Court Opinion

ID: 3077515
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:27:28.86996+00
Date Added: 2024-06-11T11:42:02.654097
License: Public Domain

IN THE
                        TENTH COURT OF APPEALS

                               No. 10-12-00062-CV

KERRY HALIBURTON, MABREE HALIBURTON
AND TAYLOR HALIBURTON,
                                  Appellants
v.

NANCY GILMORE AND LINDSEY HENDRICKS,
                                  Appellees

                         From the 12th District Court
                            Madison County, Texas
                        Trial Court No. 10-12376-012-10

                         MEMORANDUM OPINION

      This appeal involves a dispute over the ownership of three Beefmaster cattle—

Clara’s Jade, Hope’s Cracker Jack, and Clara Belle. Appellants Kerry Haliburton and

his daughters Mabree and Taylor Haliburton appeal the final judgment, entered after a

bench trial, in favor of Appellees Nancy Gilmore and her daughter Lindsey Gilmore

Hendricks (the Gilmores). We will reverse and remand.
                                            Background

          The Haliburtons met the Gilmores in 2006 through livestock shows. Taylor and

Mabree had been involved in showing horses but were interested in showing cattle.

The Gilmores operate the Gilmore Ranch where they breed Beefmaster cattle. Kerry

noticed that the cattle with Gilmore cattle genetics were winning at the livestock shows;

therefore, the Haliburtons contacted the Gilmores about buying some cattle from them.

          In 2010 at the Junior Beefmaster Breeders Association (JBBA) livestock show, the

Haliburtons won the national championship for the third year in a row. But after the

show, Kerry was informed that a protest had been filed. That night at the banquet

recognizing the champions, Kerry approached the officials and asked them who had

filed the protest. The officials told him that it was confidential. Kerry then confronted

Nancy. Kerry stated that he had been surprised when, either earlier that day or the day

before, Nancy had told another competitor that the only reason the Haliburtons win is

because they cheat and because they had influence over the judge of the national show.1

Kerry also said that after the Haliburtons had won the national championship, he

invited Nancy to join them in the picture, as he had done every time they had won, but

Nancy refused, which he also thought was “bizarre.” Kerry asked Nancy if she had

anything to do with the protest. Nancy denied having anything to do with it and

identified someone else as having filed the protest. Nevertheless, the next morning,

Kerry demanded that the Gilmores return Clara’s Jade, Hope’s Cracker Jack, and Clara

1   The Gilmores deny that Nancy made such a statement.

Haliburton v. Gilmore                                                               Page 2
Belle, all three of which had been at the Gilmores’ ranch. The Gilmores refused to

return the cattle.2

         The Gilmores sued the Haliburtons, seeking a declaratory judgment that the

Gilmores owned the cattle and that the Haliburtons’ demand for return of the cattle was

an act of bad faith. The Gilmores also alleged causes of action for breach of contract,

common-law fraud, and intentional infliction of emotional distress and sought the

recovery of actual damages, punitive damages, and attorney’s fees. The Haliburtons

answered by denying the allegations, affirmatively asserting the statute of frauds as a

defense, and seeking findings that they actually owned and were entitled to possession

of the cattle, not the Gilmores. The Haliburtons also sought the recovery of attorney’s

fees.

         The Haliburtons’ Version of Events

         Kerry testified that the first cows he bought from the Gilmores were Betty Boop

and Clara’s Jade—one cow for each of his daughters. The cows were $5,000 each.

Clara’s Jade had already been bred and was pregnant; thus, the sale/purchase also

included her unborn calf. Kerry paid for the cows with one $10,000 check, dated

October 15, 2006, and the Haliburtons received Certificates of Breeding reflecting the

sale.3

2Kerry testified that three or four days after the protest was made, experts from Texas A&M examined
his cattle and concluded that the allegations had no merit.

3 When asked if the previous testimony explained the entirety of his agreement with the Gilmores with
respect to Clara’s Jade, Kerry replied that the only other thing that the Haliburtons had discussed
generally with the Gilmores was that if the Haliburtons chose to have any of the cattle “flushed,” and the
flushing resulted in the recovery of more eggs than the Haliburtons could handle, then the Haliburtons
would split the extra eggs with the Gilmores in return for the Gilmores splitting the cost of the breeding

Haliburton v. Gilmore                                                                              Page 3
       Beefmaster cattle are registered with the Beefmaster Breeders United (BBU)

organization.    Registration and ownership of a cow is reflected by a Certificate of

Breeding. Kerry explained that registration with the BBU is like the registration of a car.

When a registered Beefmaster cow is sold, ownership of the cow is assigned to the new

owner and reflected by completing the transfer form on the back of the Certificate of

Breeding. The transfer form provides, “When the ownership of the animal named on

this Certificate changes, the Seller must immediately complete the transfer and return

the Certificate to Beefmaster Breeders United.” The form then states, “I/We hereby

authorize the transfer of this Certificate of Breeding on the records of Beefmaster

Breeders United to the buyer indicated below,” under which the “Seller,” who must be

the current registered owner, identifies himself or herself, the “Buyer,” and the “Date of

Sale” and then signs the form.           Once the transfer form has been completed, the

Certificate is then submitted to the BBU, after which the BBU issues a new Certificate of

Breeding listing the “Buyer” on the previous Certificate’s transfer form as the new

“Current Owner.”

       The original Certificate of Breeding for Clara’s Jade, showing Lindsey as the

registered owner, was admitted into evidence. The transfer form on the back of the

Certificate reflects the transfer of Clara’s Jade from Lindsey, the “Seller,” to Mabree, the

“Buyer” on October 15, 2006, the “Date of Sale,” and Lindsey signed the form. The

current Certificate of Breeding for Clara’s Jade was also admitted into evidence.

services. “Flushing” is a process by which eggs from a cow with superior genetics are harvested to
produce embryos. The embryos are then placed in recipient cows, allowing for the breeding of multiple
cattle with the donor cow’s superior genetics. Nancy’s husband is certified to perform artificial
insemination services.

Haliburton v. Gilmore                                                                         Page 4
Sometime after Lindsey’s transfer of Clara’s Jade to Mabree, Mabree transferred fifty

percent ownership of Clara’s Jade to Taylor; therefore, the current Certificate of

Breeding lists the “Breeder-Member-First Owner” of Clara’s Jade as Lindsey and the

“Current Owner” as fifty percent Mabree and fifty percent Taylor. The Certificates of

Breeding and the check by which Kerry paid the Gilmores were the only writings

between the parties related to the sale/purchase of Clara’s Jade.

       After Betty Boop and Clara’s Jade, the Haliburtons then purchased Felicity’s

Lucy on March 1, 2007 for $5,000 and Hope’s Cracker Jack on June 20, 2007 for $6,000.

A BBU “BILL OF SALE” for Hope’s Cracker Jack was admitted into evidence. It states

that Lindsey, the “Seller,” “sold” Hope’s Cracker Jack to Taylor, the “Buyer,” on June

20, 2007, the “Date of Sale,” and Lindsey signed the form. The current Certificate of

Breeding for Hope’s Cracker Jack was also admitted into evidence. It lists the “Breeder-

Member-First Owner” of Hope’s Cracker Jack as Lindsey and the “Current Owner” of

Hope’s Cracker Jack as Taylor. The Bill of Sale and the Certificate of Breeding were the

only writings between the parties related to the sale/purchase of Hope’s Cracker Jack.

       After Hope’s Cracker Jack, the Haliburtons then purchased Fritzi’s Angelina on

September 1, 2007 for $5,000 and Clara Belle on February 5, 2008 for $6,000.           The

original Certificate of Breeding for Clara Belle, showing Lindsey as the registered

owner, was admitted into evidence. The transfer form on the back of the Certificate

reflects the transfer of Clara Belle from Lindsey, the “Seller,” to Taylor, the “Buyer,” on

February 5, 2008, the “Date of Sale,” and Lindsey signed the form.            The current

Certificate of Breeding for Clara Belle was also admitted into evidence, listing Lindsey

Haliburton v. Gilmore                                                                Page 5
as the “Breeder-Member-First Owner” and Taylor as the “Current Owner.”                                 These

Certificates of Breeding were the only writings between the parties related to the

sale/purchase of Clara Belle.

          After Clara Belle, the only other show heifers that the Haliburtons purchased

from the Gilmores were Hope’s Pepper Jack on March 15, 2008 for $6,000 and Clara

Kate’s Bliss on January 2, 2009 for $6,000.4 At one time the Haliburtons also had an

arrangement with the Gilmores regarding a cow named Clara’s Kate, but the

Haliburtons never purchased her. In fact, the Gilmores received no compensation for

the arrangement, which was as follows: Lindsey had shown Clara’s Kate, but once

Lindsey had gotten beyond the age to show her, the Gilmores allowed Mabree to show

her for a few months. In doing this, the Gilmores transferred the Certificate of Breeding

for Clara’s Kate to Mabree in the same manner as they had done with the other cattle

that the Haliburtons had purchased. Kerry stated that his understanding was that a

person had to be one of the listed owners to be able to show the animal. When the

Haliburtons had finished showing Clara’s Kate, they then transferred the Certificate of

Breeding back to the Gilmores. The purchase of Clara Kate’s calf, Clara Kate’s Bliss, had

nothing to do with the arrangement.

          Besides purchasing cattle from the Gilmores, the Haliburtons also sent their

cattle to the Gilmores from time to time for breeding services, after which the cattle

would be returned to the Haliburtons. The cattle sent to the Gilmores included Clara’s

Jade, Hope’s Cracker Jack, and Clara Belle, as well as other cattle the Haliburtons had

4   Besides show heifers, Kerry testified that he had also purchased at least one bull from the Gilmores.

Haliburton v. Gilmore                                                                                  Page 6
purchased from the Gilmores and even some cattle that the Haliburtons had not

purchased from the Gilmores. Clara’s Jade, Hope’s Cracker Jack, and Clara Belle just

happened to be at the Gilmores’ ranch for breeding services when Kerry demanded

their return.

       Clara’s Jade had been at the Gilmores for approximately two years when Kerry

demanded her return. She had been at the Gilmores for that amount of time because

her eligibility to be shown had been over for some time and thus her value was in

repetitive flushing. Also, Clara’s Jade was injured at some point during the process of

being artificially inseminated, and there was a long recovery time before they could

attempt to breed her again. Hope’s Cracker Jack and Clara Belle had been at the

Gilmores since either 2009 or 2010 when Kerry demanded their return. Hope’s Cracker

Jack’s eligibility to be shown had ended by that time, but Clara Belle was still eligible to

be shown.

       Kerry did not return any of the Certificates of Breeding with the cattle when they

were sent to the Gilmores for breeding services. Taylor testified that she did have her

mother send Mr. Gilmore the Certificate of Breeding for Hope’s Cracker Jack, but she

did not sign the transfer form on the back of the Certificate. Mr. Gilmore had told

Taylor that the original Certificate of Breeding for Hope’s Cracker Jack was needed for

her first flush.

       Kerry ultimately testified that in all his discussions with the Gilmores, he never

discussed leasing or borrowing Clara’s Jade, Hope’s Cracker Jack, or Clara Belle from

the Gilmores and then transferring ownership of the cattle back to them. Before the

Haliburton v. Gilmore                                                                 Page 7
date when he demanded the cattle back from the Gilmores, the Gilmores had never told

him that they expected the cattle to be transferred back into the Gilmores’ name.

Furthermore, he never promised Nancy that he would draft a separate contract

concerning his purchases of Clara’s Jade, Hope’s Cracker Jack, and Clara Belle.5

        The Gilmores’ Version of Events

        Nancy testified that in October 2006, the Haliburtons purchased Betty Boop for

$5,000 and expressed an interest in purchasing Clara’s Jade but that the Gilmores did

not want to sell her. Clara’s Jade was about two years old at the time and ready to have

a calf. She was also the first black-coated daughter of Clara, the Gilmores’ donor cow

that had produced all the champions, and black-coated Beefmaster cattle were rarer

than red-coated ones at that time.

        The Gilmores nevertheless reached an agreement with the Haliburtons regarding

Clara’s Jade, and notes regarding this agreement were recorded in a document

maintained by Nancy and her husband in the normal course of their cattle-raising

business. The Gilmores sold twenty-five percent ownership in Clara’s Jade and one

hundred percent ownership in her calf to the Haliburtons for $5,000. Even though the

Gilmores retained a majority interest in Clara’s Jade, Nancy said they transferred the

Certificate of Breeding into Mabree’s name so that she could show Clara’s Jade at JBBA

5On cross-examination, Nancy did admit that the Gilmores reported the transfer of Clara’s Jade, Hope’s
Cracker Jack, and Clara Belle to the Haliburtons as sales on their tax returns just as they did when the
Haliburtons purchased other cattle from the Gilmores. The Gilmore Ranch also maintains a website for
which Nancy’s company controls the content. On the website is a list of at least some of the cattle that the
Gilmores have sold. The list includes: in February 2008, congratulations to Taylor on the purchase of
Clara Belle; in August 2007, congratulations to Mabree on the purchase of Angelina; in August 2007,
congratulations to Taylor on the purchase of Hope’s Cracker Jack; in March 2007, congratulations to
Taylor on the purchase of Felicity’s Lucy; and in October 2006, congratulations to Mabree on the purchase
of Clara’s Jade. The transaction for Clara’s Kate was not included on the website.

Haliburton v. Gilmore                                                                                Page 8
and other heifer shows.6 The Haliburtons were then to return Clara’s Jade to the

Gilmores at the end of her show career.                 Once Clara’s Jade was returned, the

Haliburtons would then receive a twenty-five percent ownership interest in any of her

resulting embryos or calves, as well as be responsible for twenty-five percent of her

future costs.

        Nancy said that Kerry was supposed to draft a contract memorializing the

agreement, but he never did. In January 2007, Nancy received an email from Kerry’s

wife confirming that he was working on the contract. The email read in pertinent part,

“Kerry has been out of town all week but will get to the contract as soon as possible.”

After the email, the Gilmores were told several more times that Kerry was going to get

them a contract, but it never happened. Nancy was not more forceful in insisting upon

a contract from the Haliburtons because they were friends, even “like family” by June

2007.

        Nancy testified that Clara’s Jade was returned to the Gilmores in June 2008 as her

show career was over. The Haliburtons and Gilmores had not originally negotiated in

whose name Clara’s Jade would be registered after she was returned to the Gilmores,

but when Clara’s Jade was returned, the Haliburtons asked if the Gilmores would leave

Clara’s Jade registered in the Haliburtons’ name so that they would be able to show her

future calves in a “bred and owned show.” The Gilmores agreed, and Clara’s Jade

remained in the Haliburtons’ name.

6Nancy testified that one cannot show an animal in a JBBA event unless that animal is registered in the
person’s name. Nancy also stated that it is common for someone to register an animal in another person’s
name so that the other person can show the animal and then the animal is returned to the original owner.

Haliburton v. Gilmore                                                                            Page 9
       According to Nancy, the Haliburtons and Gilmores made agreements similar to

that with Clara’s Jade with three other heifers because the heifers were considered

“super heifers or daughters of Clara.” But like with Clara’s Jade, Kerry never reduced

the entire agreements to written contracts.

       Hope’s Cracker Jack was the second cow that the Gilmores agreed to transfer to

the Haliburtons until the end of her show career, at which time the Haliburtons were to

return her to the Gilmores. The agreement also included that the Haliburtons would

get one of Cracker Jack’s natural calves and twelve embryos. Notes of the agreement

were again recorded in a document maintained by Nancy and her husband in the

normal course of their cattle-raising business.

       Hope’s Cracker Jack was returned in December 2009, her show career being over

at that time.    The Gilmores requested that the Haliburtons sign the Certificate of

Breeding back over to them after Cracker Jack’s return, but the Haliburtons forgot to

bring the Certificate of Breeding when they returned her. The Gilmores did eventually

receive it in the mail, but the Haliburtons had forgotten to sign the transfer form on the

back, according to Nancy.

       Nancy said that Clara Belle was also transferred to the Haliburtons under the

same terms as the transfer of Hope’s Cracker Jack. Notes of the agreement were again

recorded in a document maintained by Nancy and her husband in the normal course of

their cattle-raising business. Clara Belle was returned to the Gilmores in May 2010. Her

show career was not over, but when the Haliburtons asked for the three cattle, Nancy

Haliburton v. Gilmore                                                              Page 10
did not inquire as to whether the cow still had eligibility. Clara Belle’s Certificate of

Breeding was not returned when she was returned.

       Finally, in December 2008, the Gilmores transferred Clara’s Kate to the

Haliburtons. The Certificate of Breeding was transferred into one of the Haliburton’s

names. She was ready to calf at that time. Nancy said that the agreement was that for

$5,000 or $6,000, the Haliburtons could show Clara’s Kate in the major livestock shows,

keep her calf, and then bring Clara’s Kate back. There was no embryo deal. Clara’s

Kate was returned in July 2009.      The Haliburtons also returned the Certificate of

Breeding with the transfer form executed on the back.        The current Certificate of

Breeding shows Gilmore Ranch as the owner of Clara’s Kate.

       Nancy acknowledged that the Gilmores also performed breeding services for the

Haliburtons. When asked how long it takes for a cow to be flushed, Nancy replied that

the cow is given drugs for about two weeks and then the actual flush takes about a

month to a month and a half. Nancy stated that when it is time for cattle that are

owned by someone else, or currently being borrowed by someone else, to be bred, the

cattle are brought to the Gilmores for approximately thirty days and then returned to

the respective owner or borrower. Nancy did not recall it being Clara’s Jade that was

injured during the breeding process; nevertheless, she stated that the injured cow was

taken to Texas A&M for examination after the injury, the cow was returned, and the

cow was being bred again within about a month and a half to two months after that.

       The Gilmores flushed Hope’s Cracker Jack in May 2010 and again in July 2010.

The flushing resulted in three embryos. The Gilmores had cows available to receive the

Haliburton v. Gilmore                                                             Page 11
embryos, but the Haliburtons had only one cow that could receive an embryo. The

Gilmores thus took two of the embryos and the Haliburtons took one. Cracker Jack was

still in the Haliburtons’ name when the flushes were done, so the embryos would have

been in their name as well. Kerry’s wife transferred the embryos to the Gilmores by a

bill of sale, but the Gilmores did not pay the Haliburtons any money at that time.

Nancy was unaware of any other method that the embryos could have been transferred

to them other than by bill of sale.

       Nancy testified that before July 2010, the Haliburtons never made any request

that possession of the three cattle be returned to them after the cattle had been returned

to the Gilmores after the end of their show careers.

       The Trial Court’s Ruling

       The trial court ordered that the Gilmores are the owners of Clara’s Jade, Hope’s

Cracker Jack, and Clara Belle, that the Haliburtons are divested of any and all interests

in the cattle, that the Haliburtons are to execute any and all documents, including but

not limited to Beefmaster Breeders United Certificates of Breeding and Transfer,

transferring legal title of the cattle to the Gilmores within ten days from the date of the

judgment, and that the Gilmores recover from the Haliburtons reasonable and

necessary attorney’s fees in the amount of $10,000. The trial court also made findings of

fact and conclusions of law as follows:

                                      FINDINGS OF FACT

             1.     Plaintiffs and Defendants entered into an oral agreement
       whereby Plaintiffs would transfer Beefmaster Breeders United Certificates
       of Breeding (“Certificates”) to three (3) registered Beefmaster cattle (the

Haliburton v. Gilmore                                                                Page 12
       “Cattle”) and the Cattle to Defendants to enable Defendants to exhibit the
       Cattle in Junior Beefmaster Breeders Association sanctioned shows (the
       “Shows”).

              2.     As part of the agreement, Defendants were to receive or did
       receive ownership of the first born calf of each of the Cattle to exhibit
       along side the Cattle in the Shows and a certain number of embryos from
       flushes of the Cattle.

             3.     At the end of their show careers, the Cattle were to be
       returned to Plaintiffs and the Cattle were to be re-registered in Plaintiffs’
       names.

              4.      The Cattle were returned to Plaintiffs and are currently in
       Plaintiffs’ possession.

             5.     Defendants retained ownership and possession of the calves
       and received embryos as agreed by the parties.

              6.        Defendants did not re-register the Cattle in Plaintiffs’ names
       as agreed.

              7.     Defendant, Kerry Haliburton is an attorney licensed to
       practice law in the State of Texas.

             8.     Defendant, Kerry Haliburton agreed to reduce the parties’
       agreement to writing, [b]ut failed to do so.

             9.    Plaintiffs relied on the representations made by Defendant
       Kerry Haliburton.

             10.    The representations made by Defendant Kerry Haliburton
       were material and were false.

             11.   Plaintiffs relied on the representations made by Defendant
       Kerry Haliburton to their detriment.

             12.    Plaintiffs suffered damages as a result of the false
       representations made by Defendant Kerry Haliburton.

              13.    Plaintiffs incurred reasonable and necessary attorney’s fees
       of $10,000.00 in prosecuting their claim.

Haliburton v. Gilmore                                                                    Page 13
             14.   The agreement between Plaintiffs and Defendants could be
       performed within one (1) year.

                                    CONCLUSIONS OF LAW

             15.   A valid enforceable contract existed between Plaintiffs and
       Defendants.

               16.      Defendants breached the contract.

              17.    The statute of frauds does not apply to the contract between
       Plaintiffs and Defendants.

              18.    The transfer of the Cattle to Defendants and the agreed upon
       return of the Cattle to Plaintiffs was not a “sale” within the meaning of the
       Texas Uniform Commercial Code.

             19.    The Certificates do not constitute the written agreement
       between the parties.

             20.    The oral agreement between the parties constitutes a[]
       contemporaneous and collateral agreement that would naturally and
       normally be included in a separate agreement apart from the Certificates.

              21.    The Parol[] Evidence Rule does not prevent the introduction
       of intrinsic evidence regarding the Certificates or any other part of the
       agreement between the parties.

            22.    Plaintiffs are the owners of the Cattle and are entitled to
       immediate possession and ownership of the Cattle.

              23.    Defendants have a legal obligation to re-register the Cattle in
       Plaintiffs’ names.

              24.    Plaintiffs are entitled to receive reasonable and necessary
       attorney’s fees of $10,000.00 from Defendants.

This appeal ensued.

Haliburton v. Gilmore                                                                  Page 14
                                    Standard of Review

       Findings of fact entered in a case tried to the court have the same force and

dignity as a jury verdict. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex.

1991). We thus review findings of fact by the same standards that are applied in

reviewing the legal and factual sufficiency of the evidence supporting a jury’s answer to

a jury question. Id.

       The test for legal sufficiency is “whether the evidence at trial would enable

reasonable and fair-minded people to reach the verdict under review.” City of Keller v.

Wilson, 168 S.W.3d 802, 827 (Tex. 2005).         In making this determination, we credit

favorable evidence if a reasonable fact-finder could and disregard contrary evidence

unless a reasonable fact-finder could not. Id. So long as the evidence falls within the

zone of reasonable disagreement, we may not substitute our judgment for that of the

fact-finder. Id. at 822. The trier of fact is the sole judge of the credibility of the witnesses

and the weight to give their testimony. See id. at 819. Although we consider the

evidence in the light most favorable to the challenged findings, indulging every

reasonable inference that supports them, we may not disregard evidence that allows

only one inference. Id. at 822.

       When considering a factual sufficiency challenge, we consider all the evidence

supporting and contradicting the finding. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d
442, 445 (Tex. 1989).      We set aside the finding only if it is so contrary to the

overwhelming weight of the evidence as to be clearly wrong and unjust. See Cain v.

Bain, 709 S.W.2d 175, 176 (Tex. 1986).

Haliburton v. Gilmore                                                                    Page 15
        The standard of review for conclusions of law is de novo. See BMC Software Belg.,

N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). We evaluate the trial court’s legal

conclusions independently to determine whether the trial court correctly drew the legal

conclusions from the facts. Id. We uphold conclusions of law on appeal if the judgment

can be sustained on any legal theory the evidence supports. Material P’ships, Inc. v.

Ventura, 102 S.W.3d 252, 257 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). Thus,

incorrect conclusions of law do not require reversal if the controlling findings of fact

support the judgment under a correct legal theory. Id.

                                               Discussion

        In their first issue, the Haliburtons contend that the trial court erred in admitting

parol evidence to alter the terms of the Bill of Sale and Certificates of Breeding. The

Haliburtons argue that the parol evidence rule applies because the Bill of Sale and

Certificates of Breeding are writings that reflect the parties’ agreement as to the cattle in

question. The Gilmores respond that the parol evidence rule does not apply because

the documents are only part of the agreement of the parties and not integrations of the

entire agreement. We agree with the Haliburtons that the parol evidence rule applies in

this case.

        Texas Business and Commerce Code section 2.202, the parol evidence rule

applicable to the sale of goods,7 provides:

7 The Gilmores describe the transactions regarding Clara’s Jade, Hope’s Cracker Jack, and Clara Belle as
more of a sale that functions as a lease than an outright sale. Thus, although the Gilmores cite section
2.202 as authority in this case, we note that section 2A.202, the parol evidence rule applicable to the lease
of goods, is virtually identical to section 2.202. See TEX. BUS. & COM. CODE ANN. § 2A.202 (West 2009).

Haliburton v. Gilmore                                                                               Page 16
       Terms with respect to which the confirmatory memoranda of the parties
       agree or which are otherwise set forth in a writing intended by the parties
       as a final expression of their agreement with respect to such terms as are
       included therein may not be contradicted by evidence of any prior
       agreement or of a contemporaneous oral agreement but may be explained
       or supplemented (1) by course of performance, course of dealing, or usage
       of trade (Section 1.303); and (2) by evidence of consistent additional terms
       unless the court finds the writing to have been intended also as a complete
       and exclusive statement of the terms of the agreement.

TEX. BUS. & COM. CODE ANN. § 2.202 (West 2009); see id. § 2.102 (West 2009).              In

determining whether this rule is applicable, the first question is whether the Bill of Sale

and Certificates of Breeding constitute “confirmatory memoranda” containing terms

upon which the parties agree or “writing[s] intended by the parties as a final expression

of their agreement with respect to such terms as are included therein” (i.e., integrated

agreements). See id. § 2.202; Morgan Bldgs. & Spas, Inc. v. Humane Soc’y of Southeast Tex.,

249 S.W.3d 480, 486 (Tex. App.—Beaumont 2008, no pet.). A fully integrated written

agreement is a final and complete expression of all the terms agreed upon by the

parties. Morgan Bldgs. & Spas, 249 S.W.3d at 486. A partially integrated agreement is a

final and complete expression of all the terms addressed in that written agreement, but

is not a final and complete expression of all the terms the parties have agreed upon. Id.

A court considers the surrounding circumstances in determining whether, and to what

degree, an agreement is integrated. Id. (citing Sun Oil Co. v. Madeley, 626 S.W.2d 726,

731-32 (Tex. 1981)).

       The Bill of Sale and Certificates of Breeding are not fully integrated written

agreements. For instance, neither the Bill of Sale nor the Certificates of Breeding include

the price for the cattle, and both parties seem to acknowledge that there was some

Haliburton v. Gilmore                                                                 Page 17
agreement regarding breeding services that was not included in the Bill of Sale or

Certificates of Breeding. But the analysis does not end there. Although neither the Bill

of Sale nor the Certificates of Breeding include all the terms agreed upon by the parties,

both the Haliburtons and the Gilmores agree that the Bill of Sale and the Certificates of

Breeding are writings that reflect at least part of their agreement. And the documents

themselves as well as the parties’ testimony establish that the Bill of Sale and

Certificates of Breeding were the final expression of the terms of the agreement

included in those documents. Nancy specifically testified that a bill of sale or certificate

of breeding is a sufficient contract that transfers the rights to a cow. Therefore, the Bill

of Sale and Certificates of Breeding are “confirmatory memoranda” containing terms

upon which the parties agree or “writing[s] intended by the parties as a final expression

of their agreement with respect to such terms as are included therein.”

       The Gilmores nevertheless argue that the parol evidence rule does not apply in

this case because exceptions to the rule apply.      The Haliburtons disagree and also

challenge such findings of fact and conclusions of law.

       The Gilmores first argue that they were properly allowed to introduce evidence

that the Haliburtons agreed to reconvey the cattle to them and failed to do so because

parol evidence is allowed to show the failure or lack of consideration. Parol evidence is

allowed to show the failure or lack of consideration, see DeLuca v. Munzel, 673 S.W.2d
373, 376 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.), but the evidence that the

Gilmores introduced was not evidence of failure or lack of consideration. The Gilmores

did not contest that the Haliburtons paid them $5,000 in the transaction regarding

Haliburton v. Gilmore                                                                Page 18
Clara’s Jade, $6,000 in the transaction regarding Hope’s Cracker Jack, and $6,000 in the

transaction regarding Clara Belle. Instead, the Gilmores introduced evidence that their

own promise in exchange for the Haliburtons’ money was not an outright sale of the

cattle but rather a sale that actually functioned as a lease. Thus, this exception to the

parol evidence rule does not apply.

       The Gilmores next argue that the oral agreement to reconvey the cattle to them is

a contemporaneous collateral agreement, as stated in the trial court’s conclusions of law

(No. 20). The Supreme Court recently explained this exception:

              The general rule for an unambiguous contract is that evidence of
       prior or contemporaneous agreements is inadmissible as parol evidence.
       David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (per curiam).
       However, an exception exists for consistent collateral agreements. As we
       stated over half a century ago in Hubacek v. Ennis State Bank, the parol
       evidence rule “does not preclude enforcement of prior or
       contemporaneous agreements which are collateral to an integrated
       agreement and which are not inconsistent with and do not vary or
       contradict the express or implied terms or obligations thereof.” 159 Tex.
166, 317 S.W.2d 30, 32 (1958); accord Haden, 266 S.W.3d at 451 (“Under the
       exception, parol evidence can be used to demonstrate a prior or
       contemporaneous agreement that is both collateral to and consistent with
       a binding agreement, and that does not vary or contradict the agreement’s
       express or implied terms or obligations.”). A collateral agreement
       between parties concerning the relationship of several distinct obligations
       between them falls within the exception. See, e.g., Hubacek, 317 S.W.2d at
       34 (“A and B in an integrated contract respectively promise to sell and to
       buy Blackacre for $3,000.00. A contemporaneous oral agreement between
       them that the price shall be paid partly by discharge of a judgment which
       B has against A is operative.” (quoting with approval RESTATEMENT (FIRST)
       OF CONTRACTS section 240 cmt. d (1939))).

ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 875-76 (Tex. 2010).

       Here, the evidence of an oral agreement to reconvey the subject cattle to the

Gilmores is not consistent with the Bill of Sale and Certificates of Breeding. The Bill of

Haliburton v. Gilmore                                                                 Page 19
Sale and Certificates of Breeding unambiguously show that Lindsey sold the subject

cattle to Taylor and Mabree. Evidence of an oral agreement to reconvey the subject

cattle to the Gilmores at the end of their show careers contradicts that the transactions

were sales and instead indicates that the transactions were more like leases. Thus, the

consistent-collateral-agreement exception to the parol evidence rule does not apply in

this case.

       The Gilmores next argue that although there is no “intrinsic evidence exception”

to the parol evidence rule, it is true that the parol evidence rule does not prevent the

admission of intrinsic evidence as to the Certificates or other agreements of the parties,

as stated in the trial court’s conclusions of law (No. 21). The Gilmores argue that the

trial court’s “intrinsic evidence” conclusion simply means that the parol evidence rule

does not apply because the Bill of Sale and Certificates of Breeding were not integrated

agreements setting forth the entire agreement of the parties and that evidence of an oral

agreement to reconvey the subject cattle to the Gilmores at the end of the cattle’s show

career is thus admissible because it does not contradict or vary the terms of the Bill of

Sale or Certificates of Breeding. But, as just explained, the parol evidence that the

transactions were more like leases contradicts the unambiguous language of the Bill of

Sale and Certificates of Breeding showing that Lindsey sold the subject cattle to Taylor

and Mabree.

       Having found no caselaw setting forth an “intrinsic evidence” exception to the

parol evidence rule, the Haliburtons theorize that the trial court’s “intrinsic evidence”

conclusion of law meant that it found the Bill of Sale and Certificates of Breeding to be

Haliburton v. Gilmore                                                              Page 20
ambiguous and that parol evidence (i.e., “intrinsic evidence”) could thus be considered

to resolve the ambiguity and explain the meaning of the written instruments. But, as

the Haliburtons go on to explain, the trial court’s conclusion of law cannot be upheld

even under this interpretation.     The Bill of Sale and Certificates of Breeding are

unambiguous. They show that Lindsey sold the subject cattle to Taylor and Mabree.

The parol evidence that the transactions were more like leases would not then resolve

an ambiguity but create one, and parol evidence is not admissible for the purpose of

creating an ambiguity. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464

(Tex. 1998).

       Finally, the Gilmores state in their brief that although they pled common-law

fraud, at no time have they contended that the Haliburtons’ alleged fraud was an

exception to the parol evidence rule. Nevertheless, the parol evidence rule does not bar

extrinsic evidence that the defendant procured the contract by fraud. See DRC Parts &

Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854, 864 (Tex. App.—Houston [14th

Dist.] 2003, pet. denied). And the trial court made several findings of fact in favor of the

Gilmores on their fraud claim. The Haliburtons contend that the trial court’s fraud

findings are not an exception to the parol evidence rule.

       The Gilmores alleged, and the trial court found that the Haliburtons orally

agreed to return the subject cattle to the Gilmores and to re-register the cattle in the

Gilmores’ name. The trial court also found that Kerry, a licensed attorney, agreed to

reduce the parties’ oral agreement to writing but failed to do so and that the Gilmores

relied on this representation to their detriment.

Haliburton v. Gilmore                                                                Page 21
       An essential element of a fraud claim is that the plaintiff actually and justifiably

relied on the defendant’s misrepresentation to suffer injury. Id. at 858; TCA Bldg. Co. v.

Entech, Inc., 86 S.W.3d 667, 674 (Tex. App.—Austin 2002, no pet.). A party to an arm’s

length transaction must exercise ordinary care and reasonable diligence for the

protection of his own interests, and failure to do so is not excused by mere confidence in

the honesty and integrity of the other party. DRC Parts & Accessories, 112 S.W.3d at 864.

Therefore, reliance upon an oral representation that is directly contradicted by the

express, unambiguous terms of a written agreement between the parties is not justified

as a matter of law. Id.

       Even if we accept as true that the Haliburtons made the                     alleged

misrepresentations stated above, we cannot conclude that the Gilmores justifiably relied

on them to their detriment. We reiterate that the Bill of Sale and Certificates of Breeding

unambiguously show that Lindsey sold the subject cattle to Taylor and Mabree and that

an oral agreement that the transactions were to function more like leases than sales

would thus directly contradict the Bill of Sale and Certificates of Breeding.          The

Gilmores’ reliance on such a representation is therefore not justified as a matter of law.

See id. For the same reason, reliance on a representation by Kerry to reduce an oral

agreement that directly contradicts the Bill of Sale and Certificates of Breeding to

writing is not justified as a matter of law. See id.

       Nancy did testify that the Haliburtons were “like family” to the Gilmores by June

2007, indicating that the transactions were no longer being made at arm’s length;

however, even accepting Nancy’s testimony as true, the transaction regarding Clara’s

Haliburton v. Gilmore                                                               Page 22
Jade was made in 2006, soon after the Gilmores and Haliburtons had met. According to

Nancy, the Haliburtons orally agreed at that time to return Clara’s Jade to the Gilmores

at the end of her show career, and Kerry agreed to reduce this oral agreement to writing

but failed to do so. Thus, even though the transactions regarding Hope’s Cracker Jack

and Clara Belle were in 2007 and 2008, respectively, any reliance by the Gilmores on a

representation by Kerry to reduce these later agreements to writing when he never

reduced the agreement regarding Clara’s Jade to writing is not justified. Thus, the

fraud exception to the parol evidence rule does not apply in this case.

       In light of the foregoing, we conclude that the parol evidence rule applies in this

case and that the trial court therefore erred in admitting evidence of the oral agreements

contradicting the Bill of Sale and Certificates of Breeding. See TEX. BUS. & COM. CODE

ANN. § 2.202. We sustain the Haliburtons’ first issue. Furthermore, because the trial

court clearly relied on the Gilmores’ parol evidence, the Haliburtons were harmed, and

we need not address their second or third issues.

       The Haliburtons contend that without the parol evidence of the oral agreements

contradicting the Bill of Sale and Certificates of Breeding, this case should be reversed

and rendered, declaring the Haliburtons to be the owners of the cattle as reflected in the

writings and awarding them their fees and costs incurred in this matter. But because

the Haliburtons have not raised the issue that the evidence established their ownership

of the three cows as a matter of law, we reverse the judgment and remand the case to

the trial court for further proceedings consistent with this opinion.

Haliburton v. Gilmore                                                              Page 23
                                          REX D. DAVIS
                                          Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Reversed and remanded
Opinion delivered and filed May 2, 2013
[CV06]

Haliburton v. Gilmore                                    Page 24