Court Opinion

ID: 9761949
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:01:23.197743+00
Date Added: 2024-06-11T07:29:27.997767
License: Public Domain

DUNCAN, Justice,
dissenting.
The majority’s opinion evidences a fundamental misunderstanding and misapplication of basic Texas contractual and procedural law. When the correct law is properly applied in this case, it is clear both that the Campbell Lease merged into the Compromise Settlement Agreement as a matter of law and that the trial court abused its discretion in denying Ghidoni’s motion to sever and abate Meehan’s intervention. Because these errors probably resulted in an erroneous judgment, I would sustain Ghidoni’s second and fifteenth points of error, reverse the trial court’s judgment in its entirety, and remand the case to the trial court for further proceedings under the governing law. I therefore respectfully dissent.
MERGER OF THE CAMPBELL Lease and the CSA
In his second point of error, Ghidoni argues the CSA modified the Campbell Lease as a matter of law; The majority overrules this point of error, holding that Ghidoni’s argument fails because “fw]hether a contract has been modified depends on the parties’ intentions and is a question of fact,” and the testimonial evidence as to intent is conflicting. Ghidoni v. Stone Oak, 966 S.W.2d 573, 580 (Tex.App.—San Antonio, 1998, n.w.h.) (citing Hathaway v. General Mills, Inc., 711 S.W.2d 227, 228-29 (Tex.1986)). But the majority’s reliance on Hathaway is misplaced since it involved an oral employment-at-will contract, not a written, fully-executed, and fully-integrated contract like the CSA. Even more importantly, however, the majority’s *589holding not only fails to address the issue presented, it also seriously misconstrues Texas law.

The Issue: Not Whether Modification But the Extent of Modification

Stone Oak effectively concedes the CSA modifies the Campbell Lease in certain material respects.1 But, as Stone Oak recognizes, this concession does not resolve Ghidoni’s complaint. The issue, to paraphrase Stone Oak, is whether “an alleged breach of a CSA provision [can or] cannot be enforced by the default provision of the [Campbell] Lease.” In other words, the precise point upon which the parties have joined issue is not whether the CSA modifies the Campbell Lease but the extent to which it does so. Ghidoni argues the modification was complete so that the Campbell Lease and the CSA effectively became one contract and the default provisions in the Campbell Lease necessarily apply to Stone Oak’s promises in the CSA. Stone Oak, on the other hand, argues that, while the CSA may modify certain terms in the Campbell Lease, the two are nonetheless independent contracts so that the default provisions in the Campbell Lease apply only to Stone Oak’s promises in that lease.

The Governing Texas Law: Merger by Express Reference

As the majority states, whether a contract has been modified centers upon the parties’ intent, which is a question of fact. Hathaway, 711 S.W.2d at 228-29. However, this question of fact, like any other, can be proved conclusively. Id. at 229. And the parties’ intent is conclusively proved by an unambiguous contract. As the supreme court has repeatedly stated, if a contract is unambiguous, the parties’ intent presents a “question of law for the Court” to be gleaned from the contract language because, in this situation, “it is objective, not subjective, intent that controls.” City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968); see also, e.g., Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280, 282 (Tex. 1996) (per curiam); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731-32 (Tex.1981). An unambiguous contract thus renders extrinsic evidence of the parties’subjective understanding and intent immaterial. E.g., Friendswood Dev. Co., 926 S.W.2d at 282-83; Sun Oil Co., 626 S.W.2d at 732. This is the “existing precedent” by which the majority is and should “feel bound” — not a quote from Hathaway completely divorced from the context of decades of black letter Texas law.
Applying these well-established rules of contract construction to the CSA yields the precise rule of law that governs Ghidoni’s second point of error: When one agreement expressly references another, the two agreements taken together constitute the parties’ contract, and the two agreements must be construed in light of one another as a matter of law. E.g., E.H. Perry & Co. v. Langbehn, 113 Tex. 72, 79, 252 S.W. 472, 474 (1923).
In Langbehn, the question posed was whether the parties had contracted for the transportation of freight or for use of the space the freight would occupy. The parties’ contract consisted of a “freight [shipping] engagement note” that expressly incorporated the bill of lading that was to be issued when the freight was delivered for shipment. In this context, the Supreme Court of Texas held that the express incorporation of the bill of lading in the freight shipping engagement meant “the two are to be considered together as constituting the contract actually executed and acted upon.” Id. As a result, “the partial contract evidenced by the engagement note merged into, and to the extent of all inconsistencies was superseded by, the completed contract evidenced by that note and the bill of lading issued and made a part thereof; that is, the terms of the engagement note ... were modified by the issuance and acceptance of the bill of lading ..., and the later controls.” Id. 252 S.W. at 475-76.
As more recently stated by Justice Klinge-man of this court, “[w]hether a later contract *590is to be deemed an independent one, or incorporated with or correlated to the old agreement, is to be determined by the intention of the parties as expressed in the later agreement.” Keith A. Nelson Co. v. R.L. Jones, Inc., 604 S.W.2d 851, 353 (Tex.Civ.App.—San Antonio 1980, writ ref'd n.r.e.); see also San Antonio Real Estate, Bldg. & Loan Ass’n v. Stewart, 94 Tex. 441, 444, 61 S.W. 386, 387 (1901) (promissory notes and expressly-referenced lien instrument to be “construed together as constituting one contract”).

Standard of Review: Be Novo

“A trial court has no ‘discretion’ in determining what the law is or applying the law to the facts.” Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992). Accordingly, we review the trial court’s construction of an unambiguous contract under a de novo standard.

Application of the Governing Texas Law to the Undisputed Material Facts

As Ghidoni correctly asserts, no party to this litigation has ever asserted the CSA is ambiguous, and the trial court did not so rule. To do so would be disingenuous, at best, because the parties’ intent to modify the Campbell Lease by entering the CSA could not be more clear. For example, as Stone Oak concedes in its brief to this court, paragraph 3 of the CSA expressly modifies the Campbell Lease to restrict it to three wells if Ghidoni becomes lessor, and paragraph 4 of the CSA expressly requires Stone Oak to provide Ghidoni with 2.5 million gallons of water each year at no charge “[d]ur-ing the terms of the Campbell ... Lease.” Further dispelling any doubt about the parties’ intent to modify the Campbell Lease, paragraph 12(c) of the CSA unambiguously states that all parties “expressly reserve, protect and save all rights that they may have in connection with [the Campbell Lease],” while paragraph 18 of the CSA unambiguously states that “[the CSA], including the instruments to which reference has been made herein, contains the entire agreement between the parties hereto, and the terms of [the CSA] are contractual and not merely recitals....”
Under these circumstances, to the extent the Campbell Lease is not inconsistent, it is merged into the CSA by virtue of paragraph 18 of the CSA as a matter of law. See, e.g., Langbehn, 252 S.W. at 474. Necessarily, therefore, the default provisions in the Campbell Lease apply to the promises made by Stone Oak in the CSA as a matter of law, as Ghidoni contends.
Meehan’s Intervention
In his fifteenth point of error, Ghidoni asserts the trial court erred in denying his motion to sever and abate Meehan’s claims from the lease dispute. In overruling this point of error, the majority holds Ghidoni waived the point by filing a motion to sever and abate rather than a motion to strike. Ghidoni, at 586-87. The majority is incorrect.

The Governing Texas Law

In Texas, a person may intervene and become a party to pending litigation simply by filing a pleading. Tex.R. Crv. P. 60. Thereafter, any party that believes the intervention is improper bears the burden of “challenging] it by a motion to strike.” Guaranty Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 657 (Tex.1990). Once the propriety of the intervention is raised, the intervenor must show she has a “present justiciable interest,” “legal or equitable, in the lawsuit.” Mendez v. Brewer, 626 S.W.2d 498, 499 (Tex.1982).
If an intervenor fails to prove that she has a present justiciable interest in the proceeding, the trial court “may dismiss the intervention,” id., or, in appropriate circumstances, sever or separately try it. Boswell, O'Toole, Davis & Pickering v. Stewart, 531 S.W.2d 380, 382 (Tex.Civ.App.—Houston [14th Dist.] 1975, no writ); Saldana v. Saldana, 791 S.W.2d 316, 320 (Tex.App.— Corpus Christi 1990, no writ). A severance or separate trial is appropriate when, for instance, an intervenor asserts a contingent interest that may become a present justiciable interest if a particular party prevails in the main action. See, e.g., Schwartz v. Taheny, 846 S.W.2d 621, 622-23 (Tex.App.—Houston [14th Dist.] 1993, writ denied) (trial court *591severed intervention that sought contingent attorney’s fee because interest would become present justiciable interest only if attorney’s former client prevailed in main action). If the facts are not disputed, whether a justicia-ble interest is shown is a question of law. Ortiz Oil Co. v. Railroad Comm’n, 62 S.W.2d 376, 379 (Tex.Civ.App.—Texarkana 1933, no writ).

Preservation of Error

The majority holds that Ghidoni waived his right to complain of the propriety of Mee-han’s intervention by filing a motion to sever and abate rather than to strike. In this respect, however, the majority is incorrect and dangerously so. As demonstrated by Schwartz, either severance or separate trial, coupled with abatement, may well be a proper procedural path-if not the only proper path-when an intervenor asserts a contingent interest because striking the intervention might well diminish or destroy the interve-nor’s ability to assert his claim. Necessarily, therefore, if severance and abatement can be a proper ruling on an intervention, a motion for severance and abatement can be a proper preservation tool. See generally TexR.App. P. 33.1(a) (general rule for preservation of error).
Here, Ghidoni’s motion to sever and abate correctly states that Meehan’s “potential damage claims are dependent and contingent upon the outcome of the main cause of action,” and it properly requests that Meehan’s claims be severed and all discovery proceedings abated “until final disposition of the main cause of action. This would prevent the necessity of either [Ghidoni] or [Meehan] from incurring unnecessary attorneys [sic] fees until the issue of whether the leases have been terminated by default has been resolved so that the potential claim of [Mee-han] would no longer be set forth in contingent terms.” In challenging Meehan’s interest in this way, Ghidoni correctly asked the trial court to ensure that Meehan’s potential rights were protected in a manner that would not prejudice Ghidoni. Ghidoni’s motion, coupled with the trial court’s ruling, thus preserved the error of which Ghidoni now complains. See, e.g., Schwartz, 846 S.W.2d at 622-23.

Standard of Review: Legal Question Prong of Abuse of Discretion Standard

On appeal, the trial court’s ruling on an intervention is subject to an abuse of discretion standard of review. Mendez, 626 S.W.2d at 499. An abuse of discretion is shown with respect to factual matters only when the record establishes that “the trial court could reasonably have reached only one decision.” Walker, 827 S.W.2d at 840. However, “[a] trial court has no ‘discretion’ in determining what the law is or applying the law to the facts. Thus, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion....” Id.
In this case, the material facts are undisputed; therefore, the issue presented by Ghi-doni is a question of law-whether the undisputed facts demonstrate a present justiciable interest. Ortiz Oil Co., 62 S.W.2d at 379. Accordingly, the trial court’s ruling in this respect should be reviewed de novo.

Application of the Governing Texas Law to the Undisputed Material Facts

At the hearing on Ghidoni’s motion to sever and abate, Meehan failed to introduce any evidence establishing that she possessed a present justiciable interest at the time her intervention was filed. To the contrary, Meehan’s own pleadings and arguments established that she could not then meet this requirement because she had conveyed her interest to Ghidoni shortly after their divorce. Instead, Meehan asserted a contingent interest-if Ghidoni recovered on his counterclaims and if Meehan were able to have the special warranty deed set aside, she might be entitled to share in his recovery.
An interest that is “wholly contingent” upon a judgment in the primary action is not a “present justiciable interest,” and it is not “sufficient standing to entitle her to join in this suit_” Mendez, 626 S.W.2d at 500; cf., e.g., In re E.L.P., 636 S.W.2d 579, 581 (Tex.App. — San Antonio 1982, no writ) (because grandparents did not have standing, their joinder would have constituted error); *592see generally 1 Roy R. McDonald, Texas Civil PRACTICE § 5:79, at 604 (1992) Accordingly, the trial court erred in denying Ghido-ni’s motion to sever and abate Meehan’s intervention.
Harm and Disposition
As demonstrated by the above discussion, Ghidoni’s second and fifteenth points of error establish the trial court erred in ruling on the modification and intervention issues. Therefore, these points of error must be sustained if the errors rise to the level of reversible error, i.e., error that “probably caused the rendition of an improper judgment” or “probably prevented [Ghidoni] from properly presenting the case to the court of appeals” Tex. R. App. 44.1(a)(l)-(2).
Plainly, the error as to the trial court’s ruling on the modification issue was harmful-the trial court incorrectly directed a verdict against Ghidoni on the merger and termination issues, as well as his tort counterclaims; and it incorrectly precluded the jury from deciding Ghidoni’s breach of contract counterclaims in its charge. Perhaps less clear, but nonetheless established by the record, is that the trial court’s ruling on Mee-han’s intervention was harmful because it deprived Ghidoni of a trial properly confined to the evidence and issues presented by the lease dispute and instead subjected him to a trial of these issues within the context of a bitter divorce proceeding.
Because reversible error permeates the trial court’s judgment with respect to both the lease dispute and Meehan’s claims, it should be reversed in its entirety. On remand, the trial court should be instructed to conduct any further proceedings consistent with the governing law. The majority, however, instead affirms the judgment against Ghidoni on the lease dispute and simply remands Meehan’s claims for a “restoration of benefits” determination. Because this judgment is incorrect, I respectfully dissent.
ANGELINI, J., joins.

. At page 26 of its opening brief, Stone Oak states: “There was never a dispute that the size of the leased property was reduced by the CSA, that [Ghidoni] was entitled to 2.5 million gallons of water or that, if [Ghidoni] became the landlord, all notices would be sent to his address.” In short. Stone Oak has "never argued [it is] not bound by the terms of the CSA.”