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Tauch v. Virginia Angel

Court of Appeals of Texas, Fourteenth District

July 25, 2019

KYLE TAUCH, Appellant
v.
VIRGINIA ANGEL, TRUSTEE FOR THE GOBSMACK GIFT TRUST, AS ASSIGNEE OF SOUTH STATE BANK, AND SOUTH STATE BANK, Appellees

          On Appeal from the 127th District Court Harris County, Texas Trial Court Cause No. 2016-33404

          Panel consists of Chief Justice Frost and Justices Jewell and Bourliot.

          MAJORITY OPINION

          Kevin Jewell, Justice.

         The dispositive issue presented in this appeal is whether appellant Kyle Tauch entered into a valid and enforceable settlement agreement with appellee South State Bank. Tauch appeals a summary judgment against him declaring that he and the bank do not have a settlement agreement. The trial court concluded that the bank impliedly revoked its settlement offer before Tauch attempted to accept it. We conclude as a matter of law that the bank made a settlement offer to Tauch, the bank did not impliedly revoke its offer before Tauch accepted, and consequently Tauch and the bank have a valid settlement agreement. Accordingly, we reverse the trial court's judgment and remand the case to the trial court for further proceedings.

         Background

         A district court in South Carolina rendered a $4.6 million judgment in First Federal Bank's favor against Tauch. South State Bank is First Federal Bank's successor in interest. South State Bank domesticated the judgment in Texas.

         On April 11, 2016, following prior negotiations to settle the outstanding judgment, South State Bank's senior vice president, James Holden, emailed Tauch, stating that Holden "received authority to release your judgment for net proceeds of $2, 000, 000 which is still over a 50% discount. If you find that you and your investors can make this happen, please let me know as quickly as possible as the bank will likely be look[ing] at other collection alternatives." Tauch did not immediately respond.

         Two days later, an attorney representing a third party, Virginia Angel, emailed Tauch's attorney and informed him that South State Bank had assigned its interest in the South Carolina judgment to Angel. Angel demanded immediate payment for the full amount of the judgment. At Tauch's request, Angel's attorney sent a copy of the assignment agreement ("Assignment Agreement") to Tauch's attorney by email at 5:23 p.m. on April 13. The Assignment Agreement's effective date was the next day, April 14, 2016. Shortly after receiving a copy of the Assignment Agreement, Tauch emailed Holden on April 13 at 6:12 p.m. and stated: "I have spoken with my investors and they are OK with your offer. We agree to the 2 million payment which is a release and not a purchase." South State Bank's attorney responded to Tauch by email, stating that the bank assigned the judgment before receiving Tauch's acceptance email to Holden, that the bank would not be forwarding any settlement paperwork, and that Tauch should make all payments on the judgment directly to the assignee, Angel.

         In May, Angel and South State Bank signed a "Clarification of Assignment." ("Clarification Agreement"). The Clarification Agreement states that the Assignment Agreement's April 14 effective date was a mistake and that the Assignment Agreement "was meant to be dated and effective on April 13, 2016."

         Angel then filed suit, seeking a declaratory judgment that, as a matter of law: (1) Tauch could not have accepted the bank's settlement offer on April 13 because Tauch's receipt of the Assignment Agreement, before he attempted to accept, terminated his power of acceptance; (2) Tauch's April 13 email accepting the bank's offer did not form a contract because essential terms are missing from the relevant emails; and (3) Tauch owes the full amount of the South Carolina judgment, plus interest, to Angel.

         Tauch filed counterclaims against Angel, seeking a declaratory judgment that his April 13 email to Holden constituted an acceptance of South State Bank's offer and formed a binding $2 million settlement agreement. He also asserted a claim for tortious interference with contract. Tauch filed a third-party petition against South State Bank, asserting a claim for breach of the settlement agreement.

         Angel and Tauch filed cross-motions for summary judgment on their competing declaratory judgment claims. Angel argued that South State Bank's execution of the Assignment Agreement, coupled with Tauch's receipt of the Assignment Agreement, impliedly revoked the bank's April 11 settlement offer, and that Tauch therefore had no power to accept the bank's offer on April 13 at 6:12 p.m. Tauch argued that his April 13 6:12 p.m. email constituted an acceptance of Holden's offer and created a binding and enforceable settlement contract.

         The trial court granted Angel's motion and implicitly denied Tauch's motion. The court concluded that Tauch could not have accepted the offer made by South State Bank to settle the South Carolina judgment because Tauch's power of acceptance terminated upon notice of, and Tauch's receipt of, the Assignment Agreement. Because the court held that Tauch has no binding contract with South State Bank to compromise and settle the South Carolina judgment, the court signed a final judgment that Tauch take nothing on his claims against Angel and South State Bank. The trial court awarded Angel and South State Bank their attorney's fees, in amounts agreed by all parties, but provided that Tauch could recover his fees from Angel and the bank if he prevailed on appeal.

         Analysis

         Tauch presents four issues for our review, but all are based on a central argument: he entered into a valid and binding settlement agreement with South State Bank on April 13 at 6:12 p.m. before the Assignment Agreement became effective.

         A. Standard of review

         The parties' cross-motions for summary judgment present a question of law regarding the existence of a settlement agreement. We review the trial court's order granting or denying summary judgment on cross-motions de novo. See Lane-Valente Indus. (Nat'l), Inc. v. J.P. Morgan Chase, N.A., 468 S.W.3d 200, 204 (Tex. App.-Houston [14th Dist.] 2015, no pet.); see also Wausau Underwriters Ins. Co. v. Wedel, 557 S.W.3d 554, 557 (Tex. 2018) ("A declaratory judgment granted on a traditional motion for summary judgment is reviewed de novo.") (internal quotation omitted). When both sides move for summary judgement and the trial court grants one motion and denies the other, we review both sides' summary judgment evidence to determine all questions presented. Lane-Valente Indus., 468 S.W.3d at 204. A movant is entitled to summary judgment if it establishes that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Id.

         B. The parties' cross-motions for summary judgment

         Tauch moved for summary judgment on his declaratory judgment claim, arguing that Holden's April 11 email and Tauch's April 13 email together constitute a valid, binding, and enforceable settlement agreement. Settlement agreements are governed by principles of contract law. See id. Under Texas law, a legally enforceable contract generally consists of: (1) an offer; (2) acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; (5) execution and delivery of the contract with the intent that it be mutual and binding; and (6) consideration. See Coleman v. Reich, 417 S.W.3d 488, 491 (Tex. App.-Houston [14th Dist.] 2013, no pet.); Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex. App.-Houston [14th Dist.] 2010, pet. denied).

         Angel opposed Tauch's motion on three grounds: (1) Holden's email was not an offer; (2) Tauch's email was not an acceptance; and (3) the emails together lack essential terms necessary to settlement.

         1. Was South State Bank's April 11 email an offer?

         We first address whether Tauch proved as a matter of law that Holden's April 11 email was an offer. An offer "must be reasonably definite in its terms and must sufficiently cover the essentials of the proposed transaction that, with an expression of assent, there will be a complete and definite agreement on all essential details." Principal Life Ins. Co. v. Revalen Dev., LLC, 358 S.W.3d 451, 455 (Tex. App.-Dallas 2012, pet. denied) (citing Edmunds v. Houston Lighting & Power Co., 472 S.W.2d 797, 798-99 (Tex. App.-Houston [14th Dist.] 1971, writ ref'd n.r.e)); see also Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 26 (Tex. App.-Houston [14th Dist.] 2005, no pet.) (offer must be clear and definite just as there must be a clear and definite acceptance of all terms contained in the offer); Restatement (Second) of Contracts § 24 (an offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it).

         Tauch and South State Bank engaged in a series of electronic mail communication in an attempt to settle the South Carolina judgment. In December 2015, Tauch sent Holden an email, "proposing a payment of $250, 000 to settle" the judgment. Holden responded that "the bank is unable to accept your settlement offer of $250, 000." Tauch then asked for "any direction on" what the bank would be willing to accept as a settlement. Holden responded that he could not "see the bank being able to entertain any settlement offers less than $1M given [Tauch's] judgment total. If [Tauch] [could] find some help to get [him] to that level," Holden indicated that he would be interested in further negotiations. In January 2016, Tauch again emailed Holden, proposing "payment of 1 million within 45 days of a settlement agreement which is in the form of a purchase of the judgment." Holden acknowledged receipt of that "email and offer" and stated that he would "put a package together today with the terms and submit it to [the bank's] senior management for final approval." After two months passed without approval from the bank, Tauch contacted Holden and said he was "willing to just settle the judgment for 1 million instead of purchasing the judgment."

         In response, Holden sent the following email to Tauch on April 11:

I received word . . . that the bank will not be able to accept your offer to sell your note/judgment or take a discounted settlement for the outright release price of $1M that you had offered. . . . To assist you in understanding what amount the bank would be able to accept, I did ask for a counter figure and received authority to release your judgment for net proceeds of $2, 000, 000 which is still over a 50% discount. If you find that you and your investors can make this happen, please let me know as quickly as possible as the bank will likely be look[ing] at other collection alternatives.

         The terms of Holden's April 11 email-to release the outstanding judgment in exchange for net proceeds of $2, 000, 000-are clear and definite. The email covers "the essentials of the proposed transaction" that, with an expression of Tauch's assent, "there will be a complete and definite agreement." Principal Life Ins. Co., 358 S.W.3d at 455; see also Advantage Physical Therapy, 165 S.W.3d at 26.

         In opposition, Angel contends that Holden's April 11 email was exploratory, and not a firm offer. Angel likens Holden's email to an invitation for an offer:

A writes B, "I am eager to sell my house. I would consider $20, 000 for it." B promptly answers, "I will buy your house for $20, 000 cash." There is no contract. A's letter is a request or suggestion that an offer be made to him. B has made an offer.

         Restatement (Second) of Contracts § 26, illus. 4.

         We disagree. Nothing in Holden's email indicates that the bank would merely consider releasing the judgment for $2 million if Tauch offered to do so. Rather, Holden's email makes clear that he had "authority to release [Tauch's] judgment" for a sum certain and that, upon Tauch's assent to Holden's $2 million offer, the parties would conclude their dealing. Holden was awaiting a response from Tauch whether he could "make this happen." Holden's April 11 email is both a rejection of Tauch's $1 million offer and a clear counteroffer to release the judgment in exchange for $2 million. We hold that Holden's April email constitutes an offer as a matter of law.

         2. Was Tauch's April 13 email an acceptance?

         The next issue is whether Tauch proved as a matter of law that he accepted the bank's offer. An offeree must communicate a clear and definite acceptance of all terms contained in the offer. See Advantage Physical Therapy, 165 S.W.3d at 26; see also Restatement (Second) of Contracts § 50(1) (acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer). The offeree must accept in strict compliance with the material terms of the offer. An acceptance that is conditioned on terms at variance with those in the offer operates as a counteroffer and terminates the original offer. See Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 512 (Tex. 2014).

         In response to Holden's April 11 offer, Tauch sent Holden an email on April 13 at 6:12 p.m., stating:

I have spoken with my investors and they are OK with your offer. We agree to the 2 million payment which is a release and not a purchase. Please send paperwork so I can review.

         Tauch's response accepted the material terms of Holden's offer. He "agree[d] to" the bank's offer of a "2 million payment" to release the outstanding judgment. He did not vary the terms of Holden's offer, nor was his acceptance equivocal or conditional; thus, Tauch's email is a clear and definite acceptance of all material terms contained in Holden's offer. See, e.g., Angelou v. African Overseas Union, 33 S.W.3d 269, 279 (Tex. App.-Houston [14th Dist.] 2000, no pet.) ("Angelou's letter did not vary the terms of AOU's offer (e.g., that she would only, say, accept the award in Dallas), nor was it in any way equivocal (e.g., she would only 'consider' coming); thus, her acceptance was in strict compliance with the terms of AOU's offer.").

         Angel contends, however, that by requesting paperwork for review Tauch contemplated additional terms as part of the settlement agreement. Again, we disagree. Tauch's acceptance was not conditioned on any particular detail, such as further documentation; the settlement was therefore binding upon his acceptance so long as the other contract elements are met. See, e.g., MKM Eng'rs, Inc v. Guzder, 476 S.W.3d 770, 779 (Tex. App.-Houston [14th Dist.] 2015, no pet.) ("[T]he Rule 11 Agreement is not unenforceable merely because the parties contemplated taking additional actions and executing a final settlement agreement at a later date."); see also Lerer v. Lerer, No. 05-02-00124-CV, 2002 WL 31656109, at *3 (Tex. App.-Dallas Nov. 26, 2002, pet. denied) (not designated for publication) (although mediated settlement agreement "contemplated the drafting of 'more formal settlement documents,' releases, and dismissals, it did not provide the parties' agreement was contingent on or subject to the completion of any of these documents," and so the court held that the parties intended to be bound to the agreement as a matter of law); Restatement (Second) of Contracts § 27 (manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof).

         Angel's next argument presents the key issue in the case. She contends that Tauch could not have accepted the offer because Tauch's power of acceptance terminated before he sent the April 13 email. According to Angel, South State Bank revoked its offer to settle by assigning its rights under the judgment ...


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