Court Opinion

ID: 4644937
Source: CourtListenerOpinion
Date Created: 2020-12-21 08:17:41.007053+00
Date Added: 2024-06-11T08:00:48.523044
License: Public Domain

Opinion issued December 15, 2020

                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                              NO. 01-20-00251-CV
                           ———————————
                           JUAN LOWE, Appellant
                                        V.
                        FLORA B. WATSON, Appellee

                   On Appeal from the 157th District Court
                            Harris County, Texas
                      Trial Court Case No. 2019-01974

                         MEMORANDUM OPINION

      This case arises from an automobile accident between Flora Watson and Juan

Lowe, Sr. Lowe sued Watson for negligence and causing Lowe’s injuries to his knee.

Watson moved for summary judgment on the affirmative defense of release, which

the trial court granted. Lowe moved for new trial and reconsideration and the trial
court denied the motion. In two issues, Lowe argues that the trial court erred by

granting Watson’s summary-judgment motion. We reverse and remand.

                                  Background

      One November evening, Lowe was traveling west along I-10 in Louisiana

with his wife, Tricia, and their two young children, Gabriella and Juan, Jr. Watson

rear-ended Lowe’s car. The accident damaged Lowe’s car and injured his knee.

Lowe contacted Progressive Insurance Company, Watson’s insurance carrier, to file

claims for his family.

      About a month after the accident, Lowe and his wife signed three settlement

releases on December 7, 2017. All three settlements were identical, except for the

named family member and the amount. The First Release provides in part:

      This Release is given by Juan Lowe Sr. and Tricia Lowe, individually
      and as parent(s) or guardian(s) of Gabriella Lowe a minor (hereinafter
      “Releasing Party/Parties”), who for and in consideration of payment of
      Two Hundred and Fifty Dollars ($250.00), the receipt and sufficiency
      of which is hereby acknowledged as well as the promise to pay
      reasonable and necessary medical and/or dental expenses incurred by
      Releasing Party/Parties for the minor’s injury related treatment within
      30 days following 12-07-2017, up to a maximum of Three Hundred
      Dollars ($300.00) . . . .

The Second Release provides in part:

      This Release is given by Juan Lowe Sr. and Tricia Lowe, individually
      and as parent(s) or guardian(s) of Juan Lowe Jr[.] a minor (hereinafter
      “Releasing Party/Parties”), who for and in consideration of payment of
      Two Hundred and Fifty Dollars ($250.00), the receipt and sufficiency
      of which is hereby acknowledged as well as the promise to pay
      reasonable and necessary medical and/or dental expenses incurred by

                                        2
      Releasing Party/Parties for the minor’s injury related treatment within
      30 days following 12-07-2017, up to a maximum of Three Hundred
      Dollars ($300.00) . . . .

The Third Release provides in part:

      This Release is given by Juan Lowe Sr. and Tricia Lowe (hereinafter
      “Releasing Party/Parties”), who for and in consideration of payment of
      Five Hundred Dollars ($500.00), the receipt and sufficiency of which
      is hereby acknowledged as well as the promise to pay reasonable and
      necessary medical and/or dental expenses incurred by Releasing
      Party/Parties for injury related treatment within 30 days following
      12/07/2017, up to a maximum of Three Hundred Dollars ($300.00) . . .
      .

Lowe and Tricia signed all three settlement releases.

      Later, Progressive sent four checks payable to Lowe and Tricia.1 The first

check for $250 listed LOWE, GABRIELLA below the claim number. The second

check for $250 listed “LOWE JR, JUAN.” The third check for $500 listed “LOWE,

TRICIA.” The fourth check for $951.26 listed “LOWE SR, JUAN.” Lowe and Tricia

deposited the first three checks. They did not, however, deposit the fourth check.

Lowe rejected the check because his medical bills for the orthopedic specialist for

his knee exceeded Progressive’s $951.26 settlement offer.

      A dispute arose. Lowe explained that he never executed a settlement release

for his own personal injuries. Instead, he only executed settlement releases on behalf

1
      Progressive also issued two checks directly to the body shop to cover the cost of
      repairs to Lowe’s vehicle. The checks were made payable to Joe Meyers Collision
      and listed “LOWE SR, JUAN” below the claim number.

                                          3
of his children and Tricia for a derivative loss-of-consortium claim. Progressive told

Lowe that the Third Release released all his claims. Dissatisfied with Progressive’s

response, Lowe retained counsel and sued Watson for negligence in his individual

capacity. Watson answered, generally denying Lowe’s allegations and pleading

affirmative defenses of accord and satisfaction and payment.

      Watson moved for summary judgment, arguing that Lowe settled his claims

with Progressive for $500, signed a settlement release, and endorsed and cashed his

settlement check.2 In sum, Watson argued that Progressive released Lowe from all

claims related to the car accident because Lowe signed the Third Release and cashed

the $500 check. Watson attached the Third Release and four checks as summary-

judgment evidence.

      In response, Lowe first argued that he signed the Third Release in his capacity

as Tricia’s husband to settle his derivative loss-of-consortium claims and the other

two releases in his capacity as the parent and guardian of Gabriella and Juan Jr. He

contended that the Third Release “was not intended to release his own separate

personal injury claims in his individual capacity.”

      Second, Lowe argued that release contains a latent ambiguity or, in the

alternative, a mutual mistake. He contended that the settlement checks contradicted

2
      Although Watson’s motion was titled “Defendant’s Motion to Enforce Settlement
      and to Dismiss with Prejudice,” the parties and the trial court treated this motion as
      a summary-judgment motion.
                                            4
the plain language of the release, raising a genuine issue of material fact on whether

the parties intended the Third Release to cover Lowe’s separate personal injury

claims in his individual capacity. Lowe asserted that extrinsic evidence was

necessary to show the parties’ true intent. Progressive issued multiple checks under

the same claim number which were “not contemplated by the plain language of the

[Third Release]” because “the one $500.00 check [Progressive] issued . . . plainly

lists ‘LOWE, TRICIA’” as the only claimant.

      Third, Lowe argued that Watson’s failure to plead release as an affirmative

defense supports his contention that Lowe did not release his claims against

Progressive. Lowe attached responsive evidence, including six checks, his

deposition testimony, three release agreements, and the motor vehicle crash report.

      The trial court granted Watson’s motion for summary judgment and dismissed

the case. Lowe then filed a motion for new trial and reconsideration, which the trial

court denied. Lowe appealed.

                               Summary Judgment

      In his first issue, Lowe contends that the trial court erred in granting summary

judgment because the Third Release was latently ambiguous as to what claims he

intended to release as part of his settlement with Progressive. He did not intend to

release his negligence claim. Instead, he only intended to settle his derivative loss-

of-consortium claim as Tricia’s husband. And, therefore, Lowe contends that the

                                          5
objective circumstances surrounding the execution of the Third Release raises fact

issues about the parties’ true intent, and, as a result, the parties did not enter into a

valid contract to release his negligence claims.

A.    Standard of review

      We review the trial court’s ruling on a motion for summary judgment de

novo. Barbara Techs. Corp. v. State Farm Lloyds, 589 S.W.3d 806, 811 (Tex. 2019).

To prevail on a summary-judgment motion, a movant must prove that there is no

genuine issue of material fact and that they are entitled to judgment as a matter of

law. See TEX. R. CIV. P. 166a(c); Hillis v. McCall, 602 S.W.3d 436, 439–40 (Tex.

2020). Once the movant meets this burden, the burden shifts to the nonmovant to

raise a genuine issue of material fact precluding summary judgment. See Lujan v.

Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). The evidence raises a genuine issue

of fact if “reasonable and fair-minded jurors could differ in their conclusions” given

all the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236

S.W.3d 754, 755 (Tex. 2007) (per curiam). In reviewing the grounds

for summary judgment, we review the evidence in the light most favorable to the

nonmovant, “crediting favorable evidence if reasonable jurors could do so, and

disregarding contrary evidence unless reasonable jurors could not.” See Mann

Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

“[W]e indulge every reasonable inference and resolve any doubts in the

                                           6
nonmovant’s favor.” Helix Energy Sols. Group, Inc. v. Gold, 522 S.W.3d 427, 431

(Tex. 2017).

B.    Applicable law

      A release is a written contract “which provides that a duty or obligation owed

to one party to the release is discharged immediately or upon the occurrence of a

condition.” Henry v. Masson, 333 S.W.3d 825, 844 (Tex. App.—Houston [1st Dist.]

2010, no pet.); see also Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 178

(Tex. 1997) (“[A] a release is a contract”). A release of a claim “operates to

extinguish the claim . . . and is an absolute bar to any right of action on the released

matter.” Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex.

1993).

      Like any other contract, a release is subject to the rules of contract

construction. Henry, 333 S.W.3d at 844. In construing a release, our primary task is

to determine the true intentions of the parties as expressed in the language of the

agreement. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471,

479 (Tex. 2019). “If we determine that the contract’s language can be given a certain

or definite legal meaning or interpretation, then the contract is not ambiguous, and

we will construe it as a matter of law.” El Paso Field Servs., L.P. v. MasTec N. Am.,

Inc., 389 S.W.3d 802, 806 (Tex. 2012). If, however, the language of a release is

subject to two or more reasonable interpretations, then the release is ambiguous,

                                           7
raising a genuine issue of material fact on the parties’ intent. Nat’l Union Fire Ins.

Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).

“Whether a contract is ambiguous is a question of law for the court to decide by

looking at the contract as a whole in light of the circumstances present when the

contract was entered.” Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574

S.W.3d 882, 889 (Tex. 2019). We construe categorical releases narrowly. Gallagher

Headquarters Ranch Dev., Ltd. v. City of San Antonio, 303 S.W.3d 700, 702 (Tex.

2010).

C.    Analysis

      To effectively release a claim in Texas, the release must “‘mention’ the claim

to be released.” Victoria Bank & Tr. Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991).

“[A]ny claims not clearly within the subject matter of the release are not discharged.”

Id. Lowe asserts that the Third Release does not identify the claims to be released.

Watson responds that the Third Release bearing Lowe’s handwritten name next to a

signature and date establishes that the release was “directed to [Lowe] and his

claim.” The Third Release provides:

      This Release is given by Juan Lowe Sr. and Tricia Lowe (hereinafter
      “Releasing Party/Parties”), who for and in consideration of payment of
      Five Hundred Dollars ($500.00), the receipt and sufficiency of which
      is hereby acknowledged as well as the promise to pay reasonable and
      necessary medical and/or dental expenses incurred by Releasing
      Party/Parties for injury related treatment within 30 days following
      12/07/2017, up to a maximum of Three Hundred Dollars ($300.00),
      do(es) hereby for himself/herself/themselves and his/her/their heirs,

                                          8
      executors, administrators, administrators, successors, and assigns,
      RELEASE, ACQUIT, AND FOREVER DISCHARGE Matthew
      Watson and Flora Watson (hereinafter “Released Party/Parties”) and
      his/her/their heirs, executors, administrators, successors, assigns,
      agents, representatives, employers, employees, servants, and all other
      persons, firms, corporations, and organizations in privity with the
      Released Party/Parties, from any and all claims liabilities, obligations,
      demands or actions which the Releasing Party/Parties has/have now, or
      may have in the future, or for damages, costs, interest, fees or
      compensation of any kind on account of or in any way growing out of
      an accident which occurred on or about 11-26-17 at or near Houston,
      TX.

Although the broad language purports to release all past and future claims against

Watson arising from the accident, that does not end our inquiry. Importantly, there

is no express waiver of negligence or loss-of-consortium claims. Cf., e.g., Shannon

v. Mem’l Drive Presbyterian Church U.S., 476 S.W.3d 612, 631–32 (Tex. App.—

Houston [14th Dist.] 2015, pet. denied) (holding that ambiguous categorical

agreement that “released all claims” did not release fraudulent-inducement claims

because agreement lacked “express waiver” of those claims).

      In interpreting whether a release of “any and all claims . . . arising from or

related to the events and transactions” in a series of condemnation actions applied to

a dispute over land use, the Texas Supreme Court found the kind of categorical

language here ambiguous and remanded for factfinding about the scope of the

release. Gallagher, 303 S.W.3d at 701–02. We find Victoria Bank & Trust Company

v. Brady, 811 S.W.2d 931 (Tex. 1991), similarly helpful in concluding that the

release language is ambiguous. The Cattle Company and Victoria Bank had engaged
                                          9
in two separate but related transactions, one involving a $150,000 loan in which The

Cattle Company was a co-obligee and one involving the extension of a line of credit.

Id. at 933–34. The Bank conditioned the line of credit on The Cattle Company’s

agreement to assume its partner’s preexisting debt. Id. When a dispute arose over

the loan, the partner sued the Bank to enjoin the foreclosure of his property that

secured the transaction. Id. at 934. The parties settled, and The Cattle Company

agreed to release the Bank from “any and all claims and causes of action . . . directly

or indirectly attributable to the above described loan transaction.” Id. at 938. When

The Cattle Company sued the Bank over the line of credit, the Bank argued that The

Cattle Company had released it from all claims. Id. After reviewing the settlement

agreement, the Texas Supreme Court determined that the “above described loan

transaction” referred only to the initial loan. Id. The loan settlement did not release

the bank from claims arising from the line of credit because the settlement did not

mention it. Id. at 939.

      Unlike the release in Victoria, the Third Release does not list a specific

transaction but it does include a claim number. A court may consider the

circumstances of the release to determine whether an ambiguity about the parties’

intentions exists and admit extraneous evidence to make this determination. URI,

Inc. v. Kleberg Cnty., 543 S.W.3d 755, 765–66 (Tex. 2018). Lowe argues that the

claim number at the top of the Third Release does not distinguish his negligence

                                          10
claim from his derivative loss-of-consortium claim as Tricia’s husband—or from

any of the other claims he filed on behalf of Gabriella and Juan, Jr.—because the

claim number on the Third Release is the same claim number appearing on the First

Release and the Second Release. Thus, a latent ambiguity exists.

      A latent ambiguity arises when a contract which is “unambiguous on its face

is applied to the subject matter with which it deals and an ambiguity appears by

reason of some collateral matter.” URI, 543 S.W.3d at 765.                             If a

latent ambiguity arises from this application, parol evidence is admissible to

determine the true intention of the parties as expressed in the agreement.3 Nat’l

Union Fire Ins., 907 S.W.2d at 520. The classic example of a latent ambiguity is a

contract that calls for goods to be delivered to the “green house on Pecan Street”

when there are, in fact, two or more green houses on Pecan Street. See, e.g., 11

Williston on Contracts § 33.40 (4th ed.).

      Lowe’s responsive evidence shows that Progressive issued three separate

releases under the same claim number. Progressive issued four different checks

payable to Lowe and Tricia. All four checks list the same claim number that appears

on the three releases. Other than the payment amounts, the only distinguishing

feature on each check is the name below the claim number.

3
      Although this is not an issue on appeal, we note that both parties relied on extraneous
      evidence and neither party objected.
                                            11
      For example, Progressive issued a $250 check with the name of “LOWE,

GABRIELLA” below the claim number. This $250 check corresponds with the First

Release, which lists her name and $250 as the amount of consideration. Similarly,

Progressive issued a $250 check with the name of “LOWE JR, JUAN” below the

claim number. This $250 check corresponds with the Second Release, which lists

his name and $250 as the amount of consideration. The check for $500, however,

only identifies “LOWE, TRICIA, even though the Third Release identifies Tricia

and Lowe. Finally, Progressive also issued a check for $951.26, naming “LOWE

SR, JUAN” below the claim number. None of the releases in the record list this

amount as consideration. Notably, the record does not show a fourth release relating

to the amount of this check. Nor does the check appear to be cashed or deposited. 4

According to his deposition testimony, Lowe testified that he rejected the check that

Progressive had issued to him because the cost of his orthopedic treatment exceeded

the amount of the check. He further testified, “I signed a release for my wife. I did

not sign a release for myself.”

      Viewing this evidence in the light most favorable to Lowe, the Third Release

is susceptible to two reasonable interpretations: (1) a release of only Lowe’s loss-of-

consortium claim and (2) a release both of his claims for loss of consortium and

4
      We note that the check is endorsed, but there is no information from a bank showing
      that it was deposited or otherwise processed by a bank, unlike the other three checks.
                                            12
negligence. We therefore conclude that a latent ambiguity exists as to which claims

Lowe intended to release or discharge. See, e.g., RSUI Indem. Co. v. The Lynd Co.,

466 S.W.3d 113, 120 (Tex. 2015) (“[W]e conclude that the endorsement reasonably

can be read to support either party’s proposed construction and is therefore

ambiguous.”); Milner v. Milner, 361 S.W.3d 615, 619–23 (Tex. 2012) (mediated

settlement agreement was ambiguous when it was unclear whether transfer of

partnership was conditioned on consent of other partners); Exxon Corp. v. W. Tex.

Gathering Co., 868 S.W.2d 299, 302 (Tex. 1993) (natural gas purchase contract was

ambiguous because take-or-pay provision was unclear about whether takes were

actual or hypothetical); Sage St. Assocs. v. Northdale Constr. Co., 863 S.W.2d 438,

445 (Tex. 1993) (construction contracts were ambiguous because both set out

different prices and included provisions “purporting to override the other” contract).

Because a latent ambiguity exists, we hold that the trial court erred in granting

Watson’s motion for summary judgment because a genuine issue of material fact

exists about the parties’ intent. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)

(“When a contract contains an ambiguity, the granting of a motion for summary

judgment is improper because the interpretation of the instrument becomes a fact

issue.”).

                                         13
      We need not address Lowe’s remaining arguments because we sustain his first

issue. See TEX. R. APP. P. 47.1.5

                                     Conclusion

      We reverse the judgment of the trial court and remand the case for further

proceedings consistent with this opinion.

                                               Sarah Beth Landau
                                               Justice

Panel consists of Justices Goodman, Landau, and Adams.

5
      We also note that Watson argues that Lowe’s acceptance and negotiation of the $500
      check constitutes a release of all his claims against Watson. In essence, Watson
      claims an affirmative defense of accord and satisfaction, which “rests upon a new
      contract, express or implied, in which the parties agree to the discharge of the
      existing obligation by means of the lesser payment tendered and accepted.” Jenkins
      v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. 1969). We need not determine
      whether accord and satisfaction applies because neither Watson nor Lowe contends
      that they had executed a new contract. See id.
                                          14