# Mary F. Masterson, as for Estate of John C. Masterson v. BCHH Title of Texas, LLC, Julius Hardy, and ARVM 5, LLC

> Texas Court of Appeals, 1st District (Houston) · June 24, 2025

URL: https://www.frixlaw.com/law-library/cases/11086281

## Case

- **Court:** Texas Court of Appeals, 1st District (Houston)
- **Decided:** June 24, 2025
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11086281

## How later opinions describe it (automated extraction)

- recognizing fraud by nondisclosure as a subcategory of fraud

## Opinion text

Opinion issued June 24, 2025

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-23-00127-CV
———————————
MARY F. MASTERSON, AS EXECUTOR FOR ESTATE OF JOHN C.
MASTERSON, Appellant
V.
BCHH TITLE OF TEXAS, LLC AND ARVM 5, LLC, Appellees

On Appeal from the 334th District Court
Harris County, Texas
Trial Court Case No. 2022-10619

MEMORANDUM OPINION

This case arises from a failed real estate transaction involving a seller, buyer,

assignee, and escrow agent. The seller sued the other parties to recover its earnest

money. And the escrow agent counter-claimed for breach of a purported

settlement agreement.
In this appeal, the seller now challenges the trial court’s grant of summary

judgment in favor of the escrow agent and the dismissal of its fraud and contract

claims under Rule 91a against the assignee. We reverse and remand.

Factual Background

Mary F. Masterson, as executor of the estate of her father, John C.

Masterson, entered into a Residential Family Contract to sell her father’s home to

“Julius Hardy, Jr. (And/or Assigns).”1 Under the contract, Hardy was required to

deliver $1,000 in earnest money to an escrow agent of his choosing. It was also

agreed that upon any breach by Hardy, as the buyer, Hardy would forfeit his

earnest money to Masterson. The contract did not include an option for early

termination.

Before paying the earnest money, Hardy assigned all of his rights and

obligations under the Residential Family Contract to ARVM5, LLC (Assignment

Agreement). Masterson was listed as a party to the Assignment Agreement, but

she did not actually sign it. Under the assignment, ARVM5 was required to pay

$1,000 earnest money to the escrow agent, BCHH Title of Texas, LLC—which

ARVM5 did. The Assignment Agreement also gave Hardy and ARVM5 five

1
The contract is a standard TREC “One to Four Family Residential Contract
(Resale).”

2
business days of due diligence—during which time the earnest money would be

fully refundable to ARVM5.

About two weeks later, Hardy and ARVM5 signed a Cancellation

Agreement. It cancelled the assignment and instructed BCHH to release the

earnest money to ARVM5.

Hardy and Masterson then signed a “Termination of Purchase Agreement”—

waiving and releasing any claim against each other arising from the Residential

Family Contract, or by reason of its termination, and agreeing that the $1,000

earnest money would be released to Masterson.

BCHH subsequently asked about the status of the fully executed termination

and asked for Masterson’s mailing address. Masterson notified BCHH of the

termination and that it authorized payment of the earnest money to her. After

waiting nearly a month, Masterson followed up with BCHH about the earnest

money and stated that if she was forced to file suit, she would seek recovery of all

her damages and attorney’s fees.

After waiting another two weeks, and without any response from BCHH,

Masterson sent a “formal demand and presentment of claims” letter to BCHH for

breach of the “real estate contract terminated by buyer.” Masterson asserted in the

letter that she would “seek recovery of all damages allowed by law, including

reasonable attorney’s fees,” if she was required to file suit.

3
After further attempts to get the earnest money from BCHH, Masterson filed

suit against BCHH and Hardy in justice court.

Nearly three weeks after suit was filed, BCHH responded to Masterson’s

“formal demand and presentment of claims.” BCHH stated that it agreed to

Masterson’s demand for payment of the $1,000 earnest money and $250 in legal

fees. In return, BCHH requested that Masterson dismiss her suit in justice court,

countersign BCHH’s letter, and provide it with a copy of the motion to dismiss and

the justice court’s dismissal order. BCHH further stated that once it received the

countersigned letter, a check for $1,250 would then be mailed to Masterson.

Masterson declined. Masterson replied that “the settlement amount is now

$2,200 ($1,000 earnest money, $1,000 attorney’s fees, $50 filing fee and $150 for

two services of citation)”—and that once she received a cashier’s check for that

amount, she would dismiss the lawsuit. When BCHH did not agree, Masterson

nonsuited her case in justice court and filed the current suit in district court.

Procedural Background

Masterson’s live pleading in the trial court is her fifth amended petition. She

alleged causes of action against BCHH for breach of fiduciary duties, violation of

the Texas Deceptive Trade Practices Act,2 money had and received, tortious

interference with contract, and civil conspiracy. She also alleged causes of action

2
See TEX. BUS. & COM. CODE § 17.45.
4
against ARVM5 and Hardy for breach of contract, fraud, tortious interference with

a contract, and civil conspiracy. Masterson further sought a declaratory judgment

to determine the contractual rights of the parties.

BCHH filed a counterclaim against Masterson. BCHH alleged that it had

entered into a settlement agreement with Masterson, which Masterson breached.

Based on that contract claim, BCHH also sought attorney’s fees.

BCHH moved for summary judgment on its counterclaim, which the trial

court granted. The trial court awarded actual damages of $1,377.50 to BCHH and

attorney’s fees in the amount of $41,232.00, plus conditional appellate attorney’s

fees. The attorney’s fees were assessed “against Masterson, as executor and [also]

individually.”3

ARVM5 moved to dismiss all of Masterson’s causes of action against it

under Rule 91a. TEX. R. CIV. P. 91a. The trial court granted that motion in part—

dismissing Masterson’s causes of actions against ARVM5 for breach of contract

and fraud.

3
The trial court also issued findings of fact and conclusions of law. It is well
settled that findings of fact and conclusions of law have no place in a summary
judgment proceeding. See Cotton v. Ratholes, Inc., 699 S.W.2d 203, 204 (Tex.
1985) (court of appeals correctly disregarded trial court’s findings of fact in
summary judgment proceeding); August v. Williams, No. 01-00-00063-CV, 2002
WL 595079, at *1 (Tex. App.—Houston [1st Dist.] Apr. 18, 2002, no pet.) (mem.
op.) (“Findings of fact and conclusions of law have no place in a summary
judgment proceeding. . . . The trial court should not make, and an appellate court
cannot consider, findings of fact in connection with a summary judgment.”).

5
Masterson nonsuited her remaining claims against ARVM5 and all her

claims against Hardy. The trial court subsequently granted Masterson’s nonsuits

which caused the trial court’s summary judgment and Rule 91a dismissal order to

dispose of all issues and all parties in the case. Masterson now appeals.4

Summary Judgment

In her first issue, Masterson argues that the trial court erred in granting

summary judgment for BCHH on its counterclaim for breach of a settlement

agreement. We agree.

A. Standard of Review and Applicable Law

Appellate review of a summary judgment is de novo. Sommers v. Sandcastle

Homes, 521 S.W.3d 749, 754 (Tex. 2017). A traditional motion for summary

judgment is properly granted only when the movant establishes there are no

genuine issues of material fact and that it is entitled to judgment as a matter of law.

TEX. R. CIV. P. 166a(c); Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005).

We must take evidence favorable to the nonmovant as true and indulge every

reasonable inference from the evidence in favor of the nonmovant. Am. Tobacco

Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

4
In seven issues, Masterson asserts that the trial court erred by (1) granting
summary judgment for BCHH on its claim for breach of a settlement agreement;
(2) dismissing her claims against BCHH; (3) awarding attorney’s fees as damages
to BCHH; (4) awarding BCHH relief not sought in its summary judgment motion;
(5) dismissing her claims against appellee ARVM5; (6) awarding attorney’s fees
to BCHH; and (7) overruling her motions to modify the judgment.

6
When a defendant moves for traditional summary judgment it must either:

(1) disprove at least one essential element of the plaintiff’s cause of action or

(2) conclusively establish each essential element of an affirmative defense. Fallon

v. Univ. of Tex. MD Anderson Cancer Ctr., 586 S.W.3d 37, 47 (Tex. App.—

Houston [1st Dist.] 2019, no pet.).

If the movant satisfies this burden, the burden then shifts to the non-movant

to raise a genuine issue of material fact precluding summary judgment. Lujan v.

Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). However, if the movant fails to

meet this burden, “the burden does not shift and the non-movant need not respond

or present any evidence. See Chavez v. Kansas City S. Ry. Co., 520 S.W.3d 898,

899–900 (Tex. 2017) (per curiam) (quoting Amedisys, Inc. v. Kingwood Home

Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014)).

B. Analysis

BCHH asserted in its motion for summary judgment that Masterson offered

to settle this dispute in her “formal demand and presentment of claims letter” in

exchange for BCHH’s payment of the $1,000 earnest money and $250 in

attorney’s fees. BCHH accepted this offer in its response letter, and Masterson

later breached their agreement by changing the terms and not performing.

Masterson’s “formal demand and presentment of claims letter” to BCHH

provides as follows:

7
We still have not received the earnest money owed under the
contract after the buyer, Mr. Hardy, terminated the contract.
This is our formal demand and presentment of claims.

This letter shall serve as the formal presentment of legal claims
to the above[-]named persons in accordance with the Texas
Civil Practices and Remedies Code, Sections 38.001 and
38.020, et seq. As a result of the breach, the seller is entitled to
recover reasonable attorney’s fees. The amount of attorney’s
fees thus far incurred is $250, demand for which is hereby
made.

If forced to file a lawsuit in this matter, we will seek recovery
of all damages allowed by law, including reasonable attorney’s
fees in accordance with section 38.001(8) of the Texas Civil
Practices and Remedies Code, and section 17.50(c) and (d) of
the Texas Business and Commerce Code, also known as the
Texas Deceptive Trade Practices Act (DTPA).

BCHH’s response letter to Masterson states:

In the interest of expediency, please be advised that BCHH
Title of Texas, LLC agrees to your request for the demanded
amount, being the $1,000 earnest money owed and the $250 in
legal fees thus far incurred.

In return, we would request that you file the necessary motion
to dismiss with prejudice Case No. 214100358422 in the Justice
Court, Harris County, Texas, Precinct 4, Place 1.

So as to allow us to tender the demanded payment, I would ask
that you please countersign this letter on the signature line
provided below; in doing so, you agree to the payment of the
$1,250.00 identified above as payment in full regarding this
matter, and that you will file the necessary motion to dismiss
the underlying case and return to my attention.

I would ask that you please provide a time stamped copies of
the motion to dismiss and the Court’s subsequent dismissal
order.
8
Once I receive the countersigned letter, a check in the amount
of $1,250.00 will be mailed to your attention.

The elements of an enforceable contract are: (1) an offer; (2) an acceptance

in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) a

communication that each party consented to the terms of the contract;

(5) execution and delivery of the contract with an intent that it be mutual and

binding on both parties; and (6) consideration. Izen v. Comm’n for Lawyer

Discipline, 322 S.W.3d 308, 318 (Tex. App.—Houston [1st Dist.] 2010, pet.

denied).

It is well settled that an acceptance must not change or qualify the terms of

an offer, and if it does, the offer is rejected. See United Concrete Pipe Corp. v.

Spin–Line Co., 430 S.W.2d 360, 364 (Tex. 1968); Gilbert v. Pettiette, 838 S.W.2d

890, 893 (Tex. App.—Houston [1st Dist.] 1992, no writ). Acceptance must be

identical with the offer in order to make a binding contract. Gilbert, 838 S.W.2d at

893. Where “negotiations” are in writing, the question of whether an offer was

unconditionally accepted is primarily a matter of law for the court. Id. A material

change in a proposed contract constitutes a counter-offer, which must be accepted

by the other party. Id.

Likewise, a settlement agreement must contain all the essential terms of the

settlement. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). For a

9
settlement agreement to be enforceable, it must be in writing, signed, and filed

with the papers as part of the record, or made in open court and entered of record.

Id. at 459 (citing TEX. R. CIV. P. 11). Further, the settlement agreement must be

complete within itself in every material detail so that the agreement can be

ascertained from the writing, or record, without resort to oral testimony. Id. at 460.

Compliance with Rule 11 is a threshold requirement for enforceability. Knapp

Med. Ctr. v. De La Garza, 238 S.W.3d 767, 768 (Tex. 2007).

Assuming arguendo that Masterson’s “formal demand and presentment of

claims letter” was an offer of settlement,5 it included conditional language

providing that if Masterson had to file suit—she would seek additional damages.6

BCHH, who did not respond to Masterson’s purported offer until after she filed

suit, added an additional term to the purported offer. Namely, BCHH required

5
“An offer ‘must be reasonably definite in its terms and must sufficiently cover the
essentials of the proposed transaction that, with an expression of assent, there will
be a complete and definite agreement on all essential details.’” Tauch v. Angel,
Trustee for the Gobsmack Gift Trust, 580 S.W.3d 808, 813 (Tex. App.—Houston
[14th Dist.] 2019), rev’d on other grounds, 642 S.W.3d 481 (Tex. 2022).
6
Generally, terms such as “if”, “provided that”, “on condition that” or similar
phrases are necessary for determining if an offer is conditional. See Criswell v.
European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex. 1990).

10
Masterson to dismiss her pending lawsuit,7 which necessarily involved foregoing

all claims.

BCHH’s response letter thus recognized that it had been sued and stated that

BCHH would pay the requested amounts only if Masterson dismissed the pending

suit. Because BCHH’s response letter added an additional material term, it

constituted a counteroffer. See MKM Engineers, Inc. v. Guzder, 476 S.W.3 770,

778 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (“Essential or material terms

of a Rule 11 settlement agreement include payment terms and release of claims.”)

(citing Padilla v. LaFrance, 907 S.W.2d 454, 460–61 (Tex. 1995)).

Further, BCHH stated in its purported acceptance that if Masterson agreed,

she should countersign BCHH’s letter and “in doing so, you agree to the payment

of the $1,250.00 identified above as payment in full regarding this matter, and that

you will file the necessary motion to dismiss the underlying case and return to my

attention.” This language, acknowledging additional terms that Masterson would

need to accept by her signature, further reflects that BCHH’s purported acceptance

was a counteroffer. See Coleman v. Reich, 417 S.W.3d 488, 493 (Tex. App.—

Houston [14th Dist.] 2013, no pet.) (fact issue raised as to whether response was

acceptance or counteroffer when, among other things, purported acceptance letter

7
Masterson’s suit in the justice court asserted claims for breach of contract, breach
of fiduciary duty, violations of the Texas Deceptive Trade Practices Act and
violations of the Texas Insurance Code.

11
included signature block to be signed by offeror to indicate offeror’s acceptance,

“presumably because offeree was extending a counter-offer”).

It is undisputed that Masterson rejected BCHH’s counteroffer and that

Masterson then asked for additional expenses for having to file suit—which she

stated that she would do in her “formal demand and presentment of claims

letter”—and had the right to do.8 See Gilbert, 838 S.W.2d at 893. Accordingly, we

hold that the parties did not enter into a settlement agreement as a matter of law

because BCHH’s purported acceptance was an unaccepted counteroffer. The trial

court therefore erred when it granted summary judgment in favor of BCHH and

against Masterson.

We sustain Masterson’s first issue.9

8
Even in its summary judgment motion, BCHH admits that “Masterson failed to
acknowledge and sign BCHH’s acceptance letter.”
9
Masterson argues in her second issue that the trial court erred in dismissing her
claims. When it moved for summary judgment on Masterson’s claims, BCHH
maintained that their purported settlement agreement precluded Masterson’s
claims as a matter of law. Because we have concluded that the parties did not
enter into a settlement agreement—and BCHH’s only summary judgment
argument as to why the trial court should dismiss Masterson’s claims was
predicated on the existence of the purported settlement agreement—we likewise
sustain Masterson’s second issue. Because we have resolved Masterson’s first and
second issues in her favor, it is unnecessary to address Masterson’s fourth and
seventh issues. See TEX. R. APP. P. 47.1.
12
Rule 91a Motion to Dismiss

In her fifth issue, Masterson argues that the trial court abused its discretion

in granting ARVM5’s Rule 91a motion, in part, and dismissing her causes of

action against ARVM5 for breach of contract and for fraud.

A. Standard of Review and Applicable Law

Rule 91a allows a party to move for early dismissal of a cause of action on

the ground that it has “no basis in law or fact.” See Bethel v. Quilling, Selander,

Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 654 (Tex. 2020) (quoting TEX.

R. CIV. P. 91a.1). A cause of action has no basis in law if the allegations, taken as

true, together with inferences reasonably drawn from them, do not entitle the

claimant to the relief sought. Id; TEX. R. CIV. P. 91a.1.

Courts have recognized that a cause of action has no basis in law under Rule

91a in at least two situations: (1) where the plaintiff fails to plead a viable, legally

cognizable cause of action and (2) where the allegations in the plaintiff’s own

pleading establish a legal bar to the relief requested. Kadyebo v. Centennial Ct.,

No. 01-23-00760-CV, 2024 WL 3891865, at *2 (Tex. App.—Houston [1st Dist.]

Aug. 22, 2024, no pet.) (mem. op.); see also Texas Dep’t of Ins. v. Stonewater

Roofing, Ltd. Co., 696 S.W.3d 646, 653 (Tex. 2024). A cause of action has no

basis in fact if “no reasonable person could believe the facts pleaded.” TEX. R. CIV.

P. 91a.

13
Whether a defendant is entitled to dismissal under Rule 91a is a legal

question that we review de novo. See Texas Dep’t of Ins., 696 S.W.3d at 653. In

conducting our review, we may not consider any evidence and must make our

determination based solely on the plaintiff’s live pleadings, together with any

pleading exhibits permitted by Rule 59.10 See Kadyebo, 2024 WL 3891865, at *3;

TEX. R. CIV. P. 91a.1. Additionally, we must construe the pleadings liberally in

favor of the claimant, look to the pleader’s intent, and accept as true the factual

allegations in the pleadings to determine if a cause of action has a basis in law or

fact. See Malik v. GEICO Advantage Ins. Co., No. 01-19-00489-CV, 2021 WL

1414275, at *4 (Tex. App.—Houston [1st Dist.] 2021, pet. denied) (mem. op.).

B. Analysis

Based on these principles, we must determine whether Masterson’s live

pleading (her fifth amended petition) alleges a viable, legally cognizable claim

against ARVM5 for breach of contract or for fraud―and whether Masterson’s

pleading establishes a legal bar to the relief requested.

10
Rule 59 provides, “Notes, accounts, bonds, mortgages, records, and all other
written instruments, constituting, in whole or in part, the claim sued on, or the
matter set up in defense, may be made a part of the pleadings by copies thereof . . .
shall be deemed a part thereof for all purposes.” TEX. R. CIV. P. 59. Here,
Masterson attached copies of the Residential Family Contract, the Assignment
Agreement, the Cancellation Agreement, and the Termination Agreement to her
fifth amended petition as exhibits.

14
Masterson pleaded that Hardy assigned his rights under the Residential

Family Contract to ARVM5. And that ARVM5 subsequently cancelled the

assignment and specified that the earnest money would be returned to ARVM5

―with no mention of Masterson. Masterson further pleaded that ARVM5 “failed

and refused to deliver to BCHH a release authorizing BCHH to pay the earnest

money to [Masterson].” And that by cancelling the assignment, ARVM5

“committed an anticipatory repudiation and material breach of the Assignment and

the Contract.”

Masterson further pleaded that “by executing the Cancellation and

terminating the [Residential Family] Contract, [ARVM5] engaged in a fraudulent

scheme to breach the Assignment and the [Residential Family] Contract and retain

the earnest money.” That “ARVM5 committed fraud by signing the Assignment

without any intention of performing it or the [Residential Family] Contract.” And

by failing and refusing to notify Masterson of the Assignment and the

Cancellation, “ARVM5 committed fraud by nondisclosure.”

1. Breach of Contract

ARVM5 argued in its Rule 91a motion that Masterson’s breach of contract

claim has no basis in law because it had no contract with Masterson. 11 ARVM5

11
ARVM5’s Rule 91a motion to dismiss is based on Masterson’s fourth amended
petition. Masterson filed her fifth amended petition four days after the 91a motion
was filed―and more than twenty-one days before the motion was heard. See TEX.
15
further asserted that when the Assignment Agreement terminated, that released

ARVM5 from any obligation under the Residential Family Contract. Stated

differently, ARVM5 maintained that it had no privity of contract with Masterson.12

Generally, “the benefits and burdens of a contract belong only to the

contracting parties, and ‘no person can sue upon a contract except he be a party to

or in privity with it.’” First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017)

(citation omitted). Privity is established by proof that the defendant was a party to

an enforceable contract with either the plaintiff or a party who assigned its cause of

action to the plaintiff. OAIC Commercial Assets, L.L.C. v. Stonegate Vill. L.P., 234

S.W.3d 726, 738 (Tex. App.—Dallas 2007, pet. denied).

An assignee is not liable under another party’s contract without an express

or implied assumption of the contract’s obligations. Jones v. Cooper Indus., Inc.,

938 S.W.2d 118, 124 (Tex. App.—Houston [14th Dist.] 1996, writ denied). To

assume a contractual obligation, there must be promissory words or words of

R. CIV. P. 91a.3 In both amended petitions, Masterson pleaded the same cause of
action for breach of contract against ARVM5.
12
ARVM5 also makes new arguments on appeal about why Masterson’s claims
purportedly have no basis in law or fact. But because those arguments were not
first presented to the trial court in ARVM5’s Rule 91a motion, they are not
properly before us. See TEX. R. CIV. P. 91a.2 (requiring movant to specify reasons
why cause of action has no basis in law or fact); Mendoza v. Milkshake, LLC, No.
05-22-01018-CV, 2023 WL 4446339, at *3 (Tex. App.—Dallas July 11, 2023, no
pet.) (mem. op.) (declining to address appellant’s additional Rule 91a grounds for
dismissal that were not presented to trial court).
16
assumption on behalf of the assignee. Id. (citing 4 A. Corbin, Corbin on Contracts

§ 906, at 632 n.1).

ARVM5 is correct that Masterson contracted with Hardy. But Hardy

subsequently assigned that real estate contract to ARVM5. That Assignment

Agreement is attached to Masterson’s live pleading and states: “Assignor hereby

conveys, transfers, and assigns all its rights and obligations under the Contract to

the Assignee in consideration of the payment of an Assignment Fee by Assignee to

Assignor at closing.” Under the plain language of this assignment, ARVM5

stepped into Hardy’s shoes―thus establishing privity of contract between ARVM5

and Masterson. See 718 Assoc., Ltd. v. Sunwest N.O.P., Inc., 1 S.W.3d 355, 361

(Tex. App.—Waco 1999, pet. denied) (“When the assignor conveys its entire

interest, without retaining any reversionary interest, the assignee becomes a tenant

in place of the original lessee and is in privity of estate and contract with the

lessor.”); see also Clayton Williams Energy, Inc. v. BMT O & G TX, L.P., 473

S.W.3d 341, 353 (Tex. App.—El Paso 2015, pet. denied) (“[I]t is axiomatic that

when an assignee receives a transfer of rights under a contract, the assignee steps

into the assignor’s shoes for purposes of that contract.”).13

13
ARVM5 also argues that its cancellation of the assignment acts to preclude any
liability on Masterson’s breach of contract claim. This constitutes an affirmative
defense. See, e.g., Smartt v. State, No. 14-20-00110-CV, 2021 WL 1537459, at *2
(Tex. App.—Houston [14th Dist.] Apr. 20, 2021, no pet.) (mem. op.). In deciding
a Rule 91a motion, a court may consider the defendant’s pleadings in order to
17
Masterson further pleaded that she was a third-party beneficiary of the

assignment between Hardy and ARVM5. If noncontracting parties qualify as

third-party beneficiaries, they may sue for breach of the contract. Brumitt, 519

S.W.3d at 102; see City of Alton v. Sharyland Water Supply Corp., 145 S.W.3d

673, 682 (Tex. App.—Corpus Christi 2004, no pet.) (“Third-party beneficiaries to

a contract acquire the same rights and standing to enforce the contract as those held

by one of the contracting parties.”). ARVM5’s motion to dismiss did not dispute

or address Masterson’s status as a third-party beneficiary of the assignment.

Construing Masterson’s live pleading liberally in her favor, and accepting as

true the factual allegations in her pleading, we cannot conclude, at this stage, that

Masterson lacked privity with ARVM5―either due to ARVM5’s status as an

assignee or Masterson’s status as a third-party beneficiary of the assignment.

Accordingly, we hold that Masterson pleaded a viable, legally cognizable claim

make the legal determination of whether an affirmative defense is properly before
the court. Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595
S.W.3d 651, 656 (Tex. 2020). If it is, only an affirmative defense that is
“conclusively established by the facts in the plaintiff’s petition” can support a
dismissal under Rule 91a. Id. An affirmative defense that requires consideration
of evidence is not a proper basis for dismissal under Rule 91a. Id; see Burns v.
EMD Supply Inc., No. 01-22-00929-CV, 2024 WL 1558720, at *5 (Tex. App.—
Houston [1st Dist.] Apr. 11, 2024, no pet.) (mem. op.). Here, ARVM5 filed a
bare-bones general denial to Masterson’s fourth amended petition. It did not
assert any affirmative defenses and thus never pleaded the affirmative defense of
cancellation. As a result, ARVM5’s cancellation argument is beyond the scope of
our Rule 91a review. See TEX. R. CIV. P. 94; Bethel, 595 S.W.3d at 656.
18
against ARVM5 for breach of contract. The trial court thus erred in dismissing

Masterson’s breach of contract claim under Rule 91a.

2. Fraud by Nondisclosure

Masterson also pleaded in her fifth amended petition that ARVM5

committed statutory fraud, fraudulent inducement, common law fraud, and fraud

by omission or nondisclosure.

On appeal, Masterson only challenges the dismissal of her cause of action

for fraud by omission or nondisclosure. She asserts that “[b]y act and omission,

through their failure and refusal to notify Masterson of the Assignment and the

Cancellation, together with the promise to release the earnest money to Masterson,

Hardy and ARVM5 fraudulently induced Masterson to sign the Termination that

Hardy prepared.”

To establish fraud by omission or nondisclosure, a plaintiff must show that

the defendant failed to disclose material facts, the defendant had a duty to disclose

such facts to the plaintiff, the plaintiff was ignorant of the facts and did not have an

equal opportunity to discover such facts, the defendant intended the plaintiff to act

or refrain from acting based on its disclosure, and the plaintiff relied on the

omission or nondisclosure resulting in injury. Bombardier Aerospace Corp. v.

SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 219–20 (Tex. 2019).

19
As referenced above, ARVM5’s Rule 91a motion is based on Masterson’s

fourth amended petition, which is not her live pleading. Masterson’s fifth

amended petition added fraud by omission or nondisclosure as a new cause of

action.14 See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex.

1997) (recognizing fraud by nondisclosure as a subcategory of fraud). ARVM5

did not amend its 91a motion to challenge the new fraud cause of action. See TEX.

R. CIV. P. 91a.5(c).

Yet, when the trial court dismissed all of Masterson’s fraud causes of action

under Rule 91a―it also dismissed Masterson’s unchallenged cause of action for

fraud by omission or nondisclosure. By doing so, the trial court erred. The trial

court had no basis under Rule 91a to dismiss Masterson’s unchallenged cause of

action for fraud by omission or nondisclosure. See TEX. R. CIV. P. 91a.2 (“A

motion to dismiss must state that it is made pursuant to this rule, must identify each

cause of action to which it is addressed, and must state specifically the reasons the

cause of action has no basis in law, no basis in fact, or both.”); Medfin Manager,

LLC v. Stone, 613 S.W.3d 624, 631 (Tex. App.—San Antonio 2020, no pet.);
14
“[A] plaintiff’s timely filed amended pleading supersedes all previous pleadings
and becomes the controlling petition in the case regarding theories of recovery.”
Encore Enters., Inc. v. Borderplex Realty Tr., 581 S.W.3d 347, 362 (Tex. App.—
El Paso 2018, no pet.) (quoting Elliott v. Methodist Hosp., 54 S.W.3d 789, 793
(Tex. App.—Houston [1st Dist.] 2001, pet. denied)). Because Masterson’s fifth
amended petition was timely filed and superseded the fourth amended petition, the
trial court could only consider Masterson’s fifth amended petition as the live
pleading in ruling on the motion to dismiss. See TEX. R. CIV. P. 65 (stating
amended instrument replaces original instrument).
20
Parker v. Ohio Dev., LLC, No. 04-23-00069-CV, 2024 WL 1864756, at *4 (Tex.

App.—San Antonio Apr. 30, 2024, pet. denied) (mem. op.) (holding that because

defendant did not seek dismissal of civil conspiracy claim, trial court erred in

dismissing claim).

Consequently, for all of these reasons we hold that the trial court erred in

granting, in part, ARVM5’s 91a motion and dismissing Masterson’s causes of

action against ARVM5 for breach of contract and for fraud by omission or

nondisclosure. We sustain Masterson’s fifth issue.

Attorney’s Fees

In her third and sixth issues, Masterson argues that the trial court erred in

awarding attorney’s fees to BCHH. Because we are reversing the trial court’s

summary judgment for BCHH on its breach of contract claim against Masterson,

there is no basis for any award of attorney’s fees to BCHH. See TEX. CIV. PRAC. &

REM. CODE § 38.001(8); Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex.

1997) (to recover attorney’s fees under section 38.001, “a party must (1) prevail on

a cause of action for which attorney’s fees are recoverable, and (2) recover

damages.”); Parkway Dental Assocs., P.A. v. Ho & Huang Props., L.P., 391

S.W.3d 596, 612 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (reversing and

remanding award of attorney’s fees because portion of summary judgment had

been reversed on appeal and party was no longer prevailing party).

21
As a result we must also sustain Masterson’s third and sixth issues and

reverse the award of attorney’s fees to BCHH.15

Conclusion

Based on the record before us, we reverse the trial court’s summary

judgment in favor of BCHH in all things. And we reverse the corresponding award

of attorney’s fees to BCHH. We further reverse the trial court’s Rule 91a dismissal

of Masterson’s causes of action against ARVM5 for breach of contract and for

fraud by omission or nondisclosure.

We remand the case for further proceedings consistent with this opinion.

Terry Adams
Chief Justice

Panel consists of Chief Justice Adams and Justices Rivas-Molloy and Gunn.

15
Because we hold that there is no basis for any award of attorney’s fees to BCHH
in this case, it is not necessary to the final disposition of this appeal for us to
address whether the trial court erred in also assessing the attorney fee award
against Masterson in her individual capacity. See TEX. R. APP. P. 47.1.
22

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11086281. Public record. Not legal advice.