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Language People, Inc. v. Barish

Court of Appeals of Texas, Third District, Austin

October 9, 2019

Language People, Inc. and Deaf Nation Enterprises, Inc., Appellants
v.
Joel Barish, Jed Barish, and DeafNation, Inc., Appellees

          FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-16-000042, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Kelly and Smith

          MEMORANDUM OPINION

          JEFF ROSE, CHIEF JUSTICE

         This dispute arises from a proposed corporate merger gone awry. Appellants Language People, Inc. and Deaf Nation Enterprises, Inc. (Enterprises)[1] challenge the district court's final judgment adopting the jury's findings of fraud and breach of contract and awarding damages and attorneys' fees to appellees Joel Barish, Jed Barish, and DeafNation, Inc. Appellants dispute the jury's findings and assert that the district court made multiple mistakes of law. We will affirm the district court's judgment.

         BACKGROUND

         Language People is a California corporation that provides commercial interpretation and translation services, and Enterprises is a wholly owned subsidiary of Language People. DeafNation is a Texas corporation jointly owned by brothers Joel and Jed Barish. DeafNation produces "Expos," conventions held throughout the United States for individuals with hearing impairments. In January 2015, Language People entered into a Memorandum of Understanding (Memorandum) with the Barishes and DeafNation under which Language People agreed that it would purchase most of DeafNation's assets and that it would create Enterprises, a new subsidiary. The parties also agreed that the Barishes would serve as officers of Enterprises "or one of the other anticipated newly formed subsidiary corporations as deemed appropriate," each receiving $100, 000 a year and "the same benefits as Executives are offered at Language People, Inc. at this time." Under the Memorandum, which was signed by Language People and the Barishes on behalf of DeafNation, "[t]he rights to the assets of sale by DeafNation shall belong to Language People and it will ultimately put those assets into" Enterprises. In April 2015, Enterprises, Joel Barish as CEO of DeafNation, and the Barishes as individuals signed a Purchase Agreement setting out the specifics of Enterprises' purchase of DeafNation's assets. Also in April 2015, Enterprises and the Barishes signed separate Employment Agreements providing each brother a $100, 000 base salary and other compensation and benefits. We will refer to the four contracts collectively as the Agreement.

         According to the Barishes, Language People promptly created the Enterprises entity. It also applied for a trademark of the DeafNation logo, listing itself as owner, without telling the Barishes or DeafNation. The Barishes testified that Jed moved to California to begin working for Language People while Joel remained in Texas to continue coordinating the Expos and to oversee the transfer of DeafNation's assets to Enterprises. Language People, however, never completed its purchase of DeafNation's assets or compensated the Barish brothers. Jed resigned after three months in California, at which point Language People notified him that he was in breach of his contract and threatened to enforce a non-compete clause against him.

         Appellants alleged that the Barish brothers commingled personal and corporate assets and diverted tens or hundreds of thousands of dollars from the corporate bank accounts for personal use; never provided the financial documents necessary to proceed with the Agreement; and refused to allow Language People to participate in the Expos. Language People threatened to pursue claims for breach in August of 2015, asserting that the Barishes had removed corporate property from the Austin offices and that Jed Barish was planning to start a new competing entity. Language People's executives instructed Joel to discontinue any communication with his brother regarding Language People, Enterprises, and DeafNation.

         After a year passed with no significant progress under the Agreement, the Barish brothers and DeafNation filed suit in Travis County, seeking damages and declaratory relief, alleging claims for fraudulent inducement and breach of the Agreement. Language People countered with claims sounding in contract, tort, and equity. The case was tried to a jury with the assistance of several American Sign Language translators.[2] The jury found Language People liable for breach and fraud and found no liability on the part of the Barish brothers or DeafNation. Based on the jury's findings and appellees' election of remedies, the district court rescinded the contract, awarding appellees over $150, 000 in restitution damages and $334, 741.25 in attorneys' fees. Language People now appeals.

         DISCUSSION

         Language People argues that there is no evidentiary support for the adverse jury findings against it and that the district court made a number of erroneous rulings. We will consolidate the arguments for discussion. See Tex. R. App. P. 47.1; Gene Hamon Ford, Inc. v. David McDavid Nissan, Inc., 997 S.W.2d 298, 304 n.9 (Tex. App.-Austin 1999, pet. denied).

         Denial of Continuance

         We first address Language People's argument that the district court improperly denied its request for continuance of trial. We will not disturb an order denying a motion for continuance unless the trial court has committed a clear abuse of discretion. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004). A trial court abuses its discretion when it "reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id. In deciding whether a trial court has abused its discretion in denying a motion for continuance related to discovery, we consider the length of time the case was on file, the materiality and purpose of the discovery sought, and whether the party had exercised due diligence to obtain the discovery. Id.

         On February 20, 2018, Language People filed a motion for continuance, its second, [3] seeking delay of a February 26, 2018 trial setting. Language People asserted that in a December 2017 hearing, the district court had orally denied Language People's motion to compel but had not yet signed an order to that effect. Language People stated that it intended to seek review of that ruling through mandamus in this Court and that a continuance was necessary because it could not "proceed to trial or effectively pursue appellate review of the [district court's] rulings in the absence of a signed and duly entered Order on its Motion to Compel." On February 22, two separate orders were signed by different trial judges-one ruling on the motion to compel, and the other denying Language People's second motion for continuance.[4] On February 26, Language People filed a third motion for continuance, asserting that a continuance was warranted because it had filed in this Court a petition for writ of mandamus related to the verbal rulings on the motion to compel.[5] At a pretrial hearing held that same day, the district court denied Language People's third motion for continuance, stating that counsel should have contacted the court to get a signed order on the motion to compel; that the order on the motion to compel signed on February 22 was the same order that counsel for both sides had signed as to form; that this Court had denied Language People's petition for writ of mandamus that morning; and that the rulings on the motion to compel appeared to be correct. Based on this record, Language People has not shown that the district court abused its discretion in denying the second and third requests for continuance. See id. We overrule the issue.

         Findings of Liability

         Language People contends that the district court erred in entering judgment against it, relying largely on an argument that the contracts obligate Enterprises-not Language People-to purchase DeafNation's assets and to pay the Barishes.

         "Under generally accepted principles of contract interpretation, all writings that pertain to the same transaction will be considered together, even if they were executed at different times and do not expressly refer to one another." Burlington Res. Oil & Gas Co. v. Texas Crude Energy, LLC, 573 S.W.3d 198, 208 (Tex. 2019) (quoting DeWitt Cty. Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999)). That rule may apply even if the various contracts are not between the same parties. Jones v. Kelley, 614 S.W.2d 95, 98 (Tex. 1981); Miles v. Martin, 321 S.W.2d 62, 66 (Tex. 1959); Great Atl. Life Ins. Co. v. Harris, 723 S.W.2d 329, 333 (Tex. App.-Austin 1987, writ dism'd).

         There is no genuine dispute here that the Memorandum, the Purchase Agreement, and the Employment Agreements all pertain to the same transaction-i.e., Language People's purchase of DeafNation's assets-and, indeed, Language People asserts that the Memorandum, the Purchase Agreement, and the two Employment Agreements are the "four agreements that formed the transaction." Instead, Language People argues that clauses in the Purchase Agreement and Employment Agreements extinguish any other obligations to which Language People might be held and that "well established rules pertaining to the construction of multiple contracts that comprise a transaction dictate that the [Purchase Agreement] and Employment Agreements control to the extent of any conflict" with the terms of the Memorandum.

         The Purchase Agreement states, "This Agreement . . . supersede[s] all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof." The Employment Agreements similarly provide, "Unless expressly provided hereunder, this Agreement constitutes the total and complete agreement of the parties regarding Employee's employment and supersedes all prior understandings and agreements, and there are no other representations, understandings or agreements." However, Language People was not party to either the Purchase Agreement or the Employment Agreements-Enterprises executed those contracts pursuant to the terms of the Memorandum. Thus, those clauses bind Enterprises but do not extinguish Language People's obligations under the Memorandum.

         To the extent that Language People relies on the merger doctrine, which provides that "prior or contemporaneous agreements between the same parties, concerning the same subject matter, are absorbed into a subsequent agreement," Springs Window Fashions Div., Inc. v. Blind Maker, Inc., 184 S.W.3d 840, 869 (Tex. App.-Austin 2006, pet. granted, judgment vacated w.r.m.), under that doctrine, the latter contract "must be between the same parties as the first, must embrace the same subject matter, and must have been so intended by the parties," Fish v. Tandy Corp., 948 S.W.2d 886, 898-99 (Tex. App.-Fort Worth 1997, writ denied); see Spring Windows, 184 S.W.3d at 869. As noted, Language People was not party to the later three contracts containing the merger clauses, nor do the four contracts comprising the Agreement conflict so that Language People's obligations in the Memorandum may not be enforced. See The Courage Co. v. The Chemshare Corp., 93 S.W.3d 323, 333 (Tex. App.-Houston [14th Dist.] 2002, no pet.) (in construing multiple documents together, courts may "in appropriate instances" construe documents as if "part of a single, unified instrument," and later contract will prevail "to the extent that they are inconsistent"; portions of first contract that do not conflict with second may be enforced).

         In executing the Memorandum, signatories Language People, DeafNation, and the Barishes "acknowledge[d] and agree[d] that all of the terms contained in this [Memorandum] are binding and enforceable" against each party. The Memorandum sets forth the essential terms of the asset purchase and the Barishes' employment and expressly anticipates the execution of the Purchase Agreement and the Employment Agreements. Language People was bound to comply with the Memorandum's contractual provisions, which specifically describe Language People's obligations with regard to the Barishes and DeafNation. We overrule Language People's assertions that its liability was extinguished by the merger clauses contained in the three later agreements to which it was not a party.

         Sufficiency of the Evidence

         Language People next contends the evidence is legally and factually insufficient to support the jury's findings: 1) that Language People breached the Agreement; 2) that Language People committed statutory and common law fraud; and 3) that DeafNation and the Barishes were not unjustly enriched at Language People's expense.

         "When a party attacks the legal sufficiency of an adverse finding on an issue on which it did not have the burden of proof, it must demonstrate on appeal that no evidence supports the adverse finding." Graham Cent. Station, Inc. v. Peña, 442 S.W.3d 261, 263 (Tex. 2014) (per curiam). With respect to findings on issues on which the party had the burden of proof at trial, it must "demonstrate that the evidence establishes, as a matter of law, all vital facts in support of the issue." Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). In conducting our legal-sufficiency review, "we credit evidence that supports the verdict if reasonable jurors could have done so and disregard contrary evidence unless reasonable jurors could not have done so." Peña, 442 S.W.3d at 263 (quoting Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Dev. & Research Corp., 299 S.W.3d 106, 115 (Tex. 2009)). "The final test for legal sufficiency must always be 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). As for factual sufficiency, if the party did not have the burden of proof, it must show that there is insufficient evidence to support the adverse finding. In re Estate of Matthews III, 510 S.W.3d 106, 117 (Tex. App.-San Antonio 2016, pet. denied). If it had the burden of proof, the party must demonstrate that the adverse finding is against the great weight and preponderance of the evidence. Dow Chem., 46 S.W.3d at 242. We consider all the evidence and will only reverse "if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust." Id.

         Sufficiency as to the Breach of Contract Claims

         Language People asserts that there is no evidence to support the jury's finding that it breached the Agreement with DeafNation and the Barish brothers. See Peña, 442 S.W.3d at 263. A party breaches a contract when it fails or refuses to do something it has promised to do. Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.-Houston [14th Dist.] 2006, pet. denied).

         The jury answered "yes" when asked:

Do you find that the Memorandum of Understanding, the Asset Purchase and the Employment Agreements together ...

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