2d 674, 678 (Tex.1969). If such is Elliott's complaint, he is incorrect.

Our review of the record reveals that the judgment of the trial court is authorized by the defensive pleadings upon which the parties went to trial. Ungerecht's second amended original answer raised the affirmative defense of waiver. Ungerecht contended that Elliott accepted to take a ten percent interest in the properties in lieu of repayment of the note, and thus, waived his right to demand repayment. There is evidence in the record that supports this contention. See Cal-Tex Lumber Co., Inc., 989 S.W.2d at 812. Accordingly, the trial court's judgment conformed to the pleadings and was supported by evidence in the record. Elliott's fourth issue is overruled.

In his fifth issue, Elliott avers that the trial court's conclusions of law are erroneous as a matter of law, and thus, the judgment should be reversed. Elliott does not point to a specific conclusion but argues in general that the trial court's conclusion that the Letter of Agreement was not a true option contract for lack of essential terms is in conflict with the trial court's finding that Elliott accepted an interest in the project in lieu of repayment.

Conclusions of law will be upheld on appeal if the judgment can be sustained on any legal theory supported by the evidence. Dickerson v. DeBarbieris, 964 S.W.2d 680, 683 (Tex. App.-Houston [14th Dist.] 1998, no pet.). Thus, incorrect conclusions of law do not require reversal if the controlling findings of fact will support a correct legal theory. Id. Because the trial court's finding that Elliott took an interest in the properties in lieu of repayment supports the trial court's judgment, Elliott's fifth issue is overruled.

In his sixth issue, Elliott contends the trial court committed reversible error by impliedly concluding that because Elliott rejected early tender of payment, he was not entitled to payment of the note. Where the trial court has filed written findings of fact and conclusions of law which support the judgment, we decline to consider whether an implied finding which is authorized by the

defensive pleadings ⁽¹⁾ but not necessary to support the judgment was made at all, much less made in error. Elliott's sixth issue is overruled.

In his seventh issue, Elliott contends that the trial court's conclusion that there was no option in the letter agreement defeats Ungerecht's defensive pleading on that theory. As previously stated, where the trial court's findings of fact conflict with its conclusions of law, findings of facts will be deemed to control. Brown, 960 S.W.2d at 674; County of El Paso, 847 S.W.2d at 441. Elliott's seventh issue is overruled.

In his eighth issue, Elliott argues that assuming there was an option contract, Elliott did not exercise his option. Elliott does not allege error of any sort by this issue but merely presents an argumentative statement. There being nothing for us to review, we overrule Elliott's eighth issue.

In his ninth issue, Elliott contends that the trial court committed reversible error by determining that his rejection of Cretaceous' check amounted to a taking of the property in lieu of repayment, especially when there was no defensive pleading of such. Again, our review of the record reveals that the finding of the trial court that Elliott exercised his option to take a ten percent interest in the properties is authorized by the defensive pleadings upon which the parties went to trial (i.e., waiver) and is supported by evidence in the record. See Tex. R. Civ. P. 301. Elliott's ninth issue is overruled.

The judgment of the trial court is affirmed.

JIM WORTHEN

Justice

Opinion delivered January 30, 2002

Panel consisted of Davis, C.J., Worthen, J., and Griffith, J.

(DO NOT PUBLISH)

1.

In his answer, Ungerecht plead estoppel by rejection of tender, among other defenses.