Court Opinion

ID: 6317473
Source: CourtListenerOpinion
Date Created: 2022-02-25 08:13:08.68307+00
Date Added: 2024-06-11T09:01:31.116986
License: Public Domain

In The

                               Court of Appeals

                    Ninth District of Texas at Beaumont

                              __________________

                              NO. 09-19-00454-CV
                              __________________

    TEXAS A&M UNIVERSITY 12TH MAN FOUNDATION, Appellant

                                        V.

       NATHAN HINES, INDIVIDUALLY AND ON BEHALF OF
          ALL OTHERS SIMILARLY SITUATED, Appellees
__________________________________________________________________

                On Appeal from the 1A District Court
                       Newton County, Texas
                    Trial Cause No. CV-1814312
__________________________________________________________________

                         MEMORANDUM OPINION

      In this case, the plaintiff, Nathan Hines, 1 filed suit claiming the Texas A&M

University 12th Man Foundation (the Foundation) breached contractual promises to

its donors who donated money to the Permanently Endowed Scholarship Program,

a program used to fund athletic scholarships at Texas A&M. 2 After Hines sued, he

      1According to   Supplemental Briefing filed by the parties, Nathan Hines died
in 2020, after the appeal was filed.
      2Originally, the Foundation was “the Aggie Club.”

                                        1
asked the trial court to certify a class of similarly situated individuals so the suit

could proceed as a class action under Rule 42. 3 After the trial court granted the

motion, the Foundation challenged the trial court’s order certifying the suit as a class

action by filing an interlocutory appeal.4

      In the appeal, we must decide two questions: (1) whether questions common

to members of the putative class predominate over questions affecting only

individual members of the class; and (2) whether allowing the suit to proceed as a

class action suit is the superior method to fairly and efficiently resolve the parties’

dispute.5

      We conclude the answers to those questions is no, so we reverse the trial

court’s order certifying the class, as more fully explained below.

                                 Factual Background

      The record shows the Foundation, a non-profit, is an affiliate of Texas A&M

University. The Foundation performs two basic functions for the University. First,

it raises funds for the University’s athletic programs. Second, it manages ticket and

parking sales for University athletic events. Simply put, while the Foundation is

operated as a non-profit, alumni, students, and fans purchase tickets from the

Foundation to attend University athletic events, and they may donate money to the

      3Tex. R. Civ. P. 42 (Class Actions).
      4Tex. Civ.Prac. & Rem. Code. Ann. § 51.014(a)(3).
      5Tex. R. Civ. P. 42(b)(3).

                                        2
Foundation to support scholarships, awarded by Texas A&M, to athletes who attend

Texas A&M University.

      Beginning in the 1970s, the Foundation created the Permanently Endowed

Scholarship Program (the Program). The Program was used over several decades to

fund athletic scholarships that were awarded to athletes by the University. In return

for making large donations in designated amounts to the Program, Hines alleged the

Foundation promised donors priority seating and parking, benefits otherwise

unavailable to members of the Foundation that did not participate in the Program.

According to Hines, these benefits were contractual and offered in return as a quid

pro quo benefit for endowing an athletic scholarship awarded by the Program.

      When the Program ended, hundreds of individuals had become endowed

donors. By order, the trial court certified these individuals as the putative class.6 For

his part, Hines (the putative class representative) endowed two athletic scholarships

awarded by the Program. The first was a scholarship that he endowed beginning with

payments that he began making in 1989. The second was a scholarship he endowed

beginning with a single payment, paid in full in 1992.

      According to Hines, he made the 1989 endowment pursuant to an oral

agreement that he made with Harry Green, the Foundation’s executive director in

1989. Under the 1989 agreement, Hines alleged he agree to donate to the Program

      6The Permanently Endowed Scholarship Program ended in the 2000s.

                                           3
in return for two benefits: First, he promised to endow the scholarship in return for

the Foundation’s promise to provide him with tickets to the best seats available to

the Foundation for all home and away football games for the rest of Hines’ and his

wife’s lives; Second, in return for the same donation, the Foundation (through

Green) promised it would provide Hines the right to park in the best locations

available to the Foundation at all home games for the rest of Hines’ and his wife’s

lives.

         According to Hines, he made a similar arrangement with the Foundation’s

executive director Frank Shannon in 1992 when agreeing to endow a second athletic

scholarship under the Program. When Hines asked the trial court to certify his suit

as a class action, he presented evidence showing the Foundation orally agreed to

terms similar to the terms he reached with the Foundation with several other

members of the Foundation. In 1992, however, the Foundation changed it policies,

and began reducing any new agreements on any newly endowed scholarships in the

Program to writing. Second, that same year the Foundation quit offering prospective

donors complimentary tickets to football games; instead, it began to offer

prospective donors the right to purchase tickets to games at face value, even though

the tickets the Foundation offered would be located where those prospective donors

preferred to have their seats. Third, none of the prospective donors were offered

                                         4
benefits for life; instead, under the revised policies of the Foundation, the Foundation

made its benefits subject to a defined thirty-year term. 7

      Since the Foundation changed its policies over the years, and went from oral

to written policies too, members of the putative class have both written and oral

policies, so different members of the class have different terms that apply to their

contracts depending on what year the endowed donor created the athletic scholarship

under the Program at Texas A&M. Even so, Hines argues, a common thread runs

through the class claims. The thread that he asserts is common is that the Foundation

represented seating and parking privileges made available to the endowed donors

would be in the best locations available to the Foundation at no additional charge.

For convenience, we refer to Hines’ theory about his common benefit as his “best-

benefits claim.”

      On appeal, Hines agrees there is nothing in the record that documents, in

writing, the fact that the Foundation promised all members of the putative class that

each would receive a best-benefits claim by becoming an endowed donor under the

Program. Even so, Hines notes the Foundation does not dispute (and does not dispute

here) that the Foundation gave endowed donors, that is the members of the putative

class, the best seats that were available to the Foundation and the best parking

      7As  to corporate entities, the Foundation’s polices always provided that
corporate endowments were limited to twenty-five-year terms.
                                        5
available to the Foundation for many years after the donors created endowed

scholarships under the Program. For example, Hines points to his experience as

typical. He received preferential seats and parking in desirable locations at Kyle

Field for decades. On more than one occasion, he upgraded his seats at Kyle Field

at no charge. The record demonstrates other endowed donors did so as too.

      In 2006, the record shows the policies previously followed by the Foundation

changed when the Foundation created a priority system. Under the priority system,

the Foundation ranked the members of the Foundation (including the endowed

donors) and assigned each of the members points. The system was based on criteria,

which included each member’s annual contributions to the Foundation and to the

Foundation’s designated programs. Privileges allocated to the Foundation’s

members were derived from each member’s rank. Under the priority ranking system,

the members of the Foundation were required to contribute additional money or risk

losing their privileges, even if they were endowed donors under the Program.

      Even more changes occurred in 2015 when the Foundation instituted a plan to

reseat all season ticketholders as part of the renovations to Kyle Field. To obtain

seats, ticketholders (including members of the putative class) were required to make

capital or annual contributions, which were applied to the Kyle Field Capital

Campaign. For its part, the Foundation sent members of the putative class a letter

stating the Foundation would credit $2,000 per seat/per year toward that member’s

                                         6
annual or capital contribution. Yet the evidence presented by Hines shows the credit

offered by the Foundation was insufficient to allow members of the putative class to

obtain seats comparable to the seat that member previously held at Kyle Field before

the football stadium was renovated. According to Hines, the memo informing

members of the putative class about the capital contributions needed to renovate

Kyle Field is one of the facts common to all class members that shows the

Foundation breached its oral and written agreements to provide endowed donors

with the best seats and parking available to endowed donors at no additional cost as

a benefit of creating an athletic scholarship under the Program.

                              Procedural Background

      Hines and fourteen other plaintiffs sued the Foundation and the Trustees of

the Foundation in December 2017. 8 The suit alleged the Foundation, and the

Trustees breached the endowment contracts the Foundation made with the fourteen

plaintiffs. The plaintiffs also sued the defendants for promissory estoppel and breach

of fiduciary duty.

      8The Foundation moved to transfer     venue in the suit, alleging that venue was
improper because all or a substantial part of the events leading to the suit occurred
outside Newton County. The plaintiffs other than Hines then voluntarily agreed to
an order severing the case and agreed to transfer their claims to Brazos County. Only
Hines, a Newton County resident, remained in the suit in Newton County. After the
suit was severed, Hines amended his petition, brining suit individually and “on
behalf of all similarly situated purchasers of Defendant Texas A&M University 12th
Man Foundation ‘Permanently Endowed Scholarship Program’ agreements.”
                                           7
      In June 2019, Hines moved to certify a class of “all owners and beneficiaries”

of the Permanently Endowed Scholarship Program who had not released their claims

against the Foundation for “the imposition of additional charges or fees for home

and away football game seating benefits and home football parking benefits, and/or

for the diminution of those benefits.” Hines alleged the members of the putative class

met the requirements necessary for the court to certify his suit and allow it to proceed

as a class action.

      In the trial court, Hines claimed the suit could be maintained as a class action

because issues common to the putative class dominated over issues affecting only

individual members of the class. According to Hines, the Foundation breached all

promises to the members of the putative class in the same manner. Affidavits, signed

by former Foundation officers, reflect they told prospective donors, who became

endowed donors, they would receive tickets to games at no additional charge in

return for endowing athletic scholarships under the Program. Hines also points to

affidavits from some members of the putative class stating that one of the

Foundation’s executive directors, Green, told them that by donating to the Program,

endowed donors would continue to receive tickets to games and parking at no

additional charge.

      In the trial court, the Foundation argued that class claims did not dominate

over individual issues because questions about what promises may have been made

                                           8
to each donor depended on different conversations that occurred between different

Foundation officers over years when the Foundation’s policies differed given that

the oral agreements were never reduced to written form. To support that argument,

the Foundation pointed to the evidence in the record showing the variety of

agreements as to both their terms and the fact they are not memorialized in writing.

The Foundation concludes that trying the suit as a class action will require resolving

largely individualized issues, since none of the written terms of the oral agreements

address parking, seating, or provide that the benefits will be provided for life at no

added cost.

      In September 2019, the trial court conducted an evidentiary hearing on Hines’

motion to certify the suit as a class. In December 2019, the trial court signed an order

granting Hines’ motion. The order defines the class as follows:

      All owners and beneficiaries of a Texas A&M University 12th Man
      Foundation Permanently Endowed Scholarship Program Agreement
      who have not settled and released their claims against the 12th Man
      Foundation and its Trustees for the imposition of additional charges or
      fees for home and away football game seating benefits and home
      football parking benefits, and/or for the diminution of those benefits. 9

      9Nat’l   Gypsum Co. v. Kirbyville Indep. Sch. Dist., 770 S.W.2d 621, 627 (Tex.
App.—Beaumont 1989, writ dism’d w.o.j.) (In determining whether to certify a
class, trial courts may consider the pleadings and other material in the record, along
with the evidence presented at the certification hearing.).
                                          9
      The order includes findings of fact, conclusions of law, and a trial plan.10 In

finding predominance, the trial court’s class certification order states “the

Foundation made uniform promises to [members of the putative class] and that the

Foundation breached these promises in a uniform manner.” In its order, the trial

court rejected the Foundation’s argument that individual issues will dominate the

litigation, as it found no claims of members of the putative class (or the Foundation’s

defenses) would affect only individuals in trying the case. Based on that conclusion,

the trial court ruled that the substantive issues of the members of the putative class

were susceptible to proof on a class-wide basis in the trial of the case as a class-

action suit.

                                 Standard of Review

      Class actions are exceptions “to the usual rule that litigation is conducted by

and on behalf of the individual named parties only.”11 Departure from that rule is

justifiable only when the class representative has the same interest and injury as the

others in the class. 12 Under Texas law, trial courts determine whether a departure

      10Tex. R.   Civ. P. 42(c); Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 685
(Tex. 2002).
      11Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979).
      12Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348-49 (2011).

                                        10
from the usual rule is appropriate by applying the requirements in Rule 42. 13 The

party who moves for class certification bears the burden of proof under Rule 42. 14

      Rule 42(a) has four parts and provides that a suit may be maintained as a class

action “only if (1) the class is so numerous that joinder of all members is

impracticable, (2) there are questions of law, or fact common to the class, (3) the

claims or defenses of the representative parties are typical of the claims or defenses

of the class, and (4) the representative parties will fairly and adequately protect the

interests of the class.” 15 In addition to these four requirements, class actions must

meet additional requirements in Rule 42(b), including those in Rule 42(b)(3). 16 Rule

42(b)(3), which is our focus here, requires that courts determine whether the

questions of law or fact common to the members of the class predominate over the

questions that affect only individual members of the proposed class. 17 Since

“predominance is one of the most stringent prerequisites to class action

certification,” we consider it first because that question—the question of

predominance—is not a close issue on the record before us here. 18

      13Tex. R.   Civ. P. 42.
      14Stromboe, 102 S.W.3d at    694; Tex. R. Civ. P. 42(a).
      15Tex. R. Civ. P. 42(a).
      16Id. 42(b)
      17Id. 42(b)(3).
      18Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 205 (Tex. 2007).

                                          11
      In assessing predominance, courts must identify the substantive issues that

control the litigation, decide what issues will predominate in the case, and then

determine whether those issues are in fact common to the class. 19 “The test for

predominance is not whether common issues outnumber uncommon issues but. . .

whether common or individual issues will be the object of most of the efforts of the

litigants and the court.” 20 “If, after common issues are resolved, presenting and

resolving individual issues is likely to be an overwhelming or unmanageable task

for a single jury, then common issues do not predominate.” 21

      The Texas Supreme Court has instructed trial courts to perform a rigorous

analysis and go beyond the pleadings to understand the claims, defenses, relevant

facts, and substantive law before certifying a suit as a class-action suit.22 Generally,

determining whether a suit should be allowed to proceed as a class action involves

legal issues that are entangled with disputed facts, so a trial court’s certification order

“must indicate how the claims will likely be tried so that conformance with Rule 42

may be meaningfully evaluated.”23 That said, Rule 42 does not require that trial

      19Id.
      20Sw. Ref. Co., Inc. v. Bernal, 22 S.W.3d 425, 434 (Tex. 2000) (internal
quotations omitted); see also Stonebridge, 236 S.W.3d at 205.
      21Bernal, 22 S.W.3d at 434.
      22Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 696 (Tex. 2008);

Bernal, 22 S.W.3d at 435.
      23Bernal, 22 S.W.3d at 435; see Exxon Mobil Corp. v. Gill, 299 S.W.3d 124,

126 (Tex. 2009) (per curiam).
                                        12
courts adjudicate the merits of the parties’ claims before they may certify the suit as

a class action. 24 Even so, a trial court’s order certifying a class must explain what

issues are common to the class, what issues are individual to the members of the

class, why the issues common to the class predominate over the issues that are

individual to members of the class, and how the trial court is planning to handle the

trial of the issues that are individual to and not common to the class.25 Here, the trial

court found there were no individual issues, but as we explained below, we disagree.

      On appeal, orders certifying suits as class actions are reviewed under an abuse

of discretion standard.26 Under that standard, in certifying class actions, “[a] trial

court abuses its discretion if it acts arbitrarily, unreasonably, or without reference to

any guiding principles.”27 When reviewing a trial court’s order certifying a class, we

do not “indulge every presumption in the trial court’s favor, as compliance with the

class action requirements must be demonstrated rather than presumed.”28 Like this

Court, the trial court “must apply a rigorous analysis to determine whether all

certification requirements have been satisfied.”29

      24Union    Pac. Res. Grp., Inc. v. Hankins, 111 S.W.3d 69, 72 (Tex. 2003)
(stating that analyzing the substantive law for class-certification purposes requires
“far less searching than in a trial on the merits”).
       25Id. at 72-73.
       26Bowden, 247 S.W.3d at 696.
       27Id.
       28Id.
       29Id.

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                                        Analysis

      On appeal, the Foundation contends that the trial court erred in certifying the

class for three reasons: (1) common issues do not predominate over the question that

affects only individual members of the proposed class; (2) treatment of the claims in

a class is not superior to the fair and efficient adjudication of the parties’ controversy;

and (3) the class, as defined by the trial court, is defined an improper, fail-safe class.

      Hines sued the Foundation for breaching an alleged contract, an oral contract

that he claims gave him the right to receive tickets to A&M football games and

parking for life at no charge. But his contract claims depend on individualized proof

as to what he was promised, and his class claims revolve around what was promised

to other members of the putative class. The proof may or may not be the same.

Regardless of whether the proof is the same in each case, there will be fact issues in

each case as to whether the representations by the Foundation about the benefits

were material to the endowed donor in his or her decision to endow the scholarship

on the occasion in question, occasions that varied over time. We conclude the trial

court failed to conduct a rigorous analysis in concluding that there were no individual

issues that would be required to be decided based on individualized rather than class-

                                            14
wide proof given the fact that the transactions were based largely on oral

representations that were not reduced to writing. 30

      In proving the breach of uniform contract (unlike this case), the plaintiff

would have to prove (1) a valid contract existed; (2) the plaintiff performed or

tendered the performance contractually required; (3) the defendant breached the

contract by failing to perform or tender the performance required by the terms of its

contract; and (4) the plaintiff was damaged by the breach.31

      But here, there are hundreds of putative class members, none of whom have

uniform contracts with the Foundation. Some of the contracts are written, some are

oral, some are partially written and partially oral. Before 1993, all the agreements

under the Program were apparently oral. Sometime in 1992, the Foundation

attempted, by letter, to memorialize the oral agreements it made with members of

the Foundation under the Program. Yet nothing in those letters addresses rights to

seating or to parking. Nor do the letters contain any terms touching on Hines’ best-

benefits claim.

      30See Sw. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909, 921 (Tex.
2010) (noting courts have been reluctant to certify class claims, like promissory
estoppel, when proof of reliance is a required element). Porter-Garcia v. Travis Law
Firm, P.C., 564 S.W.3d 75, 87 (Tex. App.—Houston [1st Dist.] 2018, pet. denied);
(“In determining the existence of an oral contract, the court looks to the
communications between the parties and to the acts and circumstances surrounding
those communications.”).
      31See USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex.

2018).
                                          15
      While in some way Hines’ oral agreement is consistent with the oral

agreements described by other members of the putative class, the terms he described

he bargained for are not entirely consistent with the terms that apply to the others.

For instance, the terms differ as to their start and end dates, and as to payment. And

as to contracts that have written terms, those agreements provide that the contracts

cannot be modified unless the terms modifying the agreement are in writing.

      So is proceeding with Hines’ suit as a class action the superior and more

efficient method of resolving his dispute? 32 The controversy will require resolving

individualized statements about who said what and having a factfinder decide

whether, in that particular transaction, the representation was a quid pro quo in the

deal. The focus of the trial will be on what was said, the context in which what was

said occurred, and whether the statements in that context were material to that

specific endowed donor’s decision to donate money to Texas A&M University.33 It

follows that answering the question about what a single donor thought was material

to his or her decision as to tickets, seating, costs, and parking, would not necessarily

answer the question as to all donors.

      32Tex. R. Civ. P. 42(b)(3).
      33We   assume (without deciding) these transactions might be found by the
factfinder to have been contracts, not gifts. The question of whether they were gifts
rather than contracts was not argued in the trial court, nor was the argument
presented here.
                                          16
      Accordingly, we conclude the trial court abused its discretion by failing to

conduct a rigorous analysis in deciding whether Hines met the predominance

requirement of Rule 42(b)(3). 34

                                Promissory Estoppel

      For the same reasons, we conclude Hines failed to prove his promissory

estoppel claims were certifiable as a class. Under Texas law, promissory estoppel is

an equitable remedy, but it is unavailable when an express contract covers the subject

matter of the dispute.35 When an express contract does not govern the dispute, which

could be the case here depending on the factfinder’s ultimate findings in Hines’ case,

he or she may nevertheless be able to obtain a promissory estoppel remedy by

proving, (among other things) that the Foundation made a specific and definite

promise and that they relied on that promise to their detriment.36

      Regardless, exactly what the Foundation promised Hines, as well as the terms

of the promise, are matters requiring a trial. Here, Hines failed to present class-wide

proof to show the Foundation made a class-wide promise or that the endowed donors

relied on a class-wide, uniform promise in deciding to give Texas A&M money for

      34See   Stonebridge, 236 S.W.3d at 205 (noting inescapable “individual
differences between each class member’s experience with Stonebridge that could
determine in whose favor the equities weigh in resolving their claims”).
       35See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000).
       36See English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983); Davis v. Tex.

Farm Bureau Ins., 470 S.W.3d 97, 108 (Tex. App.—Houston [1st Dist.] 2015, no
pet.).
                                       17
the purpose of endowing athletic scholarships at the University. That type of proof—

meaning proof of a class-wide promise and class-wide reliance—is the type of proof

needed to support a decision certifying a promissory-estoppel class under Rule 42.37

It does not exist on the record before us here.

                                         Conclusion

      Over two decades ago, the Texas Supreme Court rejected the “certify now and

worry later” approach to class-action suits. 38 Here, Hines failed to prove that

individual issues could be tried in a class-action trial in a fair, manageable, or time-

efficient manner on a class-wide basis. 39 Consequently, we hold the trial court

abused its discretion in granting Hines’ motion to certify a class-action suit of “all

owners and beneficiaries of a Texas A&M University 12th Man Foundation

Permanently Endowed Scholarship Program Agreement who have not settled and

released their claims against the 12th Man Foundation and its Trustees for the

imposition of additional charges or fees for home and away football game seating

benefits and home football parking benefits, and/or for the diminution of those

benefits.”

      37SeeMktg. on Hold Inc., 308 S.W.3d at 921; Best Buy Co. v. Barrera, 248
S.W.3d 160, 163 (Tex. 2007).
     38Bernal, 22 S.W.3d at 435.
     39Stonebridge, 236 S.W.3d at 207.

                                     18
      We reverse the trial court’s Order Granting Plaintiff’s Motion For Class

Certification and Trial Plan. We remand the case to the trial court for further

proceedings consistent with the Court’s opinion.

      REVERSED AND REMANDED.

                                                   _________________________
                                                        HOLLIS HORTON
                                                             Justice

Submitted on May 26, 2021
Opinion Delivered February 24, 2022

Before Kreger, Horton and Johnson, JJ.

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