ACCEPTED

05-11-00486-CV 225EFJ016501427
FIFTH COURT OF APPEALS
DALLAS, TEXAS
11 September 16 P11:08
Lisa Matz
No. 05-10-01351-CV CLERK

IN THE FIFTH COURT OF APPEALS

DALLAS, TEXAS

MICHAEL KALMUS V. ELLA OLIVER and FINANCIAL NECESSITIES

NETWORK INC.

On Appeal from the 193rd District Court

Dallas County, Texas

Carl Ginsburg, Judge Presiding

APPELLANTS BRIEF

Cary W. Schulman

State Bar No. 00797390

The Cary Schulman Law Firm

5910 N. Central Expressway

Suite 1040

Dallas, Texas 75206

(214) 739-0100

(214) 739-0151 - facsimile

Appellant Requests Oral Argument

Appellants Brief 1
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IDENTITY OF PARTIES AND COUNSEL

Trial and Appellate Counsel for Trial and Appellate Counsel

Appellant Michael Kalmus Appellees Ella Oliver, Financial Necessities
Network Inc.

Cary W. Schulman
Steven Tinsley
The Cary Schulman Law Firm, P.L.L.C.
Tinsley Law Firm.
5910 N. Central Expressway
517 W. Centerville
Suite 1040
Garland, Texas 75041
Dallas, Texas 75206

Appellants Brief 2
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TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL........................................................................?

TABLE OF CONTENTS .....................................................................................................?

INDEX OF AUTHORITIES ................................................................................................?

STATEMENT OF THE CASE.............................................................................................?

ISSUES ON APPEAL..........................................................................................................?

Oral Contract is Not Subject to the Statute of Frauds Defense...........................................?

Causes of Action Exempt from Statue of Frauds Defense....................................................?

Statute of Frauds is Inapplicable and No Defense to Causes of Action..............................?

STATEMENT OF FACTS ...................................................................................................?

SUMMARY OF THE ARGUMENT ...................................................................................?

ARGUMENT .......................................................................................................................?

PRAYER ..............................................................................................................................?

CERTIFICATE OF SERVICE .............................................................................................?

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INDEX OF AUTHORITIES

Tex. Bus. & Com. Code Ann. 26.01 (2009)...............................................................16,25

Tex. Bus. & Com. Code Ann. 35.82-4 ......................................................................33, 34

Tex. Bus. Corp. Act Ann. 2.21(A)(B).............................................................................27

Tex. Civ. Prac. & Rem. Code 134.002-5...................................................................30, 31

Tex. Gov. Code 311.031..................................................................................................33

Tex. Lab. Code 61.018........................................................................................30, 31, 32

Tex. Penal Code 31.03-4............................................................................................30, 31

Tex. R. Civ. P. 166a....................................................................................................15, 29

Adams v. Petrade Intern., Inc., 754 S.W.2d 696, 707 (Tex. App.--Houston [1st Dist.]

1988, den.).............................................................................................................17, 22, 24

Bailey v. City of Austin, 972 S.W.2d 180, 193 (Tex.App.Austin 1998, pet.

denied)...............................................................................................................................23

Bank of Texas, N.A. v. Gaubert, 286 S.W.3d 546, 556 (Tex. App.--Dallas 2009, pet.

dism'd)................................................................................................................................25

Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122, 142 (Tex. App.--Corpus Christi

2006, pet. denied)...............................................................................................................16

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Baylor University v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007)................................26

Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149 (Tex. App.--Houston [1st Dist.] 2005,

pet. denied).......................................................................................................16, 17, 18, 21

Biko v. Siemens Corp., 246 S.W.3d 148, 163 (Tex. App.--Dallas 2007, pet. denied).......26

Boales v. Brighton Builders, Inc., 29 S.W.3d 159, 166 (Tex.App.Houston [14th Dist.]

2000, pet. denied)...............................................................................................................23

Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (1961)........................................16

Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986).............................................27

Cate v. Woods, 299 S.W.3d 149, 154 (Tex. App.--Texarkana 2009, no pet. h.)................26

Choi v. McKenzie, 975 S.W.2d 740, 743 (Tex. App.--Corpus Christi 1998, pet.

denied)...............................................................................................................................16

City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979)...............29

Clifton v. Ogle, 526 S.W.2d 596, 603 (Civ. App.--Fort Worth 1975, ref. n.r.e.)................22

Coastal CementSand Inc. v. First Interstate Credit Alliance, Inc., 956 S.W.2d 562, 565

(Tex.App.Houston [14th Dist.] 1997, pet. denied)........................................................29

English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983)........................................................22

El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999).........16

Fretz Const. Co. v. Southern Nat. Bank, Etc., 626 S.W.2d 478, 480 (Tex. 1981).............22

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Frost Crushed Stone Co. v. Odell Geer Const. Co., 110 S.W.3d 41, 44 (Tex.App.Waco

2002, no pet.).....................................................................................................................23

Garrod Invs., Inc. v. Schlegel, 139 S.W.3d 759, 763 (Tex. App.--Corpus Christi 2004, no

pet.)..................................................................................................................................16

GWTP Investments, L.P. v. SES Americom, Inc., 497 F.3d 478, 482 (5th Cir. [Tex.]

2007)..................................................................................................................................26

Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001)......................................................16,26

Hawkins v. Walker, 233 S.W.3d 380, 395-396 (Tex. App.--Fort Worth 2007, no

pet.)....................................................................................................................................26

Horn v. Builders Supply Company of Longview, 401 S.W.2d 143, 149 (Civ. App.--Tyler

1966, ref. n.r.e.)..................................................................................................................20

Inglish v. Union State Bank, 945 S.W.2d 810, 811 (Tex. 1997)........................................29

In re Int'l Profit Assocs., 274 S.W.3d 672, 678 (Tex. 2009)..............................................26

In re United Servs. Auto. Ass'n, 307 S.W.3d 299 (Tex. 2010)...........................................16

ISG State Operations v. Nat. Heritage Ins., 234 S.W.3d 711, 718 (Tex. App.--Eastland

2007, no pet.).....................................................................................................................26

Kelly v. Rio Grande Computerland Group, 128 S.W.3d 759, 769 (Tex.App.El Paso

2004, no pet.).....................................................................................................................23

Kenney v. Porter, 604 S.W.2d 297, 303 (Civ. App.--Corpus Christi 1980, ref.

n.r.e.)..................................................................................................................................24

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Keystone Intern., Inc. v. Ingham, 593 S.W.2d 354, 357 (Civ. App.--Texarkana 1979, no

writ).................................................................................................................................18

Khan v. Yazdchi, No. 01-02-00918-CV, 2003 WL 21513628, at *4 (Tex. App.Houston

[1st Dist.] 2003, no pet.)(mem. op.)...................................................................................29

Lathem v. Kruse, 290 S.W.3d 922, 926 (Tex. App.--Dallas 2009, no pet.).......................16

McConnell v. Southside Independent School District, 858 S.W.2d 337, 341 (Tex.

1993)..................................................................................................................................29

MCN Energy Enters., Inc. v. Omagro de Colombia, L.D.C., 98 S.W.3d 766, 774

(Tex.App.Fort Worth 2003, pet. denied)..........................................................................23

Niday v. Niday, 643 S.W.2d 919, 920 (Tex. 1982)............................................................17

Miller v. Riata Cadillac Company, 517 S.W.2d 773, 775 (Tex. 1974)........................19, 20

Otto Vehle & Reserve Law Officers Ass'n v. Brenner, 590 S.W.2d 147, 152 (Tex. Civ.

App.--San Antonio 1979, no writ).....................................................................................17

Phillips v. Phillips, 820 S.W.2d 785, 791 (Tex. 1991).......................................................16

Republic Bankers Life Ins. Co. v. Wood, 792 S.W.2d 768, 776 (Tex. App.--Fort Worth

1990, den.)...................................................................................................................17, 18

Reyna v. First Nat'l Bank, 55 S.W.3d 58, 70 n. 4 (Tex.App.Corpus Christi 2001, no

pet.)....................................................................................................................................23

Rittmer v. Garza, 65 S.W.3d 718, 722 (Tex. App.--Houston [14th Dist.] 2001, no

pet.)....................................................................................................................................16

Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991)...................16,18,19

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Shaw v. Maddox Metal Works, Inc., 73 S.W.3d 472, 480-481 (Tex. App.--Dallas 2002, no

pet.)........................................................................................................................18, 19, 28

Sprint/United Mgmt. Co. v. Texas Empl. Comm'n, 2001 Tex. App. LEXIS 4196 (Tex.

App. Dallas June 26, 2001)..........................................................................................31, 32

Tabrizi v. Daz-Rez Corp., 153 S.W.3d 63, 67 (Tex. App.--San Antonio 2004, no

pet.)....................................................................................................................................17

Young v. Ward, 917 S.W.2d 506, 511-512 (Tex. App.--Waco, 1996, no writ).............19, 21

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STATEMENT OF THE CASE

The underlying suit is a suit brought by Appellant arising out of an employment

relationship with Appellees. (CR 9-11). Appellees amended their answer to include the

statute of frauds defense after the deadline to do so. (CR 119 & 114). Appellees then

filed a motion for summary judgment based on the statute of frauds defense 19 days later.

(CR 122). Appellant responded to Appellees motion for summary judgment on January

18, 2011 and 0 on January 21, 2011 Appellant filed a supplemental petition including

exceptions to the statute of frauds. (CR 305 & 348). The court granted the Appellees

motion for summary judgment based solely on the Appellees affirmative defense of

statute of frauds applying to the oral contract, and signed the final judgment order on

January 24, 2011 (CR 351). Appellant timely filed a motion for new trial on February 22,

2011. (CR 352). Appellant timely filed their notice of appeal on April 20, 2011,

appealing the January 24, 2011 final judgment granting the Appellees Motion for

Summary Judgment (CR 464).

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0ISSUES PRESENTED

0ISSUE 1:

Does the oral employment contract whereby Defendant agreed to pay Plaintiff
commissions on sales as long as the they remained on the books (residual or reoccurring
commissions) and irrespective of whether or not Plaintiff was employed with Defendant,
violate the statute of frauds precluding enforcement of the oral contract and more
specifically, can the alleged oral contract be performed within one year rendering the
statute of frauds inapplicable?

The following issues are only necessary if it is found in response to ISSUE 1 that
statute of frauds applies to the oral employment agreement:

ISSUE 2:

Did the trial court error in granting summary judgment on Plaintiff claim that Defendant
wrongfully deducted $4,300.93 out of the Plaintiff's last check?

SUB ISSUE A:

Can the trial court grant summary judgment on this claim if the Defendant failed to seek
summary judgment in its motion?

SUB ISSUE B:

Does the statute of frauds apply to this contract claim?

SUB ISSUE C:

Does Section 61.018 preclude summary judgment as the Defendant failed to conclusively
establish that this provision in inapplicable or that the Defendant met the requirements to
deduct funds from Plaintiff's paycheck?

ISSUE 3:

Does the statute of frauds preclude Plaintiff's other causes of action of a) promissory
estoppel; b) negligent misrepresentation; c) Theft Liability Act claim; d) Texas Sales
Representative Statute; and e) Plaintiff's alter ego theory of recovery

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0STATEMENT OF FACTS

Appellant, Michael Kalmus (Kalmus or Appellant) and his wife, Deanna, a

Rowlett School teacher, met Walt Parker and Ella Oliver when they moved into the same

neighborhood. (CR 9) Walt Parker is in the financial investments and insurance industries

and runs the Appellee company with his wife Oliver, who is a certified public accountant.

(CR 9) They all became friends and even went on yearly vacation trips together including

Las Vegas and yearly ski trips (CR 9). During the initial years of their friendship,

Kalmus worked for a major pharmaceutical company as an outside representative

working with physicians. (C.R. 9) Walt Parker ran the family insurance business. After

Kalmus employment with in the pharmaceutical industry ended, and while he continued

seeking employment in the pharmaceutical field, Walt Parker began inquire as to whether

Kalmus would be interested in coming to work for him. (C.R. 9)

On or about August 2004, Kalmus and Defendants discussed the opportunity for

Kalmus to work for Financial Necessities Network Inc, the family business of Walt

Parker and his wife Ella Oliver. (CR 352). As the President corporate representative,

Walt Parker induced Appellant to come to work for Financial Necessities Network Inc. by

promising to pay him commissions on the clients Appellant signed up with the company,

for as long as they were on the books of Financial Necessities Network Inc. (hereinafter

FNNI) (CR 276, 352).

The Employment Agreement was reached through a series of talks which included

the following agreements: Appellant would be employed by FNNI as a commission

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salesperson plus salary (CR10, 352-3) Appellant was guaranteed and promised a 25%/

70% commission rate with a $5,000.00 salary to start. The agreement was that after an

initial period, salary would be reduced and commissions increased leading to a 50%/70%

maximum commission and zero salary. (CR 10, 352-3) Appellant would receive any and

all commissions concerning FFNI for as long as they came in irrespective of whether

Kalmus was still employed with the business or not and that the commission rate at the

time of separation and would continue to pay as long as they came in on the Kalmus

Clients. (CR 10, 352-3)

Appellee Parker, by his own admission, admits that he promised to pay Appellant

commissions on the personal insurance and personal friends and family clients for as long

as they were on the companys books. (CR 354). There is a fact issue, however, as to

whether the employment agreement consists of paying commissions on all Appellants

clients for as long as they are on the companys books, or until January of 2009 which

was four months after Appellants termination. (CR 267)

Appellees promised to put the agreement in writing when Appellees got back from

a trip to Mexico trip and an African Safari and on other occasions. (CR 364-5)

Despite the material representations, terms, and promises that were used to induce

Appellant to work for Appellees, upon termination, Appellee Parker began to let

Appellant know that it was not his intention to follow through with their agreement. (CR

353) Appellee Parker began attempting to renegotiate the contract and told Appellant that

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he would only pay a 25/50% commission rate and that such rate would only be paid

through 2012. (CR 353) Appellee Parker then went back on the statements made during

the termination and told Appellant that he would only pay him his commission rate

through January of 2009. (CR 265). In Appellee Parkers deposition he agrees to a

misstatement by Appellants counsel that all commissions were to be paid until January

2008, but in a prior interrogatory answer it states the commissions were to be paid until

January 2009. (CR 265)

When the time came to compensate Appellant under this wrongfully changed

employment contract Appellee Parker surreptitiously deducted more than $4,300.93 from

Kalmus November 15, 2008 final commission check without notifying him. (C.R. 11)

Appellee Parker did this because he had determined that Appellant was wrongfully paid

commissions on an account for a client, DKT Investments, over a time period in which

Appellee Parker does not remember. (CR 267). Further, Appellee Parker did not pay

Appellant any commissions under this wrongfully changed employment agreement

because he asserted there was an exception that if Appellant caused any trouble for his

family or business Parker would not pay Appellant. (CR 354). Appellee Parker states in

his deposition that he did not pay Appellant because he received a letter from an attorney

threatening suit in regards to Parker not paying Appellant the commissions he promised

him. (CR 354).

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SUMMARY OF THE ARGUMENT

In this cause, summary judgment was granted on the affirmative defense of statute

of frauds. The employment agreement between Appellant and Appellee is capable of

performance within one year and is therefore not subject to the statute of frauds. The

parties did not agree on how long the employment would last; therefore, the agreement

did not consist of a definite time when the contract would be fully performed. An

employment contract that does not specify a definite duration or prescribe conditions

from which its duration can be determined is presumed to be terminable at will. A

terminable at will contract is not within the statute of frauds. If the contingent event is the

defining event that determines if the contract had been fully performed, the oral contract

will not be barred by the statute of frauds.

Defendants sought summary judgment on the grounds that there are no genuine

issues of material fact with regard to the affirmative defense of Statute of Frauds in this

case. (CR 123) Plaintiffs petition alleged seven causes of action: breach of oral

contract, negligent misrepresentation, fraudulent misrepresentation/fraudulent

inducement, promissory estoppel, Texas Sale Representative Statute, piercing the

corporate veil/alter ego, and thievery. (C.R. 12-14) As a matter of law, the affirmative

defense of Statute of Frauds is not relevant to a number of causes of action pled by the

Plaintiff, including Texas Sale Representative Statute and Thievery.

A motion for summary judgment must stand or fall on the grounds expressly

presented in the motion, and a trial court may not grant summary judgment on a ground

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not presented by the movant in writing. It is improper for a court to grant summary

judgment on an issue (lack of legal duty) that is not pled or argued in the summary

judgment pleadings. See Tex. R. Civ. P. 166a(c); A trial court errs in granting more relief

than was requested.

The order granting Summary Judgment of January 24, 2011 granted Summary

Judgment in favor of Movants on the affirmative defense set forth therein and against

Plaintiff Michael Kalmus...the court hereby dismisses Plaintiffs causes of action. This is

a final judgment. (CR 351) The Order of January 24, 2011 had the effect of dismissing

Plaintiffs causes of action based on the solely pled affirmative defense of Statute of

Frauds despite the fact that such a defense is irrelevant to a number of causes of action

pled by Plaintiff. (C.R. 12-14)

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ARGUMENT

The statute of frauds exists to prevent fraud and perjury in certain kinds of

transactions by requiring agreements to be set out in writing and signed by the parties.

Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001); Barrand, Inc. v. Whataburger, Inc.,

214 S.W.3d 122, 142 (Tex. App.--Corpus Christi 2006, pet. denied). It bars enforcement

of contracts that cannot be performed within one year unless the contract is in writing and

signed by the party to be charged with the promise. TEX. BUS. & COM. CODE ANN.

26.01(a), (b)(6) (Vernon 2009); see Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483,

489 (Tex. 1991), overruled on other grounds by In re United Servs. Auto. Ass'n, 307 S.W.

3d 299 (Tex. 2010); see also Garrod Invs., Inc. v. Schlegel, 139 S.W.3d 759, 763 (Tex.

App.--Corpus Christi 2004, no pet.). Generally, whether a contract falls within the statute

of frauds is a question of law. Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796

(1961); Lathem v. Kruse, 290 S.W.3d 922, 926 (Tex. App.--Dallas 2009, no pet.);

Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149 (Tex. App.--Houston [1st Dist.] 2005,

pet. denied); Choi v. McKenzie, 975 S.W.2d 740, 743 (Tex. App.--Corpus Christi 1998,

pet. denied). Questions of law are reviewed de novo appeal. El Paso Natural Gas Co. v.

Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999); Rittmer v. Garza, 65 S.W.3d 718,

722 (Tex. App.--Houston [14th Dist.] 2001, no pet.).

The statute of frauds is an affirmative defense, which is waived if not pleaded. See

TEX. R. CIV. P. 94; see also Phillips v. Phillips, 820 S.W.2d 785, 791 (Tex. 1991);

Garrod Invs., Inc., 139 S.W.3d at 763. The party pleading the statute of frauds bears the

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initial burden in establishing its applicability. See Otto Vehle & Reserve Law Officers

Ass'n v. Brenner, 590 S.W.2d 147, 152 (Tex. Civ. App.--San Antonio 1979, no writ).

Once it is established that the statute of frauds applies, the burden of proof shifts to the

plaintiff to establish facts which would take the oral contract out of the statute, thus

allowing the oral promise to be enforceable. See id. "Whether the circumstances of a

particular case fall within an exception to the statute of frauds is generally a question of

fact." Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 705 (Tex. App.--Houston [1st Dist.]

1988, writ denied); see Brenner, 590 S.W.2d at 152 (stating that a plaintiff must establish

facts which take an oral contract outside the statute of frauds).

ORAL CONTRACT NOT SUBJECT TO THE STATUTE OF FRAUDS

The employment agreement between Appellant and Appellee is capable of

performance within one year and is therefore not subject to the Statute of Frauds. If an

agreement may conceivably be performed in one year, the statute of frauds does not

apply, no matter how improbable performance within one year may be. Beverick v. Koch

Power, Inc., 186 S.W.3d 145, 149 (Tex. App.--Houston [1st Dist.] 2005, pet. denied);

Tabrizi v. Daz-Rez Corp., 153 S.W.3d 63, 67 (Tex. App.--San Antonio 2004, no pet.). The

statute of frauds does not apply when "the parties do not fix the time of performance and

the agreement itself does not indicate that it cannot be performed within one year." Niday

v. Niday, 643 S.W.2d 919, 920 (Tex. 1982). The fact that performance within one year is

not required or expected does not bring the contract within the statute of frauds. Republic

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Bankers Life Ins. Co. v. Wood, 792 S.W.2d 768, 776 (Tex. App.--Fort Worth 1990, den.);

Keystone Intern., Inc. v. Ingham, 593 S.W.2d 354, 357 (Civ. App.--Texarkana 1979, no

writ) (oral agreement was enforceable despite testimony that project would "probably

take more than a year"); Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149 (Tex. App.--

Houston [1st Dist.] 2005, pet. denied).

It is undisputed that during the negotiations of the employment agreement

Appellant and Appellee disagreed as to the amount of time it would take Appellant to

achieve profitability, Appellant believed he could achieve profitability within one year

while Appellee believed it would take two years. (CR 124, 371) In their motion for

summary judgment Appellees argued that this constituted an offer for at least two years.

(C.R. 124) The fact that the parties may or may not have expected the performance of the

agreement to last more than one year does not mandate the application of the statute of

frauds. The parties did not agree on how long the employment would last; therefore, the

agreement did not consist of a definite time when the contract would be fully performed.

(CR 370).

In their motion for summary judgment Defendants attempt to construe Appellants

employment agreement to be a lifetime employment contract citing Schroeder v. Texas

Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991), Shaw v. Maddox Metal Works, Inc.,

73 S.W.3d 472, 480-481 (Tex. App.--Dallas 2002, no pet.) (distinguishing the case before

the Court from that before Schroeder) (CR 124) The Court of Appeals in Shaw explains

that an offer of "lifetime" employment--in reality a promise to employ the worker until

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retirement age--can be fully performed only when the employee retires at the employee's

anticipated retirement age. The employee's death before retirement results in an untimely

termination, not completed performance. As a result, promises of lifetime employment

usually must be in writing to satisfy the statute of frauds. Shaw v. Maddox Metal Works,

Inc., 73 S.W.3d 472, 480-481 (Tex. App.--Dallas 2002, no pet.)

Appellant disagrees with Appellees reliance on Schroeder and believes the

analysis of the Shaw case itself pertinent:

When, as here, the date performance will be completed cannot be readily

ascertained, the law provides that if performance could conceivably be completed

within one year of the agreement's making, a writing is not required to enforce it.

See Miller v. Riata Cadillac Co., 517 S.W.2d 773, 776 (Tex. 1974); Young v. Ward,

917 S.W.2d 506, 511 (Tex. App.-Waco 1996, no writ). Here, there is no known

date for completion of the contract because the date of Shaw's death is not known.

However, because Shaw could have died at any time, the contract was capable of

being fully performed within one year of its making. See Young, 917 S.W.2d at

511. Thus, it need not be in writing to be enforceable. See id. Shaw v. Maddox

Metal Works, Inc., 73 S.W.3d 480.

The Plaintiff and Defendant never explicitly agreed that Plaintiff would work for

Defendant until retirement or for life. (CR 372). In fact, the Plaintiff states that the

duration of the full performance of the contract was never discussed but that he merely

assumed that he would work there for until retirement or for life. (CR 372). From the

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fact that Appellant expected to work at Insurancemakesmesick.com for life it does not

follow necessarily that Appellee Parker explicitly agreed to such a term. Appellant states

that he expected to work for Insurancemakesmesick.com for life because he thought Walt

Parker considered him to be family. (CR 372). During the negotiation of the employment

agreement the parties never mentioned the duration of the agreement. (CR 372). An

employment contract that does not specify a definite duration or prescribe conditions

from which its duration can be determined is presumed to be terminable at will. Horn v.

Builders Supply Company of Longview, 401 S.W.2d 143, 149 (Civ. App.--Tyler 1966,

ref. n.r.e.). A terminable at will contract is not within the statute of frauds. Miller v. Riata

Cadillac Company, 517 S.W.2d 773, 775 (Tex. 1974). As Appellant described the

agreement in his deposition:

Q. Yeah. Okay. I understand. What other details of your potential employment with

Insurancemakesmesick did you discuss at the dinner in August of 2004 at Red Lobster?

A. Well, the longevity of it. That was the setup, 25/50/70. And the carrot to it all, as he

would put it, was I was building a future for me, my family and building my own

business. And if that business --if that led me to need to go back home or go to Austin

if my child actually went to school there, that I could pull up roots and go and stop

marketing business, and I would continue to draw the commissions at the level that I

was drawing upon that exit for as long as he kept the business on the books at his

agency. (CR 371). 1

1 See CR 450-1

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Therefore, the employment agreement at issue in this cause should be presumed an

at will agreement which does not fall within the statute of frauds.

Under the case law if the contingent event is the defining event that determines if

the contract had been fully performed, the oral contract will not be barred by the statute

of frauds. Our facts are similar to the Young case where there was an oral agreement to

pay a monthly pension or annuity to an employee for the rest of the employee's life could

be performed within one year, because the employee's death would result in a fully

performed rather than terminated contract. Young v. Ward, 917 S.W.2d 506, 511-512

(Tex. App.--Waco, 1996, no writ). Appellant states that Appellees promised to pay

commissions to Appellant for as long as the clients were on the Appellees books. This

agreement could have been fully performed either on the Appellants death, like in

Young, another possibility being Appellant resignation within a year, in addition to all of

the clients brought in under Appellants tenure dropping their insurance and going with a

different company within that year. Although not highly probable such a situation is

clearly conceivable and therefore makes the statute of frauds inapplicable to this

agreement. Beverick v. Koch Power, Inc., 186 S.W.3d 149.

The Court in a summary judgment hearing must make all inferences in favor of

non movant (Appellant). The trial court should have made the inference in favor of

Appellant that even though Appellant believed he would work for Appellees until

retirement or for life, that is not what was agreed upon and that in fact no agreement was

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made as to when the contract would be fully performed therefore; the trial court should

not have dismissed Appellants causes of action by Appellees summary judgment based

solely on the affirmative defense of statute of frauds.

II.
CAUSES OF ACTION FALL UNDER EXCEPTIONS TO THE STATUTE OF
FRAUDS

a) Promissory Estoppel;

Promissory estoppel may be asserted when all of the following elements are

present. Fretz Const. Co. v. Southern Nat. Bank, Etc., 626 S.W.2d 478, 480 (Tex. 1981);

Adams v. Petrade Intern., Inc., 754 S.W.2d 696, 707 (Tex. App.--Houston [1st Dist.]

1988, den.):

1. One party makes a promise to do something in the future that was made to induce

action or is reasonably calculated to induce action. In other words, the promisor should be

able to foresee that the promisee will rely on the promise. English v. Fischer, 660 S.W.2d

521, 524 (Tex. 1983).

2. The other party has taken definite and substantial action in reliance on that promise to

that party's detriment. The party must have used reasonable diligence to acquire

knowledge of the true facts of the situation, and must not ignore highly suspicious

circumstances that should warn of the danger that the party will not carry out the promise.

see Clifton v. Ogle, 526 S.W.2d 596, 603 (Civ. App.--Fort Worth 1975, ref. n.r.e.).

3. Injustice can be avoided only by enforcement of the promise. See English v. Fischer,

660 S.W.2d 521, 524, 27 Tex. Sup. Ct. J. 74 (Tex. 1983);

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It is clear in this case the the requisites of promissory estoppel have been satisfied:

(1) there were promises made by Appellee to Appellant that included statements

regarding employment and residual/recurring commissions (2) reliance on Appellees

promises by the Appellant was foreseeable to the Appellees as he was making a

significant career choice based on their representations; and (3) Appellant substantially

relied on the promises of the Appellees to his detriment.

Although promissory estoppel is normally a defensive theory, it may nonetheless

be asserted by a plaintiff as an affirmative ground for relief. Kelly v. Rio Grande

Computerland Group, 128 S.W.3d 759, 769 (Tex.App.El Paso 2004, no pet.); MCN

Energy Enters., Inc. v. Omagro de Colombia, L.D.C., 98 S.W.3d 766, 774 (Tex.App.Fort

Worth 2003, pet. denied); Frost Crushed Stone Co. v. Odell Geer Const. Co., 110 S.W.3d

41, 44 (Tex.App.Waco 2002, no pet.); Reyna v. First Nat'l Bank, 55 S.W.3d 58, 70 n. 4

(Tex.App.Corpus Christi 2001, no pet.); Boales v. Brighton Builders, Inc., 29 S.W.3d

159, 166 (Tex.App.Houston [14th Dist.] 2000, pet. denied); Bailey v. City of Austin,

972 S.W.2d 180, 193 (Tex.App.Austin 1998, pet. denied). The statute of frauds,

however, is not a defense to an action for affirmative relief under the doctrine of

promissory estoppel. See Frost Crushed Stone, 110 S.W.3d at 46; see also 14 William V.

Dorsaneo III, TEXAS LITIGATION GUIDE 210A.06[6] (2007) (The statute of frauds

is not a defense to an action for affirmative relief under the doctrine of promissory

estoppel based on the premise that the plaintiff detrimentally relied on the defendant's

oral promise.).

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The case law is clear that a cause of action for promissory estoppel survives a

defense of statute of frauds where the promisor promised to make a written contract that

would fulfill the statue of frauds. Adams v. Petrade Intern., Inc., 754 S.W.2d 696, 707

(Tex. App.--Houston [1st Dist.] 1988, den.); Kenney v. Porter, 604 S.W.2d 297, 303 (Civ.

App.--Corpus Christi 1980, ref. n.r.e.). Likewise in this case, Appellees promised to put

the agreement in writing which would have fulfilled the statute of frauds.

Appellees promised to put the agreement in writing when Appellees got back from

their Mexico trip and their African Safari and on other occasions according to Plaintiffs

deposition testimony. (CR 364-5) Because all factual inferences are made in non movant

(Appellants) favor in a summary judgment hearing, this trial court should have found

that the Appellees did in fact promise the Appellant to put the agreement in writing at a

particular time. (CR 364-5)

The cause of action for promissory estoppel also applies to another aspect of this

case. Appellees have admitted in depositions and interrogatories that they were going to

pay Appellant all commissions on the companys books until January 2009 as well as

commissions on Appellants family and friends clients for as long as they are on the

companys books. (CR 366). Furthermore, an email was sent on or around October 2008,

which was after Appellants termination from the company, that detailed this agreement

to pay commission until January 2009 and commissions on family and friends until they

drop off the companys books. (CR 366). Because both of these promises by Appellees

were written on paper, and the agreement itself could be completed within 1 year, then

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Appellant is at least entitled to these commissions and summary judgment should not

have been granted on Appellants cause of action of promissory estoppel or breach of the

oral agreement on these points.

b) Negligent Misrepresentation

A negligent misrepresentation claim may not fall within the statute when the

premise of the claim is that, although an agreement was never made, the defendant

negligently misrepresented that an agreement had been made and the plaintiff reasonably

relied on that misrepresentation to its detriment. Bank of Texas, N.A. v. Gaubert, 286

S.W.3d 546, 556 (Tex. App.--Dallas 2009, pet. dism'd). While a claim for out-of-pocket

damages may not be barred by the statute of frauds, Texas courts hold that the statute of

frauds, Tex. Bus. & Com. Code Ann. 26.01 (2009), bars a negligent misrepresentation

or tort claim when the only damages sought are benefit-of-the-bargain damages arising

out of a contract that is unenforceable under the statute of frauds. Bank of Texas, N.A. v.

Gaubert, 286 S.W.3d 546, 557 (Tex. App.--Dallas 2009, pet. dism'd).

Whether there was in fact an agreement to pay Appellant commissions for as long

as the clients were on the Appellees books is a fact question. Appellant claims that

Appellees did make this representation and Appellees claim that they did not make this

representation. Appellant should allowed to survive summary judgment in light of

Appellees affirmative defense of statute of frauds because Appellant is of the position

that he was at least led to believe these commissions would be paid to him albeit

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negligently by Appellees. Furthermore, even if the statute of frauds applies, Appellant is

still allowed out of pocket damages.

c) Fraudulent Inducement

Party asserting that it was fraudulently induced into entering into contract must

show that (1) other party made material representation, (2) representation was false and

was either known to be false when made or made without knowledge of its truth, (3)

representation was intended to be and was relied on by injured party, and (4) injury

complained of was caused by reliance. In re Int'l Profit Assocs., 274 S.W.3d 672, 678

(Tex. 2009).

A fraud claim is barred by the statute of frauds to the extent that the plaintiff seeks

to recover benefit-of-the-bargain damages that cannot otherwise be obtained due to

failure of the parties' contract to comply with the statutory requirements for a written

contract. Cate v. Woods, 299 S.W.3d 149, 154 (Tex. App.--Texarkana 2009, no pet. h.).

Nonetheless, a plaintiff may recover out-of-pocket damages incurred in relying on a

defendant's fraudulent misrepresentations. Baylor University v. Sonnichsen, 221 S.W.3d

632, 636 (Tex. 2007); Biko v. Siemens Corp., 246 S.W.3d 148, 163 (Tex. App.--Dallas

2007, pet. denied); Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001); ISG State

Operations v. Nat. Heritage Ins., 234 S.W.3d 711, 718 (Tex. App.--Eastland 2007, no

pet.); see GWTP Investments, L.P. v. SES Americom, Inc., 497 F.3d 478, 482 (5th Cir.

[Tex.] 2007) (plaintiff may recover reliance damages); Hawkins v. Walker, 233 S.W.3d

380, 395-396 (Tex. App.--Fort Worth 2007, no pet.) (fraud claim is barred by statute of

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frauds only when plaintiff seeks to obtain benefit of bargain plaintiff would have obtained

if defendant performed its promise)].

The agreement was in fact an enforceable contract. Furthermore, even if the statute

of frauds applies, and it was not an enforceable contract then Appellant is still allowed

out of pocket damages.

f ) Plaintiff's alter ego theory of recovery

Summary judgment was improperly granted on Appellants claim that the

corporate entity FNNI was improperly used as an alter ego to defraud Appellant. "Alter

ego" is a basis for disregarding the corporate fiction and imposing individual liability on

a shareholder or affiliate of the corporation. See Castleberry v. Branscum, 721 S.W.2d

270, 272 (Tex. 1986). It applies "when there is such unity between corporation and

individual that the separateness of the corporation has ceased and holding only the

corporation liable would result in injustice." Id. Alter ego is shown "from the total

dealings of the corporation and the individual, including the degree to which . . .

corporate and individual property have been kept separately, the amount of financial

interest, ownership and control the individual maintains over the corporation, and

whether the corporation has been used for personal purposes." Id. Once alter ego is found

to exist, the plaintiff must then show that the person on whom liability is sought to be

imposed caused the corporation to be used for the purpose of perpetrating, and

perpetrated an actual fraud on the obligee for the direct personal benefit of the person on

whom liability is sought to be imposed. See TEX. BUS. CORP. ACT ANN. 2.21(A),

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(B) (Vernon Supp. 2001). Shaw v. Maddox Metal Works, Inc., 73 S.W.3d 472, 480-481

(Tex. App.--Dallas 2002, no pet.)

Appellant was harmed by an unfair device by which a corporate entity was used to

achieve an inequitable result. Appellee Ella Oliver co-owns or independently owns the

companies in which Appellant worked and commingled the company resources. (CR 14).

Appellee Oliver used these businesses to perpetrate a fraud on Appellant by contracting

with him for employment with the agreement to pay his commissions to him as long as

these commissions were on the books regardless of Appellants employment status. (CR

14) Appellee Oliver breached this contract with Appellant and refused to pay what he is

owed. (CR 14) The fraud was perpetrated through the alter ego primarily for the personal

benefit of Appellees. Appellant was harmed by FNNI and the alter ego of Appellees. (CR

14) There is a genuine issue of material fact regarding use of the corporate entity to

defraud Appellant and summary judgment was improperly granted. The agreement was in

fact an enforceable contract. Furthermore, even if the statute of frauds applies, and it was

not an enforceable contract then Appellant is still allowed out of pocket damages.

III.
STATUTE OF FRAUDS IS INAPPLICABLE AND NO DEFENSE TO CAUSES
OF ACTION

Appellees sought summary judgment on the grounds that there are no genuine

issues of material fact with regard to the affirmative defense of Statute of Frauds in this

case. (CR 123) Plaintiffs petition alleged seven causes of action thievery. (C.R. 12-14)

As a matter of law, the affirmative defense of Statute of Frauds is not relevant to a

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number of causes of action pled by the Plaintiff, including liability under the Texas Theft

Liability Act and the Texas Sale Representative Statute. The order granting Summary

Judgment of January 24, 2011 granted Summary Judgment in favor of Movants on the

affirmative defense set forth therein and against Plaintiff Michael Kalmus...the court

hereby dismisses Plaintiffs causes of action. This is a final judgment. (CR 351) The

Order of January 24, 2011 had the effect of dismissing Plaintiffs causes of action based

on the solely pled affirmative defense of Statute of Frauds despite the fact that such a

defense is irrelevant to a number of causes of action pled by Plaintiff. (C.R. 12-14)

A motion for summary judgment must stand or fall on the grounds expressly

presented in the motion, McConnell v. Southside Independent School District, 858 S.W.

2d 337, 341 (Tex. 1993), and a trial court may not grant summary judgment on a ground

not presented by the movant in writing. City of Houston v. Clear Creek Basin Auth., 589

S.W.2d 671, 677 (Tex. 1979). It is improper for a court to grant summary judgment on an

issue (lack of legal duty) that is not pled or argued in the summary judgment pleadings.

See Tex. R. Civ. P. 166a(c); McConnellv. Southside Indep. Sch. Dist., 858 S.W.2d 337,

339 (Tex. 1993); Coastal CementSand Inc. v. First Interstate Credit Alliance, Inc., 956

S.W.2d 562, 565 (Tex.App.Houston [14th Dist.] 1997, pet. denied); see also Khan v.

Yazdchi, No. 01-02-00918-CV, 2003 WL 21513628, at *4 (Tex. App.Houston [1st

Dist.] 2003, no pet.)(mem. op.).A trial court errs in granting more relief than was

requested. Inglish v. Union State Bank, 945 S.W.2d 810, 811 (Tex. 1997).

Texas Theft Liability Act

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The court erred in granting summary judgment on the cause of action of theft on

the grounds that such a cause of action was precluded by the statute of frauds. (CR 351).

Appellants wages were unlawfully deducted by from his wages by the Appellees and

such funds were unlawfully appropriated by Appellees. 0Under the Texas Labor Code an

employer may not withhold or divert any part of an employee's wages unless the

employer:

(1) is ordered to do so by a court of competent jurisdiction;

(2) is authorized to do so by state or federal law; or

(3) has written authorization from the employee to deduct part of the wages for a

lawful purpose. Tex. Lab. Code 61.018.

The Texas Theft Liability Act defines theft as unlawfully appropriating property or

unlawfully obtaining services as described by Section 31.03, 31.04, 31.05, 31.06, 31.07,

31.11, 31.12, 31.13, or 31.14, Penal Code. Tex. Civ. Prac. & Rem. Code 134.002.

Contrary to Appellees assertion in their Motion for Summary Judgment that

sections of the penal code are relating theft are not necessarily legal authority in our

civil courts, the Texas Theft Liability Act specifically enumerates the provisions

actionable in the court (CR 126)

In Section 31.03 of the Texas Penal Code, Theft is described as follows:

(a) A person commits an offense if he unlawfully appropriates property with intent

to deprive the owner of property.

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(b) Appropriation of property is unlawful if:

(1) it is without the owner's effective consent;

Further, theft of a service is described in 31.04 is described as intentionally or

knowingly securing performance of a service by deception, threat, or false token or

intentionally or knowingly securing the performance of a service by agreeing to provide

compensation and, after the service is rendered, failing to make payment after receiving

notice demanding payment. Tex. Penal Code 31.04(a)(1)&(4).

Section 61.018 of the Texas Labor Code makes it clear that the Appellees had no

right to deduct unilaterally and without authorization money from Appellants pay check.

Under the Texas Theft Liability Act, a person who has sustained damages due to theft

actual damages found by the trier of fact and, in addition to actual damages, damages

awarded by the trier of fact in a sum not to exceed $1,000 in addition to court costs and

reasonable and necessary attorney's fees. Tex. Civ. Prac. & Rem. Code 134.005.

In Sprint/United Mgmt., an employee worked for employer for five years. Shortly

after employee began working, employer changed payroll methods to an "arrears

method." Under this method, employer paid a worker who worked week one on the

Friday of week two, rather than on the Friday of week one. The change in payroll systems

caused all affected workers to receive one paycheck for only one week's wages. To

prevent any hardship, employer made an additional payment to each affected worker of

what amounted to one week's wages. Employer classified the payment as an advance but

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did not ask or require its employees to sign a written agreement to repay the advance.

When employee quit working for employer, her final paycheck reflected a deduction for

the "arrearage advance" from the payroll system years earlier. The Texas Labor

Commission ordered employer to re-pay the deducted arrearage advance. The appeals

court affirmed this decision, concluding employer could not recover the funds previously

advanced to employee from her wages because under Tex. Lab. Code 61.018 employer

was (1) not ordered to do so by a court, (2) not authorized to do so by state or federal law,

and (3) not in possession of employee's written authorization to do so. Sprint/United

Mgmt. Co. v. Texas Empl. Comm'n, 2001 Tex. App. LEXIS 4196 (Tex. App. Dallas June

26, 2001).

Likewise in our case, Appellees claim that Appellant was never given the DKT

Investments client for commissions. Appellant claims that he was given the DKT

Investments client for commissions. (CR 296-298) The Appellees then deducted all

commissions from DKT Investments over the past 3 years from Appellants last paycheck

without a court order, authority under state or federal law, or a written authorization from

the employee to do so. (CR 296-298) The purpose behind Tex. Lab. Code 61.018 is to

"prohibit and deter employers from withholding wages earned based on the employer's

claimed loss caused by the employee. Sprint/United Mgmt. Co. v. Texas Empl. Comm'n,

2001 Tex. App. LEXIS 4196 (Tex. App. Dallas June 26, 2001). The employer Financial

Necessities Network Inc. is withholding a substantial portion of Appellants last paycheck

based on the companys claimed loss allegedly caused by the Appellant. Even though, at

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this point, there is a fact issue as to whether Appellant is entitled to the commissions, the

statutes and case law show that what was done to Appellant was unlawful and the funds

should be returned to him. The statute of frauds is no defense to violation of the unlawful

deduction of wages and surely no defense to the unlawful appropriation of anothers

property. The trial court cannot dismiss Appellants cause of action of thievery (theft) by

Appellees summary judgment based solely on the affirmative defense of statute of

frauds.

e) Texas Sales Representative Statute

The affirmative defense of Statute of Frauds is inapplicable to the Texas Sales

Representative Act sections of the Texas Business and Commerce Code 35.82-4

(Repealed by Acts 2007, 80th Leg., Ch. 885, 2.47(a)(1), eff. April 1, 2009). At the time

of the incident in question the statute was in effect and pursuant to Texas Government

Code 311.031 the claim is therefore actionable. Texas Business and Commerce Code

35.82 states:

A contract between a principal and a sales representative under which the sales

representative is to solicit wholesale orders within this state must be in

writing....and set forth the method by which the sales representative's commission

is to be computed and paid. The principal shall provide the sales representative

with a copy of the contract.

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A statute of frauds defense is inapplicable to the Sales Representative Statute as 35.83

states: If a compensation agreement between a sales representative and a principal that

does not comply with Section 35.82 is terminated, the principal shall pay all commissions

due the sales representative within thirty working days after the date of the termination.

Appellees were in clear violation of 35.82 in that a written contract was not

provided to Appellant in accordance with the law. The statute of frauds is no defense to

this violation and summary judgment was inappropriately granted on this cause of action

The statutory penalty for failure to comply with 35.82-3 is liable to the sales

representative in a civil action for three times the unpaid commission sustained by the

sales representative plus reasonable attorney's fees and costs.

PRAYER

WHEREFORE the premises considered, Appellant prays that this Court find Summary

Judgment was improperly granted on all of Appellants causes of action and order an

immediate new trial and for all costs of the appeal to be taxed Appellee and counsel for

Appellee and for any and all further relief to which he is justly entitled.

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CERTIFICATE OF SERVICE

I hereby that on September 16, 2011, a copy of the foregoing Appellants Brief was

served via facsimile ((972) 271-5579) to the counsel of Appellee:

Steven Tinsley

Tinsley Law Firm.

517 W. Centerville

Garland, Texas 75041

/s/ Cary Schulman

_____________________________

Cary Schulman

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