National Property Holdings, L.P. v. Westergren
453 S.W.3d 419
| Tex. | 2015Background
- Westergren held an earlier option and sued competing option-holders, blocking sale of a 190-acre tract; mediation produced a written Mediated Settlement Agreement (MSA) under which NPH would buy the property and parties would release claims and the lis pendens.
- Separately, Plank (individual) orally promised Westergren a $1 million payment and partnership interest in NPH in exchange for Westergren’s cooperation (the alleged oral contract); these promises were not in the MSA.
- Months after the sale, Plank delivered a $500,000 check to Westergren and presented a bold, titled document labeled “AGREEMENT AND RELEASE”; Westergren signed it in front of a notary without reading it and accepted the check.
- When no further payments were made, Westergren sued Plank, NPH, and related parties for breach of the oral contract, partnership duties, and fraud; the defendants counterclaimed for breach of the MSA and the release.
- A jury found for Westergren on liability issues but awarded $0 on fraud damages; the trial court later entered a JNOV/take-nothing judgment for defendants; the court of appeals reversed in part; the Texas Supreme Court reviewed and resolved key legal issues.
Issues
| Issue | Plaintiff's Argument (Westergren) | Defendant's Argument (Plank/NPH) | Held |
|---|---|---|---|
| 1) Fraudulent inducement of the release (justifiable reliance) | Westergren relied on Plank’s oral assurances that $500,000 was partial payment of the $1M and that the document was a mere receipt | Release was clear on its face; Westergren had reasonable opportunity to read it and cannot justifiably rely on oral statements | Held for defendants — reliance was not justifiable as a matter of law; no evidence of fraudulent inducement |
| 2) Enforceability of oral contract under statute of frauds (partial performance) | $500,000 payment (and Westergren’s release of lis pendens) constituted partial performance, making the oral real-estate contract enforceable | Payment and acts were consistent with settlement/release, not unequivocally referable to the oral land-sale contract; oral testimony cannot supply the needed proof | Held for defendants — statute of frauds bars the oral contract; partial-performance exception not met |
| 3) Did signing the release and later suing breach the release or MSA? | Release/M SA did not prevent suit or contain a covenant not to sue; release provides an affirmative defense only | Defendants argued suit breached the release and MSA | Held for plaintiff on counterclaims — neither the MSA nor the release contains an express covenant not to sue; filing suit did not breach them |
| 4) Remaining tort and partnership claims (fraud, statutory fraud, partnership duties) | Claims flow from Plank’s promises and conduct | Oral partnership promise unenforceable under the statute of frauds; fraud claims lacked recoverable damages on appeal | Held: fraud and partnership claims fail (fraud claims not appealed as to $0 damages; partnership claim barred by statute of frauds) |
Key Cases Cited
- Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828 (Tex. 2009) (standard for reviewing legal sufficiency against a jury verdict)
- Thigpen v. Locke, 363 S.W.2d 247 (Tex. 1962) (party cannot justifiably rely on oral misrepresentations that conflict with an unambiguous written contract)
- Tex. & Pac. Ry. Co. v. Poe, 115 S.W.2d 591 (Tex. 1938) (opportunity to read a document negates justifiable reliance on oral assurances)
- Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) (fraudulent inducement is a species of fraud arising in contract context)
- In re Int’l Profit Assocs., Inc., 274 S.W.3d 672 (Tex. 2009) (elements of fraudulent inducement)
- Chevalier v. Lane’s, Inc., 213 S.W.2d 530 (Tex. 1948) (partial-performance exception to the statute of frauds requires acts unequivocally referable to the oral agreement)