Justice Chari Kelly
Justice Rosa Theofanis
A divided Austin Court of Appeals has reversed a judgment in a breach of contract case that the dissent argues raises significant contract interpretation and appellate procedure concerns.
Camino Real Developers, LLC; Jack Dyer; and Dan Addante v. Tim Adkins and RivenRock, LLC (No. 03-23-00233-CV; April 30, 2025) arose from a business deal to develop an RV park in Caldwell County gone sour. Addante and Dyer formed Camino Real Developers. The company agreement assigned 50% ownership to JLR Mansions, who was to provide most of the capital to finance the operation. Dyer and Addante owned 25% each. When it became evident that JLR couldn’t keep up payments on the land note, Addante and Dyer entered into discussions with Adkins and Ballard, co-owners of RivenRock. They eventually signed a letter of intent under which JLR would sell its interest to Rivenrock. After some back and forth, the parties executed a purchase agreement. They subsequently executed a revised company agreement reflecting the change in ownership.
Time passed and disagreement arose over Rivenrock’s entitlement to two-thirds voting rights. Those rights were included in a document called the “Recap,” which was circulated prior to executing the deal. Addante and Dyer took the position that the purchase agreement and amended company agreement didn’t provide for that. Adkins and RivenRock filed suit against Addante and Dyer, seeking monetary damages, declaratory relief, and specific-performance. Camino Real intervened to assert rights under the company agreement. After a bench trial, the trial court determined that RivenRock owned 50% of Camino Real and a two-thirds voting authority over financial matters and voided a $5 million capital call issued by Addante and Dyer over RivenRock’s objections. The court entered judgment for Adkins and RivenRock on their breach of contract and declaratory and specific-performance relief, denying all other claims and counterclaims. The key finding of fact was that the terms proposed by the Recap were accepted by Adkins and RivenRock by their performance, forming a binding contract. Addante, Dyer, and Camino Real appealed.
In an opinion by Justice Kelly, joined by Chief Justice Byrne, the court of appeals affirmed in part and reversed and rendered in part. The threshold question was whether the letter of intent should be read as part of the contract between the parties. The trial court ruled that the Recap was part of the contract, not the LOI, which it said “only related to the sale of JLR Mansions’ 50% interest” and did not address the voting requirements. Addante and Dyer argued that the LOI must be read together with the Recap, which would preclude RivenRock’s two-thirds position. Reviewing the sequence of events, the court of appeals noted that Adkins received and signed the LOI but never signed the Recap, and that the LOI contained substantially the same or similar provisions as the LOI. The court thus concluded that the two documents should be read together with the contract as “necessary parts of the same transaction involving Adkins’ and RivenRock’s substitution for … JLR Mansions in the Camino Real project to create the RV park.
Adkins and RivenRock argued that the LOI didn’t say anything about the 2/3 vote referred to in the Recap. No problem, the court replied, because “in plenty of cases in which Texas courts have construed multiple writings together, one of the writings lacked a term or concept contained in another” (citations omitted). Trying another tack, Adkins and RivenRock pointed out that the LOI itself stated that any language other than its definitive-agreement language was nonbinding. No matter, the court said, because “Adkins and RivenRock provide no authority suggesting that the presence of some nonbinding terms prevents the Recap and LOI from being construed together—they still can be.” Undeterred, Adkins and RivenRock pointed to the post-LOI sale of JLR’s interest and only that. Again, no dice, because the LOI “contains terms that on their face apply not just to JLR Mansions but to Addante and Dyer as well.” The trial court thus erred in neglecting to construe the LOI together with the Recap when analyzing the contract.
The issue then became whether the LOI created a condition-precedent that, when not fulfilled, cancelled out Addante’s and Dyer’s nonperformance of the 2/3 voting provision. The court ruled that the LOI’s “definitive-agreement” condition (which provided that “[l]egally binding obligations with respect to the contemplated transaction will only arise upon execution of a definitive agreement and related agreements with respect to the transaction”] constituted a condition precedent to binding contractual obligations. Contrary to Adkins’ and RivenRock’s assertion that the definitive-agreement condition was satisfied by the sale documents for the 50% interest, the court determined that satisfying the LOI’s condition “had to have involved Addante and Dyer as well, based on construing the Recap and LOI together as one.” And because no definitive agreement was signed between Addante, Dyer, Adkins, and RivenRock, the condition precedent did not occur. Addante and Dyer thus could not be liabile for breach of the contract. The trial court erred in rendering judgment on the contract for Adkins and RivenRock, as well as in declaring that RivenRock was entitled to the 2/3 voting interest. The court affirmed the parts of the trial court’s judgment confirming that RivenRock owned a 50% interest in Camino Real and denied Addante and Dyer’s counterclaims, as well as those of Camino Real (which depended on an enforceable contract). The court ordered each party to bear their own fees and costs and reversed and rendered judgment that Adkins and RivenRock take nothing on their contract and declaratory claims.
Justice Theofanis dissented. First, she would have decided, as Addante and Dyer argued, that the threshold issue was whether the Recap should have been admissible parole evidence in the first place. Second, she would remand the case to the trial court for consideration of Adkins’ and RivenRock’s equitable claims. Because they prevailed on their breach of contract claim at the trial court, they “had no reason to complain” in that court about the alternative theories. Once the court of appeals reversed that judgment, Adkins and RivenRock should be able to proceed on those claims on remand. As Justice Theofanis put it, “[u]nder the Court’s opinion, a litigant who prevails at the trial court is required to argue in favor of her alternative claims—which may be inconsistent with the recovery she was awarded in the trial court—in her appellee’s brief to avoid the foreclosure of those claims, even though she prevailed at the trial court on another claim. . . . That places a higher burden on prevailing parties—and appellants in responding to conditional issues and appellate courts deciding them—than the Rules of Appellate Procedure contemplate.”
This case does seem to pose a real question about appellate procedure, the details of the contract action aside. It also raises an issue regarding the parole evidence rule, which the majority seems to blow right past. In any event, we’ll soon see if this goes any further.
