Affirmed and Opinion filed October 30,=20
2007.
In The
Fourteenth Court=20
of Appeals
____________
NO. 14-06-00323-CV
____________
CHARLES=20
SANDEL, =
Appellant
V.
ATP OIL=20
& GAS CORPORATION, =
Appellee
On Appeal from the =
157th District Court
Harris County, =
Texas
Trial Court Cause =
No. 2004-69748
O P I N I=20
O N
Appellant=20
Charles Sandel appeals from the trial court=3Ds grant of=20
summary judgment in favor of appellee ATP Oil & Gas =
Corporation=20
(AATP@). =20
We affirm.
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Background
ATP, an=20
oil and gas production company, hired Sandel on April 26, 1999 as =
its=20
Director of Land and Associate Counsel. Pursuant to its =
stock option=20
plans, ATP periodically offered its employees stock options. =
During=20
his employment, ATP offered Sandel three grants of stock =
options. In=20
1999 and 2000, ATP granted Sandel stock options, and he signed a=20
ANonqualified=20
Stock Option Agreement@ =
as=20
required by ATP in conjunction with the grant. Sandel signed =
no such=20
stock option agreement for the final of the three stock option =
grants in=20
2001, and it is the third offer that is the focus of this=20
litigation.
On May 17,=20
2001, ATP sent Sandel a letter, which was signed by T. Paul =
Bulmahn,=20
ATP=3Ds=20
president. This letter discussed changes to =
Sandel=3Ds base=20
salary and vacation benefits. As to stock options, the =
letter stated=20
as follows:
Further,=20
ATP is pleased to grant you options for stock ownership of the =
company in=20
the amount of 20,000 shares at the market value as of closing of =
the=20
market exchange on May 17, 2001. One-quarter of these =
options will=20
be exercisable on July 1, 2002, and one-quarter each succeeding =
year on=20
that date.
The letter=20
concluded, AYour=20
dedication and hard work is recognized and valued.@ =20
Unlike in 1999 and 2000, this letter was not accompanied by a =
stock option=20
agreement for Sandel=3Ds=20
signature, which surprised Sandel. Rather, sometime later =
(the=20
record does not reveal exactly when), Bulmahn provided Sandel with =
a stock=20
option agreement and asked him to sign it. Sandel refused, =
stating=20
that he wanted to read it. He later told Bulmahn=3Ds=20
assistant that he had Aconcerns@ =
about the=20
agreement.
In June of=20
2003, Sandel resigned his position at ATP without ever having =
signed the=20
stock option agreement. Over a year later, in September =
2004, Sandel=20
wrote Bulmahn a letter requesting details about how to exercise =
the stock=20
options discussed in the May 2001 letter. ATP responded by =
letter,=20
informing him that he had no options to exercise because, =
according to the=20
stock option agreement, he was entitled to exercise vested options =
only=20
during the six months following the end of his employment. =
More=20
letters were exchanged, with Sandel taking the position that the =
May 2001=20
letter constituted an unconditional grant of stock options and ATP =
insisting that the letter merely notified Sandel of the grant and =
that=20
exercise of the stock options was governed by the stock option =
agreement=20
and the company=3Ds stock=20
option plan.
In=20
December 2004, ATP filed a declaratory judgment action, seeking a=20
declaration that the May 2001 letter was not an enforceable grant =
of stock=20
options. The trial court granted ATP=3Ds motion=20
for summary judgment, specifically finding that the May 2001 =
letter did=20
not constitute a binding agreement. Sandel now appeals, =
arguing in=20
one issue that the trial court erred in granting summary judgment =
because=20
the May 2001 letter is binding, both under the common law and =
Texas=20
statutory law, and asserting that ATP is estopped from denying =
that the=20
letter is binding.
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Analysis
Appellee=3Ds motion=20
for summary judgment contained both traditional and =
no‑evidence grounds.=20
See Tex. R. =
Civ. P.=20
166a(c), (i). The standard of review for a =
traditional motion=20
for summary judgment is whether the successful movant at the trial =
level=20
carried its burden of showing that there is no genuine issue of =
material=20
fact and that judgment should be granted as a matter of law. =
KPMG=20
Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d =
746, 748=20
(Tex. 1999). A defendant must conclusively negate at least =
one=20
essential element of each of the plaintiff=3Ds causes=20
of action or conclusively establish each element of an affirmative =
defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d =
910, 911=20
(Tex. 1997). Under this traditional standard, this court =
must take=20
as true all evidence favorable to the nonmovant and must make all=20
reasonable inferences in the nonmovant=3Ds=20
favor. See id. We review a no‑evidence =
summary judgment=20
de novo by construing the record in the light most favorable to =
the=20
nonmovant and disregarding all contrary evidence and =
inferences. =20
Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 =
(Tex.=20
1997). A no‑evidence summary judgment is improperly =
granted when the=20
respondent brings forth more than a scintilla of probative =
evidence that=20
raises a genuine issue of material fact. See Tex. R. Civ. P. =
166a(i);=20
Coastal Conduit & Ditching, Inc. v. Noram Energy Corp., =
29=20
S.W.3d 282, 284 (Tex. App.C =
Houston=20
[14th Dist.] 2000, no pet.).
In=20
1464-Eight, Ltd. v. Joppich, 154 S.W.3d 101, 110 (Tex. =
2004), the=20
Texas Supreme Court adopted section 87 of the Restatement (Second) =
of=20
Contracts regarding option contracts. Section 87 provides, =
in=20
pertinent part:
(1) An offer =
is binding=20
as an option contract if it
(a) is in =
writing and=20
signed by the offeror, recites a purported consideration for the =
making of=20
the offer, and proposes an exchange on fair terms within a =
reasonable=20
time; or
(b) =20
is made irrevocable by statute.
Restatement=20
(Second) of Contracts =
' =
87(1)=20
(1981); see also Joppich, 154 S.W.3d at 110. Thus, an =
offer=20
is irrevocable if it either meets the elements in section 87(1)(a) =
or=20
meets the requirements of a relevant statute. Sandel argues =
that the=20
May 2001 letter irrevocably grants him stock options under both=20
theories.
We=20
conclude the May 2001 letter is not irrevocable under section =
87(1)(a) of=20
the Restatement. Section 87(1)(a) requires that an offer be =
in=20
writing and Arecite[] a=20
purported consideration for the making of the offer.@ =20
Consideration is a bargained for exchange consisting of a benefit =
to the=20
promisor or a detriment to the promisee. Roark v. =
Stallworth Oil=20
& Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991). The =
parties=20
have not cited, and we cannot find, any cases from Texas or other =
states=20
defining how consideration must be Arecite[d]@ =
under=20
section 87. The plain meaning of recite is A[t]o=20
relate in detail@ =
or=20
A[t]o list=20
or enumerate.@ =20
American Heritage=20
Dictionary (4th ed. 2006); see also Black=3Ds=20
Law Dictionary 1298 (8th=20
ed. 2004) (stating that a Arecital@ =
is=20
A[a]n act=20
or description of some fact or thing@). =20
Thus, the bargained for exchange must be detailed or enumerated in =
the=20
offer. The May 2001 letter does not detail or enumerate any=20
consideration for granting stock options. As Sandel =
testified in his=20
deposition, he considered the letter as being given with =
Ano strings=20
attached,@ =
and he=20
specifically indicated that no one asked him to give up any rights =
to=20
receive the letter. Apparently recognizing that his past =
service=20
cannot constitute consideration,=20
Sandel argues on appeal that the final statement in the May 2001 =
letter,=20
AYour=20
dedication and hard work is recognized and valued,@ =
implies=20
an expectation of continued hard work, but that argument is =
inconsistent=20
with his deposition testimony that the letter came with no strings =
attached. Further, any such implied consideration is not =
recited in=20
the letter and is thus insufficient under section 87(1)(a). =
Sandel=20
also argues that he continued working for ATP for two years after=20
receiving the May 2001 letter and that his actual continued =
employment=20
constitutes consideration. However, as discussed above, that =
continued employment was not bargained for, and A[t]he=20
detriment [to the promisee] must induce the making of the=20
promise.@ =20
Roark, 813 S.W.2d at 496. For these reasons, we =
conclude the=20
trial court did not err in granting summary judgment on the ground =
that=20
the May 2001 letter is not binding under section =
87(1)(a).
We now=20
consider whether the May 2001 letter is binding under section =
87(2)=20
pursuant to a statute. Article 2.14-1 of the Texas Business=20
Corporations Act governs the grant of stock options. It =
provides=20
that a corporation may create stock options and that such options=20
Ashall be=20
evidenced in such manner as the board of directors shall=20
approve.@ =20
Tex. Bus. Corp. Act =
Ann.=20
art. 2.14-1, '' =
A, C=20
(Vernon Supp. 2006). ATP=3Ds board of=20
directors, in its stock option plan, set forth the manner in which =
stock=20
options can be granted and exercised. The stock option plan=20
provided:
Each=20
Option shall be evidenced by an Option Agreement in such form and=20
containing such provisions not inconsistent with the provisions of =
the=20
Plan as the Committee from time to time shall approve . . . . Each =
Option=20
Agreement shall specify the effect of termination of . . . =
employment . .=20
. .
We=20
conclude that the May 2001 letter does not evidence the grant of =
stock=20
options as required by ATP=3Ds board of=20
directors. The stock option plan requires that all options =
be=20
evidenced by a stock option agreement that specifies the effect of =
termination of employment. Although the stock option =
agreement=20
Sandel refused to sign specified that such options expired six =
months=20
after termination, the May 2001 letter was silent on the subject =
and thus=20
could not constitute a stock option agreement under the stock =
option=20
plan. Sandel argues that the stock option plan and stock =
agreement=20
are irrelevant because ATP=3Ds board of=20
directors designated Bulmahn as the person to grant stock options =
and=20
Bulmahn=3Ds May 2001=20
letter did not impose any conditions on the grant. However, =
even if=20
the board of directors designated Bulmahn to grant stock options, =
there is=20
no evidence that he was authorized to do so in a manner =
inconsistent with=20
the stock option plan. Thus, although there are no Texas =
cases=20
interpreting article 2.14-1 in the context of stock options, we =
conclude=20
that under the plain meaning of the statute, the May 2001 letter =
was not=20
irrevocable under the statute because the letter did not grant =
options in=20
the manner required by the stock option plan, and therefore the =
trial=20
court did not err in granting summary judgment on this=20
basis.
Finally,=20
Sandel argues that ATP is estopped from contending that the May =
2001=20
letter is not binding under the doctrine of promissory =
estoppel. =20
Promissory estoppel is a defensive theory that estops a promisor =
from=20
denying the enforceability of a promise. Trammel Crow Co. =
No. 60=20
v. Harkinson, 944 S.W.2d 631, 636 (Tex. 1997). The =
elements of=20
promissory estoppel are a promise that the promisor can foresee =
will cause=20
substantial, detrimental reliance by the promisee. See =
English v.=20
Fischer, 660 S.W.2d 521, 524 (Tex. 1983). To show =
detrimental=20
reliance, the plaintiff must show that he materially changed his =
position=20
in reliance on the promise. Miller v. Raytheon Aircraft =
Co.,=20
229 S.W.3d 358, 379 (Tex. App.CHouston=20
[1st Dist.] 2007, no pet. h.); see also English, 660 S.W.2d =
at 524=20
(finding no promissory estoppel when plaintiff could not show that =
he=20
would not have taken his detrimental actions if defendant had not =
made=20
promise). Sandel contends that the May 2001 letter =
constitutes a=20
promise that he detrimentally relied upon by continuing to work at =
ATP for=20
two years after receiving it. He argues that this either =
establishes=20
his promissory estoppel defense as a matter of law or at least =
raises a=20
fact issue precluding summary judgment. We disagree. =
Assuming=20
the May 2001 letter constitutes a promise, Sandel has offered no =
evidence=20
of detrimental reliance. Sandel claims his testimony that he =
did not=20
seek other employment for two years shows detrimental =
reliance. =20
However, when Sandel received the May 2001 letter, he had no =
employment=20
offers or pending interviews and had not identified any potential=20
employers. Failure to seek another job is insufficient =
because=20
Sandel must show that but for the letter, he would have stopped =
working=20
for ATP, and he presented no such evidence. See=20
English, 660 S.W.2d at 524; Miller, 229 S.W.3d at =
379;=20
see also First Nat=3Dl=20
Bankshares of Beloit, Inc. v. Geisel, 853 F.=20
Supp. 1344, 1356 (D. Kan. 1994) (concluding that evidence that =
plaintiffs=20
relied on promise of stock options in declining to pursue other =
employment=20
opportunities was insufficient to raise fact issue on detrimental =
reliance=20
element of promissory estoppel defense); cf. Johnson & =
Johnson=20
Med., Inc. v. Sanchez, 924 S.W.2d 925, 930 (Tex. 1996) =
(holding that=20
employer=3Ds promise=20
to recall laid off employee could not support fraud claim because =
employee=20
did not present any evidence of detrimental reliance Asuch as=20
turning down other offers of employment@);=20
Miller, 229 S.W.3d at 379 (finding no promissory estoppel =
when=20
employee accepted new job based on employer=3Ds promise=20
when former position was no longer available). Thus, we =
conclude the=20
trial court did not err in granting summary judgment on =
Sandel=3Ds=20
promissory estoppel defense.
We affirm the trial =
court=3Ds =
judgment.
/s/ =20
Leslie B. Yates
Justice
Judgment=20
rendered and Opinion filed October 30, 2007.
Panel=20
consists of Justices Yates, Seymore, and Edelman.
See Alex Sheshunoff Mgmt. =
Servs., L.P.=20
v. Johnson, 209 S.W.3d 644, 659 (Tex. 2006) (Jefferson, C.J.,=20
concurring) (noting that A>past consideration=3D is not consideration@).
Senior Justice Richard H. Edelman =
sitting=20
by =
assignment. |