Henry v. Masson
2010 Tex. App. LEXIS 10271
| Tex. App. | 2010Background
- Henry and Masson formed Houston Hand and Upper Extremity Center, LLP, a medical practice partnership in Houston, dissolved amid prolonged personal and business disputes.
- In March 2004, the parties executed a Settlement Agreement to wind up the Partnership, separate the practices, implement Windup Steps, and release claims, plus a provision that Masson would buy Henry's Hepburn Estates for $150,000.
- Windup Steps were to be overseen by a neutral administrator Frost; Henry was to circulate initial drafts reflecting his understanding within 14 days; Masson would circulate drafts if Henry delayed.
- Henry failed to deliver the Windup Steps drafts by the deadline; Masson began separating practices on April 16, 2004; Henry prevented Windup Steps from proceeding pending his objections.
- Henry deeded the Hepburn Estates to Masson but Masson did not pay $150,000; Masson later argued release of Hepburn claims; jury later found Henry breached first and Masson’s breach excused, with receivership continuing windup.
- Final judgment in May 2007 awarded Masson damages for Henry’s breach, ordered capital contributions to the Partnership, and terminated the receivership; Henry and Masson appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Material breach by Henry | Masson: Henry's failure to deliver Windup Steps drafts first breached the agreement. | Henry: Masson’s drafts meant Henry’s delivery was redundant and nonmaterial. | Henry's breach was material; Masson entitled to benefit-of-bargain damages. |
| Damages for loss of benefit and expenses | Masson: $75,000 reflects fair division of non-like assets and Windup Step failures. | Henry: damages not supported by evidence or scope of Windup Steps. | Damages supported; verdict within evidentiary range; fees upheld. |
| OffSet/Return of Hepburn Estates ($150,000) and releases | Masson: the Hepburn transfer and release did not extinguish Masson’s obligation to pay $150,000 because release language excludes that agreement. | Henry: Masson’s continued performance excused by first breach; release bars remaining claims. | Trial court erred in not enforcing $150,000 offset or title return; Hepburn Estates claim not released by the March 19, 2004 release. |
| Finality/jurisdiction of judgment | Masson challenges interlocutory/receiver orders impacting finality. | Henry asserts lack of finality and jurisdiction over appeal. | Final judgment is final; this Court has jurisdiction. |
Key Cases Cited
- Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (material breach may excuse performance; indivisibility caveat)
- City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699 (Tex. App.-Fort Worth 2008) (damages framework for breach of contract; benefit of the bargain)
- Gupta v. E. Idaho Tumor Inst., Inc., 140 S.W.3d 747 (Tex. App.-Houston [14th Dist.] 2004) (election to continue performance after breach; effect on damages)
- Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877 (Tex. 1996) (non-breaching party's election to treat contract as continuing)
- Hanks v. GAB Bus. Servs., Inc., 644 S.W.2d 707 (Tex. 1982) (disgorgement as equitable remedy not available in contract damages)
- Long Trusts v. Griffin, 222 S.W.3d 412 (Tex. 2007) (continuation of contract after breach; ability to recover profits)
- Baty v. ProTech Ins. Agency, 63 S.W.3d 848 (Tex. App.-Houston [14th Dist.] 2001) (contract interpretation; releases must clearly release claims)
- Doe v. Tex. Ass'n of Sch. Bds., Inc., 283 S.W.3d 451 (Tex. App.-Fort Worth 2009) (contract construction principles; reading release as whole)
- Keck, Mahin & Cate v. Nat'l Fire Ins. Co., 20 S.W.3d 698 (Tex. 2000) (release scope and ambiguity; effect of language)
- BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (appellate review of trial court legal conclusions)