Michael A. Creel v. Houston Industries, Inc. D/B/A Reliant Energy, Inc.

Opinion issued November 6, 2003

In The

Court of Appeals

For The

First District of Texas

____________

NO. 01-02-01076-CV

____________

MICHAEL A. CREEL, ALBERT M. ZIMMEREBNER, AND ROBERT N.

JONES, Appellants

V.

HOUSTON INDUSTRIES, INC. D/B/A RELIANT ENERGY, INC., Appellee

****

HOUSTON INDUSTRIES, INC. D/B/A RELIANT ENERGY, INC.,

Appellant

V.

MICHAEL A. CREEL, ALBERT M. ZIMMEREBNER, AND ROBERT N.

JONES, Appellees

On Appeal from the 61st District Court

Harris County, Texas

Trial Court Cause No. 99-59890

O P I N I O N

In this appeal from a final summary judgment, t he central issue is whether the

trial court erred in determining as a matter of law that appellant/appellee Houston

Industries, Inc. d/b/a Reliant Energy, Inc. (“Reliant”) correctly computed the amount

of severance compensation paid to appellants/appellees Michael Creel, Albert

Zimmerebner, and Robert Jones (sometimes collectively called “the plaintiffs”) under

the severance agreements that are the subject of this dispute. The secondary issues

are whether the trial court erred in rendering summary judgment (1) in favor of

Reliant on Creel’s tort claims and (2) in favor of the plaintiffs for their attorneys’ fees

incurred in the litigation , whether or not the plaintiffs prevailed in the litigation and

subsequent appeals.

We affirm.

Background

1. The Severance Agreements

The plaintiffs are former executives with NorAm Energy Corp. (“NorAm”) or

its subsidiaries. On or about July 16, 1996, in anticipation of a probable merger by

NorAm with Houston Industries, Inc., all three plaintiffs entered into separate, but

substantially similar, severance agreements with NorAm.

The severance agreements provided that, if a “Change in Control” occurred at

NorAm during the “Severance Period,” and if the signatory executive was terminated,

the signatory executive would receive the severance compensation set forth in section

5 of the agreements. Additionally, if the signatory executive terminated his

employment during the Severance Period because one or more enumerated events had

occurred, the signatory executive would also receive the section 5 severance

compensation.

Under section 5, the terminated executive was entitled to receive:

in a single lump sum, an amount equal to 2.99 times the sum of (A) Base

Pay (at the highest rate in effect for any period prior to the Termination

Date) plus (B) Incentive Pay (determined in accordance with the

standards set forth in Section 1(h)).

Section 1(h) of the severance agreements defined “Incentive Pay” as follows:

“Incentive Pay” means an annual amount equal to not less than the

annual bonus that would have been paid for the year in which the

Change in Control occurred if the performance goals had been achieved

at the opportunity ( i.e. , maximum) level, pursuant to any bonus,

incentive, profit-sharing, performance, discretionary pay or similar

agreement, policy, plan, program or arrangement (whether or not

funded) of the Company [NorAm], or any successor thereto providing

benefits at least as great as the benefits payable thereunder prior to a

Change in Control.

(Emphasis added.)

The severance agreements also provided that if the signatory executive was

required to incur legal fees to enforce his rights under the agreement, NorAm (or its

successor) would be obligated to pay such legal fees. To secure such payment, the

severance agreements required NorAm (or its successor) to fund a trust account.

Section 8 of the severance agreements provided:

(a) It is the intent of the Company that the Executive not be required

to incur legal fees and the related expenses associated with the

interpretation, enforcement or defense of Executive’s rights under this

Agreement by litigation or otherwise because the cost and expense

thereof would substantially detract from the benefits intended to be

extended to the Executive hereunder. Accordingly, if it should appear

to the Executive that the Company has failed to comply with any of its

obligations under this Agreement or in the event that the Company or

any other person takes or threatens to take any action to declare this

Agreement void or unenforceable, or institutes any litigation or other

action or proceeding designed to deny, or to recover from, the Executive

the benefits provided or intended to be provided to the Executive

hereunder, the Company irrevocably authorizes the Executive from time

to time to retain counsel of Executive’s choice, at the expense of the

Company as hereafter provided, to advise and represent the Executive

in connection with any such interpretation, enforcement or defense,

including without limitation the initiation or defense of any litigation or

other legal action, whether by or against the Company or any director,

officer, stockholder or other person affiliated with the Company, in any

jurisdiction. . . . Without respect to whether the Executive prevails, in

whole or in part, in connection with any of the foregoing, the Company

will pay and be solely financially responsible for any and all attorneys’

and related fees and expenses incurred by the Executive in connection

with any of the foregoing.

(b) Without limiting the obligations of the Company pursuant to

Section 8(a), in the event a Change in Control occurs, the performance

of the Company’s obligations under this Section 8 will be secured by

amounts deposited or to be deposited in trust pursuant to certain trust

agreements to which the Company will be a party . . . . Any failure by

the Company to satisfy any of its obligations under this Section 8(b) will

not limit the rights of the Executive hereunder. Subject to the foregoing,

the Executive will have the status of a general unsecured creditor of the

Company and will have no right to, or security interest in, any assets of

the Company or any Subsidiary.

(Emphasis added.)

2. Merger and Termination

On August 6, 1997, NorAm and its subsidiaries completed a merger with

Houston Industries, which was later renamed Reliant Energy, Inc. It is undisputed

that Reliant assumed NorAm’s obligations under the severance agreements and under

the trust agreements. It is also undisputed that Creel, Zimmerebner, and Jones were

terminated and entitled to severance compensation under their respective severance

agreements.

What is disputed is whether Reliant paid all the severance

compensation due the plaintiffs under their respective agreements.

At the time of their respective terminations, Reliant paid a lump sum to each

plaintiff under section 5 of the severance agreements, based on its interpretation of

what was meant by “annual amount” in the definition of “Incentive Pay” under

section 1(h) of the severance agreements.

According to Reliant, whether the

“Incentive Pay” came under NorAm’s annual incentive plan or under Reliant’s short-term incentive plan that replaced it, the “annual amount” consisted of the annual cash

bonus that was paid, and did not include the value of restricted stock or stock options

that were long-term or multi-year compensation.

3. Litigation

In December 1999, Jones filed suit against Reliant seeking a declaratory

judgment interpreting the term “Incentive Pay” under his severance agreement and

asserting a cause of action for breach of contract based on the argument that Reliant

had not paid him all the severance benefits to which he was entitled and had refused

to pay his attorneys’ fees incurred in connection with his pursuit of his severance

compensation. Generally speaking, he argued that, for purposes of determining his

lump sum severance compensation, the term “Incentive Pay” included not only the

annual bonus but also the value of long-term incentive benefits that were awarded

“under any bonus, incentive, profit-sharing, performance, discretionary pay or similar

agreement, policy, plan, program or arrangement .”

Creel and Zimmerebner intervened in the lawsuit in August and October 2001,

respectively, asserting the same breach of contract claims as Jones. Creel and

Zimmerebner later amended their petitions to include negligence claims.

4. Facts Underlying the Tort Claims

The following facts appear to be undisputed: In 1989, Arkla, Inc. (a

predecessor of NorAm), created two trusts. Both trusts were governed and construed

under Missouri law, and the trustee of both was a trust company located in St. Louis,

Missouri. Trust Agreement No. 1 assured the payment of amounts under certain

employment, severance, retirement, income, income deferral, death, survivor, and/or

other agreements. Trust Agreement No. 2 was established to fund certain legal fees

and other expenses associated with lawsuits brought on behalf of the beneficiaries of

NorAm covered by Trust Agreement No. 1. Reliant used Trust Agreement No. 2 to

satisfy its obligation under section 8(b) of the severance agreements to establish a

trust. As a successor to NorAm, Reliant is a party to Trust Agreement No. 2; the

plaintiffs are trust beneficiaries.

Trust Agreement No. 2 appears to contemplate that a person seeking payment

of legal fees under a severance agreement will first submit a claim to Reliant. If

Reliant does not pay the claim within 30 days, the claim may be submitted to the

trustee for payment. Before payment, the trustee submits the claim to review

counsel.

There is a preliminary approval process, and Reliant receives a copy of

review counsel’s preliminary approval. However, Trust Agreement No. 2 contains

no provision allowing Reliant to prevent review counsel from approving a claim or

the trustee from paying it. Trust Agreement No. 2 requires review counsel to approve

requests for expenses unless (1) the request did not receive preliminary approval or

(2) in the sole judgment of review counsel, it appears that the underlying claim is not

eligible for reimbursement, is not meritorious, or is not being pursued in manner

consistent with the nature and magnitude of the claim.

The decision of review counsel to pay a claim is final, and the trustee may rely

on that decision for all purposes. Reliant is obligated to indemnify and hold harmless

the trustee and review counsel against any damages, losses, claims, or expenses

incurred arising out of their performance of their duties, unless arising out of their

gross negligence or wilful misconduct.

It appears undisputed that in July 2001, Creel submitted a request for

reimbursement of his legal fees to review counsel. Reliant opposed reimbursement

on two grounds: (1) Creel’s underlying claim was not meritorious, and (2) Creel was

not listed on Exhibit A. Review counsel denied Creel’s request on the sole ground

that he was not listed on Exhibit A.

Approximately six months later, Reliant

determined that Creel’s name should have been added to Exhibit A and so advised

review counsel. Review counsel subsequently advised counsel for the parties that

Creel’s claim was being reconsidered. Neither the record nor the briefs reveal the

result of any such reconsideration.

Creel amended his petition in March 2002 to add claims for negligence and

tortious interference against Reliant. Creel argued that Reliant was negligent in

failing to include his name as a trust beneficiary and tortiously interfered with his

right to receive reimbursement from the trust for his legal fees.

5. Motions for Summary Judgment

Ultimately, the plaintiffs each filed a motion for partial summary judgment on

the attorneys’ fees issue. The parties, Reliant on the one hand and the plaintiffs on

the other, filed cross-motions for summary judgment concerning the interpretation of

“Incentive Pay.” Reliant’s motion also sought summary judgment on the negligence

and tortious interference claims.

6. Final Judgment

On October 1, 2002, the trial court signed a final judgment, as follows:

(1) Reliant’s motion for summary judgment against the plaintiffs on

their claims of breach of contract arising from the calculation and

payment of the plaintiffs’ severance benefits was granted (without

specifying its re asons), and it was ordered that the plaintiffs take nothing

on their breach of contract claims.

(2) Jones’s motion for summary judgment and Creel and

Zimmerebner’s motion for partial summary judgment on their claims of

breach of contract arising from the calculation and payment of the

plaintiffs’ severance benefits were denied (without specifying its

reasons).

(3) Reliant’s motion for summary judgment against Creel and

Zimmerebner on Creel’s claims of negligence and tortious interference

and Zimmerebner’s claims of negligence was granted (without

specifying its reasons), and it was ordered that Creel and Zimmerebner

take nothing on these claims.

(4) The breach of contract, negligence, and tortious interference

claims were dismissed with prejudice.

(5) Reliant’s motion for summary judgment was denied with respect

to the plaintiffs’ breach of contract claims related to payment of their

attorneys’ fees. The plaintiffs’ motions for reconsideration of the order

denying their motions for partial summary judgment regarding

attorneys’ fees were granted. Reliant was ordered to pay the attorneys’

fees of Jones, Creel, and Zimmerebner incurred in the prosecution of the

suit through the completion of any and all appeals and regardless of

whether the plaintiffs prevailed in their claims. However, Reliant would

only be so obligated to the extent that the Trust had not or would not pay

such attorneys’ fees.

This appeal followed.

Standard of Review

We follow the usual standard of review for an order granting one party’s

motion for summary judgment and denying the other parties’ motions for summary

judgment under Tex. R. Civ. P. 166a(a), (b). See Dow Chem. Co. v. Francis , 46

S.W.3d 237, 242 (Tex. 2001) (summary judgment order not specifying grounds); FM

Properties Operating Co. v. City of Austin , 22 S.W.3d 868, 872 (Tex. 2000) (order

granting and denying cross-motions for summary judgment); Science Spectrum, Inc.

v. Martinez , 941 S.W.2d 910, 911 (Tex. 1997) (standard of review and burden under

rule 166a(a), (b)). We also follow the usual standards for reviewing an order granting

a motion for summary judgment. See Flameout Design & Fabrication, Inc. v.

Pennzoil Caspian Corp. , 994 S.W.2d 830, 834 (Tex. App.—Houston [1st Dist.] 1999,

no pet.).

Summary Judgment on the Interpretation of “Incentive Pay”

The first issue the plaintiffs present for this Court’s review is whether the trial

court erred in granting Reliant’s motion for summary judgment, and in denying their

motions for summary judgment, on their breach of contract claims, thereby affirming

Reliant’s method of calculating “Incentive Pay.”

Here, as in the trial court, both the plaintiffs and Reliant argue that there are no

material issues of fact and that the severance agreements are unambiguous.

Nonetheless, they sharply disagree over how to interpret the language surrounding

the term “Incentive Pay.”

The mere fact that the parties disagree about the meaning of a contract does not

make an otherwise straightforward contract ambiguous. Transcontinental Gas

Pipeline Corp. v. Texaco, Inc. , 35 S.W.3d 658, 665 (Tex. App.— Houston [1st Dist.]

2000, pet. denied). Nor does an ambiguity arise just because the parties’ respective

interpretations are sharply conflicting. Columbia Gas Transmission Corp. v. New

Ulm Gas, Ltd. , 940 S.W.2d 587, 589 (Tex. 1996); Transcontinental Gas Pipeline

Corp. , 35 S.W.3d at 665 . We accept the parties’ characterization of the severance

agreements as unambiguous, as did the trial court.

Therefore, our primary concern is to ascertain the true intent of the parties as

expressed within the four corners of the severance agreements. See National Union

Fire Ins. Co. , 907 S.W.2d at 520; see also White v. White , 830 S.W.2d 767, 769 (Tex.

App.— Houston [1st Dist.] 1992, writ denied) (interpretation of contract is controlled

by parties’ intentions as expressed within four corners of agreement). In interpreting

the severance agreements, we examine them in their entirety in an effort to harmonize

and give effect to all their provisions so that none will be meaningless. See MCI

Telecomm. Corp. v. Texas Utils. Elec. Co. , 995 S.W.2d 647, 652 (Tex. 1999); State

Farm Life Ins. Co. v. Beaston , 907 S.W.2d 430, 433 (Tex. 1995). If a contract term

is not defined, it will be given its plain, ordinary, and generally accepted meaning.

DeWitt County Elec. Co-op., Inc. v. Parks , 1 S.W.3d 96, 101 (Tex. 1999).

We quoted above the relevant portion of section 5 of the severance agreements,

which provides that a terminated executive receives in a single lump sum, an amount

equal to 2.99 times the sum of (A) Base Pay plus (B) Incentive Pay.

According to Reliant, “Incentive Pay” encompasses only the annual bonus,

based on performance for the year under consideration, and does not encompass all

awards under a “bonus, incentive, profit-sharing, performance, discretionary pay or

similar agreement, policy, plan, program or arrangement ,” such as stock options and

restricted stock. According to the plaintiffs, “Incentive Pay” means the annual bonus,

as well as the value of any long-term performance measure payments, such as stock

options and restricted stock under a “bonus, incentive, profit-sharing, performance,

discretionary pay or similar agreement, policy, plan, program or arrangement. ”

The severance agreements do not specifically reference the name of the

document that determines “the annual amount” pursuant to “any bonus, incentive . .

. plan.” In their brief, the plaintiffs state there were “numerous bonus and incentive

awards in place.” Attached to the summary judgment motions of Creel and

Zimmerebner are the following documents: (1) NorAm Energy Corp. 1994 Incentive

Equity Plan, (2) Long Term Incentive Plan Cycles VII, VIII and IX Current

Performance Data, (3) Restricted Stock Agreement Performance Cycle IX, and (4)

Cycle IX Incentive Stock Option Agreement.

We have reviewed all of these

documents.

According to the plaintiffs’ brief and to their motions for summary judgment,

Reliant used the “Annual Incentive Award” under the 1994 Incentive Equity Plan for

the purpose of determining their “Incentive Pay.” The 1994 Plan defined the “Annual

Incentive Award” as “the annual incentive compensation payment made pursuant to

Paragraph 9.” Paragraph 9 provided that the Compensation and Benefits Committee

of NorAm’s Board of Directors could authorize payment of annual incentive

compensation, which became payable upon achievement of specified Management

Objectives. The Management Objectives were based on a one-year Performance

Cycle. Annual incentive compensation could be paid in cash, shares of common

stock equal to the aggregate value of the incentive compensation payable, or a

combination of both, as determined by the Committee.

The 1994 Plan also provided that the Committee, from “time to time,” could

authorize grants to participants of:

(1) “Option Rights,” options to purchase shares of common stock.

(2) “Appreciation Rights,” a right for a participant to receive an amount

determined by the Committee at the date of grant and expressed as a percentage of the

spread at the time of exercise. Appreciation Rights could be granted in tandem with

Option Rights or separate and apart from them.

(3) “Restricted Stock,” grants or sales of restricted common stock to

participants.

(4) “Opportunity Shares,” grants of opportunity shares.

(5) “Performance Units,” grants of performance units.

The plaintiffs argue that the value of the long-term components of the 1994

Plan— common stock, opportunity shares, option rights, appreciation rights, restricted

stock, and performance units— should also have been included as “Incentive Pay,”

in determining their severance compensation. However, the only award the 1994 Plan

characterized as “annual” was the “Annual Incentive Award.” The other components

were awarded from “time to time.”

Reliant does not specifically refer to the 1994 Plan in its brief. Reliant refers

generically to “NorAm’s (or NorAm’s successor, Reliant Energy’s) annual incentive

plan.” According to the recitals in Reliant’s “Annual Incentive Compensation Plan”

(AICP), it superseded and replaced the annual incentive awards portion of NorAm’s

1994 Plan effective January 1, 1999. Reliant also refers to the “annual bonus” as the

annual cash bonus provided under NorAm’s annual incentive plan or any replacement

plan that performed the same function of providing an annual cash bonus. The AICP

does not contain the term “annual bonus,” but instead defines “award” as “an

incentive compensation award payable in cash granted to a Participant with respect

to a particular Plan Year .” Under the AICP, the Compensation Committee of the

Board of Directors has the sole and absolute authority and discretion to determine the

time and manner of the awards, but the AICP states that generally, awards are made

in cash and are made at the end of the Plan Year. In its brief, Reliant also discusses

Reliant’s long term incentive compensation plan, which included grants of stock

options and restricted stock and was based on three-year performance cycles.

According to Reliant’s motion for summary judgment, following the close of the

merger, Reliant’s long term incentive plan replaced that of NorAm’s for the

executives, including Jones and Zimmerebner, who stayed on with Reliant.

The plaintiffs contend that the value of the long-term incentive payments

should be included in “Incentive Pay” because the long-term incentive payments

were, in fact, made annually. They assert Reliant admitted that, regardless of the

nature of the underlying performance measure, participants received awards under

both short-term and long-term incentive plans on an annual basis. The plaintiffs rely

on the deposition testimony of Dean Woods, a former employee of NorAm and, at the

time of his deposition, the Executive Director of Compensation and Benefits for

Reliant.

Q: Is your position, Mr. Woods, that [Creel] was not receiving annual

payments under the LTIP or long-term incentive plan?

A: May I say exactly what I believe he was receiving?

Q: Absolutely.

A: He was receiving, as all participants in that plan were receiving,

periodic awards or grants of stock options or performance shares under

the terms of the plan.

Q: How often were these periodic awards?

A: Typically, they were annual awards.

However, immediately after that answer, Woods was asked if Creel received

a payment under the long-term incentive plan for the year the “Change in Control”

occurred, that is 1997, the date the merger was approved.

Recall that “Incentive

Pay” meant an annual amount equal to not less than the annual bonus that would have

been paid for the year in which the Change in Control occurred.

Woods’s discussion in his deposition of the payment Creel received in 1997

under the long term incentive programs indicates that it resulted from the acceleration

of the long term incentive programs in accordance with the terms of the severance

agreements. Section 3 of the severance agreements provided as follows:

3. Acceleration of Incentive Benefits . On the date that the last

regulatory approval is obtained for a transaction which, if consummated,

would result in a Change in Control, (i) all outstanding stock options to

purchase stock of the Company that are then held by the Executive will

become immediately exercisable notwithstanding any provision

contained in any stock option agreement to the contrary, and (ii) all

shares of restricted stock previously issued to the Executive which have

not been forfeited by the terms of any restricted stock agreement,

together with any opportunity shares provided for in such agreement,

will be delivered immediately to the Executive free of all restrictions

(other than restrictions on transfer imposed by federal or state securities

laws) notwithstanding any provision contained in any restricted stock

agreement to the contrary.

It would not be reasonable to treat as an “annual amount” for purposes of “Incentive

Pay” under the severance agreement an amount that was paid annually only in the

year of the Change of Control based on an acceleration of benefits clause in the same

severance agreement.

It appears to this Court that the only reasonable construction to be given to

“Incentive Pay” is that it consists of the “Annual Incentive Award,” defined as the

annual incentive compensation payment under the NorAm 1994 Plan or the “award”

defined as “an incentive compensation award payable in cash granted to a Participant

with respect to a particular Plan Year” under Reliant’s AICP. “Incentive Pay” does

not include the value of long term incentive awards such as stock options or restricted

stock. Accordingly, we conclude the trial court did not err in granting Reliant’s

motion for summary judgment against the plaintiffs on their claims of breach of

contract arising from the calculation and payment of the plaintiffs’ severance

compensation.

Exclusion of Summary Judgment Evidence

In their second issue, the plaintiffs contend that the trial court erred in

excluding as summary judgment evidence the employment agreement between

Reliant and nonparty Wayne Stinnett executed on March 31, 1999. The Stinnett

agreement was attached as an exhibit to Creel’s opposition to Reliant’s motion for

summary judgment. Reliant objected to the Stinnett agreement being used to construe

the severance agreements because it was not attached to any deposition testimony as

an exhibit nor was it otherwise sworn to as a true and correct copy. In its response

to the plaintiffs’ motions for summary judgment, Reliant also objected to the use of

the Stinnett agreement in interpreting the severance agreements under the parol

evidence rule. The trial court excluded the Stinnett agreement .

Even were we to hold that the Stinnett agreement was relevant and that it was

not required to be authenticated or self-proving, the application of the parol evidence

rule would still support the exclusion of the Stinnett agreement, entered into in 1999,

in interpreting the severance agreements (exec uted in 1996). See Sun Oil Co.

(Delaware) v. Madeley , 626 S.W.2d 726, 731 (Tex. 1981); Transit Enters., Inc. v.

Addicks Tire & Auto Supply, Inc. , 725 S.W.2d 459, 461 (Tex. App.—Houston [1st

Dist.] 1987, no writ). Accordingly, we conclude the trial court did not err in

excluding the Stinnett agreement.

Summary Judgment on Creel’s Tort Claims

In a separate brief, Creel contends that the trial court erred in granting Reliant’s

motion for summary judgment on his negligence claim and tortious interference claim

because Reliant neither negated an essential element of Creel’s claims nor

conclusively established an affirmative defense to Creel’s claims. Furthermore, Creel

asserts that his tort claims are not “repackaged contract claims,” see Southwestern

Bell Telephone Co. v. DeLanney , 809 S.W.2d 493 (Tex. 1991), as argued by Reliant.

In connection with this assertion, Creel maintains that his tort claims were not based

on any alleged violation of the severance agreement, but rather on Reliant’s wrongful

conduct with respect to Creel’s relationship with Trust Agreement No. 2.

It is well established in Texas that a plaintiff cannot take a breach of contract

claim and convert it into a tort claim. See Formosa Plastics Corp. v. Presidio Eng’rs

& Contractors, Inc. , 960 S.W.2d 41, 44-45 (Tex. 1997); DeLanney , 809 S.W.2d at

494 . To distinguish contract and tort causes of action, we analyze the source of the

duty and the nature of the remedy. Formosa Plastics Corp. , 960 S.W.2d at 45 .

Trust Agreement No. 2 is an agreement between Reliant (as a successor in

interest grantor) and the trustee. Under the express wording of Trust Agreement No.

2, the beneficiaries of the trust created by the agreement are entitled to enforce all the

terms and provisions of the agreement, although they are not parties to the agreement

We have carefully reviewed Trust Agreement No. 2 and conclude that Reliant as

grantor took no actions under that agreement relative to Creel that it was not entitled

to take. While Creel asserts that his claims are not based on any violations by Reliant

of the severance agreement, in fact, they are. It is through the severance agreement

that Creel is entitled to have his legal fees and expenses paid for by Reliant and to be

a beneficiary of the trust created by Trust Agreement No. 2.

Reliant’s duty to pay for Creel’s legal fees and expenses rests on section 8 of

the severance agreement. Based on the wording of the severance agreement, we

conclude that Reliant’s duty to pay Creel’s attorneys’ fees in connection with

enforcement or interpretation of that agreement is based on the agreement itself, that

Creel’s remedy rests in contract, and that the parties contractually contemplated, in

executing the agreement, the dispute which is the subject of this litigation.

Based on Formosa Plastics Corp. and DeLanney , the trial court did not err in

rendering summary judgment for Reliant on Creel’s tort claims. We overrule Creel’s

issue.

Summary Judgment on the Attorneys’ Fees and Related Expenses Issue

In its appellant’s brief, Reliant presents the issue that the trial court erred in

concluding that section 8 of the severance agreements unambiguously obligated

Reliant to pay the plaintiffs’ attorneys’ fees and related expenses.

Reliant argues that, based on the plain, unambiguous language of section 8 of

the severance agreements, its obligation to pay attorneys’ fees must be determined

with reference to the “benefits intended to be extended” or the “benefits provided or

intended to be provided to the Executive.” According to Reliant, because the trial

court concluded that Reliant correctly determined the amount of severance

compensation, there was no intent to provide the benefit of the additional “Incentive

Pay” sought by the plaintiffs in this litigation. Reliant also contends that this Court

should consider the circumstances surrounding the formation of the severance

agreements, as shown in the testimony of Rick Spurlock, which it claims confirms

that the purpose of the attorneys’ fees provision was not to subsidize frivolous or

unmeritorious claims. Alternatively, Reliant argues that section 8 of the severance

agreements is ambiguous and that summary judgment on the attorneys’ fees matter

was, therefore, improper.

Reliant’s main argument rests on two small phrases and ignores the remainder

of section 8, such as: “It is the intent of the Company that the Executive not be

required to incur legal fees and the related expenses associated with the interpretation,

enforcement or defense of Executive’s rights under this Agreement by litigation or

otherwise . . . .”, and: “Without respect to whether the Executive prevails, in whole

or in part,

in connection with any of the foregoing, the Company will pay and be

solely financially responsible for any and all attorneys’ and related fees and expenses

incurred by the Executive in connection with any of the foregoing.”

The phrase, “benefits intended to be extended” does not qualify the Company’s

responsibility to pay the Executive’s attorneys’ and other related fees and expenses

incurred in connection with litigation interpreting the severance agreements, such as

this litigation. The phrase is contained only in the reason given for the Company’s

undertaking such a responsibility without qualification: “because the cost and

expense therefore would substantially detract from the benefits intended to be

extended to the Executive hereunder.” The second phrase, or the “benefits provided

or intended to be provided to the Executive,” appears in a part of section 8(a) that

does not apply to this litigation, which was instituted by the plaintiffs: “in the event

that the Company or any other person takes or threatens to take any action to declare

this Agreement void or unenforceable, or institutes any litigation or other action or

proceeding designed to deny, or to recover from, the Executive the benefits provided

or intended to be provided to the Executive hereunder . . . .”

Finally, the language of section 8(a) gave the plaintiffs discretion to commence

this litigation and seek payment of their attorneys’ fees from Reliant without limit or

qualification: “Accordingly, if it should appear to the Executive that the Company has

failed to comply with any of its obligations under this Agreement . . . .” Accordingly,

we conclude that the trial court did not err in granting the plaintiffs’ motion for partial

summary judgment on the issue of attorneys’ fees.

Conclusion

The judgment is affirmed.

Adele Hedges

Justice

Panel consists of Justices Hedges, Nuchia, and Hanks.