02-19-00320-CV
Tex. App.Oct 7, 2021Background
- Ray Fischer sold his tax-consulting business to Boozer and Raymond (CTMI) and later litigated an earn‑out dispute (the “2010 Adjustment”).
- At the 2011 trial the parties entered a Rule 11 settlement on the record: CTMI would deposit 15% of certain revenues into a CTMI account to be controlled by attorney T. Wesley Holmes, and if Fischer prevailed he “will receive” those funds.
- CTMI deposited $990,175.66 into a Regions Bank account nominally owned by CTMI but controlled and administered by Holmes; Regions issued 1099s to Holmes FBO CTMI.
- Holmes absconded with the funds while appeals were pending; the Texas Supreme Court ultimately held the 2010 Adjustment enforceable in Fischer v. CTMI.
- CTMI sued for a declaratory judgment claiming it had satisfied its Settlement Agreement by depositing the funds; Fischer counterclaimed for breach when he never received the money.
- The trial court granted summary judgment for CTMI, declaring the Settlement an escrow agreement and that CTMI had no further liability; the court of appeals reversed, held there was no escrow, and rendered judgment for Fischer.
Issues
| Issue | Fischer's Argument | CTMI's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in denying Fischer's motion to transfer venue | Move should be granted; case belongs in Dallas | Venue in Tarrant was proper | Not reached — appellate court rendered judgment on the merits of the contract dispute, making venue issue moot |
| Whether the Rule 11 Settlement created an escrow that discharged CTMI upon deposit | Settlement did not create an escrow; deposit did not relieve CTMI of payment obligation because Fischer never received funds | Settlement created an escrow (Holmes as depositary); deposit into the account satisfied CTMI's obligations | Reversed trial court: Settlement was a contract (not an escrow); Holmes was not a neutral third party; CTMI breached by failing to deliver funds; rendered judgment for Fischer for $990,175.66 and awarded contractual attorney’s fees per the parties’ Rule 11 agreement (specified trial and appellate amounts) |
Key Cases Cited
- Fischer v. CTMI, L.L.C., 479 S.W.3d 231 (Tex. 2016) (Texas Supreme Court holding 2010 Adjustment enforceable)
- Campbell v. Barber, 272 S.W.2d 750 (Tex. Civ. App.—Fort Worth 1954, writ ref’d) (defines escrow as deposit with a stranger or third party to be delivered upon condition)
- Norman v. Wilson, 41 S.W.2d 331 (Tex. Civ. App.—Austin 1931, writ ref’d) (discusses effect of deposit with bank as escrow and trustee duties)
- Vector Indus., Inc. v. Dupre, 793 S.W.2d 97 (Tex. App.—Dallas 1990, no writ) (escrow purpose is to have a neutral third party protect the promisee)
- Frost Nat’l Bank v. L & F Dist., Ltd., 165 S.W.3d 310 (Tex. 2005) (principles of contract construction — ascertain parties’ intent and give effect to all provisions)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (when both parties move for summary judgment, appellate court reviews both records and renders the judgment it should have)
- Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) (summary judgment reviewed de novo)
- Rice v. Metro. Life Ins. Co., 324 S.W.3d 660 (Tex. App.—Fort Worth 2010, no pet.) (elements of a breach of contract claim)