Mary Ann Munoz v. Debra Witt and Farmers Texas County Insurance Company--Appeal from 19th District Court of McLennan County

IN THE

TENTH COURT OF APPEALS

No. 10-07-00010-CV

Mary Ann Munoz,

Appellant

v.

Debra Witt and Farmers

Texas County Insurance Company,

Appellees

From the 19th District Court

McLennan County, Texas

Trial Court No. 2005-3350-1

MEMORANDUM Opinion

Mary Ann Munoz and Debra Witt were in an auto accident after Witt allegedly failed to yield the right of way. Munoz hired attorney Joe Alfred Izen, Jr., who negotiated a $9,500 settlement with Witt s insurer, Farmers Texas County Insurance Company. After receiving and depositing Farmers settlement check, Izen realized that his firm had miscalculated Munoz s unpaid medical bills by omitting a large hospital bill, and Munoz was unwilling to sign the release. Izen sent his firm s $9,500 check to Farmers, explaining that Munoz could not settle for $9,500, given that her unpaid medical bills were over $4,000 more than originally thought to be. Farmers deposited Izen s check and thereafter refused to pay more than $9,500 to settle.

After the two-year statute of limitations had run, Munoz sued Witt for negligence and rescission and Witt and Farmers for breach of contract or rescission. The trial court granted Witt and Farmers amended motion for summary judgment. Munoz appeals, asserting in two issues that the trial court erred in entering summary judgment and in denying Munoz s motion for new trial.[1] We will affirm.

The statute of limitations for a personal injury claim is two years. Tex. Civ. Prac. & Rem. Code Ann. 16.003(a) (Vernon 2006). In most cases, a personal injury cause of action accrues when a wrongful act causes an injury. Childs v. Haussecker, 974 S.W.2d 31, 40 (Tex. 1998). Witt moved for summary judgment on her limitations affirmative defense. The auto accident occurred on October 1, 2003, and this suit was filed on October 10, 2005. Munoz did not file suit within two years, so unless she can avoid the statute of limitations, her negligence claim is time-barred.

Munoz first contends that the running of the two-year limitations period was tolled while the settlement agreement was in effect, that it does not commence running until the settlement is judicially rescinded, and that a failed settlement tolls the running of limitations. We address Munoz s alternative rescission claim below, but we note now that because there is no settlement agreement to rescind, the premise of her contention fails. Munoz is correct that, upon rescission of a contract, the parties are restored to their former position the status quo ante. See Allen v. Allen, 751 S.W.2d 567, 573 (Tex. App. Houston [14th Dist.] 1988, writ denied), disapproved on other grounds by Formosa Plastics Corp. USA v. Presidio Eng s & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998). But Munoz cites no authority for the proposition that, in the absence of a tolling agreement, rescission of a settlement agreement revives an expired statute of limitations or that a failed settlement tolls limitations. Cf. Alexander v. Handley, 136 Tex. 110, 146 S.W.2d 740, 741-43 (1941) (settlement agreement contained tolling provision if payment not made).

Munoz also pled three theories in avoidance of Witt s statute of limitations defense: equitable estoppel; prior payment; and waiver. Equitable estoppel precludes a defendant from asserting limitations as a defense when the defendant or her representative made a representation that induced the plaintiff to delay filing suit until limitations had run. Vaughn v. Sturm-Hughes, 937 S.W.2d 106, 108 (Tex. App. Fort Worth 1996, writ denied). The nonmovant must raise a material issue of fact on the following equitable estoppel elements: (1) a false representation or concealment of a material fact; (2) the representation was made with knowledge or the means of knowledge of the true facts; (3) the representation was made to a party without knowledge or the means of knowledge of the true facts; (4) the representation was made with the intention that it would be acted upon; and (5) the party to whom the representation was made relied upon or acted upon it to his prejudice. Frank v. Bradshaw, 920 S.W.2d 699, 701 (Tex. App. Houston [1st Dist.] 1996, no writ).

Munoz argues that there are fact issues on whether the settlement agreement was repudiated and whether Farmers considered it to be, and that with respect to equitable estoppel, a fact issue exists because, according to Izen s paralegal s affidavit, unidentified Farmers representatives told him several times in phone calls (after Farmers had accepted back its money and accepted Munoz s repudiation) that, as far as Farmers was concerned, the matter is settled.

As we hold below, there are no fact issues on whether Munoz repudiated the settlement agreement and Farmers accepted that repudiation. Because Munoz s law firm knew that Farmers had accepted its money back, they knew that Farmers had accepted Munoz s repudiation of the $9,500 settlement. They also knew that there was no longer a settlement agreement because they knew that Farmers was willing to pay only $9,500 to settle and that Munoz was unwilling to accept $9,500 to settle. Thus, the alleged telephonic misrepresentations could not have induced Munoz to delay filing suit, thus rendering equitable estoppel unavailable.[2] Also, there is no evidence on Munoz s (i.e., her attorney s) actual reliance on the alleged misrepresentation in not filing suit before limitations ran, thus failing to create a fact issue on the fifth element. Finally, the undisputed evidence conclusively establishes the third element against Munoz: her law firm knew or had the means to know that Farmers did not consider the matter settled, as we have just explained.

Munoz pled that Farmers prior $9,500 payment was an advance payment that tolled the running of limitations. Farmers $9,500 payment was not an advance payment; it was full payment in settlement of all of Munoz s claims and damages. Cf. Phipps v. Miller, 597 S.W.2d 458, 460-61 (Tex. Civ. App. Dallas 1980, writ ref d n.r.e.) (advance payment under now-repealed statute tolled limitations). Otherwise, Munoz cites no authority on point for this proposition.

Munoz pled that Witt waived the right to assert limitations as a defense by retaining the $9,500 that Izen had returned to Farmers while allegedly insisting that the claim had been settled. The waiver claim fails for the same reasons as the equitable estoppel claim fails, and because, as we discuss below, the summary judgment evidence conclusively establishes that Munoz repudiated the settlement agreement and that Farmers accepted that repudiation.

For the above reasons, the trial court did not err in granting summary judgment on Munoz s negligence claim against Witt.

Munoz sued Witt and Farmers for breach of contract, seeking recovery of $9,500 payable under the settlement agreement and attorney s fees. A breach of contract claim depends on the existence of a valid, enforceable contract. See Runge v. Raytheon E-Systems, Inc., 57 S.W.3d 562, 565 (Tex. App. Waco 2001, no pet.). There is no dispute that there had been an agreement to settle Munoz s personal injury claim for $9,500. Farmers claims representative Lisa Simpson wrote Izen on May 10, 2004:

Enclosed please find a check for the agreed settlement amount of $9,500.00. This is with the understanding that all bills and/or liens, including but not limited to any and all hospital liens or subrogations, will be paid from this amount.

Please have your client execute the enclosed release form and forward to my attention.

Izen deposited the Farmers check, but on May 12 wrote Simpson the following:

Tendered herewith is our firm check in the amount of $9,500.00 which represents Farmers settlement check, in the like amount, cashed by mistake. After reviewing the medical records I find that Hillcrest Baptist Hospital has a $4,688.08 hospital lien which means that my client is unable to comply with paragraph four of Farmers Release In Full Of All Claims And Rights.

. . .

Of course my client and I would look forward to further negotiation but I can not, in good faith, urge my client to accept a $9,500.00 settlement offer when faced with $7,693.08 in out of pocket medical costs.

In a May 21 letter, Simpson replied that Munoz s claim had been evaluated based on medical expenses of $7,871.00, which included the Hillcrest bill, and that Farmers evaluation had not changed. Almost a year later, in a May 2, 2005 letter, Simpson wrote Izen following up on their phone conversation that day: I can re-issue the previous agreed to settlement check upon receipt of the signed release by your client and her husband.

These undisputed facts establish that Farmers did not breach the contract. Munoz s theory for how Farmers breached the contract is that she did not repudiate the agreement to settle for $9,500 because there is an issue of material fact on whether Farmers accepted her repudiation, relying in part on Simpson s statement that she would re-issue a $9,500 check and in part on the paralegal s affidavit evidence with unidentified Farmers representatives who allegedly said that the matter was settled.

A party s performance under a contract is excused if the other party repudiates a dependent promise. See Glass v. Anderson, 596 S.W.2d 507, 511 (Tex. 1980); Ennis Bus. Forms, Inc. v. Gehrig, 534 S.W.2d 183, 189 (Tex. Civ. App. Waco 1976, writ ref d n.r.e.). When one party repudiates the agreement and refuses to be bound by material obligations, the other party may accept that repudiation as final and is not required to further regard the obligations imposed upon him thereby. Dunham & Ross Co. v. Stevens, 538 S.W.2d 212, 216 (Tex. Civ. App. Waco 1976, no writ).

Parties may rescind their contract by mutual agreement and thereby discharge themselves from their respective duties. It is a well established rule that the repudiation of a contract by one party rescinds the contract when such repudiation is accepted by the other party. If the repudiation is not accepted by the other party, the contract is kept alive for the benefit of both parties; the non-repudiating party, like the repudiating party, remains subject to all obligations under the contract.

Santa Fe Petroleum, L.L.C. v. Star Canyon Corp., 156 S.W.3d 630, 638 (Tex. App. Tyler 2004, no pet.) (internal citations omitted). Repudiation may be proven by words or actions by a contracting party that indicate he is not going to perform his contract in the future. It is conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract. In re Braddock, 64 S.W.3d 581, 585 (Tex. App. Texarkana 2001, no pet.) (internal citations omitted). To repudiate a contract, the repudiating party must positively, unequivocably, and unconditionally refuse to perform the contract prior to the time fixed for performance. Cooper v. Wildman, 528 S.W.2d 80, 86 (Tex. Civ. App. Corpus Christi 1975, no writ) (op. on reh g).

Izen s May 12 letter (that Munoz would not sign the release and that he would look forward to further negotiation ), Izen s return of the $9,500 to Farmers, Farmers acceptance and deposit of Izen s check, and Farmers continued, consistent refusal to pay no more than $9,500 in settlement indisputably established Farmers acceptance of Munoz s repudiation. Farmers willingness to still pay the originally agreed upon $9,500 (i.e., its willingness to allow Munoz to withdraw her repudiation) is not evidence of Farmers rejection of Munoz s repudiation. No genuine issues of material fact exist.

Finally, because Munoz s alternative claim for rescission of the settlement agreement depends on the existence of a valid, enforceable contract, and we have found that no contract exists because Farmers accepted Munoz s repudiation, no claim for rescission lies.

For the above reasons, the trial court did not err in granting Witt and Farmers summary-judgment motion. We overrule Munoz s first issue.

Because summary judgment was proper, we also overrule issue two, which is that the trial court erred in not granting the motion for new trial, which asserted that summary judgment was improper.

Having overruled Munoz s issues, we affirm the trial court s judgment.

BILL VANCE

Justice

Before Chief Justice Gray,

Justice Vance, and

Justice Reyna

Affirmed

Opinion delivered and filed August 27, 2008

[CV06]

[1] We review a trial court s summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In reviewing a summary judgment, we must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented. See Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). We must consider all the evidence in the light most favorable to the nonmovant, indulging every reasonable inference in favor of the nonmovant and resolving any doubts against the motion. See id. at 756.

[2] Also, the alleged telephone statements are irrelevant because they came after Farmers had accepted Munoz s repudiation. Moreover, they are not inconsistent with Farmers position that the claim had been settled for $9,500 and that Farmers was still willing to pay that amount. Farmers refusal to pay $9,500 when Munoz filed suit after limitations had run and its position that it accepted Munoz s repudiation do not turn the alleged statements into misrepresentations.