Shaw v. Maddox Metal Works, Inc.
73 S.W.3d 472, 2002 WL 467174 (2002)
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Rule of Law:
An oral contract for a lifetime annuity is not barred by the Statute of Frauds because it is capable of being performed within one year of its making. A conflict between a party's deposition and subsequent affidavit on a material fact, such as consideration, generally creates a fact issue that precludes summary judgment.
Facts:
- Ray Shaw worked for Maddox Metal Works, Inc. for twenty-two years as an engineer and executive vice president.
- After Ray Shaw was diagnosed with cancer, he, his wife Ingrid Shaw, Maddox Metal, and its owner Samuel L. Maddox, allegedly made an oral agreement.
- The agreement stipulated that after Ray's death, Ingrid Shaw would receive a lifetime annuity.
- The annuity was to be an annual amount equal to six percent of a key man life insurance policy on Ray, plus $100 for each millstone sold by the company.
- Ray Shaw continued to work for Maddox Metal until his death.
- Following Ray's death, from October 1997 to June 1999, Maddox Metal paid Ingrid Shaw $1,605 monthly, which was equivalent to the six percent annuity calculation.
- From July 1999 through October 1999, the monthly payments were reduced to $500, and then ceased entirely.
- During this period, Maddox Metal also issued several separate checks to Ingrid Shaw described as 'stones commission'.
Procedural Posture:
- Ingrid Shaw sued Maddox Metal Works, Inc., Maddox/Adams International, and Samuel L. Maddox in a Texas trial court for breach of an oral contract.
- Shaw also alleged that Samuel L. Maddox was personally liable under the theory of alter ego.
- The defendants filed a motion for summary judgment, arguing the contract was unenforceable.
- The defendants also filed a motion to strike portions of Shaw's affidavit.
- The trial court granted the defendants' motion to strike evidence.
- The trial court then granted the defendants' motion for summary judgment without specifying its reasons.
- Ingrid Shaw, as appellant, appealed the trial court's judgment to the Texas Court of Appeals.
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Issue:
Is an oral agreement for a lifetime annuity unenforceable as a matter of law for lack of consideration, indefiniteness of terms, or violation of the statute of frauds?
Opinions:
Majority - Justice Wright
No, an oral agreement for a lifetime annuity is not unenforceable as a matter of law, as there are genuine issues of material fact regarding consideration, definiteness, and the statute of frauds does not apply. The court found summary judgment was improper. First, on the issue of consideration, a fact issue was created by the conflict between Ingrid Shaw's deposition (which suggested the annuity was for her husband's past performance) and her affidavit (which stated it was also for his promise to continue working until death). A conflict between a deposition and an affidavit on a material point presents a fact issue for a jury, and the trial court abused its discretion by striking the affidavit testimony. Ray Shaw's continued employment until his death could be construed as performance, creating a binding unilateral contract. Second, the contract terms were not too indefinite, as testimony from other witnesses suggested the duration was for Shaw's 'lifetime' and the initial payments made by Maddox Metal matched the specific formula alleged by Shaw, creating fact issues on duration and amount. Third, the agreement does not violate the Statute of Frauds, which requires contracts not performable within one year to be in writing. Because the annuity was for Ingrid Shaw's lifetime, the contract was capable of being fully performed within one year, as she could have died within that period. This distinguishes it from lifetime employment contracts, which contemplate retirement rather than death as the endpoint. However, the court affirmed summary judgment for Samuel Maddox individually, finding no evidence he perpetrated an actual fraud for his personal benefit, a necessary element for an alter ego claim.
Analysis:
This decision reinforces the principle that summary judgment is inappropriate when there are genuine disputes over material facts, particularly highlighting that a non-movant's conflicting deposition and affidavit testimony will typically defeat summary judgment rather than be disregarded as a 'sham.' The case provides a crucial clarification on the application of the Statute of Frauds' one-year provision, drawing a clear distinction between a 'lifetime annuity' and 'lifetime employment.' By holding that a contract contingent on a person's life is performable within one year, the court narrows the scope of the Statute of Frauds and protects oral agreements that might otherwise be deemed unenforceable, impacting future cases involving contracts of indefinite duration tied to a lifespan.
