United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE
issue remains in this case-whether Defendants Tammy
O'Connor and Michael Stewart can be bound and held liable
for breaching a contract they never signed. The Court
previously granted summary judgment against O'Connor and
Stewart on all of their claims relating to the sale of their
company to Atherio, Inc. Doc. 211, Mem. Op. & Order. But
the Court did not reach the issue of now-Plaintiff Jason
Cory's counterclaim against Defendants. Cory's
counterclaim asserts that O'Connor and Stewart breached a
different agreement-the Omnibus Compromise and Release
Agreement (the “Omnibus Agreement”)-that entitles
Cory to damages and attorneys' fees incurred in defending
against O'Connor and Stewart's original claims.
See Doc. 161, Cory's Answer & Countercl.,
¶¶ 350-73. The Omnibus Agreement was entered into
by Cory, Atherio (through its representatives), and a related
party to, among other things, terminate Cory's employment
with Atherio. The Omnibus Agreement also contained terms
under which Cory, Atherio, and other Atherio parties would
release any claims they had or might have had against each
other. O'Connor and Stewart-Atherio shareholders at the
time-did not sign the Omnibus Agreement. But Cory nonetheless
argues they should be bound by this release provision because
(1) their agent had authority to bind them to the Omnibus
Agreement or (2) they accepted the benefits of the Omnibus
Agreement. The parties have filed crossmotions for summary
judgment on these issues. After reviewing the briefing, the
Court DENIES Cory's motion for summary
judgment (Doc. 218) and GRANTS Defendants
O'Connor and Stewart's motion for summary judgment
(Doc. 216). Because no other issues remain in this matter, a
final judgment will follow this Order.
factual background of this case has been recounted in the
Court's prior opinions (Docs. 100, 109, 152, & 211).
The Court discusses only the facts pertinent to the remaining
issues in the case.
O'Connor and Michael Stewart sold their ownership
interests in their technology company to Atherio, Inc. in
June 2013. Doc. 224, Defs.' Resp., 3. At the time of this
transaction, Jason Cory was Atherio's chief executive
officer. Doc. 219, Cory's Br. Summ. J., 2. In January of
2014, a dispute arose between Cory and Atherio's other
executives based on allegations of potential company
mismanagement. Id.; Doc. 224, Defs.' Resp., 3.
Atherio's board placed Cory on unpaid leave, and Cory and
the Atherio executives began negotiating a resolution. Doc.
224, Defs.' Resp., 3-4. In May of 2014, Atherio, Cory,
and Prudent Capital (Atherio's mezzanine lender) reached
an agreement on the terms of Cory's exit from Atherio-the
Omnibus Agreement. Doc. 217, Defs.' Br. Summ. J., 1; Doc.
217-4, Defs.' App., 256-269.
to this Order, § 15 of the Omnibus Agreement provides:
Atherio Parties' Cory Parties Release: Expressly
subject to Section 15.1 hereof (which obligations
are expressly not released hereby), upon the Effective Date,
Atherio, any Affiliate of Atherio, and any
Atherio Party hereby release, remise, and forever discharge
Cory and the Cory Parties from any and all rights, claims,
demands, Actions, causes of action, losses, expenses and
judgments, whether known or unknown, suspected
or unsuspected, accrued or not accrued, to which Atherio, any
Affiliate of Atherio, or the Atherio Parties have, may have,
or may claim to have against, Cory or any of the Cory Parties
provided, however, that Atherio, any Affiliate of Atherio,
and any Atherio Party does not waive, relinquish or may
release any of its rights or any of the obligations of Cory,
arising out of this Agreement.
Doc. 217-4, Defs.' App., 262 (emphasis added). A previous
section of the Omnibus Agreement defines “Atherio
Parties” as “shareholders (including Furst, Farb,
Dinkel, Tammy O'Connor, Michael S. Stewart, and
Pickett).” Id. at 261.
Omnibus Agreement was signed and executed in May of 2014 by
Cory, Greg Furst-on behalf of Atherio as its CEO at the
time-and Steven Schwartz, on behalf of Prudent Capital.
Id. at 267-69. It is undisputed that O'Connor
and Stewart did not sign the Omnibus Agreement. Doc. 217,
Defs.' Br. Summ. J., 1; Doc. 219, Cory's Br. Summ.
J., 1. In fact, they argue that they never saw the Omnibus
Agreement until a subsequent legal proceeding in 2015.
Id. at 7. O'Connor and Stewart argue that until
they saw the agreement in that proceeding, they never knew it
included a term (§ 15) that purported to release their
personal claims against Cory. Id.
on the other hand, argues that Furst had the authority to
bind O'Connor and Stewart to the Omnibus Agreement based
on discussions he had with them. Doc. 219, Cory's Br.
Summ. J., 5-6 (citing Furst's Dep.). Alternatively, Cory
claims that the Omnibus Agreement included provisions that
benefitted the Defendants, such as an indemnification
provision, and that they accepted these benefits.
Id. at 6-7. Finally, Cory argues that O'Connor
and Stewart are liable to him for damages and attorneys'
fees because they violated the release provision cited above
and breached the Omnibus Agreement when they originally
brought this suit against him. Id. at 15-17.
January 18, 2019, both sides filed crossmotions for summary
judgment on Cory's breach of contract claim. Cory filed
his motion for summary judgment (Doc. 218), in which he
asserts O'Connor and Stewart are bound by the Omnibus
Agreement as a matter of law. O'Connor and Stewart filed
their motion for summary judgment on the same issue, in which
they argue that Cory has failed to create a genuine issue of
material fact on his theories of liability. Both motions have
been fully briefed, and the Court now considers whether
O'Connor and Stewart can be bound by this agreement.
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A dispute “is ‘genuine'
if the evidence is sufficient for a reasonable jury to return
a verdict for the non-moving party.” Burrell v. Dr.
Pepper/Seven Up Bottling Grp., 482 F.3d 408, 411 (5th
Cir. 2007). And a fact “is ‘material' if its
resolution could affect the outcome of the action.”
summary-judgment movant bears the burden of proving that no
genuine issue of material fact exists. Latimer v.
Smithkline & French Labs., 919 F.2d 301, 303 (5th
Cir. 1990). Usually, this requires the movant to identify
“those portions of the pleadings, depositions, answers
to interrogatories, and admissions on file, together with
affidavits, if any, which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation
marks omitted). But if the non-movant ultimately bears the
burden of proof at trial, the movant may satisfy its burden
just by pointing to the absence of evidence supporting the
non-movant's case. Id. at 322-23.
movant meets that burden, then it falls to the non-movant to
“show with significant probative evidence that there
exists a genuine issue of material fact.” Hamilton
v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir.
2000) (internal quotation marks omitted) (citing Conkling
v. Turner, 18 F.3d 1285, 1295 (5th Cir. 1994)). And
significant probative evidence is just that: significant.
See Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994) (per curiam). “[M]etaphysical doubt as
to material facts, ” “conclusory allegations,
” “unsubstantiated assertions, ” or a mere
“scintilla of evidence” will not do.
Id.(internal citations and quotation marks omitted).
Rather, “the non-movant must go beyond the pleadings
and present specific facts indicating a genuine issue for
trial.” Bluebonnet Hotel Ventures, L.L.C. v. Wells
Fargo Bank, N.A., 754 F.3d 272, 276 (5th Cir. 2014)
(citing Celotex, 477 U.S. at 324).
sure, the court views evidence in the light most favorable to
the non-movant when determining whether a genuine issue
exists. Munoz v. Orr, 200 F.3d 291, 302 (5th Cir.
2000). The presence of crossmotions does not change this
approach: The court will “review each party's
motion independently, viewing the evidence and inferences in
the light most favorable to the nonmoving party.”
Ford Motor Co. v. Tex. Dep't of Transp., 264
F.3d 493, 498 (5th Cir. 2001). But it need not “sift
through the record in search of evidence to support a
party's opposition to summary judgment.” Ragas
v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.
1998) (quoting Skotak v. Tenneco Resins, Inc., 953
F.2d 909, 915-16 & n.7 (5th Cir. 1992)). Simply put, the
non-movant must “identify specific evidence in the
record” and “articulate the precise manner in
which that evidence supports [its] claim.” Id.
If it cannot, then the court must grant summary judgment.
Little, 37 F.3d at 1076.
Court must decide if O'Connor and Stewart-nonsignatories
to the Omnibus Agreement-can nonetheless be bound by it and
held liable for breaching it. The Court asked the parties to
address which principles of law would support such liability.
Doc. 213, Status Report Order. Cory argues that O'Connor
and Stewart can be held liable under (1) agency law or (2) a
ratification/adoption theory. Doc. 219, Cory's Br. Summ.
J., 1. The Court addresses each theory in turn.
issue under this theory is whether Greg Furst, as an agent of
O'Connor and Stewart, had their authority to bind them to
the Omnibus Agreement. Under Texas law,  “[a]n agent
cannot bind a principal absent either actual or apparent
authority.” Sanders v. Total Heat & Air,
Inc., 248 S.W.3d 907, 913 (Tex. App.-Dallas 2008, no
pet.). “Texas law does not presume agency, and the
party who alleges it has the burden of proving it.”
IRA Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex.
2007). “An agent's authority to act on behalf of a
principal depends on some communication by the principal
either to the agent (actual or express authority) or to the
third party (apparent or implied authority).”
Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007).
Court will first determine whether the summary-judgment
evidence supports a finding of actual authority and then
whether the ...