Court Opinion

ID: 9930536
Source: CourtListenerOpinion
Date Created: 2024-02-07 07:12:24.203883+00
Date Added: 2024-06-11T11:19:28.087311
License: Public Domain

Affirmed in part; Reversed and Remanded in part and Opinion Filed
February 2, 2024

                                       In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                               No. 05-23-00040-CV

                MATTHEW BOSWELL, Appellant
                             V.
               PAPPY’S PET LODGE GROUP, LLC,
   PAPPY’S FRANCHISING, LLC, AND WILLIAM KINDER, Appellees

               On Appeal from the 296th Judicial District Court
                            Collin County, Texas
                   Trial Court Cause No. 296-02877-2021

                         MEMORANDUM OPINION
                 Before Justices Carlyle, Goldstein, and Breedlove
                          Opinion by Justice Breedlove
      In this suit arising from a written agreement, the trial court granted summary

judgment for appellees Pappy’s Pet Lodge Group, LLC, Pappy’s Franchising, LLC,

and William J. Kinder. In four issues, appellant Matthew Boswell contends the trial

court erred because he raised genuine issues of material fact on his claims for breach

of contract, fraud, fraud by nondisclosure, and promissory estoppel. He also argues

he raised fact issues regarding limitations, waiver, performance of the contract, and
repudiation. We affirm the trial court’s judgment in part and reverse and remand in

part.

                                            BACKGROUND

          On September 27, 2011, appellant Matthew “Red” Boswell as “Franchise

Consultant” and appellee William “Bill” Kinder as “Pappy’s Pet Lodge Owner”

signed a contract “for Red to handle Pappy’s franchise opportunity analysis,

construction and optimization.”1 The terms, drafted by Boswell, were as follows:

           Either party can end the relationship at any time

           I [Boswell] report back to Bill every week to go over the past week’s
            results and the coming week’s focus

           Paid bi-weekly in advance (or whatever frequency Bill prefers)

           Travel and other standard misc expenses would be reimbursed bi-
            weekly at 50 cents per mile . . .

           Compensation:

                  o $30 per hour up to 20 hours per week. Bill can change this
                    weekly max at any time. 20 hours x 2 weeks + 30 miles =
                    $600 x 2 +15 = 1,215.00

                  o In exchange for this 92% rate reduction off of my standard
                    hourly rate, I receive .0125 (1.25%) of franchised locations
                    gross revenue per month

                  o Once Pappy’s sells 10 or more locations that percentage
                    would bump to 1.67%

                  o Once Pappy’s sells 50 it would bump to 2%

    1
        Boswell refers to the agreement as the “Franchise Consulting Agreement” or FCA; we will do so as
well.
                                                   –2–
            o If we never launch or never sell at least 6 franchises (for $20k
              or more each) then if/when Pappy’s majority ownership
              changes hands I would receive reimbursement compensation
              for the hours that I have worked simply computed at the
              difference between $250/hr (my standard rate) and $30/hr
              (the drastically reduced rate for this project) less $100 (my
              punishment for not creating a more attractive opportunity).
              Each week’s hours approved in advance by Bill. So, $120 per
              hour is the “Worst Case Scenario” reimbursement amount.
              Example: 200 hrs at $120 = $24,000 at majority ownership
              transfer closing table.

       I would be responsible for creating and paying for formalized
        agreement which would be delivered to Bill once this project is well
        under way.

       Checks made payable to Matt Boswell

       This written agreement is exactly what we verbally agreed to on the
        phone one week ago. No details have been left out. I have already
        invested 10 hours into this project and will now begin investing up
        to 20 more per week into it until told otherwise by Bill in writing
        (email is fine).

      The parties agree that Pappy’s Pet Lodge Group paid Boswell a total of

$2,962.50 on the FCA between September 2011 and April 2012, and that no further

amounts are due for Boswell’s services during that time period. The parties also

agree that Boswell stopped providing services under the FCA after April 2012,

because Kinder told Boswell that Pappy’s was not going to pursue its plans to

franchise the business. The parties disagree about the content and effect of the

conversation, however. Kinder testified that “we stopped”; “we were going to

extinguish” Boswell’s relationship with Pappy’s “and move on.” Boswell

acknowledged that Kinder told him that Pappy’s was “not going to be franchising

                                       –3–
now.” But Boswell testified he understood this to mean that only the hourly work

would stop: “He had me stop my hourly working. But the agreement was in no way

terminated.”

      In 2019, Boswell learned that at least one Pappy’s franchise had been sold two

years earlier. Boswell demanded royalties under the FCA, and filed this suit in 2021

when he did not receive them. In his operative petition, Boswell alleged claims

against Pappy’s Pet Lodge Group, LLC, Pappy’s Franchising, LLC, and Kinder for

breach of the FCA, fraud, fraud by nondisclosure, and promissory estoppel.

      The defendants (together, “Pappy’s”) answered and asserted numerous

affirmative defenses. Pappy’s then filed traditional and no-evidence motions for

summary judgment on all of Boswell’s claims. In its no-evidence motion, Pappy’s

alleged:

       For Boswell’s breach of contract claim, there was no evidence that Boswell
        performed or tendered performance, no evidence of a breach by Pappy’s,
        and no evidence of damages as a result of any breach;

       For Boswell’s fraud claim, there was no duty to disclose the opening of
        any franchise or the gross monthly revenues from any franchise; and

       For Boswell’s claim of fraud by nondisclosure, there was no fiduciary or
        other relationship between the parties.

In its traditional motion, Pappy’s alleged:

       Pappy’s alleged breach occurred after the FCA’s termination, so there “is
        no valid, enforceable contract on which Plaintiff can sue”;

       If the FCA was not terminated, Boswell committed a prior material breach
        by failing to provide consulting services after 2012;

                                         –4–
       If the FCA was not terminated, Boswell’s breach of contract claim is
        barred by the four-year statute of limitations;

       Pappy’s is entitled to summary judgment on its affirmative defenses of
        repudiation/prior material breach and waiver;

       Boswell’s fraud and fraudulent inducement claims are not viable in light
        of his breach of contract claim;

       Boswell’s promissory estoppel claim is barred under the express contract
        doctrine and by the four-year statute of limitations.

      The trial court granted Pappy’s motions in their entirety and rendered

judgment. This appeal followed.

                       ISSUES AND STANDARDS OF REVIEW

      Boswell challenges the trial court’s summary judgment in four issues. In his

first issue, he contends he produced sufficient evidence to raise a fact issue

precluding summary judgment on his breach of contract claim. In his second and

third issues, he contends he produced sufficient evidence to raise fact issues on his

fraud, fraud by nondisclosure, and promissory estoppel claims in response to

appellees’ traditional and no-evidence motions. In his fourth issue, he contends he

raised genuine issues of material fact regarding whether the parties terminated the

FCA, his performance, limitations, and the absence of any repudiation, waiver, or

material breach.

      We review an order granting summary judgment de novo. Durham v.

Children’s Med. Ctr. of Dallas, 488 S.W.3d 485, 489 (Tex. App.—Dallas 2016, pet.

denied). When we review a traditional summary judgment in favor of a defendant,

                                        –5–
we determine whether the defendant conclusively disproved an element of the

plaintiff’s claim or conclusively proved every element of an affirmative defense.

Alexander v. Wilmington Sav. Fund Soc’y, 555 S.W.3d 297, 299 (Tex. App.—Dallas

2018, no pet.). We take evidence favorable to the nonmovant as true, and we indulge

every reasonable inference and resolve every doubt in the nonmovant’s favor. Id. A

matter is conclusively established if ordinary minds could not differ as to the

conclusion to be drawn from the evidence. Id. When, as in this case, the summary

judgment does not specify the grounds on which it was granted, we affirm if any

ground advanced in the motion is meritorious. See id.

      When both no-evidence and traditional summary judgment motions are filed,

we generally address the no-evidence motion first. See Ford Motor Co. v. Ridgway,

135 S.W.3d 598, 600 (Tex. 2004). If the challenge to the order granting the no-

evidence summary judgment motion fails, we need not also consider the traditional

motion. See id.

      A movant is entitled to a no-evidence summary judgment if, “[a]fter adequate

time for discovery . . . there is no evidence of one or more essential elements of a

claim or defense on which an adverse party would have the burden of proof at trial.”

TEX. R. CIV. P. 166a(i). The trial court “must grant” the motion unless the non-

movant produces summary judgment evidence to raise a genuine issue of material

fact on the issues the movant raised. Id. “A genuine issue of material fact exists if

more than a scintilla of evidence establishing the existence of the challenged element

                                         –6–
is produced.” Ford Motor Co., 135 S.W.3d at 600. “More than a scintilla of evidence

exists when the evidence rises to a level that would enable reasonable and fair-

minded people to differ in their conclusions.” King Ranch, Inc. v. Chapman, 118

S.W.3d 742, 751 (Tex. 2003) (internal quotation omitted).

      A party moving for traditional summary judgment has the burden of

establishing that no material fact issue exists and the movant is entitled to judgment

as a matter of law. TEX. R. CIV. P. 166a(c). In reviewing the granting of a traditional

summary judgment, we consider all the evidence in the light most favorable to the

non-movant, indulging all reasonable inferences in favor of the non-movant, and

determine whether the movant proved that there were no genuine issues of material

fact and that it was entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt.

Co., 690 S.W.2d 546, 548–49 (Tex.1985).

                                     DISCUSSION

      We first address Boswell’s first and fourth issues that challenge the trial

court’s judgment on his contract claims. We then turn to Boswell’s second and third

issues that challenge the trial court’s judgment on his fraud and promissory estoppel

claims.

1.    Contract issues

      A.     No-evidence motion on performance, breach, and damages

      “A successful breach of contract claim requires proof of the following

elements: (1) a valid contract; (2) performance or tendered performance by the

                                         –7–
plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by

the plaintiff as a result of that breach.” Petras v. Criswell, 248 S.W.3d 471, 477 (Tex.

App.—Dallas 2008, no pet.). Pappy’s no-evidence motion for summary judgment

challenged (1) whether Boswell performed or tendered performance, (2) whether

Pappy’s breached the FCA, and (3) whether Boswell was damaged by the breach.

We conclude that genuine issues of material fact exist on each of these matters. See

TEX. R. CIV. P. 166a(c).

      Regarding Boswell’s performance, the summary judgment evidence reflects

the parties’ disagreement about what services Boswell was required to perform

under the FCA. The FCA states only that Boswell will “handle Pappy’s franchise

opportunity analysis, construction and optimization.” Kinder testified that Boswell

was required to “sell franchises,” while Boswell testified to his understanding that

he, personally, did not have to sell any franchises under the agreement in order to

receive the designated percentages of gross revenue from the franchised locations.

Further, although the FCA required Boswell to create and pay for a “formalized

agreement,” Boswell testified he did not do so because Kinder told him it was not

necessary until “later when it comes time to sell.” The evidence shows that Boswell

did provide some services under the FCA, was paid for them, and stopped his hourly

work at Kinder’s request. We conclude Boswell raised a genuine issue of material

fact regarding his performance. See Petras, 248 S.W.3d at 477.

                                          –8–
      Regarding Pappy’s breach, it is undisputed that Pappy’s did not pay

compensation to Boswell when it sold franchises. Pappy’s argues the FCA was

terminated years before any franchises were sold, and the FCA provides that

“[e]ither party can end the relationship at any time.” Pappy’s concludes it owed

nothing more to Boswell under the FCA. Boswell, however, testified that the

“relationship” meant only “[t]he hourly relationship, the consulting hourly.” Boswell

thus argues that “the key term in the FCA, the ‘relationship’ between the Parties is

not defined and thus subject to interpretation.” Boswell also contends that a fact issue

exists “as to whether the FCA was paused, as Boswell claims, or terminated, as

Appellees claim.” The parties offered conflicting testimony on this point, and the

summary judgment record does not include contemporaneous documents to support

either party’s understanding. The FCA did not include any time limit for the parties

to carry out their responsibilities. We conclude Boswell raised a genuine issue of

material fact whether Pappy’s breached the FCA. See Petras, 248 S.W.3d at 477.

      Regarding damages, the undisputed evidence shows that after Boswell and

Kinder signed the FCA, Pappy’s received and paid for Boswell’s services at the

discounted rate under the FCA. It is also undisputed that Pappy’s “sold at least two

franchises,” as Boswell alleged in his operative petition, but did not pay any

commission to Boswell. We conclude Boswell raised a genuine issue of material fact

whether he suffered damages from Pappy’s alleged breach of the FCA.

                                          –9–
      Because Boswell raised genuine issues of material fact on his claim for breach

of contract, we conclude the trial court erred by granting Pappy’s no-evidence

motion for summary judgment on this claim. We sustain Boswell’s first issue.

      B.     Limitations, repudiation, and waiver

      In its traditional motion, Pappy’s sought summary judgment on its affirmative

defenses of repudiation/prior material breach, waiver, and limitations, and contended

that because the alleged breach occurred after the FCA’s termination, there was no

valid, enforceable contract on which Boswell could sue. These defenses are

premised on Boswell’s inaction between 2012, when he ceased providing services

to Pappy’s, and 2019, when he learned that Pappy’s had sold a franchise. In his

fourth issue, Boswell contends he raised genuine issues of material fact regarding

his performance of his contractual obligations, the FCA’s termination and

limitations, and the absence of any repudiation, waiver, or material breach.

      We first conclude that Boswell raised a genuine issue of material fact on

whether his claims are barred by limitations. There is no term or expiration date

stated in the FCA, and the parties offered conflicting evidence about the date on

which limitations began to run.

      Pappy’s argues limitations began to run in 2012 when it contends is when the

FCA was terminated. Kinder testified that in 2012, he and Boswell “agreed that we

wouldn’t go forward.” Kinder explained that “we were not even close to being able

                                        –10–
to do franchising at that time,” and “the whole purpose of [Boswell’s] existence in

our world was to sell franchises. That wasn’t happening, and so we stopped.”

       Boswell, in contrast, argues that limitations did not begin to run until Pappy’s

failed to pay his monthly commissions after it sold a franchise, which he contends

was in breach of the FCA. Boswell testified that under the FCA, he was not required

to sell franchises. He testified that the FCA has never been terminated; that although

Kinder “had me stop my hourly working,” “the agreement was in no way

terminated.” He testified that his obligation under the FCA to “report back to Bill

every week” was no longer in effect, but the FCA and the obligation to pay him

when Pappy’s sold franchises remained in effect.2 Although Boswell concedes he

did not provide any services under the FCA after 2012, he argues he raised a genuine

issue of material fact on whether limitations bars some or all of his claims. We agree.

       At trial, if Boswell carries his burden to prove that the FCA required Pappy’s

to pay him compensation when the franchises were sold—a question not presented

in this appeal—then his suit filed on June 1, 2021, was within four years of at least

some of the monthly payments due. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 16.004(a)(3) (four-year limitations period for actions for debt). “When recovery is

sought on an obligation payable in installments, a separate cause of action accrues

for each missed payment and a separate limitations period runs against each

   2
     Boswell also argues that in any event, termination of the FCA would not affect his claim for
“reimbursement compensation” for the work he performed.
                                             –11–
installment from the time it becomes due.” Barnes v. LPP Mortg., Ltd. 358 S.W.3d

301, 307 (Tex. App.—Dallas 2011, pet. denied). Accordingly, we conclude that

Boswell raised a genuine issue of material fact on Pappy’s limitations defense.

       Turning to Pappy’s contentions that Boswell’s claims are barred by prior

material breach, repudiation, and waiver, Pappy’s argued in its summary judgment

motion that “Boswell did not even contact Kinder, much less perform as a consultant

or sell franchises, for more than seven years.” Pappy’s argued that Boswell did not

sell either of Pappy’s two franchises, did not fulfill his obligation to create and pay

for a formalized agreement, and failed to report to Kinder on a weekly basis as the

FCA required. Pappy’s also contended that “if Boswell ever had the right to claim

the commission component of his compensation after April 2012, Boswell’s conduct

shows the intentional relinquishment of that right” by his failure to contact Kinder

for almost seven years, lack of “effort to keep up with Defendants or even learn if

Defendants had opened any franchise locations,” and failure “to retain any proof of

the hours he had worked for Defendants.” Pappy’s argued that this conduct

demonstrated Boswell’s “actual belief that the Agreement had in fact been mutually

terminated and was no longer in force, or alternatively demonstrating his intentional

relinquishment of any right to claim commissions” or other compensation under the

FCA.

       Boswell, however, testified that his inactivity under the FCA was in

compliance with a request from Kinder. In his summary judgment response, Boswell

                                        –12–
argued that he “quickly demanded Kinder abide by the terms of the [FCA] after

learning of its breach, repeatedly ask[ing] Kinder to reconsider and do the right

thing,” and only filed suit “as a last resort.” Boswell also contended that Pappy’s

evidence of his alleged prior breaches of the FCA only raised fact questions that

could not be resolved by summary judgment.

      Concluding that Boswell raised genuine issues of material fact on Pappy’s

affirmative defenses to Boswell’s claim for breach of contract, we sustain Boswell’s

fourth issue.

2.    Promissory estoppel and fraud claims

      Boswell’s second and third issues challenge the trial court’s summary

judgment on his promissory estoppel and fraud claims.

      A.        Promissory estoppel

      For his claim of promissory estoppel, Boswell pleaded that Pappy’s promised

to pay royalties, he relied on that promise, Pappy’s knew or should have known of

his reliance, and he provided over 100 hours of work in reliance on the promise.

Pappy’s sought summary judgment on the ground that the “alleged breach is covered

by an express contract.”

      We conclude the trial court did not err by granting summary judgment for

Pappy’s on this claim. See Guar. Bank v. Lone Star Life Ins. Co., 568 S.W.2d 431,

434 (Tex. App.—Dallas 1978, writ ref’d n.r.e.) (“If the promise in question is a part

of a valid contract, the promisee cannot disregard the contract and sue for reliance

                                       –13–
damage under the doctrine of promissory estoppel.”). Further, Boswell’s promissory

estoppel claim is barred by the economic loss rule. “The economic loss rule generally

precludes recovery in tort for economic losses resulting from a party’s failure to

perform under a contract when the harm consists only of the economic loss of a

contractual expectancy.” Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445

S.W.3d 716, 718 (Tex. 2014) (per curiam). As damages for his promissory estoppel

claim, Boswell pleaded only for “the accrual of royalties owed to Plaintiff.”

Boswell’s claim to these royalties arises only from the FCA. Accordingly, we

overrule this portion of Boswell’s second and third issues.

      B.     Fraud and fraud by non-disclosure

      Further, we affirm the summary judgment on Boswell’s common law fraud

and fraud by non-disclosure claims because the damages Boswell seeks are amounts

he claims are due under the FTA. See Transcontinental Realty Investors, Inc. v. John

T. Lupton Trust, 286 S.W.3d 635, 647 (Tex. App.—Dallas 2009, no pet.) (where

plaintiff sought benefit-of-the-bargain damages, its fraud claim failed as a matter of

law). In his operative petition, Boswell alleged that “Defendants promised Plaintiff

that they would pay Plaintiff a royalty amount based on the monthly gross revenue

for each franchised location,” and described his injury as “Defendants’ refusal to pay

Plaintiff royalties accruing [or] otherwise owing to Plaintiff.” Accordingly,

Boswell’s fraud and fraud by non-disclosure claims fail. See id.

                                        –14–
      C.     Fraudulent inducement

      Boswell’s fraudulent inducement claim is different. Pappy’s moved for

summary judgment only on the ground that the fraudulent inducement claim is “not

viable in light of Plaintiff’s breach of contract claim.” However, “the legal duty not

to fraudulently procure a contract is separate and independent from the duties

established by the contract itself.” Formosa Plastics Corp. USA v. Presidio Eng’rs

& Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1997). “A party states a tort claim

when the duty allegedly breached is independent of the contractual undertaking and

the harm suffered is not merely the economic loss of a contractual benefit.”

Chapman Custom Homes, Inc., 445 S.W.3d at 718.

      In his summary judgment response, Boswell cited Kinder’s testimony that

Pappy’s never intended to perform under the FCA. Kinder testified that the FCA was

“onerous” and “we would never accept . . . in a legal document” the paragraph

awarding Boswell 1.25 percent of franchised locations’ gross revenue per month.

Kinder explained that “[o]ur intent was to get a fully negotiated contract of

employment” with Boswell as a director of franchising on a commission basis, but

“[w]e never got that far.” Boswell argued that Pappy’s “intention all along was to

renegotiate the [FCA] and deprive [Boswell] of the benefit of this bargain.” We

conclude that Pappy’s did not establish its right to judgment as a matter of law on

Boswell’s fraudulent inducement claim. See id.; see also Fuller v. Le Brun, 616

S.W.3d 31, 44–45 (Tex. App.—Houston [14th Dist.] 2020, pet. denied) (fraudulent

                                        –15–
inducement claim was not barred by the economic loss rule where the claim arose

from misrepresentations made before the parties entered into their contract).

      D. Conclusion on fraud and estoppel issues

      We sustain the portion of Boswell’s second and third issues that challenge the

trial court’s summary judgment on his fraudulent inducement claim. In all other

respects, we overrule Boswell’s second and third issues.

                                   CONCLUSION

      We affirm the trial court’s judgment in part, reverse in part, and remand the

case to the trial court for resolution of Boswell’s claims for breach of contract and

fraud in the inducement.

230040f.p05                                /Maricela Breedlove/
                                           MARICELA BREEDLOVE
                                           JUSTICE

                                        –16–
                             Court of Appeals
                      Fifth District of Texas at Dallas
                                   JUDGMENT

 MATTHEW BOSWELL, Appellant                    On Appeal from the 296th Judicial
                                               District Court, Collin County, Texas
 No. 05-23-00040-CV          V.                Trial Court Cause No. 296-02877-
                                               2021.
 PAPPY’S PET LODGE GROUP,                      Opinion delivered by Justice
 LLC, PAPPY’S FRANCHISING,                     Breedlove. Justices Carlyle and
 LLC, AND WILLIAM KINDER,                      Goldstein participating.
 Appellee

        In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED in part and REVERSED in part. We REVERSE that portion
of the trial court’s judgment granting summary judgment on appellant Matthew
Boswell’s claims for breach of contract and fraud in the inducement. In all other
respects, the trial court’s judgment is AFFIRMED. We REMAND this cause to the
trial court for further proceedings consistent with the opinion.

      It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 2nd day of February, 2024.

                                        –17–