Opinion
No. 07-15-00405-CV
08-28-2017
BARBARA JEAN SUSARABA, APPELLANT v. JOHN ROYAL BATES, APPELLEE
On Appeal from the County Court at Law No. 2 Travis County, Texas
Trial Court No. C-1-CV-14-004939, Honorable Eric Shepperd, Presiding
MEMORANDUM OPINION
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
Appellant Barbara Jean Susaraba appeals the trial court's order granting summary judgment in favor of appellee John Royal Bates. Susaraba challenges the trial court's order through two issues. We will reverse the court's judgment.
Background
In 2007, Susaraba loaned money to her daughter and son-in-law, Kathleen and appellee John Royal Bates, to help them start a business. The Bates signed a promissory note in the amount of $106,242, the terms of which stated Kathleen and John were jointly and severally liable for the debt. The payments were to be made through forty-eight monthly installments, beginning in December 2007, with interest, until the debt was paid in full. The business, which they incorporated as Austin Beauty and Health, Inc., was not profitable. The last payment to Susaraba was made in July 2011.
In May 2011, Kathleen filed for divorce against John. The January 2012 final divorce decree provided that John and Kathleen each would be liable for 50% of the remaining liability on the note. Kathleen was awarded ownership of the business.
In March 2014, Kathleen and Susaraba signed an instrument entitled "Lien in Lieu of Judgment" giving Susaraba a security interest in the business's equipment. John did not sign the lien instrument.
The text of the lien instrument reads, in full:
I, Barbara Jean Susaraba, hereby place a lien on the Beautytek equipment and all other equipment and furnishings related to or owned by Austin Beauty and Health, Inc. in an effort to secure a personal debt.
The original amount of the note dated September 17, 2007 was $106.242.00, payable to Barbara Jean Susaraba by John and Kathy Bates, husband and wife.
This money was loaned to John and Kathy Bates personally to purchase the Beautytek, a major piece of equipment, which is the basis of Austin Beauty and Health, Inc.
There have been no payments made on this debt since February 17, 2010.
The balance of this debt, $70,000 was acknowledged in the divorce proceedings of John and Kathy Bates which became final January 20, 2012.
According to the Final Decree of Divorce each party is responsible for the payment of one-half of this debt ($35,000 each). However, as the creditor I did not agree to this and am not subject to the terms of the divorce court rulings in respect to this debt and will look to both parties for full payment according to their ability to pay.
It has become clear that Austin Beauty and Health, Inc. and Kathy Bates are unable to pay any portion of this debt. Kathy Bates has agreed to this lien in lieu of a judgment.
Susaraba filed suit against John in May 2014 and sent demand for payment in June 2014. John did not respond to the demand and did not remit further payments.
In February 2015, the trial court determined Susaraba was barred by the statute of limitations from recovering any installment payments missed on or before May 30, 2010. John later filed a motion for summary judgment asserting that the lien instrument constituted an accord and satisfaction or a release of his obligations under the note. After a hearing, the trial court granted the motion. Susaraba appeals.
Analysis
A defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff's causes of action or if it conclusively establishes all elements of an affirmative defense. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010). Once the defendant establishes a right to summary judgment as a matter of law, the burden shifts to the plaintiff to present evidence raising a genuine issue of material fact. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79 (Tex. 1979); Scown v. Neie, 225 S.W.3d 303, 307 (Tex. App.—El Paso 2006, pet. denied). We review the grant or denial of a traditional motion for summary judgment de novo. Valence Operating Company v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Texas Integrated Conveyor Systems, Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 365 (Tex. App.—Dallas 2009, pet. denied). Under this standard, John had the burden to establish that the lien in lieu of judgment constituted an accord and satisfaction, entitling him to judgment as a matter of law.
An accord and satisfaction exists when parties agree to discharge an existing obligation in a manner other than in accordance with the terms of their original contract. Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. 1969). The doctrine of accord and satisfaction is based on the creation of a new contract, express or implied, by which the parties specifically and intentionally agree to the discharge of one of the parties' existing obligations in a manner otherwise than originally agreed. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 863 (Tex. 2000). To prove accord and satisfaction, the evidence must establish an assent of the parties to an agreement that the amount paid by the debtor to the creditor was in full satisfaction of the entire claim. Jenkins, 449 S.W.2d at 455. The evidence must demonstrate the parties' unmistakable communication that the different performance will discharge the existing obligation, and their "agreement to discharge the existing obligation [must be] plain, definite, certain, clear, full, explicit and not susceptible of any other interpretation." Honeycutt v. Billingsley, 992 S.W.2d 570, 577 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) (citing Jenkins, 449 S.W.2d at 455).
Because an "accord" is in essence a contract or agreement, the rules of construction applicable to contracts apply. See Hycarbex, Inc. v. Anglo-Suisse, Inc., 927 S.W.2d 103, 108 (Tex. App.—Houston [14th Dist.] 1996, no writ) (citing Harris v. Rowe, 593 S.W.2d 303, 306 (Tex. 1979) (applying rules of contract construction to escrow agreement alleged to be an accord)). In construing a written contract, the court's primary concern is to ascertain the true intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To achieve this objective, the court "should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless." Id. (emphasis in original). No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id.
In Jenkins, the court held that where the parties' agreement to an accord and satisfaction "rest[s] in implication the facts proved must irresistibly point to such conclusion." 449 S.W.2d at 455. Susaraba notes that John was not a party to the lien instrument. It is undisputed he played no part in its drafting or execution and was unaware of the document at the time it was signed. John undertook no new obligation under the instrument, and any effect of the instrument on his obligation under the note arises only by implication. We agree with Susaraba that the instrument she and her daughter signed does not establish a new contract with John with the unmistakable certainty and clarity the law requires. See Lopez, 22 S.W.3d at 863; Honeycutt, 992 S.W.2d at 577.
The instrument contains language that Kathleen "has agreed to this lien in lieu of a judgment," but it contains also language the instrument is made "in an effort to secure a personal debt," and that Susaraba "will look to both parties for full payment according to their ability to pay." Kathleen was awarded, through the decree of divorce, the business for which the equipment was purchased with the money secured by the note. The notion that Susaraba intended by the instrument to accept a lien on the business's equipment and furnishings in satisfaction of John's obligation on the note is not so clear, full, and explicit that it is not susceptible of any other interpretation.
In the trial court, John cited Morrow Development Corp. v. American Band and Trust Co., 875 P.2d 411, 414 (Okla.1994) and In re Anderson, No. 95-15419-SSM, 1997 Bankr. LEXIS 2480 (Bankr. E.D. Va. Aug. 29, 1997), cases involving a mortgagor's delivery of a deed in lieu of foreclosure. Neither case calls for a different disposition of the case before us.
We must conclude John failed to prove as a matter of law he was entitled to judgment on the defense of accord and satisfaction.
For similar reasons, we agree with Susaraba also that summary judgment may not be sustained on the defense of release. By his traditional summary judgment motion, John had the obligation to establish the defense as a matter of law. Frost Nat'l Bank, 315 S.W.3d at 508. "Release is an affirmative defense, TEX. R. CIV. P. 94, where the defendant bears the burden to plead and prove the existence of an effective and valid release." Barras v. Barras, 396 S.W.3d 154, 170 n.5 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (citing Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990)). In general, a release surrenders legal rights or obligations between the parties to an agreement. Dresser Indus. v. Page Petroleum, 853 S.W.2d 505, 508 (Tex. 1993).
John contends that by the lien instrument Susaraba unambiguously accepted the lien on the business's assets and released his obligation on the note. Contract language is unambiguous if it can be given a definite legal meaning and is not reasonably susceptible to more than one meaning. See Lopez, 22 S.W.3d at 861. The lien instrument contains no express language of release applicable to John or Kathleen. Any intention to release either party from the note's obligations must be implied from the lien instrument's language. Such an implication might be drawn, but the instrument's language stating Susaraba would "look to both parties for full payment according to their ability to pay" suggests a contrary intention. The instrument does not unambiguously release John's obligations under the note.
John's brief refers also to cases holding that a release of one joint debtor is a release of all. See Bates v. Wills Point Bank, 32 S.W. 339, 340 (Tex. Civ. App.—Dallas 1895 no writ). Because we conclude the lien instrument does not unambiguously state an intention to release either of the debtors, the holding of such cases does not support summary judgment for John.
Concluding that summary judgment may not be sustained on either of the affirmative defenses John asserted, we reverse the trial court's judgment and remand the cause for further proceedings.
James T. Campbell
Justice