Summary
holding that movant's failure to state any of the elements of nonmovant's counterclaims, and specifically the element or elements supported by no evidence, rendered motion inadequate
Summary of this case from Gillespie v. Chambers Cty.Opinion
No. 01-09-00034-CV
Opinion issued May 6, 2010.
On Appeal from the 295th District Court Harris County, Texas, Trial Court Cause No. 2007-62862.
Panel consists of Chief Justice RADACK, and Justices ALCALA and HIGLEY.
MEMORANDUM OPINION
In this breach of contract case, appellant, Gripping Eyewear, Inc., appeals from the trial court's summary judgment rendered in favor of appellees, Dan L. Dietz and Carolyn Dietz (collectively the "Dietzes"). In four issues, Gripping Eyewear contends the trial court erred by granting the Dietzes' matter-of-law motion for summary judgment on the breach of contract claims and by granting the Dietzes' no-evidence motion for summary judgment on Gripping Eyewear's counterclaims. We conclude the trial court properly granted summary judgment in favor of the Dietzes on their breach of contract claim, properly granted a take-nothing summary judgment on Gripping Eyewear's breach of contract counterclaim, but erred by granting the no-evidence summary judgment on Gripping Eyewear's remaining counterclaims. We affirm in part, and reverse and remand in part.
Background
The Dietzes invented a magnetic buckle to secure eyeglasses onto clothing and received patents for this product and other similar products. In December 2004, the Dietzes entered into an Assignment, Non-Compete and Consulting Agreement (Consulting Agreement) with Gripping Eyewear. The Dietzes agreed, among other things, not to disclose confidential information, as defined by the parties, and not to compete with Gripping Eyewear in Gripping Eyewear's "field of business," a term also defined by the parties. Gripping Eyewear also agreed to make future payments to the Dietzes.
The relationship between the parties included at least two prior lawsuits. In 2005, Gripping Eyewear defaulted by failing to make required payments under the Consulting Agreement, and the Dietzes sued to collect. In Cause No. 2004-74129, in the 295th District Court of Harris County, the Dietzes and Gripping Eyewear entered into a Formal Settlement Agreement (Settlement Agreement) in February 2007. Under this Settlement Agreement, Gripping Eyewear agreed to pay and did pay $275,000 on or before February 12, 2007, $45,000 on or before February 26, 2007, and $32,500 on or before June 30, 2007. Gripping Eyewear, however, did not pay $35,250 that it had agreed to pay on or before September 30, 2007.
Gripping Eyewear also failed to make the quarterly payments due under the Consulting Agreement. It did not pay the June 30, 2007 quarterly payment of $42,500, which, under the terms of the Settlement Agreement, included the March 31, 2007 Consulting Agreement quarterly payment that had been deferred. Gripping Eyewear also failed to pay Consulting Agreement quarterly payments due September 30, 2007, December 31, 2007, March 31, 2008 and June 30, 2008. As of July 1, 2008, the total of unpaid Consulting Agreement payments were $127,500, and the total unpaid Settlement Agreement payments were $35,250 for a total unpaid amount of $162,750. The Dietzes filed a lawsuit for breach of contract for these amounts that Gripping Eyewear had not paid.
In addition to its general denial to the Dietzes' breach of contract claim, Gripping Eyewear's answer asserted five "defenses": (1) failure of consideration, (2) failure to perform conditions precedent, (3) unclean hands based on the theory that the Dietzes had "not given the performance for which they bargained" by failing to comply "with all terms and obligations owed by them" under the agreement, (4) excessive demand of attorney's fees by the Dietzes, and (5) failure to mitigate damages. Gripping Eyewear also filed nine counterclaims against the Deitzes: (1) breach of contract by asserting that the Dietzes violated their agreements by disclosing information and seeking a patent on an item containing a magnetic clip, (2) patent infringement, (3) breach of covenant not to compete, (4) breach of fiduciary duty, (5) indemnity, (6) attorneys fees and costs, (7) conversion, (8) business disparagement, and (9) punitive damages. It also requested injunctive relief.
The Dietzes filed a matter-of-law motion for summary judgment on their claim against Gripping Eyewear for breach of contract requesting $162,750 that the Dietzes claimed was due under the terms of the agreements they had with Gripping Eyewear. This motion by the Dietzes only mentioned its own claim for breach of contract; the motion did not mention the "defenses" asserted by Gripping Eyewear in its answer, nor the counterclaims presented by Gripping Eyewear.
Gripping Eyewear responded to the Dietzes' motion and asserted its own matter-of-law motion for summary judgment requesting judgment in its favor concerning the Dietzes' claim for breach of contract, and requesting judgment that the court find the Dietzes liable in Gripping Eyewear's claims for breach of contract and breach of covenant not to compete. This matter-of-law motion by Gripping Eyewear also asked the court to determine that the Dietzes had unclean hands, which was one of the "defenses" included in Gripping Eyewear's answer. In the motion filed by Gripping Eyewear, its theory underlying all of its assertions was that the Dietzes materially breached the covenant not to compete by filing requests for patents in violation of the consulting agreement. Other than unclean hands, no other "defense" asserted in Gripping Eyewear's answer was mentioned in the matter-of-law motion for summary judgment filed by Gripping Eyewear. Other than breach of contract and breach of covenant not to compete, no other counterclaim asserted by Gripping Eyewear was mentioned in the matter-of-law motion for summary judgment filed by Gripping Eyewear.
The Dietzes never replied to Gripping Eyewear's answer to the Dietzes' matter-of-law motion for summary judgment. The Dietzes also did not file any response to Gripping Eyewear's matter-of-law motion for summary judgment that requested the trial court to find the Dietzes liable for breaching the contract and covenant not to compete. The trial court rendered partial summary judgment in favor of the Dietzes for $162,750 for actual damages, prejudgment interest, attorney's fees, and court costs.
Following the trial court's partial summary judgment in favor of the Dietzes for breach of contract, the Dietzes filed a no-evidence motion for summary judgment asserting Gripping Eyewear had no evidence to support its counterclaims or its defenses to the Dietzes' claim for breach of contract. The no-evidence motion identified each of the counterclaims and defenses by their title but it did not specify the elements of each counterclaim and defense it challenged. Gripping Eyewear did not file any response to the no-evidence motion for summary judgment filed by the Dietzes. The trial court granted the no-evidence motion for summary judgment. The final judgment in this case incorporated the prior partial summary judgment ruling in favor of the Dietzes for $162,750 for breach of contract, granted additional attorney's fees of $1,650 to the Dietzes, and ordered that Gripping Eyewear take nothing.
After the trial court's final summary judgment, Gripping Eyewear responded to the no-evidence motion for summary judgment, asked for reconsideration of the matter-of-law summary judgment ruling, and requested a new trial. Shortly after that, Gripping Eyewear filed a motion similar to its earlier motion for reconsideration. After the Dietzes responded to these motions, the trial court entered an order confirming that it was overruling Gripping Eyewear's motions.
Standard of Review
Because summary judgment is a question of law, we review a trial court's summary judgment decision de novo. See Provident Life Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The movant for a matter-of-law summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). Once the movant has established a right to summary judgment, the non-movant has the burden to respond to the motion and present to the trial court any issues that would preclude summary judgment. Harvest House Publishers v. Local Church, 190 S.W.3d 204, 210 (Tex. App.-Houston [1st Dist.] 2006, pet. denied) (citing City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979); also citing Marchal v. Webb, 859 S.W.2d 408, 412 (Tex. App.-Houston [1st Dist.] 1993, writ denied)).
In a rule 166a(i) no-evidence summary judgment, the movant represents that no evidence exists as to one or more essential elements of the non-movant's claims, upon which the non-movant has the burden of proof at trial. TEX. R. CIV. P. 166a(i). The non-movant then must present evidence raising a genuine issue of material fact on the challenged elements. Id. A party who files a no-evidence summary judgment motion pursuant to rule 166a(i) has essentially requested a pretrial directed verdict. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex. 2006). A fact issue exists if the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). If the evidence does no more than create a mere surmise or suspicion of fact, less than a scintilla of evidence exists, and summary judgment is proper. Macias v. Fiesta Mart, Inc., 988 S.W.2d 316, 317 (Tex. App.-Houston [1st Dist.] 1999, no pet.). A non-movant is not required to marshal its proof to defeat a no-evidence motion for summary judgment; it need only point out evidence that raises a fact issue on the challenged elements. TEX. R. CIV. P. 166a(i), 1997 cmt.
When a party moves for both a no-evidence and a matter-of-law summary judgment, we first review the trial court's summary judgment under the no-evidence standard of Rule 166a(i). In re Estate Allen, 301 S.W.3d 923, 926 (Tex. App.-Tyler 2009, pet. filed) (citing Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004)). If the no-evidence summary judgment was properly granted, we do not reach arguments under the traditional motion for summary judgment. Id.
Gripping Eyewear's Counterclaims
In part of its second issue, Gripping Eyewear contends the trial court erred by granting the Dietzes' motion for no-evidence summary judgment because the Dietzes failed to list the elements of Gripping Eyewear's counterclaims. Also, part of Gripping Eyewear's third issue presents a conditional challenge asserting that it presented evidence raising an issue of fact on the counterclaims.
Texas Rules of Civil Procedure 166a(i) states that "[t]he [no-evidence] motion must state the elements as to which there is no-evidence." TEX. R. CIV. P. 166a(i). Rule 166a(i) requires that a no-evidence summary judgment motion "be specific in challenging the evidentiary support for an element of a claim or defense; paragraph (i) does not authorize conclusory motions or general no-evidence challenges to an opponent's case." Gary E. Patterson Assocs., P.C. v. Holub, 264 S.W.3d 180, 200 (Tex. App.-Houston [1st Dist.] 2008, pet. denied) (quoting TEX. R. CIV. P. 166a(i), 1997 cmt.). "Thus, all that is required under Rule 166a(i) is that the no-evidence motion specifically challenge an element or elements of the non-movant's theory of liability or defense; a specific attack on the evidentiary components that might prove a certain element is unnecessary, as long as the element itself is specifically challenged." Id. (citing Timothy Patton, SUMMARY JUDGMENT IN TEXAS, PRACTICE, PROCEDURE AND REVIEW § 5.03[2][b] (3rd ed. 2006)).
The Dietzes' no-evidence motion does not state any of the elements of Gripping Eyewear's counterclaims. The Dietzes' motion states,
[Gripping Eyewear] does not have legally-sufficient evidence to support any of the elements of its . . . counterclaims on which it has the burden of proof at trial. . . .
Likewise, [Gripping Eyewear] has no evidence to support its counterclaims of breach of contract, patent infringement, breach of covenant not to compete, breach of fiduciary duty, indemnity and attorney's fees, conversion, business disparagement, request for punitive damages and request for injunctive relief. Again, [Gripping Eyewear] has not come forward with any evidence to support its alleged counterclaims and failed to submit any affidavit or other sworn summary judgment evidence in support its counterclaims and in opposition to the Traditional Motion.
The Dietzes' motion for no-evidence summary judgment was conclusory and failed to specifically challenge any element or elements of Gripping Eyewear's counterclaims. We hold the trial court erred in granting the Dietzes' motion for no-evidence summary judgment. See TEX. R. CIV. P. 166a(i); Gary E. Patterson Assocs., 264 S.W.3d at 200.
The consequence of reversing the no-evidence motion for summary judgment filed by the Dietzes against Gripping Eyewear's counterclaims is that we must remand those claims back to the trial court unless they were properly resolved by another vehicle, such as a matter-of-law motion for summary judgment. See Bandera Elec. Co-op., Inc. v. Gilchrist, 946 S.W.2d 336, 337 (Tex. 1997) (unresolved claims should be reversed and remanded to trial court for disposition). The only counterclaims that were discussed in any of the matter-of-law motions for summary judgment were Gripping Eyewear's counterclaims for breach of covenant not to compete and for breach of contract, and, therefore, we address those two counterclaims separately below to determine whether these claims were properly resolved by the matter-of-law motion for summary judgment filed by Gripping Eyewear. Excluding Gripping Eyewear's counterclaims for breach of covenant not to compete and breach of contract, we remand the remaining counterclaims to the trial court.
Gripping Eyewear's Counterclaim for Breach of Covenant Not to Compete
Having determined that the no-evidence summary judgment on the breach of covenant not to compete counterclaim was erroneous, we address the matter-of-law summary judgment filed by Gripping Eyewear on that claim. Gripping Eyewear filed a matter-of-law motion for summary judgment asking the trial court to find the Dietzes liable for breach of covenant not to compete. The Dietzes did not file any response to that motion for summary judgment.
"The burden on a movant seeking summary judgment on traditional grounds is great." Michael v. Dyke, 41 S.W.3d 746, 750 (Tex. App.-Corpus Christi 2001, no pet.). The movant must conclusively establish that no genuine issue of material fact exists and that the movant is, therefore, entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Sw. Elec. Power Co., 73 S.W.3d at 215. Motions for summary judgment must "stand or fall on their own merits." McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342 (Tex. 1993). Even in the absence of a response from the nonmovant, in order to be entitled to judgment, "[t]he movant still must establish his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law." City of Houston, 589 S.W.2d at 678.
In its motion for a matter-of-law summary judgment, Gripping Eyewear argued that to be entitled to a summary judgment on its breach of covenant not to compete claim, it must prove:
(1) an agreement for personal services; (2) the covenant not to compete was part of the agreement at the time the agreement was made; (3) the covenant's limitations were reasonable in time, geographic area and scope; (4) the covenant did not impose a greater restraint than what was necessary to protect the parties [sic] interest; and (5) the covenant was breached.
(Citations omitted).
Gripping Eyewear's motion only addresses elements one, two, and five. Gripping Eyewear stated, "The Agreement, on its face, establishes prongs 1 and 2 of the elements stated above." Gripping Eyewear further stated, "Exhibits A-G, which are the actual filings by the Dietzes, demonstrate that the covenant was actually breached." Because Gripping Eyewear did not attempt to prove all the elements that would entitle it to summary judgment on its breach of covenant not to compete claim, its motion does not stand on its own merits. See McConnell, 858 S.W.2d at 342 (noting "summary judgments must stand or fall on their own merits"). We hold Gripping Eyewear did not prove it was entitled to summary judgment as a matter of law on its counterclaim for breach of covenant not to compete. We, therefore, remand that claim to the trial court. Excluding Gripping Eyewear's claim for breach of contract, we sustain the second issue concerning the counterclaims and do not reach the third issue.
"Defenses" Asserted by Gripping Eyewear
In its second issue, Gripping Eyewear contends the trial court erred by granting the Dietzes' motion for no-evidence summary judgment because the Dietzes failed to list the elements of Gripping Eyewear's "defenses." Gripping Eyewear's third issue presents a conditional challenge asserting that it presented evidence raising an issue of fact on the defenses. In its fourth issue, Gripping Eyewear contends that the trial court erred by granting the Dietzes' matter-of-law motion for summary judgment because the Dietzes should have been barred from relief under the doctrine of "unclean hands."
A. Unclean Hands
The only "defense" presented by Gripping Eyewear in its summary judgment response to the Dietzes' matter-of-law motion for summary judgment was its argument that the Dietzes had "unclean hands" by breaching the contract first by filing patents. The equitable doctrine of "unclean hands" requires that a party seeking equity must come to court with clean hands. In re Eagle Global Logistics, L.P., 89 S.W.3d 761, 766 (Tex. App.-Houston [1st Dist.] 2002, orig. proceeding [mand. denied]). As asserted by Gripping Eyewear, the "unclean hands" doctrine is an affirmative defense on which Gripping Eyewear has the burden of proof. See Adams v. First Nat'l Bank, 154 S.W.3d 859, 876 (Tex. App.-Dallas 2005, no pet.); see also Long Distance Int'l Inc. v. Telefonos de Mexico, S.A. de C.V., 49 S.W.3d 347, 350-51 (Tex. 2001) (applying general rule that party relying on affirmative defense must conclusively establish defense in summary judgment context). The doctrine of unclean hands will be applied only to "one whose conduct in connection with the same matter or transaction has been unconscientious, unjust, or marked by a want of good faith, or one who has violated the principles of equity and righteous dealing." In re Jim Walter Homes, Inc., 207 S.W.3d 888, 899 (Tex. App.-Houston [14th Dist.] 2006, orig. proceeding) (quoting Thomas v. McNair, 882 S.W.2d 870, 880-81 (Tex. App.-Corpus Christi 1994, no writ.)). In addition, the complaining party must show serious injury to himself arising from the conduct that cannot be corrected without applying the doctrine. Id.
In its response to the Dietzes' matter-of-law motion for summary judgment, Gripping Eyewear's sole grounds for asserting that the Dietzes had "unclean hands" is that the Dietzes filed seven patents, beginning in April 2005, with the United States Patent and Trademark Office. However, as we explain more fully below, the trial court properly found that the filing of these patents did not breach the agreements between the Dietzes and Gripping Eyewear. We hold that Gripping Eyewear produced no evidence of "unclean hands" by the Dietzes.
We overrule the fourth issue.
B. The Remaining "Defenses" Pleaded by Gripping Eyewear
The plaintiff is not under any obligation to negate affirmative defenses. Judge David Hittner and Lynne Liberato, Summary Judgments in Texas, State and Federal Practice, 46 HOUS. L. REV., 1379, 1456 (2010). The mere pleading of an affirmative defense, without supporting proof, will not defeat an otherwise valid motion for summary judgment. Id. 1456-57 (citing Hammer v. Powers, 819 S.W.2d 699, 673 (Tex. App.-Fort Worth 1991, no writ)).
Other than "unclean hands," Gripping Eyewear's answer asserted four other "defenses": (1) failure of consideration, (2) failure to perform conditions precedent, (3) excessive demand of attorney's fees by the Dietzes, and (4) failure to mitigate damages. Here, except for unclean hands, Gripping Eyewear's "defenses" named in its pleadings were not mentioned in its response to the Dietzes' motion for summary judgment or in Gripping Eyewear's own motion for summary judgment concerning its claims for breach of contract. If the Dietzes' motion for summary judgment was valid, then the motion is not defeated because the Dietzes failed to address the "defenses" pleaded by Gripping Eyewear but not asserted in Gripping Eyewear's response to the Dietzes' motion for summary judgment or Gripping Eyewear's motion for summary judgment. See Hammer, 819 S.W.2d at 673. As we note below, the trial court properly rendered summary judgment in favor of the Deitzes on their claim for breach of contract. We overrule Gripping Eyewear's second and third issues concerning the remaining defenses pleaded but not asserted by Gripping Eyewear. See id.
We overrule the second and third issues concerning the defenses pleaded by Gripping Eyewear.
Breach of Contract
In its first issue, Gripping Eyewear asserts the trial court erred by granting the Dietzes' matter-of-law motion for summary judgment. Gripping Eyewear specifically contends the evidence establishes a genuine issue of material fact on Gripping Eyewear's defense, which asserts the Dietzes breached the agreement first. It argues that because the Dietzes breached first, Gripping Eyewear was not obligated to pay the sums due under the agreements.
A. Applicable Contract Law
When construing a written contract, our primary concern is to ascertain the true intent of the parties as expressed in the instrument. J. M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). We must examine and consider the entire contract in an effort to harmonize and give effect to all provisions so that none are rendered meaningless. Id. If the written instrument is so worded that it can be given a definite or certain legal meaning, then the contract may be construed as a matter of law. See DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).
All contractual provisions should be considered with reference to the entire instrument, and no single provision taken alone should be controlling. J. M. Davidson, 128 S.W.3d at 229. A simple lack of clarity or disagreement between parties does not render a term ambiguous. See Parks, 1 S.W.3d at 100. Rather, an ambiguity arises only after the application of established rules of construction leaves an agreement susceptible to more than one meaning. Id. For an ambiguity to exist, both potential meanings must be reasonable. Id. Whether a contract is ambiguous is a question of law for the trial court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered. Plotkin v. Joekel, 304 S.W.3d 455, 470 (Tex. App.-Houston [1st Dist.] 2009, pet. denied) (citing Coker, 650 S.W.2d at 394).
The essential elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Valero Mktg. Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.] 2001, no pet.).
B. Analysis on Whether the Dietzes Breached First
The Dietzes filed Plaintiff's Motion for Traditional Summary Judgment on their breach of contract claim against Gripping Eyewear. The Dietzes' Motion for Summary Judgment is based solely on the theory that Gripping Eyewear materially breached the Consulting Agreement and Settlement Agreement by "failing to make the quarterly payments due and owing . . . under the Consulting Agreement for March, June, September and December 2007 and March and June 2008 . . . [and b]y failing to make the $35,250 payment due under the Settlement agreement."
Gripping Eyewear filed Defendant's Summary Judgment Response and Cross-Motion for Partial Summary Judgment as to Liability. Gripping Eyewear argued that "[the Dietzes are] not entitled to a summary judgment on their claims as they . . . are in breach of the agreements between the parties" because the Dietzes filed "the first of seven patents with the . . . [United States Patent and Trademark Office] . . . which contain a magnetic device used to secure an item to a person's clothing." Gripping Eyewear further argued that "(1) the Dietz[es] materially breached the contact; [and] (2) this breach was material and relieved [Gripping Eyewear] from the obligation of making the quarterly payments provided for in the Agreement."
The parties both agree to the existence and content of the Consulting Agreement and Settlement Agreement, and both parties agree that Gripping Eyewear ceased making payments to the Dietzes under the Agreements in September 2005. However, the parties disagree as to whether the Dietzes breached the Consulting Agreement beginning in April 2005 with the filing of the first of seven patents with the United States Patent and Trademark Office, which contain "a magnetic device used to secure an item to a person's clothing." Because the parties agree to the existence of a valid contract and damages sustained by the Dietzes as a result of Gripping Eyewear's failure to make payments under the Agreements, we will not address those elements of the Dietzes' breach of contract claim. See Valero Mktg. Supply Co., 51 S.W.3d at 351.
To succeed in their breach of contact claim, the Dietzes must prove that they performed or tendered performance under the Agreements. Id. We must first examine the entire contract to determine the Dietzes' required performance under the Agreements, in an effort to give effect to all provisions. J. M. Davidson, 128 S.W.3d at 229.
The Consulting Agreement entered into by the parties on December 13, 2004 states, in pertinent part,
X. No Competitive Ownership or Competition — DIETZ[ES] shall not, directly or indirectly, participate in the ownership, management, operation, financing or control of, or be employed by or otherwise render services to, any person, corporation, firm, or other entity in the Company's Field of Business in the Territory. . . . The obligations of this Section IX shall expire ten (10) years from the Effective Date.
The Consulting Agreement defines the "Company's Field of Business" as "the manufacturing, distribution, sale and marketing of all items specifically connected with or related to eyewear, including, but not limited to, eye glasses, attachments for eyewear, containers for eyewear, visor clips, eyewear accessories, magnetic eyewear applications and eyewear frames." The Consulting Agreement contains a clear promise by the Dietzes that they would not compete or participate in competition against Gripping Eyewear in the Company's Field of Business, which is defined as that related to all items "specifically connected with or related to eyewear." The Consulting Agreement does not provide any restrictions on the Dietzes' invention, production, or other business activities unrelated to eyewear.
Gripping Eyewear argues that the Dietzes breached the Consulting Agreement in April 2005 with the filing of the "first of seven patents" with the United States Patent and Trademark Office. In Gripping Eyewear's Defendant's Summary Judgment Response and Cross-Motion for Partial Summary Judgment, Gripping Eyewear states,
In April 2005, Dietz filed the first of seven (7) patents with the United States Patent and Trademark Office ("USPTO"), attached hereto as Exhibit B, which contains a magnetic device used to secure an item to a person's clothing. Dietz has continued to file items similarly described since his first breach in April 2005. See Exhibits C-H.
(Emphasis omitted).
Exhibit B is a publication of a patent application filed April 13, 2005. The publication describes a "writing instrument with magnetic clip." Exhibit C is a publication of a patent application filed April 20, 2005, and describes a "attachable magnetic clip and system." The abstract of the publication describes the device as a device that "attaches to the clothing of a person and uses magnetic fields to secure the clip to the person's clothing and [to] secure instruments to the magnetic clip." The publication describes "instruments" as "portable instruments such as writing pens and miniature flashlights. . . ."
Exhibit D, E, F, G, and H are additional patent application publications. Exhibit D shows a "utility clip for utilitarian tools" and describes the device as a "utility holder" for magnetic tools, writing instruments, and flashlights. Exhibit E shows an "illuminated writing instrument." Exhibit F shows "illuminated writing instruments with magnetic retainer clip." Exhibit G shows a "magnetic instrument holder" further described as a "magnetic pocket pouch" with an accompanying illustration that shows a magnetic pocket pouch with four slots for four writing instruments. Exhibit H shows a "magnetic spring clip and system" that is designed to attach "to a writing instrument, lighting instrument, or any other similar device."
Each of the listed patents relate to non-eyewear items such as writing instruments, miniature flashlights, and small tools, or other similarly sized objects. The record, therefore, conclusively establishes that the Dietzes' patents that Gripping Eyewear identifies as breaches of the Consulting Agreement are not "specifically connected with or related to eyewear." Because the patent applications fail to show that any of the patents relate to eyewear, the patent applications do not constitute breaches of the Consulting Agreement. The record shows no genuine issue of material fact as to the Dietzes' performance of the contract. See Valero Mktg. Supply Co., 51 S.W.3d at 351.
To succeed in their breach of contract claim, the Dietzes must also prove that Gripping Eyewear breached the Consulting Agreement and Settlement Agreement. Id. We must first examine the entire contract to determine Gripping Eyewear's required performance under the Agreements, in an effort to give effect to all provisions. See J. M. Davidson, 128 S.W.3d at 229.
The Settlement Agreement requires Gripping Eyewear to pay a total of $387,750.00 to the Dietzes before September 30, 2007 and to continue the payment of quarterly payments as required under the Consulting Agreement, through March 2015. The Settlement Agreement states,
1. Settlement Payments. GEI shall pay to the Dietz[es] the sum of $387,750.00 as follows:
a. $275,000.00 on or before February 12, 2007 . . .
b. $45,000.00 on or before February 26, 2007;
c. $32,500.00 on or before June 30, 2007; and
d. $35,250.00 on or before September 30, 2007 . . .
2. Items Satisfied by Settlement Payments. The Settlement Payments specified in paragraph 1 above shall satisfy the following items that were outstanding on the Effective Date:
a. The September and December 2005 and the March, June, September and December 2006 quarterly payments under the Consulting Agreement . . .;
b. Any and all amounts to be determined by the arbitration . . .; and
c. The January 31, 2007 annual payment due under the Promissory Note . . .
3. Consulting Agreement Modifications. The March 2007 quarterly payment under the Consulting Agreement shall be deferred one calendar quarter and shall be paid concurrently with the June 2007 quarterly payment under the Consulting Agreement. The due date for all quarterly payments accruing under the Consulting Agreement after March 2007 shall be the last day of the calendar month in which the quarterly payment is due (namely, June 30, September 30, December 31 and March 31 as applicable).
The Consulting Agreement referenced by the Settlement Agreement states, "In consideration of this Agreement and the covenants contained herein, GRIPPING EYEWEAR, beginning on March 31, 2005, will pay to [the] DIETZ[ES] a quarterly amount of TWENTY-ONE THOUSAND TWO HUNDRED FIFTY DOLLARS ($21,250.00) for a period of ten years." Both parties agree that Gripping Eyewear ceased making payments to the Dietzes as was required by the Consulting Agreement for a total of $127,500, and both parties agree that Gripping Eyewear did not pay $35,250 of the Settlement Agreement.
We hold the evidence conclusively shows (1) the existence of valid contracts, the Consulting Agreement and the Settlement Agreement; (2) performance by the Dietzes; (3) breach of the contract by Gripping Eyewear which failed to pay the amounts due under the agreements; and (4) damages sustained by the Dietzes as a result of the breach. The Dietzes have proven the elements of their breach of contract claim. See Valero Mktg. Supply Co., 51 S.W.3d at 351. The evidence also conclusively shows that the Dietzes did not breach the agreement first because none of the patents they filed relate to eyewear.
Gripping Eyewear filed a matter-of-law cross-motion for partial summary judgment on its claim for breach of contract, asking the trial court to find the Dietzes liable. Gripping Eyewear sought damages that included repayment of the $21,500 it paid the Dietzes for the second quarterly payment made in 2005, attorney's fees, court costs, damages for patents filed by the Dietzes, and a declaration that Gripping Eyewear's obligations to make payments pursuant to the consulting agreement in the future are extinguished. Because it presents the same arguments for its own breach of contract claims as it does defending against the Dietzes' breach of contract claim, we hold that the trial court properly ordered a take nothing judgment in Gripping Eyewear's breach of contract claim against the Dietzes.
We overrule the first issue and the second and third issues concerning Gripping Eyewear's counterclaim for breach of contract.
Conclusion
We reverse the judgment of the trial court and remand all the counterclaims except breach of contract for further proceedings.