Court Opinion

ID: 3111416
Source: CourtListenerOpinion
Date Created: 2015-10-16 06:55:40.963133+00
Date Added: 2024-06-11T10:17:15.004114
License: Public Domain

Affirm in part; Reverse and Render in part; Opinion Filed April 30, 2013.

                                         S In The
                                     Court of Appeals
                              Fifth District of Texas at Dallas

                                      No. 05-11-01519-CV

                          PAUL MICHAEL LEIGHTON, Appellant
                                        V.
                            ELIZABETH REBELES, Appellee

                       On Appeal from the 14th Judicial District Court
                                   Dallas County, Texas
                            Trial Court Cause No. 08-11357-A

                                          OPINION
                            Before Justices Francis, Lang, and Evans
                                   Opinion by Justice Evans
       Paul Michael Leighton appeals the trial court’s judgment declaring that he and Elizabeth

Rebeles formed a general partnership and dividing the partnership assets between them.

Specifically, Leighton challenges the jury’s finding that Rebeles did not release her claim to the

partnership assets at issue. Leighton further challenges the trial court’s entry of judgment

notwithstanding the verdict on his claim against Rebeles for breach of an oral contract. After

examining the record on appeal, we conclude there was sufficient evidence to support the jury’s

finding that Rebeles did not release her claim to the assets. We further conclude the trial court

erred in rendering judgment in favor of Rebeles on Leighton’s breach of contract claim.

Accordingly, we reverse the portion of the trial court’s judgment ordering that Leighton take

nothing by his breach of contract claim and render judgment that he recover $31,000 in damages

along with postjudgment interest.     We further render judgment that Leighton recover his
attorney’s fees as stipulated in the court below. In all other respects, the trial court’s judgment is

affirmed.

                                         BACKGROUND

       Paul Michael Leighton and Elizabeth Rebeles met in Reno, Nevada and began a

relationship. In 1984, Leighton moved to Dallas and Rebeles followed several months later.

Once they were in Dallas, the two began living together, filing joint tax returns, and purchasing

property as husband and wife. Rebeles believed they had entered into a common law marriage.

       Shortly after Rebeles moved to Dallas, she and Leighton began operating a sand and

gravel business together. Leighton handled the operations and finances, while Rebeles managed

the administrative and customer relations aspects of the business.           Together, Rebeles and

Leighton purchased two properties that they operated as Paul’s Pit Sand and Gravel and Hutchins

Sand & Gravel. Both parties signed as debtors for loans and credit sales made to the businesses.

The proceeds from the operations were deposited into joint checking accounts that served as both

their business and personal bank accounts. Neither Rebeles nor Leighton drew a salary, but

instead paid for their personal matters from the joint accounts.

       In 2006, Rebeles filed for a divorce from Leighton. Leighton filed a counter-petition

asserting that there was no marriage but, in the alternative, asked the court to partition the

property he and Rebeles had acquired during the time they lived together. In August 2006,

Rebeles discovered there was no record of her divorce from Paul Rebeles, the man to whom she

had been married before her alleged common law marriage to Leighton. Because Rebeles could

not prove that she had divorced her previous husband, she and Leighton decided to non-suit their

divorce case.

                                                 –2–
          To facilitate their separation, Leighton and Rebeles signed an agreement dated August

26, 2006. 1 The agreement stated,

          Let it be known that for $150,000.00 Elizabeth Rebeles Leighton . . . agrees to
          relinquish all past, present, and future interest in Paul’s Pit Sand and Gravel, and
          in Hutchins Sand & Gravel and any dealings by Paul M. Leighton.

Rebeles testified at trial that the money was intended to allow her to run her own business and

she would “bow out” of Leighton’s operation of Paul’s Pit Sand and Gravel and Hutchins Sand

& Gravel. Leighton testified that the $150,000 was part of a “severance package” to allow

Rebeles to go out on her own. Leighton acknowledged at trial that the agreement did not

partition the two properties he and Rebeles owned jointly and on which he mined and sold

material for Paul’s Pit and Hutchins Sand & Gravel. Accordingly, he and Rebeles met with an

attorney who drew up documents by which Rebeles would transfer her interest in one of the

properties to Leighton and Leighton would transfer his interest in the other property to her. After

the documents were created, however, Leighton refused to sign them.

          Shortly after signing the August 26 contract, Leighton and Rebeles entered into an oral

agreement whereby Leighton would sell sand, gravel, and other materials from properties he

leased mixed with materials from one of the properties he owned with Rebeles. Rebeles agreed

to perform the billing and clerical work through her separate company, American Materials, in

exchange for one-third of the profits from the sales. Eventually, a dispute arose between the two

about the amount of money Rebeles owed Leighton as his share of the profits.

          Rebeles brought this suit alleging, among other things, that she and Leighton had formed

a partnership during the time they lived together and requested the trial court to supervise a

winding up of the partnership business including a division of the partnership assets. Leighton

responded to the suit asserting affirmative defenses including the defense of release. In addition,

   1
       The notarization indicates that the agreement was not signed by the parties until September 5, 2006.

                                                                      –3–
Leighton counterclaimed for the money he alleged was owed to him under his oral contract with

Rebeles to sell sand and gravel through American Materials.

          The case was tried to a jury. The jury found that Leighton and Rebeles formed a

partnership in 1984 and that an event requiring a winding up of the partnership occurred in

August or September of 2006. The jury further found that Rebeles did not withdraw from the

partnership, nor did she release her claim in the partnership assets. Finally, the jury found that

Rebeles breached her oral contract with Leighton and that Leighton was entitled to $31,000 in

damages.

          Both Leighton and Rebeles filed motions challenging the jury’s findings. Leighton asked

the court to disregard the jury’s findings on the partnership issues because, among other things,

he argued the August 26 contract constituted a release of Rebeles’s claims to the partnership

assets. Rebeles asked the trial court to hold that Leighton take nothing by his breach of contract

claim because she argued that claim was “subsumed” in the jury’s partnership findings. Rebeles

contended that the subject matter of the contract was part of the partnership business and had to

be treated as such. The trial court determined, in accordance with the jury’s findings, that

Rebeles and Leighton had formed a general partnership.                                Then, in protracted post-verdict

proceedings punctuated by four interlocutory orders, some of which were appealed, 2 the court

wound-up the partnership and divided the partnership assets between them. The trial court

concluded the case by incorporating its rulings on the verdict and post-verdict winding-up of the

partnership in a final judgment, including disregarding the jury’s finding on Leighton’s breach of

contract claim and ordering that he take nothing by his counterclaim. Leighton brings this

appeal.

     2
       See Leighton v. Rebeles, 343 S.W.3d 270 (Tex. App.—Dallas 2011, no pet.); Leighton v. Rebeles, 05-11-00717-CV, 2012 WL 438914
(Tex. App.—Dallas Feb. 10, 2012, no pet.)

                                                               –4–
                                              ANALYSIS

I. Effect of the August 26 Contract

       In his first point of error, Leighton contends that Rebeles released any claim she had to

the alleged partnership assets by the agreement she signed dated August 26, 2006. Leighton

does not challenge the jury’s finding that a partnership existed. He argues only that the August

26 contract is unambiguous and, by its terms, Rebeles released all interest she held in the

partnership as a matter of law. Alternatively, Leighton argues there is legally and factually

insufficient evidence to support the jury’s adverse verdict that the agreement did not constitute a

release of Rebeles’s partnership interest. Rebeles responds that nothing in the language of the

contract demonstrates her intent to relinquish her claim to her share of the partnership assets and

there was legally and factually sufficient evidence for the jury to conclude that she had not

released her claim.

       A release is a contract governed by the rules of contract construction. See Williams v.

Glash, 789 S.W.2d 261, 264 (Tex. 1990). In construing a written contract, our primary concern

is to ascertain the true intentions of the parties as expressed in the language of the agreement.

See Stroop v. Northern Cnty. Mut. Ins. Co., 133 S.W.3d 844, 851 (Tex. App.—Dallas 2004, pet.

denied). Language should be given its plain grammatical meaning unless it definitely appears

that the intention of the parties would thereby be defeated. See Reilly v. Rangers Mgmt., Inc.,

727 S.W.2d 527, 529 (Tex. 1987).        A court should construe a contract from a utilitarian

standpoint, bearing in mind the particular business activity sought to be served. Id. at 530. We

need not embrace strained rules of construction that would avoid ambiguity at all costs. Id.. We

must avoid, when possible and proper, construing a contract in such a way that it is

unreasonable, inequitable, and oppressive. Id. We will not declare a forfeiture unless the

language of the contract compels that result because it cannot be construed any other way. Id

                                               –5–
        If a contract can be given a certain or definite legal meaning, it is not ambiguous and

should be construed as a matter of law. See El Paso Field Services, L.P. v. MasTec N. Am., Inc.,

389 S.W.3d 802, 806 (Tex. 2012). A contract is ambiguous if it is susceptible to more than one

reasonable interpretation. Id. If a contract is ambiguous, a fact issue is created on the parties’

intent. Id.

        The contract at issue is a single sentence stating that, in exchange for $150,000, Rebeles

agrees to “relinquish all past, present, and future interest” in the two businesses that were

operated by the partnership. Leighton contends that, as a matter of law, the August 26 contract

released all of Rebeles’s claims to the partnership assets. However, the agreement only names

the businesses being operated by the partnership and makes no reference to the partnership itself.

Leighton has conceded, and the evidence shows, that neither he nor Rebeles believed the contract

had any effect on Rebeles’s interest in the land they owned jointly and on which they operated

the partnership businesses named in the release. As the businesses were mining operations, the

land constituted a substantial portion of the partnership’s assets. Both parties presented parol

evidence at trial as to their intent and the meaning of the language in the contract, thereby

essentially treating the contract as ambiguous. Because the language of the contract does not

identify the partnership or the partnership’s relationship to the businesses named, and neither

party understood the contract to resolve ownership of at least some of the partnership’s

significant assets, we conclude the contract is ambiguous and does not clearly evidence an intent

that Rebeles surrender her interest in the partnership itself or all of the partnership’s assets.

        Having concluded the contract is ambiguous, we must now determine whether there is

legally and factually sufficient evidence to support the jury’s finding that the contract was not

intended as a release of Rebeles’s claim.         In determining whether the evidence is legally

sufficient, we consider whether the evidence at trial would enable reasonable and fair-minded

                                                  –6–
people to reach the verdict under review crediting favorable evidence to the verdict if reasonable

jurors could, and disregarding contrary evidence unless reasonable jurors could not. City of

Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Anything more than a scintilla of evidence

is legally sufficient to support a challenged finding. Catalina v. Blasdel, 881 S.W.2d 295, 297

(Tex.1994). In reviewing the factual sufficiency of evidence, we review all the evidence in

support of and against the trial court's finding and will set aside the finding only if the evidence

is so weak or if the finding is so against the great weight and preponderance of the evidence that

it is clearly wrong and unjust. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).

For both analyses, we bear in mind that, “[j]urors are the sole judges of the credibility of the

witnesses and the weight to give their testimony.” Thota v. Young, 366 S.W.3d 678, 695 (Tex.

2012) (quoting City of Keller, 168 S.W.3d at 819).

       The evidence before the jury included testimony that Leighton and Rebeles intended the

contract as a means of distancing themselves in their business activities after the deterioration of

their personal relationship.   Rebeles testified that, at the time she signed the contract, she

understood it would provide her with money to operate American Materials in exchange for

relinquishing her involvement in Paul’s Pit and Hutchins Sand & Gravel. She also understood

that she would have a separate bank account for American Materials and would no longer

receive income from the businesses operated by Leighton. Rebeles stated that the $150,000

represented only a portion of her and Leighton’s attempt to separate their business activities and

that she requested some of the other partnership assets, such as heavy equipment and a deed to

one of the properties, to allow her to operate independently.

         Leighton also testified that the $150,000 was intended to allow Rebeles to start her own

business. He viewed the $150,000 as a “severance package” that terminated her employment

with Paul’s Pit and Hutchins Sand & Gravel. As noted above, neither party believed the contract

                                                –7–
had any effect on their joint ownership of the land and minerals that formed the basis of the

partnership businesses. Leighton acknowledged that he refused to sign the paperwork that would

have separated their interests in those properties.

       Based on the testimony of the parties, we conclude there is legally and factually sufficient

evidence for the jury to find that the August 26 contract was not intended as a release of

Rebeles’s claim to the partnership assets.       The jury could have reasonably interpreted the

contract as merely the first step in the attempted separation of the partners’ business dealings as

Rebeles testified. We resolve Leighton’s first issue against him.

II. Trial Court’s Disregard of Jury Finding

       In his second issue, Leighton contends the trial court erred in disregarding the jury’s

finding in his favor on his breach of contract claim. Rebeles moved the court to disregard the

finding on the ground that it was “subsumed” by, and irreconcilable with, the jury’s partnership

finding.    In essence, Rebeles contends that the jury’s partnership finding necessarily

encompassed her and Leighton’s continued business relations after the August 26 contract

including the oral agreement for mining one of the properties billed through American Materials,

Rebeles’s separately managed business. Because such activity was part of the partnership’s

business, Rebeles reasons, it could not constitute a separate contract subject to breach. Leighton

argues the breach of contract finding is easily reconcilable with the partnership finding in that the

jury could have concluded that the agreement was made outside the partnership. We agree.

       A trial court has the duty to harmonize the jury’s findings whenever possible, and it may

not strike answers because of an alleged conflict if there is any reasonable basis on which they

can be reconciled. See Beltran v. Brookshire Grocery Co., 358 S.W.3d 263, 268 (Tex. App.—

Dallas 2011, pet. denied). Every finding is of equal importance and one finding cannot be varied

by the interpretation of another finding of equal dignity. See Hancock v. Sammons, 267 S.W.2d

                                                 –8–
252, 257 (Tex. App.—Fort Worth 1954, writ ref’d n.r.e.). A jury finding may not be disregarded

unless it is unsupported by the evidence or the issue is immaterial. See Spencer v. Eagle Star

Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994).

        Here, Rebeles does not contend, and the record does not show, that the jury’s finding in

favor of Leighton on his breach of contract claim was either unsupported by the evidence or

immaterial. Furthermore, the finding that Rebeles breached the oral agreement does not conflict

with the finding that Rebeles and Leighton formed a partnership. The jury could have concluded

that Leighton and Rebeles were not acting as agents of the partnership when they entered into the

agreement, but were instead representing their own independent interests. Because the findings

can be reconciled, the trial court erred in failing to grant judgment in favor of Leighton on his

breach of contract claim in accordance with the jury’s verdict. We resolve Leighton’s second

issue in his favor.

        Based on the foregoing, we reverse the portion of the trial court’s judgment ordering that

Leighton take nothing on his claim for breach of contract. We render judgment that Leighton

recover $31,000 from Rebeles, as awarded by the jury, along with postjudgment interest at a rate

of 5% per annum from and after October 31, 2011. See TEX. FIN. CODE ANN. § 304.003 (West

2006). In addition, we render judgment awarding Leighton attorney’s fees, as stipulated by the

parties, in the amount of $20,000 at the trial court level, $10,000 for the appeal to this Court, and

an additional $10,000 in the event of an appeal to the Texas Supreme Court. In all other

respects, the trial court’s judgment is affirmed.

111519F.P05                                               /David W. Evans/
                                                          DAVID W. EVANS
                                                          JUSTICE

                                                    –9–
                                         S
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                        JUDGMENT

PAUL MICHAEL LEIGHTON, Appellant                      On Appeal from the 14th Judicial District
                                                      Court, Dallas County, Texas
No. 05-11-01519-CV          V.                        Trial Court Cause No. 08-11357-A.
                                                      Opinion delivered by Justice Evans.
ELIZABETH REBELES, Appellee                           Justices Francis and Lang participating.

       In accordance with this Court’s opinion of this date, the judgment of the trial court is

REVERSED IN PART and judgment is RENDERED that Paul Michael Leighton recover

$31,000 in accordance with the jury’s verdict along with postjudgment interest at a rate of 5%

per annum from and after October 31, 2011. In addition, judgment is RENDERED that Paul

Michael Leighton recover from Elizabeth Rebeles attorney’s fees as stipulated by the parties in

the amount $20,000 at the trial court level, $10,000 for the appeal to this Court, and an additional

$10,000 in the event of an appeal to the Texas Supreme Court. In all other respects, the

judgment of the trial court is AFFIRMED.

Judgment entered this 30th day of April, 2013.

                                                    /David W. Evans/
                                                    DAVID W. EVANS
                                                    JUSTICE

                                               –10–