Roman G. Diaz A/K/A Gabe Diaz v. West Texas Automation, Inc.

• Court: Court of Appeals of Texas
• Decided: July 3, 2008
• Docket: 11-07-00195-CV
• Status: Published

Opinion

Opinion filed July 3, 2008

Opinion filed July 3, 2008

                                                                        In The

    Eleventh Court of Appeals

                                                                 ____________

                                                          No. 11-07-00195-CV

                                                     __________

ROMAN G. DIAZ A/K/A GABE DIAZ, Appellant

vs.

WEST TEXAS AUTOMATION, INC., Appellee

On Appeal from the County Court at Law

Midland County, Texas

Trial Court Cause No. CC13353

                                              M E M O R A N D U M   O P I N I O N

Roman G. Diaz a/k/a Gabe Diaz and West Texas Automation, Inc. agreed that Diaz would work for West Texas for a period of twelve months.  West Texas paid Diaz a $10,000 signing bonus.  Diaz worked for West Texas for thirteen months and quit.  West Texas sued Diaz claiming that the employment agreement provided that, if Diaz ever left his employment, he had to repay the $10,000 signing bonus to West Texas.  The trial court agreed and entered a judgment against Diaz for $10,000, attorney=s fees of $5,000, and prejudgment interest.  We reverse and render.

 In a single issue, Diaz argues that, because he worked the full term of the agreement, the trial court erred in holding that under the terms of the agreement he had to repay the signing bonus.

On January 13, 2005, Diaz and West Texas entered into an employment agreement.  The term of employment was for a period of twelve months beginning on the date of the agreement.  In the agreement, the parties provided for the rate of pay, for Diaz=s duties and functions while employed, and for benefits.  The parties also set forth conditions relating to termination.  By the terms of the agreement, Diaz was prohibited from disclosing confidential information during the term of employment or thereafter.  Diaz was further prohibited from using such information to compete with West Texas.  By the terms of the agreement, upon termination of the term of employment, Diaz was required to surrender all repositories of confidential information to West Texas.  Diaz was prohibited from competing with West Texas as long as he was employed by West Texas and for a period of one year thereafter.  Further, Diaz basically was prohibited, during the term of employment and for a period of one year thereafter, from soliciting business from customers of West Texas; from either employing employees of West Texas or interfering with the employer/employee relationship between West Texas and its other employees; and from interfering with West Texas=s vendors, providers, and suppliers.

By article 3.2 of their agreement, West Texas and Diaz contracted:

Employee shall be paid a one-time signing bonus in the amount of $10,000.00, subject to withholding for federal income, social security, and any other applicable taxes.  In the event that Employee leaves his employment with the Company for any reason other than a reason stated in articles 4.1 and 4.3 of this Agreement, then Employee shall pay to the Company $10,000.00 within 30 days after he leaves his employment with the Company.^[1]

Diaz maintains that, because he stayed employed by West Texas for longer than the twelve months provided for in the agreement, he should not be required to refund the signing bonus.  West Texas takes the position that it is entitled to repayment of the bonus regardless of when Diaz left his employment with West Texas.

Although neither party claims that the contract is ambiguous, we believe it to be important  to note that whether a contract is ambiguous is a question of law.  Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003).  If a contract is not ambiguous, the construction of the agreement is a question of law.  MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999).  A court must consider all provisions of a contract with reference to the entire agreement.  Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).  No single provision by itself will be given controlling effect.  Id.  An appellate court reviews the trial court=s conclusions of law de novo.  MCI Telecomms., 995 S.W.2d at 651.  A contract is not an ambiguous one simply because each of the parties interpret it differently.  Am. Mfrs., 124 S.W.3d at 157.  When a contract is susceptible to two or more reasonable interpretations, it is ambiguous.  Id.  We agree that this contract is not ambiguous because it is not susceptible to more than one reasonable interpretation.             When we consider all of the provisions of the employment contract together, we are led to the conclusion that, as a matter of law, Diaz was not obligated to pay the $10,000 signing bonus back to West Texas because he worked for it for the employment term.  The parties specifically provided that the obligation regarding confidentiality would exist not only during the AEmployment Term@ but also Athereafter.@  The parties also agreed that Diaz would not compete with West Texas A[d]uring the Employment Term and so long as Employee remains employed by Company (whether for the Employment Term or longer) and for a period of one (1) year thereafter.@  Additionally, the parties basically agreed that Diaz would not interfere with West Texas=s relationship with business contacts, employees, vendors, or providers A[d]uring the Employment Term and for a period of one (1) year thereafter.@

We believe it to be significant that, under article 3.1 entitled ACompensation,@ wages were agreed upon in the agreement; were to be paid to Diaz A[d]uring the term of employment@; and were specifically made subject Ato withholding for federal income, social security, and any other applicable taxes.@  Likewise, in article 3.2, the $10,000 signing bonus was specifically made subject Ato withholding for federal income, social security, and any other applicable taxes,@ the same as the earned hourly wage.

Unlike the provisions for confidentiality, non-competition, and non-solicitation, the agreement pertaining to the signing bonus did not contain any provision for extension beyond what the parties called the AEmployment Term.@  If the parties wanted to agree that the provision regarding the signing bonus would extend beyond the AEmployment Term,@ they certainly knew how to write it into the contract, as they did with the provisions for confidentiality, non-competition, and non-solicitation.  See SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840 (Tex. 2005) (employment agreement for sales bonus written to extend beyond the employment period).

When we consider all of the provisions of the agreement with reference to the whole instrument, we hold that Diaz was not required to refund the signing bonus to West Texas unless he left his employment with West Texas prior to the expiration of twelve months.  Any other construction conceivably could result in Diaz working for West Texas for twenty, thirty, forty or more years and yet be obligated to refund the bonus to West Texas when he terminated his employment with the company.  West Texas conceded as much at oral argument.  Our construction of the contract avoids a construction that is unreasonable.  See Frost Nat=l Bank v. L & F Distributors, Ltd., 165 S.W.3d 310, 312 (Tex. 2005).

West Texas argues that the agreement determines the rights and obligations of the parties, not what Diaz believes that his experience shows what the benefits of a bonus are.  In its brief, West Texas argues that A[t]he parties could have agreed to bonus the employee extra time off, a frozen turkey, or tickets to a local high school football game, but they did not.@  Under the construction presented by West Texas, if Diaz had received a bonus of extra time off, a frozen turkey, or football tickets, rather than $10,000, and if, at any time during his lifetime, he quit working for West Texas, he would be obligated to work extra time to make up for the bonus time, or to replace the frozen turkey, or to return the football tickets.  Surely that was not the intent of the parties regarding the $10,000 signing bonus as we ascertain it in the context of all of the other provisions of the employment agreement.  Diaz=s sole issue on appeal is sustained.

We reverse the judgment of the trial court and render judgment that West Texas take nothing by its suit.

JIM R. WRIGHT

CHIEF JUSTICE

July 3, 2008

Panel consists of:  Wright, C.J.,

McCall, J., and Strange, J.

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^[1]Article 4.1 of the agreement was entitled ADeath or Substantially Total Disability of Employee.@  Article 4.3 of the agreement was entitled ATermination without Cause.@