Martin v. Martin
326 S.W.3d 741
| Tex. App. | 2010Background
- MRMC is a privately held company and the general partner of MRMC’s publicly traded affiliate, with Ruben and Scott Martin controlling voting shares and serving on MRMC’s board.
- The brothers’ relationship deteriorated over control; Ruben favored acquisitions (California refinery) while Scott sought to constrain unilateral control and formalize decision-making via a shareholder agreement.
- In January 2008 the brothers signed a Settlement Agreement to negotiate a shareholder agreement in good faith for 60 (later 90) days, with a Completion Date triggering other obligations.
- The parties failed to reach an actual shareholder agreement or fulfill remaining obligations; Scott claimed Ruben breached the settlement by failing to perform other defined duties.
- The trial court impliedly found the agreement enforceable, the jury awarded Scott damages and costs, and Ruben sought JNOV/new trial; Scott won on appeal, Ruben cross-appealed.
- The Texas Court of Appeals reversed, holding the settlement is unenforceable as a matter of law because a key term, the shareholder agreement, was left open and essential to the overall agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Settlement Agreement enforceable or an unenforceable agreement to agree? | Scott contends the agreement’s terms (including negotiation of a shareholder agreement) can be enforced even if all terms aren’t finalized. | Ruben contends the agreement is unenforceable because the shareholder agreement term is essential and left open for future adjustment. | Unenforceable as a matter of law. |
Key Cases Cited
- Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000) (agreement to agree renders contract unenforceable when essential terms are open)
- Playoff Corp. v. Blackwell, 300 S.W.3d 451 (Tex. App.-Fort Worth 2009) (material terms open for future adjustment negate enforceability)
- Meru v. Huerta, 136 S.W.3d 383 (Tex.App.-Corpus Christi 2004) (enforceability generally a question of law; agreements left open may be unenforceable)
- Komet v. Graves, 40 S.W.3d 596 (Tex.App.-San Antonio 2001) (not all terms must be fixed; essential terms matter for enforceability)
- T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218 (Tex. 1992) (each contract should be assessed for material terms; open essential terms invalidate contract)
- Mickens v. Longhorn DFW Moving, Inc., 264 S.W.3d 875 (Tex.App.-Dallas 2008) (whether enforceability rests on contract formation or legal conclusions)
- America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617 (Tex.App.-San Antonio 1996) (defining when a contract is definite enough to grant a remedy)