Hal Crews and Debra Leitch v. DkASI Corporation, Debra H. Holley, David Holley and ASI Gymnastics, Inc.
469 S.W.3d 194
Tex. App.2015Background
- Hal Crews and Debra Leitch (each 25% shareholders) sued Debra and David Holley and ASI for shareholder oppression; parties negotiated a buyout of Crews and Leitch’s 50% interest in DKASI.
- Holleys’ counsel sent a June 7, 2012 proposal with six provisions: (1) each side to designate an appraiser; (2) consultants to select a third appraiser to value Plaintiffs’ 50% interest assuming the three DKASI gyms operate independently and excluding adjacent undeveloped Keller land; (3) ASI to buy the Interests at the third appraiser’s price; (4–6) other terms including financing context in paragraph 5.
- Crews/Leitch agreed to paragraphs 1–4 and the context of paragraph 5 but not specific financing terms; subsequent email bargaining produced an agreement by Crews/Leitch to give Holleys 100% of the TCAD value for the Keller parcel, which the Holleys accepted. Holleys filed the acceptance as a Rule 11 agreement.
- The trial court enforced the Rule 11 agreement, appointed a neutral appraiser, and the appraiser valued the 50% interest; Holleys deposited the buyout funds into the court registry and later sought a declaratory judgment that Crews/Leitch were no longer shareholders.
- On cross-motions for summary judgment the trial court granted Holleys’ motion, denied Crews/Leitch’s, awarded Holleys $133,840 in attorney’s fees, and Crews/Leitch appealed.
Issues
| Issue | Plaintiff's Argument (Crews/Leitch) | Defendant's Argument (Holleys) | Held |
|---|---|---|---|
| Enforceability — essential terms / agreement to agree | No enforceable Rule 11: parties never agreed on essential financing/payment terms; thus only an "agreement to agree" | Parties agreed to the "heart" (appraisal and buyout) and later accepted one of the financing mechanics (TCAD concession), making terms sufficiently definite | Court: Agreement contained essential terms (appraisal and buyout); financing mechanics were nonessential or resolved — enforceable Rule 11 (issue overruled) |
| Effect of later conduct converting negotiations | Later conduct cannot create contract if essential terms missing | Parties’ post-offer emails and acceptance show agreement reached | Court: Need not decide separately because it found essential terms agreed; treated later conduct as confirming agreement |
| Rule 11 signature requirement — email signature block | Computer-generated email signature does not satisfy Rule 11’s requirement that agreements be "in writing, signed and filed" | Electronic signature block and filings demonstrated assent; trial court had opportunity to address signature | Court: Argument not preserved (untimely raised); therefore not considered on appeal (issue overruled) |
| Contract ambiguity — meaning of "fair market valuation" and "operating independently" | "Operating independently" requires valuing DKASI as a standalone entity and then awarding 50% of that value (arguing valuation should not reflect lack of control) | Phrase means evaluate the three DKASI gyms apart from ASI gyms; "fair market value" retains its ordinary meaning (noncontrolling interest and marketability considered) | Court: Contract unambiguous; fair market value used in ordinary sense (noncontrolling interest considered); no ambiguity (issue overruled) |
| Attorney’s fees under Declaratory Judgment Act | N/A (challenge by Crews/Leitch) | Holleys sought fees after prevailing on their declaratory counterclaim that plaintiffs no longer were shareholders | Court: Award reversed — Holleys’ declaratory counterclaim was essentially a restatement of their affirmative defense, so using DJA to obtain fees was improper; fee award abused discretion (reversed) |
Key Cases Cited
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (standard for reviewing cross-motions for summary judgment).
- T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218 (Tex. 1992) (essential contract terms must be definite and certain).
- MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660 (Tex. 2009) (Declaratory Judgment Act cannot be used to obtain otherwise impermissible attorney’s fees).
- Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998) (abuse-of-discretion standard for attorney’s fees awards).
- Kanan v. Plantation Homeowner’s Ass’n Inc., 407 S.W.3d 320 (Tex. App.—Corpus Christi 2013) (material/essential terms and parties’ intent in contract formation).
- Ritchie v. Rupe, 339 S.W.3d 275 (Tex. App.—Dallas 2011) (definition of fair market value used in valuation disputes).