RTKL Associates, Inc. v. Daniel P. Robinowitz, & Transcontinental Realty Investors, Inc

• Court: Court of Appeals of Texas
• Decided: December 10, 2012
• Docket: 05-11-00786-CV
• Status: Published

Opinion

AIH RM; Opinion Filed I)ecemher 10, 2012.

in The (!uitrt uf Aiiah .fift1i Jitrirt nf !xa at Da11zu No. 05-i I-00786-CV

RTKL ASSOCIATES, INC., Appellant

TRANSCONTINENTAL REALTY INVESTORS, INC., Appellee

On Appeal from the 134th District Court Dallas County, Texas Trial Court Cause No. 09-10076-G

OPINION Before Justices Moseley, Fillmore, and Myers Opinion By Justice Myers

RTKL Associates, Inc. appeals the summary judgment in favor of Transcontinental Realty

Investors. Inc. (TCI) on RTKL’s claim for breach of contract. RTKL brings one issue contending

the trial court erred in granting TCI’s motion for summaryjudgment. We affirm the trial court’s

judgment.

BACKGROUND

This lawsuit arises out of the settlement of prior litigation. RTKL provided architectural

services to Woodmont Investment Co., L.P. for a real estate development. The property being

developed was owned by Woodmont TCI Group XIII, L.P. (XIII), and TCI was the one hundred l1t shareholder of \1I I s majority- interest Ii in i ted partner.

oodmont Investment (‘o.. L. P. sued R lK[ seekinc a declaration that its architectural— 3 \

services aureenient with RTKL was invalid and that R FK[ was not entitled to recover unpaid fees.

RTKL tiled a counterclaim against Woodmont Investment Co., [P and its general and limited

partners, Woodmont Investment Co. GP [[C and Daniel Rohinowitz:

On March 12. 2009, the parties engaged in mediation and reached a tentative settlement (the

mediation document). They aejeed that RTKL would he paid 5700,000. with S 140,000 down and

$560.000 in monthly payments otS 10.000. They agreed that the payments would he made by “IC!”

The mediation document required that T’Cl approve the agreement by 5:00 p.m. on March 16. At

5:53 p.m. on March 16, Tonya Parker, an attorney fc)r Woodmont Investment Co., L.P.. its general

partner, and Rohinowitz, sent an e—mail to RTKL’s attorney, Hollye Fisk, stating, “I just received

word that TCI has approved the settlement. I will move torward with preparation of settlement

documents.’ Parker sent Fisk draft settlement documents on April 13, 14. 23. and 27 showing TC1

as the paying party.

Sometime between April 27 and April 30, Parker told Fisk that the payor on the settlement

would be XIll:i By May 7, all the parties signed the formal settlement agreement with XIII as the

payor. On June 30, XIII filed for bankruptcy protection. RTKL then learned that XIII had no cash

or bank accounts but had hundreds ot thousands of dollars of trade debt as well as the $700,000

XIII owned the property. XIH s general partner o as LC Station (ii’. LLC. which owned a 0. I percent interest in XIII. The Class A limited partner was -r LC Station. Inc.. ‘a loch held a 75 percent intercst in XIII. TCI o’a ned 75 percent ofr [C Station, Inc. Daniel Moos was TCi’s president and chief executive of heer. Vvoodmont Ins estment Co.. L P. was XII Is Class 3 limited partner, holding a 24.’.) percent interest in XllI.

2 To clarif, \Voodniont Investment Co., LP. was a limited partnership. Its general partner was Woodmont Investment Co. OP. LLC. Daniel Rohinowitz was president of Woodmont Investment Co. OP. [[C and a limited partner of Woodmont Investment Co., [P.

‘ Fisk testified that Parker told him that XIII had assets to hind the settlement. Parker denied making any statements to Fisk concerning XIII’s ability to fund the settlement. settlement debt.

R IKI, stied TCI and Robinon itz tbr breach of contract and ftaud seeking actual damages of

70O.000. lii moved fbr summary ludgmcnt on RTKL’s claii saainst it, which the trial court

granted, RTKLs fraud claims against Robinowitz proceeded to trial, and the jury found that

Robinowitz did not commit fraud. The trial court entered judgment that RTKL take nothing on its

claims against TCI and Robinowitz. RTKL now appeals the summary judgment on its claim for

breach of contract against TCI.

STANDARD OF REVIEW

TC I moved Ibr summary judgment on both no—evidence and traditional grounds. The

standard for reviewing a traditional summary judgment is well established. See Nixon v. A/Jr. Prop.

/fgInt Co 690 W 2d 546, 548 49 (Tex 1985), AkAfee Inc v Ailvsvs Inc ,316 S W 3d 820

$25 (Tex. App. - Dallas 2010, no pet.). The movant has the burden of showing that flO genuine issue

of material fact exists and that it is entitled to judgment as a matter of law. TEX. R. Civ. P. 1 66a(c).

In deciding whether a disputed niaterial fact issue exists precluding summary judgment, evidence

favorable to the nonmovant will be taken as true. Nixon, 690 S.W.2d at 549; In re Estate of Berry.

280 S.W.3d 47$, 480 (Tex. App.—Dallas 2009, no pet.). Every reasonable inference must be

indulged in favor of the nonmovant and any doubts resolved in its favor. City of Keller v. Wilson,

168 S.W.3d 802, $24 (Tex. 2005). We review a summary judgment de novo to determine whether

a party s right to prevail is established as a matter of law. Dickev v. Club C’oip., 12 S.W.3d 172, 175

(Tex. App.—Dallas 2000, pet. denied).

RELEASE

TCI’s grounds for summary judgment included that it was released by RTKL from any

liability under the formal settlement agreement. Paragraph 4 of the agreement provided: The RTKL Parties hereby completely and irrevocably release and forever discharge the Woodrnont Parties (including its present, future, or tbrmer, direct or indirect parents, subsidiaries, affiliates, agents, legal representatives, employees, officers, directors, partners, shareholders, insurers and attorneys) from any and all past, present or future causes of action, claims, damages or losses, of whatever kind or nature, in law or equity, relating to or arising in any manner from (a> the claims, defenses, and allegations made in Litigation No. 1 and Litigation No. 2 described in Paragraph 2 above, including claims that were included or could have been included in Litigation No. 1 and Litigation No. 2; and (b) any other facts known to the RTKL Parties up to the date of its [sicj execution of this settlement agreement.

The settlement agreement also provided it would “inure to the benefit of the respective present,

future or former, direct or indirect parents ... of the undersigned,” which included XIII. TCI was

not a party to Litigation Nos. I and 2, so the only way it could be released was under provision (b),

“any other fhcts known to the RTKL Parties up to the date of its execution of this settlement

agreement.” TCI would then be released if it was one of the “Woodmont Parties” or one of their

direct or indirect parents, subsidiaries, affiliates, agents, etc.

The Woodmont Parties were specifically listed in the agreement, and they did not include

TCI. However, XIII was one of the Woodmont Parties. TCI asserted in its motion for summary

judgment that it was released by the agreement and was a beneficiary of the agreement because it

was a direct or indirect parent of XIII. TCI stated in the motion that it owned T LC Station, Inc.,

which was a seventy-five percent owner and Class A limited partner of XIII. In its reply to RTKL’s

response to the motion for summary judgment, TCI cited to the statutory definition of “parent,”

section 1.002(65) of the Texas Business Organizations Code.

The Texas Business Organizations Code defines “Parent” as meaning:

an organization that directly or indirectly through or with one or more of its subsidiaries:

(A) owns at least 50 percent of the outstanding ownership or membership interests of another organization; or

-4- (B) possesses at least 50 percent of the voting power of the owners or members of another organization,

TEx. Bus. ORus. CODE ANN. § L002(65) (West 2012). The code defines “ownership interest” as meaning:

an owner’s interest in an entity. The term includes the owner’s share of profits and losses or similar items and the right to receive distributions. The term does not include an owner’s right to participate in management.

Id. 1.002(64). The code defines subsidiary as meaning:

an organization for which another organization, either directly or indirectly through or with one or more of its other subsidiaries:

(A) owns at least 50 percent of the outstanding ownership or membership interest of the organization; or

(B) possesses at least 50 percent of the voting power of the owners or members of the organization.

Id. § 1.002(85). T LC Station, Inc. owns seventy-five percent of the interest in Xii; thus, T LC Station, Inc.

is the parent of XIII. See id. § 1.002(65). TCI owns one hundred percent of the shares of T LC Station, Inc., so T LC Station, Inc. is the subsidiary of TCI. Therefore, TCI is a parent of XIII

because it indirectly through its subsidiary T LC Station, Inc. “owns at least 50 percent of the

outstanding ownership or membership interests of’ XIII.

RTKL argues that the statutory definition of “parent” is not applicable because the settlement

agreement provided for the release of the “direct or indirect parent,” and TCI cited only the definition

of “parent,” not “direct or indirect parent.” We disagree. The definition of “parent” provides

meanings for both direct and indirect parentage. Under the definition, an entity is a direct parent if

the entity itself owns fifty percent of another organization. The entity is an indirect parent if it owns

through a subsidiary fifty percent or more of another organization. See Bus. ORGs. § 1.002(65).

—5— Ihus. ‘I [C Station. Inc. is a direct parent of Xlii. and IC!, throuuh its subsidiary 1 1 .C Station. Inc..

is an indirect parent of XIII.

RIK I asserts TCI waived the argument that it was a direct or indirect parent ol XIII under

the definitions in the Business Organizations Code because it did not cite to the statute in its motion

for summary judgment. The first time TCI cited the statute was in its reply to RTKL’s response to

the motion for summary judgment. The grounds supporting the grant of summary judgment must

he contained in the motion br summary judgment and may not be presented for the Iirst time in a

reply to a response to the motion for summary judgment .41cC anne/f i. Southside Indep. Sc/i. 1)1st,

55$ S.W.2d 337. 341 (Tex. 1993): Sanders i Capitol ;Irea Council. 930 S.W.2d 905, 910 lIes.

App.—-Austin 1996, no writ). TCI’s ground in its motion for summary judgment was headed,

“Plaintiff Released TCI as Part of the Settlement Agreement” Under that heading, TC1 stated it was

not one of the listed parties in the settlement agreement. It then quoted the release language set out

above that released the parties their direct and indirect parents. It then stated that it was a

beneficiary of the settlement agreement because it was a direct or indirect parent of XIII, and it

quoted the paragraph of the agreement stating the agreement inured to the benefit of the parties’

direct and indirect parents. TCI then stated it was

“the owner of TLC [sic] Station, Inc., which is a seventy-five percent (75%) owner and Class A limited partner of Woodmont IC! XIII. As such TCI was released by Plaintiff under Paragraph 4 wherein Plaintiff released the “Woodmont Parties” from “any and all past, present or future causes of action, claims. damages or losses, of whatever kind or nature

(Footnote omitted.) This language describes TCI’s status as an indirect parent and asserts TCI

should be released under paragraph 4. TCI’s presentation of the ground sufficiently notified RTKL

of the issue: that TCI was released under paragraph 4 of the settlement agreement through its status

as an indirect parent of XIII, a party to the agreement. TCI’s citation to the statutory definition of

—6— “parent” in its reply to RTKL’s response to the motion tor summary judgment did not present a new

ground for summary judgment; it provided authority for the ground set out in the motion for

summary judgment. We conclude TCI did not waive this ground for summary judgment.

TCI also argues that paragraph 4 did not release RTKL’s claims against TCI because the

release (lid not mention RTKL’s breach of contract claim. To release a claim effectively, the

releasing instrument must “mention” the claim to be released, Victoria Bank & Trust Co. v. Brady,

$ Ii S.W.2d 93 1, 938 (Tex. 1991). Claims not “clearly within the subject matter” of the release are

not discharged, even if those claims exist when the release is executed. Id. For the release to

“mention” a claim, it does not have to describe specifically a particular cause of action. See Mem.

Med. Ctr. of E. Tex. v. Kesz/er, 943 S.W.2d 433, 434 (Tex. 1997) (per curiarn), The “mention”

requirement does not bar general, categorical releases, but they are narrowly construed. Duncan v.

Cessna 4ircra,f Co., 665 S.W.2d 414, 422 (Tex. 1984); see Kesz/er, 943 S.W.2d at 434.

In this case, the settlement agreement promised release of the parties and their direct and

indirect parents from all claims “relating to or arising in any manner from” (a) Litigation No. 1 and

Litigation No. 2, and (b) “any other facts known to the RTKL Parties up to the date of its execution

of this settlement agreement.”

RTKL argues the settlement agreement did not release TCI from RTKL’s breach of contract

claim because the agreement did not mention releasing TCI for its obligation under the mediation

document to pay RTKL $700,000. RTKL cites Victoria Bank & Trust C’o. v. Brady in support of its

argument. In 1984, Marlyn Brady and the Cattle Co. executed a promissory note to Victoria Bank

secured by Brady’s ranch. Brady, 811 S.W.2d at 933. The Cattle Co. also received a separate line

of credit from the bank, secured by a certificate of deposit and a lien on the Cattle Co.’s cattle. Id.

at 93 3—34. The Cattle Co. paid off the debt under the line of credit, and the bank released the

—7— certificate ofdeposit but did not release the lien on the cattle. Id. at 934. Later, the Cattle Co. sold

some cattle and received a draft drawn on the bank. Id. The bank refused to pay the draft until the

Cattle Co. agreed to deduct $40,000 from the draft and to apply it to the debt under the Brady—Cattle

Co. note. Id. The bank asserted the cattle sold were subject to its lien on the cattle securing the

Cattle Co.’s line of credit. Id. Brady and the Cattle Co. sued the bank on a variety of claims

concerning the note and the sale of cattle. The parties reached a settlement agreement. The

agreement described the execution ofthe Brady—Cattle Co. note and its renewals and extensions and

then stated that the Cattle Co. released the Bank from all claims Cattle Co. might have “attributable

to the above described loan transaction.” Id. at 937 & n.8. The supreme court determined the claims

concerning the bank’s deduction of $40,000 from the proceeds of the sale of cattle based on the

bank’s lien on the cattle securing the line of credit were not released because they were not

mentioned in the release or attributable to the Brady—Cattle Co. note and, thus, were not clearly

within the subject matter of the release. Id. at 939. Bratty is not applicable to this case because

Brady did not involve the general release present in this case.

The ease before us is more analogous to Memorial !s’fedical Center qfEast Texas v. Keszler,

943 S.W.2d 433 (Tex. 1997) (per curiam). In that case, Memorial brought a “corrective action”

against Keszler and revoked his privileges after he was found guilty oftampering with government

records. id. at 434. Keszler sued Memorial. The parties reached a settlement in which Keszler

agreed to release Memorial from all claims

arising out of corrective action taken by [Memorial] against [Keszler] and any other matter relating to [Keszler ‘cJ relationship with [Memorial], including but not limited to his relationship as a member ofthe staff or as a physician having clinical privileges, it being the intent of [Keszler] to release all claims of any kind oi’ character which he might have against [Memorial]

IS After the settlement, Keszler sued Memorial for damages for injuries he suffered as a result of

-8- exposure to a toxic sterilizing, agent Memorial used during his employment. Id. The supreme court

stated the release must “mention” the claim, but it disagreed with the court of appeals’ holding that

the claim must be specifically enumerated to be released, id. at 435. The supreme court concluded

the claim was “mentioned” in the release because Keszler agreed to release all claims relating to his

relationship with Memorial, and his claim for toxic exposure during his employment at Memorial

was related to his relationship with Memorial. Id.

In this case, RTKL agreed to release TCI (as a parent of the named party Xlii) from “all..

claims elating to or arising in any manner from . . . (b) any other facts known to the RTKL

Parties up to the date of its execution of this settlement agreement.” it is undisputed that RTKL

knew when it executed the settlement agreement that TCI had promised in the mediation document

to pay RTKL the $700,000 settlement amount. Thus, RTKL’s breach of contract claim is

“mentioned” in paragraph (b) of the release, 4

We conclude the trial court did not err in granting TCI’s motion for summary judgment on

RTKL’s breach of contract claim. We overrule RTKL’s sole issue.

CONCLUSION

We affirm the trial court’s judgment.

LANA MYERS JUSTICE

1 10786F.P05

We do not consider whether the claim falls within paragraph (a) of the release for claims relating to or arising out of Litigation Nos. I and 2.

—9— 01 41pmt1s rLntrt iftIi Ditrfrt of xa at Oallas

JUDGMENT RTKL ASSOCIATES, INC., Appellant Appeal from the 134th District Court of Dallas County, Texas. (Tr.Ct.No. 09-10076- No. 05-1 1-007$6-CV C). Opinion delivered by Justice Myers. Justices TRANSCONTINENTAL REALTY Moselev and Fillmore participating. INVESTORS, INC.. Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED. It is ORDERED that appellee Transcontinental Realty Investors, Inc. recover its costs of this appeal from appellant RTKL Associates, Inc.

Judgment entered December 10. 2() 12.

LANRS’’ JUSTICE