Paulette Baribeau v. Hill Country Partners, L.P.

Opinion

Fourth Court of Appeals San Antonio, Texas MEMORANDUM OPINION

No. 04-18-00334-CV

Paulette BARIBEAU, Appellant

v.

HILL COUNTRY PARTNERS, L.P., Appellee

From the 37th Judicial District Court, Bexar County, Texas Trial Court No. 2016-CI-08378 Honorable Michael E. Mery, Judge Presiding

Opinion by: Patricia O. Alvarez, Justice

Sitting: Patricia O. Alvarez, Justice Luz Elena D. Chapa, Justice Irene Rios, Justice

Delivered and Filed: July 10, 2019

AFFIRMED

Appellant Paulette Baribeau (“Baribeau”) appeals from a judgment rendered on a directed

verdict in a suit for breach of a commercial lease agreement. We affirm the trial court’s judgment.

Background

Appellee Hill Country Partners, L.P. (“Hill Country”) owns a shopping center in Castle

Hills. On January 9, 2012, Baribeau and her business partner Danny Lara signed an agreement to

lease Suite 127 of Hill Country’s shopping center (“the Original Lease”). The Original Lease

defines “Tenant” as “Danny Lara and Paulette Baribeau, to be assign[ed] to an LLC to be formed,” 04-18-00334-CV

and permits the tenant to operate a gym business in Suite 127 beginning May 1, 2012. Baribeau,

Lara, and Hill Country’s vice president are the only signatories to the Original Lease, which was

admitted at trial without objection.

Although the parties dispute what prompted the decision to do so, an amendment to the

Original Lease was signed in March 2012 (“the First Amendment”). The First Amendment

modifies the definition of “Tenant” to read: “Sherry Denise Lara, Paulette Baribeau and John

Cordova, to be assigned to an LLC to be formed.” Sherry Lara is Danny Lara’s wife. John Cordova

previously operated a gym business in another suite in Hill Country’s shopping center. Under the

First Amendment, Danny Lara was removed from the definition of “Tenant” but remained a

guarantor for the tenant’s obligations. No one disputes that Hill Country, Baribeau, Danny and

Sherry Lara, and Cordova each signed the First Amendment.

Baribeau, Sherry Lara, and Cordova subsequently formed a limited liability company to

operate the gym. After a dispute arose among them, Baribeau and Sherry Lara sued Cordova. The

lawsuit eventually settled, “conditioned on the satisfactory resolution with [Hill Country]” of a

finish-out advance for Suite 127 and “Cordova’s release from the lease and approval of [a] new

lease by the new Landlord.” The parties requested that Hill Country agree to a second amendment

removing Cordova and the Laras from the lease and identifying Baribeau as the sole tenant and

guarantor.

On January 18, 2013, Hill Country, Baribeau, Cordova, and the Laras signed a second

amendment to the Original Lease (“the Second Amendment”). The Second Amendment contains

a “Ratification of Lease” provision, in which Baribeau agrees to “ratify, confirm, and adopt the

Lease 1, as amended by the Second Amendment,” as well as a “Ratification of Guaranty” provision.

1 “Lease” is defined as the Original Lease, as amended by the First Amendment.

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“Tenant” was redefined as “Paulette Baribeau” only, and Hill Country agreed to lease additional

space to Baribeau and pay Baribeau $100,000 as a finish-out allowance. The Second Amendment

also contains a “Release of Landlord” provision stating:

As a material consideration of this Agreement to [Hill Country], but for which [Hill Country] would not enter into this Second Amendment, Baribeau, [Sherry] Lara, Cordova, and [Danny] Lara hereby release and discharge [Hill Country] of and from any and all claims, demands, and/or causes of action held by any of them against [Hill Country], its principals, partners, employees, representatives, consultants, successors and assigns, whether known or unknown, choate or inchoate, for all periods prior to [January 9, 2013], including, without limitation, any and all such claims based upon or arising from, whether in whole or in part, the negotiation, formation, performance and/or non-performance of the Lease, as amended by this Second Amendment.

Baribeau was represented by counsel when she signed the Second Amendment.

After signing the Second Amendment, Baribeau made full rent payments for six months

and partial rent payments thereafter. In October 2015, Baribeau ceased operating the gym business

and making rent payments to Hill Country. Hill Country filed this lawsuit for breach of the Original

Lease as amended. Baribeau answered and asserted counterclaims for, among other things, fraud

and fraudulent inducement. Baribeau also raised fraud and fraudulent inducement as affirmative

defenses.

The case proceeded to a jury trial. After both sides rested and closed, Hill Country moved

for a directed verdict on its claims for breach of contract and attorney’s fees, its defenses of release,

ratification, and statute of limitations, and all of Baribeau’s counterclaims and fraud-based

defenses. The trial court granted the motion for directed verdict in full and rendered final judgment

in Hill Country’s favor. Baribeau appeals.

Standard of Review

A trial court may enter a directed verdict in favor of a plaintiff where the evidence

conclusively establishes the plaintiff’s right to judgment as a matter of law. See Ibarra v. Nat’l

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Constr. Rentals, Inc., 199 S.W.3d 32, 37 (Tex. App.—San Antonio 2006, no pet.) (citing

Prudential Ins. Co. of. Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000)). We review

the granting of a directed verdict using the standard of review applicable to a challenge to the legal

sufficiency of the evidence. Id. (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).

Accordingly, we review the evidence to determine whether a reasonable and fair-minded jury

could have reached the verdict under review. See City of Keller, 168 S.W.3d at 827. We credit

favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a

reasonable factfinder could not. Id. “[W]e can consider any reason the directed verdict should have

been granted, even if not stated in the [plaintiff’s] motion.” Ibarra, 199 S.W.3d at 37.

Discussion

In three issues, Baribeau argues the trial court erred in granting a directed verdict in Hill

Country’s favor. In her first and second issues, Baribeau argues the release and ratification

provisions in the Second Amendment are not valid. In her third issue, Baribeau argues the trial

court erred in granting a directed verdict because the evidence raised a fact question regarding

Baribeau’s fraud-based affirmative defenses.

A. Release

In its motion for directed verdict, Hill Country argued it conclusively proved its affirmative

defenses of release and ratification. A release that is valid on its face is a complete bar to any action

based on matters encompassed by the release. Tamez v. Sw. Motor Transp., Inc., 155 S.W.3d 564,

569 (Tex. App.—San Antonio 2004, no pet.).

In the Second Amendment, Baribeau expressly released Hill Country from “any and all

claims, demands, and/or causes of action . . . including, without limitation, any and all such claims

based upon or arising from, whether in whole or in part, the negotiation, formation, performance

and/or non-performance of the Lease . . . .” In her first issue on appeal, Baribeau argues this release

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is not valid because Hill Country “fraudulently induced Baribeau into the [O]riginal Lease.”

Baribeau argues that because the Original Lease was procured by fraud, “nothing that flows from

that [O]riginal [L]ease,” including the Second Amendment, “is valid.”

Baribeau relies on the general rule that a release agreement, like any other contract, may

be subject to avoidance if it was fraudulently induced. See Schlumberger Tech. Corp. v. Swanson,

959 S.W.2d 171, 178 (Tex. 1997) (citing Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990)).

For instance, in Schlumberger, the supreme court held a settlement agreement containing a release

of claims could be avoidable if the non-releasing party fraudulently induced the releasing party to

sign the settlement agreement itself. Id. However, because the settlement agreement contained a

provision in which the releasing party expressly disclaimed reliance upon any statements or

representations of the non-releasing party, the court held the settlement agreement and release

provision were enforceable. Id. at 181.

Here, in contrast, Baribeau does not allege any fraud in the inducement of the Second

Amendment itself; rather, she argues the Original Lease was procured by fraud. Baribeau does not

identify any authority for the premise that a release agreement may be avoidable because of

fraudulent procurement of another separate agreement, particularly where the release agreement

expressly releases any claims related to that separate agreement. Indeed, if such a rule existed, it

would prevent parties to contractual disputes from fully and finally resolving those disputes by

bargaining for and executing releases of claims arising from the prior contracts. See id. at 179

(noting the importance of this practice).

Further, even if Baribeau was not aware at the time she signed the Second Amendment of

the potential fraudulent inducement claim arising from the Original Lease, the release provision

expressly releases “any and all claims, demands, and/or causes of action . . . whether known or

unknown . . . .” Parties to a release agreement need not anticipate and identify each potential cause

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of action related to the release’s subject matter, and a valid release may encompass as yet unknown

claims. Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 20 S.W.3d 692, 698

(Tex. 2000). Therefore, even if Baribeau was not aware of her potential claim for fraudulent

inducement of the Original Lease, absent any alleged fraud in the procurement of the Second

Amendment, she cannot avoid her agreement to release that unknown claim.

Accordingly, because Baribeau has not demonstrated the release contained in the Second

Amendment is invalid, her first issue is overruled. In addition, because the trial court could have

granted a directed verdict on all of Baribeau’s counterclaims based on Hill Country’s affirmative

defense of release, we need not determine whether the ratification provisions in the Second

Amendment are also a valid basis for the directed verdict on Baribeau’s counterclaims. See Ibarra,

199 S.W.3d at 37. We, therefore, do not reach Baribeau’s second issue.

B. Fraud defenses

In her third issue, Baribeau argues the trial court erred in granting a directed verdict because

the evidence regarding her fraud-based defenses was sufficient to raise a fact issue for the jury. To

establish her common law fraud defense, Baribeau bore the burden of demonstrating: (1) Hill

Country made a material misrepresentation or omission, (2) either with knowledge of its falsehood

or recklessly without any knowledge of the truth, (3) with the intent that Baribeau act upon it, and

(4) Baribeau acted on the misrepresentation to her detriment. See BP Am. Prod. Co. v. Zaffirini,

419 S.W.3d 485, 503 (Tex. App.—San Antonio 2013, pet. denied); Haynes v. Beceiro, 219 S.W.3d

24, 27 n.2 (Tex. App.—San Antonio 2006, pet. denied). Fraudulent inducement requires proof of

the same elements in relation to a contract between the parties. Zaffirini, 419 S.W.3d at 505.

Baribeau argues the trial evidence demonstrates: (1) John Cordova “was on the [O]riginal

Lease, or was supposed to be”; (2) Hill Country insisted that Cordova be added to the Original

Lease by way of the First Amendment; and (3) “neither Baribeau nor Lara would have signed the

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[O]riginal [L]ease had they known that Cordova was, or would become part of the lease.” Although

Baribeau does not specify which element(s) of her defenses are supported by the trial evidence she

cites, we construe her briefing as alleging Hill Country made a material misrepresentation or

omission by concealing that Cordova “was on the [O]riginal Lease, or was supposed to be.”

Baribeau relies exclusively on Cordova’s deposition testimony that he signed the Original Lease

at the same time Danny Lara and Baribeau signed it but was later told by Hill Country’s

commercial leasing agent that “we can’t find the original one that you signed,” “[s]o we’re going

to have to do an amendment to the lease to put you back in.”

The evidence presented at trial, however, conclusively establishes Cordova did not sign the

Original Lease. The Original Lease itself was admitted into evidence, without objection, and

contains the signatures of Baribeau, Danny Lara, and Hill Country’s vice president only. The

Original Lease also clearly defines “Tenant” as Danny Lara and Baribeau only. In addition,

Baribeau testified Cordova was not present on January 9, 2012 when she and Danny Lara signed

the Original Lease, directly contradicting Cordova’s testimony. No evidence was presented that

Cordova signed a different or additional lease; rather, Cordova claimed he signed the same lease

Baribeau and Danny Lara signed. Because all of the evidence in the record contradicts Cordova’s

deposition testimony that he signed or “was supposed” to sign the Original Lease, a reasonable

factfinder could disregard it. See City of Keller, 168 S.W.3d at 827.

In addition, even assuming the evidence created a fact question as to whether Hill Country

“insisted” that Cordova sign the First Amendment, this evidence is immaterial to whether either

the Original Lease or the First Amendment was procured by fraud. Insistence itself is not a

misrepresentation of fact. See BLACK’S LAW DICTIONARY 18c (10th ed. 2014) (defining

“misrepresentation of fact” as “[a] false statement about the occurrence, existence, or quality of an

act, circumstance, event, or thing, tangible or intangible”).

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We conclude Baribeau has not identified any evidence in the record either conclusively

proving her affirmative defenses as a matter of law or raising a material question of fact sufficient

to defeat Hill Country’s motion for a directed verdict on those defenses. Accordingly, we overrule

Baribeau’s third issue.

Conclusion

Having overruled Baribeau’s first and third issues, we affirm the trial court’s judgment.

For the reasons set forth above, we need not address Baribeau’s second issue.

Patricia O. Alvarez, Justice

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