On April 26, 2024, the Texas Supreme Court issued a per curiam opinion in Frank Thomas Shumate, Jr., et al. v. Berry Contracting, L.P., et al., both clarifying (and expanding) the application of settlement credits. First, per curiam opinions are usually short, straightforward opinions issued by the Texas Supreme Court (speaking as a whole, ostensibly not authored by any particular Justice) on legal matters that usually present no new law/legal principles. Second, although the Shumate decision was rendered as a per curiam opinion, it was most likely the case as the Texas Supreme Court had an opportunity to examine the same operative agreement (found to be a settlement agreement) at issue in Shumate, in an opinion issued several weeks before in a case styled Bay, Ltd. v. Mulvey.
Can a Prior Result Serve as a Credit in a Subsequent Case?
Shumate involved a suit brought by Berry Contracting against Shumate, alleging that Shumate conspired with a Berry employee (Mendietta) to use Berry-related labor and materials to provide unauthorized services to customers and to personally enrich Shumate. Berry prevailed in its suit and was awarded almost $900,000 in actual damages and approximately $4,500,000 in exemplary damages against Shumate. At the trial court level, Shumate requested that he be allowed a credit against the above judgment based upon an agreement entered into between Berry and Mendietta (for essentially the same conduct that formed the basis of Berry's suit against Shumate). The trial court refused to allow any settlement credit/offset and the court of appeals affirmed the trial court's decision.
The Texas Supreme Court reversed the court of appeals, holding (in reliance on its related Mulvey decision) that the Berry/Mendietta agreement was in fact a settlement agreement of which Shumate should have the benefit, to be determined by the trial court upon remand. Interestingly, the total value of the Berry/Mendietta settlement agreement was $1,900,000, which included periodic future payments. On remand, the trial court is to consider what portion of the Berry/Mendietta settlement shall be applied to reduce what Shumate owes Berry from the above-referenced judgment.
Settlement Credits in Texas
Although this case is more factually complicated than most settlement credit-related cases – as settlement credits are usually associated with just one case (whether entered into before or during a single suit) – Shumate stands for the proposition that Texas courts will apply all settlement credits related to the operative facts/transaction, whether created pre-suit, post-suit, or from separate suits as the case may be.
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