Court Opinion

ID: 9953931
Source: CourtListenerOpinion
Date Created: 2024-03-24 07:18:39.832049+00
Date Added: 2024-06-11T08:12:56.665916
License: Public Domain

Reversed and Remanded and Memorandum Opinion filed March 21, 2024.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-22-00144-CV

             GARY WAYNE SPANGLER, JUNIOR, Appellant

                                        V.
BRANDY L. LISS, AS INDEPENDENT EXECUTRIX OF THE ESTATE OF
             MARY A. JAMES, DECEASED, Appellee

                      On Appeal from the Probate Court
                           Galveston County, Texas
                     Trial Court Cause No. PR-0081495-A

                         MEMORANDUM OPINION

      Appellant Gary Wayne Spangler (“Spangler”) and the decedent, Mary A.
James (“James”), were formerly co-owners in a hospice care business. After
James’s death, Spangler sued her estate to recover his interest in the business. The
trial court granted summary judgment to Brandy L. Liss (“Liss”), the independent
executrix, and Spangler appeals in four issues. We reverse the trial court’s order
and remand for further proceedings.
                               I.    BACKGROUND

      Spangler and James owned several medical businesses together, including
Essential Hospice and Palliative Services, LLC (“Essential”), which they and five
other individuals purchased in 2017. Spangler owned 55.9% of Essential after the
purchase, and James owned 29.4%. In early 2018, Spangler learned that he was
facing a federal indictment for allegedly misbilling Medicaid and Medicare. Such
an indictment could have resulted not just in a criminal conviction for Spangler,
but also the cancelation of his businesses’ authority to bill Medicaid and Medicare
for patient treatments. In preparing for the interruption that would be posed by the
federal indictment and trial, Spangler sold 4.9% of Essential in March 2018 to a
third party. The $125,000 in proceeds from the sale were deposited in Essential’s
bank account. On March 2, 2018, Spangler assigned his remaining fifty-one
percent ownership interest in Essential to James (“the Assignment”). Spangler
states that he and James agreed she would hold the fifty-one percent interest he
transferred to her, make no distributions of profit from Essential, and, when the
federal legal issues resolved, re-convey the interest to Spangler. Spangler states
that he received no other consideration for the Assignment.

      Spangler was acquitted of the federal charges on February 19, 2020.
Afterwards, he requested co-owners in his various businesses, including James, to
re-convey his former interests to him. James died on February 22, 2021, from
complications from COVID-19 before she could re-convey fifty-one percent of
Essential to Spangler.

      Spangler filed a declaratory judgment lawsuit in May 2021 against the
executrix of James’s estate, seeking a declaration that the Assignment was void for
lack of consideration, that he owned fifty-one percent of Essential, and that James
and her estate had no interest in Essential. The executrix, appellee Liss, filed a

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motion for partial summary judgment asserting that (1) parol evidence was
inadmissible to contradict the Assignment’s recitation of “good and sufficient
consideration”; (2) parol evidence could not be used to prove a “side agreement”
that James had agreed to re-convey Spangler’s former interest in Essential to him;
and (3) that James had held an interest in Essential before the Assignment.1

       Liss set her motion for submission on September 14, 2021.2 Seven days
before the submission, Spangler timely filed a response to Liss’s motion for partial
summary judgment and a first amended petition. In his first amended petition,
Spangler added causes of action for breach of contract, conversion, fraud, and
constructive trust for breach of fiduciary duty. Liss did not amend her motion for
partial summary judgment to address these claims. Nonetheless, the trial court
granted a summary judgment on all claims. Thereafter, Spangler filed his second
through fifth amended petitions to add four other claims and a motion for new trial,
which the trial court denied.3 This appeal ensued.

                               II.    STANDARD OF REVIEW

       We review the granting of a summary judgment under a de novo standard of
review. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009). “[W]e apply the familiar standard of review appropriate for

       1
         Spangler’s counsel conceded that James owned an interest in Essential before the
Assignment and told the trial court that the request for declaratory relief thus contained a
typographical error.
       2
         The hearing or submission date determines the non-movant’s deadline to file a response
to the motion for summary judgment. Martin v. Martin, Martin & Richards, Inc., 989 S.W.2d
357, 359 (Tex. 1998). “Although Rule 166a(c) . . . calls for a hearing on a motion for summary
judgment, . . . unless required by the express language or the context of the particular rule, the
term ‘hearing’ does not necessarily contemplate either a personal appearance before the court or
an oral presentation to the court.” Id. at 359.
       3
         A motion for new trial is not a prerequisite for an appeal of a summary judgment
proceeding. Lee v. Braeburn Valley W. Civic Ass’n, 786 S.W.2d 262, 263 (Tex. 1990).

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each type of summary judgment, taking as true all evidence favorable to the
nonmovant, and indulging every reasonable inference and resolving any doubts in
the nonmovant’s favor.” Dias v. Goodman Mfg. Co., L.P., 214 S.W.3d 672, 675–
76 (Tex. App.—Houston [14th Dist.] 2007, pet. denied). The movant must state in
its motion the specific grounds upon which the summary judgment should be
granted. See Tex. R. Civ. P. 166a(c). To prevail on a traditional motion for
summary judgment, a movant must establish that no genuine issue of material fact
exists and that the movant is entitled to judgment as a matter of law. Id.; Mann
Frankfort, 289 S.W.3d at 848.

      After the movant facially establishes its right to summary judgment, the
burden shifts to the nonmovant to present a material fact issue that precludes
summary judgment. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d
671, 678 (Tex. 1979); Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex. App.—
Houston [14th Dist.] 2000, pet. denied). Evidence raises a genuine issue of
material fact if reasonable and fair-minded jurors could differ in their conclusions
in light of all of the summary judgment evidence. See Goodyear Tire & Rubber
Co. v. Mayes, 236 S.W.3d 754, 755–56 (Tex. 2007) (per curiam). When, as here,
the trial court’s order granting summary judgment does not specify the grounds
relied on for the ruling, the summary judgment will be affirmed if any of the
theories advanced are meritorious. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d
374, 380 (Tex. 1993); Olmstead v. Napoli, 383 S.W.3d 650, 652 (Tex. App.—
Houston [14th Dist.] 2012, no pet.).

                                 III.   ANALYSIS

      In his second issue, which is dispositive, Spangler asserts that the trial court
erred in granting Liss’s motion for partial summary judgment on his claims for
declaratory relief alleging (1) the Assignment was void for lack of consideration

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and (2) he owns fifty-one percent of Essential. Liss argues that Spangler cannot use
parol evidence to contradict the Assignment’s recitation of “good and valuable”
consideration or to establish a “side agreement” that differed from the
Assignment’s terms. Liss also argues that the Dead Man’s Rule prevents the trial
court from considering Spangler’s declaration about lack or failure of
consideration.

A.    CONSIDERATION & PAROL EVIDENCE

       Generally, a contract must be supported by consideration to be enforceable.
Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 659 (Tex. 2006).
“Consideration is a present exchange bargained for in return for a promise.” Roark
v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991). When an
instrument recites that consideration has been given, we presume that consideration
to be sufficient. McLernon v. Dynegy, Inc., 347 S.W.3d 315, 335 (Tex. App.—
Houston [14th Dist.] 2011, no pet.) “However, parol evidence is admissible to
show want or failure of consideration and establish the actual consideration given
for the instrument.” Id. (citing DeLuca v. Munzel, 673 S.W.2d 373, 376 (Tex.
App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.)).

      Liss argues that Spangler cannot use parol evidence to contradict the
Assignment’s recitation of “good and valuable” consideration. Liss likens the
Assignment to the contract in Lakeway Co. v. Leon Howard, Inc., in which the
Texas Supreme Court held that “[w]hen the consideration expressed in a writing is
contractual in nature, and not simply a recital of consideration already performed,
the parol evidence rule does apply.” 585 S.W.2d 660, 662 (Tex. 1979) (per
curiam). Unlike the Assignment between Spangler and James, the written contract
in Lakeway specified $18,000 in consideration. Id. at 661. The court in Lakeway
explained that a previous or simultaneous agreement to alter $18,000 to $23,000

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was in conflict with the written contract and not merely collateral to it. See id.

      In contrast, the recitation of consideration in the Assignment between
Spangler and James does not include a specific dollar amount. The Assignment
instead states that Spangler and James exchanged “good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,”
which is “simply a recital of consideration already performed” for which Lakeway
contemplates the admission of parol evidence. Id.; see Carrico v. Kondos, 111
S.W.3d 582, 586–87 (Tex. App.—Fort Worth 2003, pet denied) (addressing a
contract for “consideration of [$10] and other good and valuable consideration”
and concluding the “recital of acknowledgement of consideration is no more than a
statement of fact that may be contradicted by parol evidence”).

      Liss also contends that the parol evidence rule and related doctrine of merger
prevent evidence of a “side agreement” to re-convey Spangler’s interest. When
parties have entered into a valid, written, integrated contract, the parol evidence
rule precludes enforcement of any prior or contemporaneous agreement that
addresses the same subject matter and is inconsistent with the written contract.
West v. Quintanilla, 573 S.W.3d 237, 243 (Tex. 2019). An integrated contract is a
writing or writings constituting a final expression of one of more terms of an
agreement, and a completely integrated contract is a full and exclusive statement of
the terms of the agreement. Id. at 244 (citing Black’s Law Dictionary).

      However, the parol evidence rule does not bar evidence of consistent
collateral agreements, even when the two agreements address related subjects. See
id. at 247; see, e.g., ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867,
875–76 (Tex. 2010) (concluding parol evidence rule did not preclude parties’ oral
agreement that engineering firm would continue leasing office space as part of the
consideration for buyout of the engineering firm). Moreover, a trial court may

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consider parol evidence to determine if consideration exists “even though the
parties have reduced their agreement to a writing which appears to be a completely
integrated agreement.” Audubon Indem. Co. v. Custom Site-Prep, Inc., 358 S.W.3d
309, 316 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). Thus, it was proper
for the trial court to consider parol evidence to show lack or failure of
consideration for the Assignment. See McLernon, 347 S.W.3d at 335. In his
declaration, Spangler included the statement “I received no consideration for the
Assignment other than James’ agreement to reconvey my interests if I was
ultimately acquitted.” This is evidence about lack or failure of consideration, and,
taken in the light most favorable to the non-movant, raises a fact issue about
Spangler’s claims for declaratory relief.

B.    DEAD MAN’S RULE

      Liss next contends that the trial court was barred by Texas Rule of Evidence
601(b), the “Dead Man’s Rule,” from considering the statement in Spangler’s
declaration that he received no consideration for the Assignment other than
James’s agreement to reconvey the interest. The Dead Man’s Rule generally
prohibits a party from testifying about oral statements by a testator unless the
statements can be corroborated or are solicited by the opposing party. Tex. R. Evid.
601(b); Estate of Wright, 482 S.W.3d 650, 655 (Tex. App.—Houston [14th Dist.]
2015, pet. denied). Liss raised the Dead Man’s Rule in her objections to Spangler’s
summary judgment evidence, but there is no ruling in the record. An objection and
ruling in the trial court is a prerequisite to preserve this argument for appellate
review. See Tex. R. App. P. 33.1(a); Seim v. Allstate Tex. Lloyds, 551 S.W.3d 161,
164–66 (Tex. 2018); see also Wright, 482 S.W.3d at 656 (concluding that Dead
Man’s Rule had been waived); Fraga v. Drake, 276 S.W.3d 55, 61 (Tex. App.—El
Paso 2008, no pet.) (concluding that Dead Man’s Rule had been waived).

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       Finally, even if Liss could assert the Dead Man’s Rule on appeal without
having obtained a ruling in the trial court, the Dead Man’s Rule applies only to an
“oral statement by the testator.” Tex. R. of Evid. 601(b)(2). A portion of
Spangler’s declaration, stating that “I received no consideration for the
Assignment” is not an oral statement by the testator and would not be subject to the
Dead Man’s Rule.4

       We therefore conclude that (1) Spangler was permitted to introduce parol
evidence about lack or failure of consideration; (2) we do not address the Dead
Man’s Rule because it was not preserved for appellate review; (3) a portion of
Spangler’s declaration is not subject to the Dead Man’s Rule; and (4) Spangler’s
declaration raised a fact issue regarding his claim that “[t]he Assignment is void
for lack of consideration.”

C.     REMAINING ISSUES

       Next, we address the other grounds asserted in Liss’s motion for partial
summary judgment and Spangler’s remaining appellate issues regarding causes of
action he added in first through fifth amended petitions.

       Liss’s motion for partial summary judgment argued that “[b]ecause the

       4
          When the Dead Man’s Rule is applicable, a party may evade its application with
corroborating evidence. Fraga, 276 S.W.3d at 61. The corroboration need not be sufficient
standing alone but must tend to confirm and strengthen the testimony of the witness and show
the probability of its truth. See id.; Coleman v. Coleman, 170 S.W.3d 231, 239 (Tex. App.—
Dallas 2005, pet. denied). Spangler provided the deposition testimony of a witness, Josie Van, in
his motion for new trial. Van testified that Spangler sold his interest in Essential to James to
protect the company during the federal litigation. Van also testified James confirmed “in the
event that [Spangler] was exonerated from these charges, that they agreed that she would allow
him to buy his shares back.” Because we conclude that Spangler’s declaration raises a fact issue
that prevents summary judgment, we need not reach issues related to admissibility of Van’s
testimony or denial of Spangler’s motion for new trial. See Tex. R. App. P. 47.1; Lance v.
Robinson, 543 S.W.3d 723, 740 (Tex. 2018) (“Rule 47.1 requires only that the court of appeals
address issues necessary to dispose of the appeal.”).

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Assignment was supported by adequate consideration,” Spangler’s “second
requested declaration—that he owns 51% of Essential—also fails.” This ground
was expressly contingent on Liss establishing entitlement to summary judgment on
her first ground. We have concluded that Spangler raised a fact issue on Liss’s first
ground as to failure or lack of consideration. It thus follows that summary
judgment cannot be awarded on this second, contingent ground.

      In his remaining appellate issues, Spangler argues that the trial court erred in
granting summary judgment on eight claims he pleaded in amended petitions.
Spangler added four of the eight claims in his first amended petition—breach of
contract, conversion, fraud, and breach of fiduciary duty and constructive trust. A
party may amend his pleadings after a motion for summary judgment is filed until
seven days before the summary judgment hearing. See Tex. R. Civ. P. 63; Yeske v.
Piazza Del Arte, Inc., 513 S.W.3d 652, 671 (Tex. App.—Houston [14th Dist.]
2016, no pet.). Spangler timely filed the first amended petition seven days before
the summary judgment hearing. Liss did not amend her motion to address these
four new claims.

      Because a court’s authority to render a summary judgment depends on “the
issues expressly set out in the motion or in an answer or any other response,” see
Tex. R. Civ. P. 166a(c), a trial court cannot grant a summary judgment on grounds
that were not presented. See FDIC v. Lenk, 361 S.W.3d 602, 609 (Tex. 2012);
Bridgestone Lakes Cmty. Improvement Ass’n v. Bridgestone Lakes Dev. Co., 489
S.W.3d 118, 122 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). A movant
who does not amend or supplement her pending summary judgment motion to
address newly-added claims is generally not entitled to summary judgment on
those claims. See Blancett v. Lagniappe Ventures, Inc., 177 S.W.3d 584, 592 (Tex.
App.—Houston [14th Dist.] 2005, no pet.); Smith v. Atlantic Richfield Co., 927

                                          9
S.W.2d 85, 88 (Tex. App.—Houston [1st Dist.] 1996, writ denied).

       If a trial court grants a summary judgment on a claim not addressed in the
motion, then the trial court’s error is reversible. See Lehmann v. Har–Con Corp.,
39 S.W.3d 191, 200 (Tex. 2001); Bridgestone, 489 S.W.3d at 123. There are
limited exceptions to this under the harmless error rule. See G&H Towing Co. v.
Magee, 347 S.W.3d 293, 297–98 (Tex. 2011) (per curiam) (citing Tex. R. App. P.
44.1(a)). But such limited exceptions can be considered only when the trial court
correctly grants summary judgment on a ground raised in the motion. See Ineos
USA, LLC v. Elmgren, 505 S.W.3d 555, 566 (Tex. 2016) (refusing to expand the
harmless-error rule to an appeal in which the trial court erroneously granted
summary judgment on the grounds raised in the motion). A movant cannot be
denied summary judgment on its pleaded grounds but granted summary judgment
on an unpleaded ground. See id. Because we have concluded that the trial court
erred in granting summary judgment on the bases asserted in Liss’s motion, we
decline to analyze the harmless error exception for the four causes of action timely
pleaded in Spangler’s first amended petition. To the extent the trial court granted
summary judgment on the causes of action added in Spangler’s first amended
petition, this constitutes error.

       Finally, although Spangler complains on appeal of additional causes of
action he pleaded in his second through fifth amended petitions, these petitions
were filed after the submission on summary judgment. A trial court can consider
only the pleadings and proof on file at the time of the hearing on summary
judgment or filed after the hearing and before judgment with the permission of the
court. Leinen v. Buffington’s Bayou City Serv., 824 S.W.2d 682, 685 (Tex. App.—
Houston [14th Dist.] 1992, no writ). After submission, a party must obtain a
written order granting leave to file an amended petition. See Tex. R. Civ. P.

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166a(c); Hussong v. Schwan’s Sales Enters., 896 S.W.2d 320, 323 (Tex. App.—
Houston [1st Dist.] 1995, no writ). There is no such leave to file the second
through fifth amended petitions in the record. Thus, the trial court could have
considered only the pleadings and proof on file at the time of submission of the
summary judgment. See Hussong, 896 S.W.2d at 323. We do not consider
Spangler’s new claims raised in the second through fifth amended petitions in our
analysis.

                                IV.    CONCLUSION

      For the reasons stated above, we conclude that Spangler raised a fact issue
on his claims for declaratory relief precluding summary judgment. Further, Liss
did not move for summary judgment on the four additional causes of action
Spangler pleaded in his first amended petition; we conclude that harmless error
analysis cannot be extended to them. Because it was error for the trial court to
grant summary judgment on the claims for declaratory relief and the four
additional claims pleaded in the first amended petition, we reverse the trial court’s
order and remand to the trial court for further proceedings.

                                              /s/ Margaret "Meg" Poissant
                                                  Justice

Panel consists of Justices Wise, Zimmerer, and Poissant.

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