Date: 03-17-2015

Case Style: Kingwood Home Health Care, L.L.C. d/b/a Health Solutions Home Health v. Amedisys, Inc., d/b/a Amedisys Texas, Ltd

Case Number: 14-11-00368-CV

Judge: John Donovan

Court: Texas Court of Appeals, Fourteenth District Court of Appeal from 165th District Court of Harris County

Plaintiff's Attorney: Michell Pector for Amedisys, Inc., d/b/a Amedisys Texas, Ltd

Defendant's Attorney: Steve Martin Williard for Kingwood Home Health Care, L.L.C. d/b/a Health Solutions Home Health

Description: Amedisys, Inc., d/b/a Amedisys Texas, Ltd. (“Amedisys”) sued Kingwood
Home Health Care L.L.C., d/b/a Health Solutions Home Health (“Kingwood”) for
tortious interference with non-solicitation agreements between Amedisys and two
of its employees. Following the second mediation, and pursuant to Texas Rule of
Civil Procedure 1671 and Texas Civil Practice & Remedies Code Chapter 42,
1 Texas Rule of Civil Procedure 167 provides “If a settlement offer made under this rule
2
Kingwood tendered to Amedisys a written settlement offer. See generally Tex. R.
Civ. P. 167; Tex. Civ. Prac. & Rem. Code Ann. §§ 42.001–42.005 (West, Westlaw
through 2013 3d C.S.).2
Amedisys accepted Kingwood’s offer. Kingwood did not tender the
settlement proceeds. Amedisys amended its pleadings to assert a breach-ofcontract
claim regarding Kingwood’s refusal to abide by the agreement. Amedisys
filed a motion to enforce the agreement and also filed a motion for summary
judgment. The trial court granted Amedisys’s motion for summary judgment.
Kingwood appealed.
On original submission, this court reversed and remanded, with one justice
dissenting, holding “Amedisys’s letter was not a valid acceptance of Kingwood’s
offer, and the parties do not have a binding settlement agreement.” The court did
not address Kingwood’s remaining issues. See Kingwood Home Health Care,
L.L.C. v. Amedisys, Inc., 375 S.W.3d 397, 400–401 (Tex. App.—Houston [14th
Dist.] 2012), rev’d and remanded, Amedisys, Inc. v. Kingwood Home Health Care,
437 S.W.3d 507 (Tex. 2014). Amedisys appealed to the Supreme Court of Texas.
The supreme court concluded the evidence conclusively established
Amedisys’s clear intent to accept Kingwood’s offer, thereby creating a binding
settlement agreement, reversed this court’s judgment, and remanded “for further
proceedings consistent with this opinion.” See Amedisys, 437 S.W.3d at 517–518.
Specifically, the supreme court noted Kingwood argued to this court that fact
is rejected, and the judgment to be awarded on the monetary claims covered by the offer is
significantly less favorable to the offeree than was the offer, the court must award the offeror
litigation costs against the offeree from the time the offer was rejected to the time of judgment.”
2 “If a settlement offer is made and rejected and the judgment to be rendered will be
significantly less favorable to the rejecting party than was the settlement offer, the offering party
shall recover litigation costs from the rejecting party.” Texas Civil Practice & Remedies Code
Ann. § 42.004(a).
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issues existed regarding its fraudulent-inducement and failure-of-consideration
defenses. Id.
After further consideration of these issues, we affirm the trial court’s
judgment.
I. BACKGROUND
Amedisys and Kingwood are competitors in the home health field.
Following the departure of two of its employees with whom Amedisys had nonsolicitation
agreements, Amedisys sued Kingwood for its alleged improper use of
Amedisys’s trade secrets, unfair competition, and tortious interference. After
participating in two mediations, on June 11, 2010, Kingwood sent an offer of
settlement to Amedisys, providing:
Please accept this letter as an offer of settlement . . . . Specifically,
my client, [Kingwood] makes this offer to pay your client, [Amedisys]
to settle all monetary claims between the parties . . . in accordance
with Texas Civil Practice and Remedies Code Chapter 42 and Tex. R.
Civ. P. 167 [for] a total sum of $90,000 . . . . A lump-sum payment in
the amount of $90,000 will be made by [Kingwood] within fifteen
(15) days after acceptance. . . . Amedisys may accept this settlement
offer by serving written notice on [Kingwood’s] counsel before June
25, 2010. . . .
At no time prior to Amedisys’s acceptance of the offer of settlement did
Kingwood withdraw it.3 See Tex. R. Civ. P. 167.3. On June 25, Amedisys notified
Kingwood of its acceptance of the offer of settlement. Despite the terms of the
offer and Amedisys’s requests, Kingwood did not tender the settlement funds.
On June 16, prior to accepting Kingwood’s offer, Amedisys filed its
designation of expert witnesses.4 Kingwood also filed its expert designations. On
3 Kingwood filed a notice of withdrawal of consent in August, 2010.
4 Amedisys designated an attorney to testify on attorneys’ fees, and the senior vice
4
June 21, Kingwood filed a motion to strike Amedisys’s designation, asserting the
designations were due May 22, and set the motion for hearing on July 12.
Kingwood’s motion to strike did not mention that timely designation of expert
witnesses was consideration for its offer of settlement. The parties disputed
whether Amedisys’s designation was timely—that question is not before us. On
July 12, the trial court granted Kingwood’s motion to strike. Amedisys contends it
did not respond to the motion to strike and did not appear at the hearing because it
believed the case was settled on June 25.
Amedisys filed a motion to enforce the settlement agreement, amended its
pleadings to assert a breach-of-contract claim, and filed a motion for summary
judgment urging that there was a valid and enforceable contract to settle the suit,
which Kingwood materially breached. Kingwood responded that the settlement
offer was obtained through fraud; specifically, that Amedisys repeatedly asserted it
would never settle its suit for less than six figures,5 and that the consideration for
the offer failed when Amedisys did not timely designate expert witnesses.
As explained above, Kingwood appealed to this court asserting the trial
court erred in impliedly determining there were no genuine issues of material fact
regarding Kingwood’s affirmative defenses, and the trial court erred in striking
portions of the affidavit of Charles Snider, which supported the motion and was
directed to Kingwood’s defenses. This court concluded Amedisys’s letter was not
a valid acceptance of Kingwood’s offer; thus, there was no binding agreement.
This court did not address Kingwood’s remaining issues.
president and controller of Amedisys to testify on damages.
5 “As it turns out, Kingwood did not want Amedisys to accept the offer and made it only
because Amedisys said it would not accept an offer under six figures. Instead, Kingwood made
the offer merely to trigger a right to recover its litigation costs under rule 167.” See Amedisys,
437 S.W.3d at 509.
5
The supreme court held the evidence conclusively established Amedisys’s
clear intent to accept Kingwood’s settlement offer, that the agreement is binding,
and remanded for our consideration of Kingwood’s remaining issues. See
Amedisys, 437 S.W.3d at 517–18.
II. ISSUES ON REMAND
Based on the supreme court’s instruction to consider “the outstanding
undecided issues,” we consider whether there are genuine issues of material fact
regarding Kingwood’s affirmative defenses. Kingwood contends the affidavit of
fact witness, Charles Snider, creates genuine issues of fact on its affirmative
defenses of fraud and fraud in the inducement. Kingwood further argues the
consideration for the settlement agreement failed due to the untimely designation
of expert witnesses filed by Amedisys, thereby precluding the trial court’s order
granting Amedisys’s motion for summary judgment.
III. ANALYSIS
A party seeking a traditional summary judgment must conclusively prove all
elements of its claims; that is, prove its entitlement to judgment as a matter of law.
Tex. R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d
211, 215–16 (Tex. 2003). Where, as here, a party asserts an affirmative defense to
defeat a summary judgment, it must do more than merely plead the affirmative
defense. The non-movant must come forward with evidence sufficient to raise a
fact issue on each element of at least one of its affirmative defenses. Brownlee v.
Brownlee, 665 S.W.2d 111, 112 (Tex. 1984). We review a summary judgment de
novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
Amedisys moved for summary judgment to enforce the settlement
agreement. Kingwood sought to avoid summary judgment on the affirmative
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defenses of fraud, fraudulent inducement, and failure of consideration. Therefore,
Kingwood was required to create a fact issue on every element of at least one
affirmative defense. See McLernon v. v. Dynegy, Inc., 347 S.W.3d 315, 335 (Tex.
App.—Houston [14th Dist.] 2011, no pet.). Justifiable reliance is an essential
element common to both fraud and fraudulent inducement. See Nat’l Property
Holdings, L.P. v. Westergren, No. 13-0801, —S.W.3d—, —, 2015 WL 123099, at
*2–4 (Tex. Jan. 9, 2015); Sawyer v. E.I. Du Pont de Nemours and Co., 430 S.W.3d
396, 401 (Tex. 2014).
To create a fact issue, Kingwood relies solely on the affidavits of Charles
Snider. Kingwood complains that the trial court erred by ruling that certain
statements in Snider’s affidavits are conclusory and striking the statements.
Kingwood contends that these statements are competent summary judgment
evidence. We need not consider whether the trial court erred by excluding the
evidence; we will assume without deciding that the statements in the affidavits are
not conclusory because they fail to raise a fact issue.
The pertinent language of the affidavits is:
Affiant attended mediation on behalf of [Kingwood] in this matter on
or about June 10, 2010. At the mediation, an agent of Amedisys . . .
made explicit and emphatic statements that Amedisys would never
settle this lawsuit for less than six figures . . . . Affiant took the
statement’s [sic] from Amedisys’ agent as true and as such formulated
a settlement offer based upon [sic] Tex. R. Civ. P. Rule 167 for
$90,000.
Affiant has personal knowledge that Kingwood relied upon the
assertions made by Amedisys that it would never settle with
Kingwood for less than six figures and as a result, invoked the
statutory settlement offer set forth in Tex. R. Civ. P. 167. . . .
Affiant has personal knowledge that Amedisys’ misrepresentations in
this case have caused Kingwood injury.
Amedisys’ statements were false and purposely made to induce
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[Kingwood] to make the $90,000 offer knowing full well that it would
accept a settlement of less than six figures.
Affiant has personal knowledge that Amedisys’ representation that it
would never settle with [Kingwood] for less than six figures was
material [and that] Amedisys made its representations to [Kingwood]
with the intent that it act [sic] upon the misrepresentations and in fact
[Kingwood] did rely upon the representations of Amedisys that it
would not settle this case for less than six figures.
Affiant has personal knowledge that Kingwood would not have made
such Rule 167 offer of $90,000 had it not been for the statements of
Amedisys’ agent stating emphatically that Amedisys would never
settle this pending litigation for less than six figures.
Affiant has personal knowledge that it was Amedisys’ statements
regarding the fact that Amedisys would never settle this litigation for
less than six figures that induced Affiant . . . to make the settlement
offer on behalf of [Kingwood] for $90,000.
Affiant has personal knowledge and is familiar with the statements
made by [Amedisys] prior to June 11, 2010 in the above entitled cause
of action, regarding settlement amounts. Specifically, Affiant has
personal knowledge that Amedisys made repeated assertions that it
would never settle with [Kingwood] for less than a six digit figure.
Affiant has personal knowledge that Amedisys’ representation that it
would never settle with [Kingwood] for less than six figures was
material in [Kingwood’s] consideration of the settlement offer.
Affiant has personal knowledge that Amedisys made its
representations to [Kingwood] with the intent that it act [sic] upon the
misrepresentations of Amedisys that it would not settle this case for
less than six figures.
A. Fraud and Fraudulent Inducement
To prove the affirmative defense of fraud or of fraudulent inducement,
Kingwood must prove that, in making the Rule 167 settlement offer, it justifiably
relied upon the alleged representations of Amedisys that it would never settle this
lawsuit for less than six figures. See Nat’l Property Holdings, L.P., — S.W.3d at
—, 2015 WL 123099, at *2–4; Sawyer, 430 S.W.3d at 401; Italian Cowboy
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Partners v. Prudential Inc., 341 S.W.3d 323, 377 (Tex. 2011.
Kingwood chose to present an offer of settlement which Amedisys could
accept, counter, or reject. Amedisys accepted the offer as presented. Even
presuming that an agent of Amedisys, an opposing party, made repeated statements
that Amedisys would never settle this lawsuit for less than six figures, no
summary-judgment evidence raises a genuine fact issue as to whether Kingwood
justifiably relied upon these statements when it allegedly made the $90,000
settlement offer presuming that it would never be accepted. See Nat’l Property
Holdings, L.P., — S.W.3d at —, 2015 WL 123099, at *2–5 (holding that evidence
was legally insufficient to support a finding that party justifiably relied on alleged
representations); Graybar Electric Co. v. LEM & Assocs., L.L.C., 252 S.W.3d 536,
546-47 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (holding that evidence
was legally insufficient to support a finding that party justifiably relied on alleged
representation); Atlantic Lloyds Ins. Co. v. Butler, 137 S.W.3d 199, 226–27 (Tex.
App.—Houston [1st Dist.] 2004, pet. denied) (affirming summary judgment as to
fraud claim because there was no genuine issue of material fact as to whether the
plaintiff’s alleged reliance was justifiable); Beal Bank, S.S.B. v. Schleider, 124
S.W.3d 640, 651–52 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (holding
that there was no evidence to support jury’s finding that plaintiff's alleged reliance
on lender's alleged statements was justifiable); Bluebonnet Sav. Bank, F.S.B. v.
Grayridge Apartment Homes, Inc., 907 S.W.2d 904, 909 (Tex. App.—Houston
[1st Dist.] 1995, writ denied) (holding there was no evidence to support jury's
finding that alleged reliance by borrower on alleged oral assurances by lender that
loan restructuring proposal would be accepted was justifiable).
Thus, Kingwood has failed to raise a fact issue on its affirmative defenses of
fraud and fraudulent inducement. See also Jones v. Thompson, 338 S.W.3d 573,
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584 (Tex. App.—El Paso 2010, pet. denied) (holding purchaser cannot be liable for
fraud if he offers a price below market value and the seller accepts it); Anglo-
Dutch Petroleum Intern., Inc. v. Shore Harbour Capital Mgmt Corp., No. 01-09-
00417-CV, 2011 WL 862117, at *3 (Tex. App.—Houston [1st Dist.] Mar. 10,
2011, no pet.) (mem. op.) (stating the reliance on representation that a “deal would
close” was not justifiable because it was not a representation that a future event
certainly would occur); Marburger v. Seminole Pipeline Company, 957 S.W.2d 82,
86–87 (Tex. App.—Houston [14th Dist.] 1997, pet. denied) (citing Keasler v.
Natural Gas Pipeline Co. of America, 569 F.Supp. 1180, 1187 (E.D. Tex. 1983),
aff’d 741 F.2d 1380 (5th Cir. 1984)) (reasoning that to determine if an offer is nonnegotiable,
the offerees had only to make a counter-offer, and representation that
an offer is the best and final is not actionable as a matter of law).
B. Failure of Consideration
Finally, Kingwood argues its affirmative defense of failure of consideration
precludes the summary judgment in favor of Amedisys.6 While not entirely clear,
it appears Kingwood asserts that there was a failure of consideration because
Amedisys did not designate its expert witnesses in a timely fashion, and the trial
court struck the expert witnesses; therefore, the settlement agreement is
unenforceable.
Consideration includes a benefit to the promisor or a detriment to the
promisee and is a present exchange bargained for in return for a promise. See
Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991).
Failure of consideration generally occurs when, because of some
6 Failure of consideration differs from lack of consideration—the latter refers to a
contract that lacks mutuality of obligation. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 409
(Tex. 1997).
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supervening cause after an agreement is reached, the promised performance fails.
Walden v. Affiliated Computer Servcs., Inc., 97 S.W.3d 303, 320–21 (Tex. App.—
Houston [14th Dist.] 2003, pet. denied). Complete failure of consideration is a
defense to a breach-of-contract action on which Kingwood had the burden to raise
a fact issue. See id. at 321 (citing Gensco, Inc. v. Transformaciones Metalurgicias
Especiales, S.A., 666 S.W.2d 549, 553 (Tex. App.—Houston [14th Dist.] 1984,
writ dism’d)); see also McLernon, 347 S.W.3d at 335 (citing Kaye/Bassman Intern
Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 814 (Tex. App.—Dallas 2010, pet.
denied)). For the failure-of-consideration defense to preclude summary judgment
in favor of Amedisys, the summary-judgment evidence must raise a genuine issue
as to whether Amedisys’s timely designation of its expert witnesses was part of the
performance promised by Amedisys in the settlement agreement between
Kingwood and Amedisys. See Walden, 97 S.W.3d at 320–21.
In support of its defense to enforcement of the contract, Kingwood offered in
its response to Amedisys’s motion for summary judgment:
. . . Affiant has personal knowledge that the consideration that
Kingwood would have received as a result of a settlement with
Amedisys either failed and/or was materially reduced as a result of the
Court’s Order Granting Kingwood’s Motion to Strike Amedisys’
Expert Designations.
Snider’s affidavit suggests Kingwood’s consideration was the timely
designation of expert witnesses. Yet, Kingwood made its offer on June 11, three
weeks after it claims Amedisys’s expert designations were due. The specific terms
of Kingwood’s offer do not mention designation of experts. Rather, Kingwood
unequivocally offered $90,000 to settle “all claims asserted or which could have
been asserted by Amedisys against [Kingwood]” in the suit. Nowhere in the offer
or acceptance does Kingwood request, or Amedisys promise, that Amedisys will
timely designate its expert witnesses, nor could Kingwood do so because it made
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the settlement offer after it claims the expert designations were due. Under the
applicable standard of review, the summary-judgment evidence does not raise a
fact issue as to whether Amedisys’s timely designation of its expert witnesses was
part of the performance promised by Amedisys in the settlement agreement or
whether Amedisys’s untimely designation of expert witnesses constituted a failure
of consideration. See id. Accordingly, the summary-judgment evidence does not
raise a genuine fact issue as to each element of the defense of failure of
consideration.
We overrule appellant’s first issue.
We have addressed the argument regarding Kingwood’s alleged affirmative
defenses, without addressing whether the trial court erred in striking portions of
Snider’s affidavits. Thus, we have addressed all arguments necessary to the
disposition of this appeal, and we need not address the second and third issues.

Outcome: We affirm the judgment of the trial court.
/s/ John Donovan
Justice
Panel consists of Chief Justice Frost and Justices Jamison and Donovan.

Plaintiff's Experts:

Defendant's Experts:

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