Court Opinion

ID: 9770616
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:12:57.103968+00
Date Added: 2024-06-11T07:31:18.978736
License: Public Domain

BUTTS, Justice,
dissenting.1
I respectfully dissent.
Valores Corporativos S.A. de C.V. (Val-ores), Casa Chapa S.A. de C.V., and Chapa Trading Company, Inc. (Chapa) appeal from the summary judgment in favor of McLane Company, Inc. (McLane) and Wal-Mart Stores, Inc (Wal-Mart).
Valores sued McLane for breach of contract, breach of fiduciary duty,2 and constructive fraud. Other claims were dismissed. Valores sued Wal-Mart, the parent company of McLane, for tortious interference and knowing participation in McLane’s alleged breach of fiduciary duty, and other claims which were later dismissed. The trial court *170granted interlocutory partial summary judgments in favor of McLane and Wal-Mart. The final summary judgment was entered about a week later. The trial court ruled that no agreement, partnership, or joint venture was formed between Valores and McLane.3
Valores assigns two points of error: 1) The trial court erred in granting in part McLane’s and Wal-Mart’s motion for partial summary judgment. 2) The trial court erred in granting the appellees’ motion for partial summary judgment as to the breach of fiduciary duty and constructive fraud causes of action. We should affirm.
McLane and Wal-Mart filed a motion for partial summary judgment alleging that negotiations were never completed and never reduced to writing to create a partnership/joint venture or corporation, all of which were conditions precedent to the formation of a partnership. They alleged the essential elements of a partnership were not agreed upon, including how profits and losses would be shared.4
Wal-Mart, as the parent corporation, alleged it could not, as matter of law, interfere with the business relations of McLane, its wholly owned subsidiary. In addition, the claims against it for constructive fraud and participation in breach of fiduciary duty would fail as a matter of law.
Background
In November 1990, coinciding with NAU-TA and interest in trade relations between the United States and Mexico, McLane and Valores began negotiations to engage in the wholesale grocery distribution business in Mexico. Robert Hudspeth, international vice-president of McLane, contacted the director-general of Valores, Gilberto De Hoyos, and they met to discuss the possibility of a partnership. Meeting with them were Dray-ton McLane, who headed McLane, and Jose Chapa, chairman of the board of Valores.
On December 4, 1990, Drayton McLane wrote to Chapa, expressing interest “in considering a grocery distribution joint venture with your company.” Valores lacked the technology advancements of McLane and sought to modernize its distribution business in Mexico. It was anticipated that the partnership would utilize the existing Valores customer base and multi-million dollar grocery distribution business while McLane furnished the know-how and technology. Both companies would provide capital. Meetings were held and communications exchanged from December 1990, until September 1992.
The McLane concept was to buüd a large “McLane Company type distribution center in the Monterrey area which would take advantage of McLane’s state-of-the art technology.” The officers and personnel of both companies inspected the operations of each other’s facilities in Mexico, the United States, and Spain. Detailed studies and extensive research of the Valores business were made. Analyses, investigations and projections were made. The parties agree that the negotiations were of a complex and international magnitude.
Hudspeth held a meeting in Temple, Texas, in March 1991, “to begin discussions and planning for a proposed partnership between Valores and McLane.” McLane wrote that the purpose was to evaluate the potential of a future relationship between Valores and McLane in Mexico. Hudspeth described the “initial agreement” to Drayton McLane in April 1991: that McLane would contribute know-how, Valores would contribute business, and all subsequent capitalization would be shared. Drayton McLane acknowledged “it has tremendous potential.” Hudspeth anticipated in a letter to De Hoyos that “within a few months our project could be launched.”
McLane prepared a “Preliminary Mexican Joint Venture Proposal,” providing in addition to the above-noted matters, that ownership of the joint venture would be split 50/50, all start-up expenses and capital expenditures would be split 50/50. Estimated capital *171expenditures were $11,700,700. Software would remain in Temple with communications by satellite or other means.
McLane and Valores exchanged more letters and memoranda during September 1991, pertaining to matters such as projected capital costs, projected profits, projected warehouse expenses, projected transportation needs, and the proposed agenda of a meeting in Monterrey between leaders of the companies on September 26, 1991. To finalize the joint venture was the stated purpose of the meeting.
The summary judgment deposition testimony of Jose Chapa and De Hoyos states that Valores had an agreement with McLane and Drayton McLane told them they had a deal with Valores. De Hoyos denied that any additional approval or authorization was needed, and said he was not told that the agreement was contingent upon any future happening. They shook hands at the meeting, and “we took this as an agreement.”
The nucleus of the Valores and Chapa claim that a partnership existed is the September 27,1991 unsigned memorandum from Hudspeth to De Hoyos following the meeting.5 Valores claims that document is the partnership agreement of the parties and contains all essential elements of a partnership contract.
A letter to Valores and Chapa from McLane after that time indicated they were beginning a venture, and they were excited about the formation of the new entity, Cha-pa/McLane. However, no actual business was ever transacted, no buildings constructed, no truck transportation plans agreed upon, no data system completed, and no financing by Valores, as was necessary, had
been sought. The two companies continued to exchange letters and information and to conduct meetings. Additionally, both Jose Chapa and De Hoyos explained that the parties understood at that time it would be necessary for a Mexican corporation “Cha-pa/McLane” to be formed in the future to replace the partnership, and the partnership would then go out of existence. The summary judgment evidence does not support an agreement on this future contingency, including the matter of the value and ownership of corporation shares.
Significantly, the deposition testimony of De Hoyos confirmed Valores and Chapa and the Board of Directors of Valores believed that a final agreement between the parties must be in writing. The Valores attorney sent a draft of the proposed partnership agreement to McLane on October 14, 1991.
After reviewing a draft of the proposed agreement, the attorney for McLane, Robert McClaren, expressed in writing on October 23,1991, many concerns about material matters which were not yet determined. During this time there were press releases in Mexico and the United States announcing that the companies would establish a wholesale distribution business in Mexico called “Cha-pa/McLane.”
On November 5, 1991, at the insistence of McLane, Valores sent a revised proposed partnership agreement to the McLane attorney. However, the redraft was never finally acted upon nor approved by the two businesses. Although the companies continued to exchange information and business data, the McLane attorney continued to express concerns in writing about the proposed partnership draft.
*172In the meantime, an action plan and checklist for the Monterrey distribution center was prepared by a firm recommended by MeLane which included designers, engineers and architects. Attorney McClaren continued to insist that more changes and preparation of documents were needed. The Valores Board meeting minutes of December 20,1991, state that a draft of the partnership agreement and by-laws of the company had been finished and sent to their attorney, who forwarded them to MeLane for final approval. The minutes affirmatively reflect the Board recognized that MeLane had not approved them. The minutes recorded that the board “awaited review of the MeLane suggested corrections.”
During this interval, other matters were undertaken, such as selection of a site for the Monterrey distribution center, a memorandum specifying the water and power supply requirements, and other operational planning.
Significantly, the January 27, 1992 Valores Board meeting minutes state: “To date we have not concluded formalizing our agreement; however, it was requested that [Val-ores attorney] Quintero give us his opinion on the partnership agreement drafted by their attorney.”
In addition, the February 27,1992, Valores Board meeting minutes mention problems with the Chapa/McLane negotiations because of the Wal-Mart and CIFRA (a grocery distribution business in Mexico) relationship. In this regard, there is summary judgment evidence that Valores knew that Wal-Mart had acquired the MeLane Company as its subsidiary as early as December 1990.
In May 1992, Chapa and De Hoyos attended a management meeting of MeLane. Drayton MeLane wrote to them that “the potential for the future is truly unlimited, and we continue to be extremely excited about our partnership and joint venture.”
Minutes from the May 26, 1992 meeting between the two businesses covered topics of matters to be effected in the future, such as the building lay-out of offices and loading areas with a named firm to provide lay-out drawings. These would include, among other proposed sites, the dock for “Servi-Despen-sa,” the valuable home delivery service of Valores. It was recommended that a Chicago firm be hired to prepare drawings for bidding purposes. A Mexico firm was to design the offices. A design would be made for the cool and frozen building and the dry grocery building, and was to include all specs. None of these proposed essentials were ever undertaken or executed.
A new figure of over sixteen million dollars was estimated for the capital budget. A tentative ground-breaking date was set for July 1, 1992. A tentative bidding date for the steel frames of buildings would be by August or early September, 1992.
But on May 29,1992, Wal-Mart announced its second expanded venture with CIFRA. Hudspeth told De Hoyos there were problems because of that venture. On June 3, 1992, representatives of Valores and MeLane met in Dallas. McLane’s stated position at the meeting was that MeLane was “on hold” at that time on continuing to try to develop the joint venture contract due to some conflicts arising from the Wal-Mart/CIFRA business.
Summary judgment evidence shows that at that very time Valores was considering a distribution partnership with another company, Fleming, and also had contacted other U.S. grocery distribution companies. The August 18,1992, Valores Board meeting minutes state “that we have already wasted much time in this [MeLane] partnership and that it is very strained ...” The Board instructed De Hoyos to ask Hudspeth for indemnification for Valores expenses and to tell Hudspeth that “Valores is out of the negotiations.”
At the Valores Board meeting of September 3,1992, members expressed concern that the Board needed to see the fine print of a contract. Some directors opined that a business relationship with the Fleming company was better for Valores’s business interests and shareholders. The minutes of the Board meeting of September 26, 1992, reflect that Hudspeth telephoned De Hoyos that day and confirmed “that MeLane was not interested *173in forming a partnership with Valores, putting an end to the negotiations.”
Standard of Review
In an appeal from a summary judgment, we take as true evidence favorable to the nonmovant. Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). If the defendant disproves at least one element of the plaintiffs claims as a matter of law, summary judgment is appropriate. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 476-77 (Tex.1995). To obtain summary judgment based on an affirmative defense, the defendant must conclusively establish all elements of the affirmative defense. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex.1995). These established standards are reaffirmed in Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280, 282 (Tex. 1996). See Tex.R. Civ. 166a.
We must first decide whether there was a contract or whether McLane has successfully negated one or more elements of the cause of action for breach of contract.
“A partnership is an association of two or more persons to carry on as co-owners a business for profit.” Tex.Rev.Civ. Stat. Ann. art. 6132b § 6(1) (Vernon 1970 & Supp.1996) (Texas Uniform Partnership Act governing this case). This relationship must be based on an agreement, either express or implied. Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 287 (Tex.1978); Corpus Christi v. Bayfront Associates, 814 S.W.2d 98, 107 (Tex.App.—Corpus Christi 1991, writ denied). Since there was never an express agreement to form a partnership, for a partnership to exist, the agreement must be implied from the relationship of the parties. Bayfront, 814 S.W.2d at 107. Before an agreement to be partners can be implied, there must be proven four essential elements:
(1) a community of interest in the venture;
(2) an agreement to share profits, (3) an agreement to share losses, and (4) a mutual right of control or management of the enterprise.
Ayco Dev. Corp. v. G.E.T. Serv. Co., 616 S.W.2d 184, 186 (Tex.1981); Micrea, 572 S.W.2d at 287; Bayfront, 814 S.W.2d at 107-108. The burden of proof of the existence of a partnership is upon the party seeking to establish the relationship. Grimmett v. Higginbotham, 907 S.W.2d 1, 2 (Tex.App.—Tyler 1994, writ denied).
The intention of the parties to a contract is a prime element in determining whether or not a partnership or joint venture exists. Micrea, 572 S.W.2d at 287. However, just as the words of an express contract do not necessarily control the substance of the relationship, the terms used by the parties in referring to the arrangement do not control. Id. at 288. Therefore, the terms used by Drayton McLane and Hudspeth, such as “joint venture” and “our partnership” do not control.
Whether or not manifestations of assent are sufficient to show that a written agreement is contemplated, or constitute a contract themselves, or are simply preliminary negotiations to a contract depends on the intent of the parties to prepare and adopt a written memorial. The circumstances may show that the agreements are preliminary negotiations. Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 556 (Tex.1972). In the present case, the' Valores Board of Directors minutes clearly referred to the agreements and meetings as negotiations, called for an end to the negotiations, and requested indemnification for their expenditures. McLane, through Hudspeth, also considered these preliminary negotiations.
Thus, the trial court could properly conclude that the parties perceived their manifestations of assent on the matters discussed at various meetings and in the communications as preliminary negotiations.
Moreover, if an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Lynx Exploration & Prod. Co., Inc. v. 4-Sight Operating Co., Inc., 891 S.W.2d 785, 788 (Tex.App.—Texarkana 1995, writ denied). Although Valores offered summary judgment proof by way of depositions that the parties contemplated joint ownership of a wholesale grocery distribution business in the future, the terms of the contem*174plated agreement were so indefinite as to be impossible for the court to fix the legal obligations and liabilities of the parties. The evidence shows that the parties themselves were still in the process of arranging those matters. If an “agreement is so indefinite as to make it impossible for a court to fix the legal liability of the parties thereto, it cannot constitute an enforceable contract.” Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940, 942 (1944); Lynx, 891 S.W.2d at 789.
In order to be legally binding, a contract must be sufficiently definite in its terms so that a court can understand what the promisor undertook. Bendalin v. Delgado, 406 S.W.2d 897, 899 (Tex.1966); University Nat’l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.—San Antonio 1989, no writ). The material terms of the contract must be agreed upon before a court can enforce a contract. Where an essential term is open for future negotiation, there is no binding contract.
T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992).
Reliance by Valores on Foreca v. GRD Dev. Co., Inc., 758 S.W.2d 744 (Tex.1988) is misplaced. In Foreca the parties had previously agreed upon the terms of a one transaction sales contract. In that case the words “subject to legal documentation” did not indicate, as a matter of law, an intention not to be bound. Id. at 746. The supreme court limited the holding to that factual setting by stating “in this case” this was not conclusive on the intent of the parties to contract but was a fact question. The court stressed, however, that in some cases a court may conclude, as a matter of law, that there exist ed no immediate intent to be bound. Id. See Restatement (Second) of CONTRACTS § 27, cmt. c (1981).
Absent from the present complex business dealings were final agreements on many material matters, including the securing of required licensing, the Mexican government approval and agreed terms for forming the necessary Mexican corporation, the purchase of the building site, an intellectual property-agreement, provisions for operation and control of the water and power supply in the Monterrey center, a “buy-sell” partnership agreement; several necessary final budgets, the financing of Valores to enable it to participate in the business, the decision on kinds and sizes of trucks and the necessary cost-efficient transportation plan, and the computer software system. Further, no funds for capitalization had been placed in escrow by either McLane or Valores, the matter of mutual control of the new corporation to be formed had not been finalized (one example — the votes of three Valores officers against the votes of three McLane officers could not break a stalemate), and there was never a necessary agreement concerning sharing the control and operation of Servi-Despensa, the lucrative home delivery service of Valores. These were all specialized material matters which sophisticated business persons, such as these owners, CEOs, vice-presidents, and chairmen of boards of multimillion dollar companies would normally reduce to writing.
While there may have been an implied agreement for McLane and Valores to share ownership and capital expenditures, the summary judgment evidence fails to show an agreement to share profits and losses. These are essential elements of a partnership agreement, and failure to agree on these elements negates the existence of a partnership. A failure by the parties to agree to share losses precludes implying the existence of a partnership. Bayfront, 814 S.W.2d at 108; Gutierrez v. Yancey, 650 S.W.2d 169, 172 (Tex.App.— San Antonio 1983, no writ). See Grimmett, 907 S.W.2d at 2 (agreement to share losses was neither express nor implied). In the present case any agreement to share profits and losses was neither express nor implied. Thus, because McLane conclusively negated these elements of the requisite elements of an implied agreement to be partners, the trial court correctly ruled as a matter of law that no enforceable contract existed. And when no contract exists, there can be no breach of the contract.
Tortious Interference With Contract
As a cause of action against Wal-Mart, Valores alleged that Wal-Mart tortiously interfered with the partnership contract. We agree with Wal-Mart that Valores could not *175have prevailed in this particular cause of action.
A tortious interference cause of action is established if the plaintiff proves: (1) the existence of a contract subject to interference; (2) a willful and intentional act of interference; (3) the act was a proximate cause of the plaintiffs damages; and (4) actual damage or loss resulted. Friendswood, 926 S.W.2d at 282.
Even if Wal-Mart cannot conclusively negate one of these four elements, it may still prevail if it conclusively establishes the affirmative defense of justification. Id. A party is justified in interfering with another’s contract if it exercises (1) its own legal rights or (2) a good faith claim to a colorable legal right, even though that claim ultimately proves to be mistaken. Id. A party to a business relationship cannot interfere with itself. American Medical Int'l Inc. v. Giurintano, 821 S.W.2d 331, 335 (Tex.App.— Houston [14th Dist.] 1991, no writ).
The Fifth Circuit Court of Appeals, in applying Texas law, held that a parent and its subsidiary are so closely aligned in business interests as to render them, for tor-tious interference purposes, the same entity. Deauville Corp. v. Federated Dept. Stores, Inc., 756 F.2d 1183 (5th Cir.1985); Giurintano, 821 S.W.2d at 336. The financial interests of the parent and subsidiary are identical since the parent controlled the subsidiary and its profits. Giurintano, 821 S.W.2d at 336. The trial court correctly ruled that Wal-Mart sustained its burden of conclusively establishing it had a legal right to interfere with the proposed agreement; therefore, it conclusively established its affirmative defense of legal justification. See Friendswood, 926 S.W.2d at 283.
Breach of Fiduciary Duty and Constructive Fraud
After the trial court granted McLane’s and Wal-Mart’s first motion for partial summary judgment, ruling there was no enforceable partnership contract, the defendants filed their second motion for partial summary judgment regarding the claims of breach of fiduciary duty and constructive fraud. They maintained that the previous ruling of no contract or partnership precluded these claims. The trial court agreed and granted final summary judgment.
The record throughout demonstrates the continuing independent posture of each company, with both being represented by astute businessmen. Valores had its own board of directors, officers and legal counsel. It is reputedly a successful multimillion dollar business of many years’ standing. Likewise, McLane is an equally large and successful business. Neither was the beneficiary in an equitable fiduciary relationship in these transactions. See Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507-08 (Tex.1980). These were arms-length transactions between the knowledgeable business representatives of each company. The various studies, analyses and exchange of information in this case supported both the Valores and McLane postures of businesses conducting certain required in-depth evaluations of a possible potential partnership in the future. These did not give rise to a fiduciary relationship. The evidence is also clear that the parties had not had dealings with each other in the past, so as to possibly give rise to a confidential relationship in this dealing. See Consolidated Gas & Equip. Co. v. Thompson, 405 S.W.2d 333, 337 (Tex.1966) (fiduciary relationship might arise outside formal relationship when, over long period of time, the parties had worked together for the joint acquisition of property previous to the particular agreement sought to be enforced). The summary judgment evidence undisputedly demonstrates that no confidential relationship existed as matter of law. The court correctly concluded as a matter of law that the evidence established conclusively there was no breach of a fiduciary relationship or constructive fraud.
Additionally, Wal-Mart is the parent entity of McLane with a unity of interest and cannot, as a matter of law, be liable for participation in an alleged breach of fiduciary duty. Further, even assuming, arguendo, that McLane breached a fiduciary duty, Wal-Mart would not be liable as a joint tortfeasor because it is not a third party who knowingly participated in the breach of a fiduciary duty. See Kinzbach Tool Co. v. Corbett-Wallace *176Corp., 138 Tex. 565, 160 S.W.2d 509, 513 (1942).
The majority opinion mistakenly relies on the fact that the trial judge signed the interlocutory order, claiming it became final. That would be true only if that order had been severed and made final, which it was not. The record reflects that the trial court signed the final summary judgment a week after the interlocutory order had been signed. Thus, the interlocutory order was subject to the plenary control of the court until final summary judgment was entered in the ease. Further, Tex.R. Civ. P. 166a(d) applies only when the trial court grants the interlocutory order on some matters and reserves other issues for a jury or bench trial. In that instance, the preliminary interlocutory order would grant relief on matters of law, and “[u]pon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly.” Tex.R. Civ. P. 166a(e). See Texas United Ins. v. Burt Ford Enterprises, 703 S.W.2d 828, 832-33 (Tex.App.—Tyler 1986, no writ). That did not happen here.
Respectfully, I would overrule the points of error and affirm the judgment of the trial court.

. Assigned to this case by the Chief Justice of the Supreme Court of Texas pursuant to Tex. Gov't Code Ann. § 74.003 (Vernon 1988).

. Valores assigned portions of its claims against appellees to Chapa. Appellees do not dispute the assignment.

. Other claims against McLane and Wal-Mart were dismissed, as were claims against Drayton McLane, Jr., who is not a party to this appeal.

. The final judgment recites that the summary judgment was not granted on the statute of frauds ground.

. I. Potential financial loss of closing/downsizing existing distribution business: Future joint venture to reimburse Valores [for closing losses] to be generated from operating profits.
II. Joint venture will be owned and capitalized equally.
III. Estimated capital investment requirements — 10-12 million dollars.
IV. Financing methods will be evaluated by Valores and recommendations made as to best methods for benefit of joint venture.
V. In-depth Data Systems analysis will begin as soon as practical with project completion date of December 13, 1991.
VI. Transportation analysis to be completed as soon as practical.
VII. Board of Directors will consist of six members — three from each company.
VIII. Training orientation schedules for Cha-pa/McLane executives to be finalized as soon as practical.
IX. Budgets to be completed: Preliminary— start-up; preparation; capital expenditure; operating and cash flow.

X. Agreement: First Draft of Agreement by Val-ores to be forwarded to McLane.

XI. Target date for operation start-up: August 1992.