Settlement Credits Save Diocese “Big Bucks” in Ranch Dispute
Judgment Determining Catholic Archdiocese Was Unjustly Enriched by Improvements to its 978.6 acre Ranch Vitiated by Fourth Court of Appeals.
In a July 2021 opinion, the Fourth Court of Appeals saved the Diocese of Corpus Christi from a $458,426.14 jury verdict. In deciding to reverse and render a Take Nothing Judgment, the Court nullified the determination of a Jim Wells County jury that:
“the Diocese held benefits or property that were provided to the [Ranch] that in equity and good conscience belong . . . to [the Plaintiff].” and awarded $458,426.14 in damages for “the reasonable value of such property or benefits that the Diocese holds that in equity and good conscience belongs to [the Plaintiff].”
The case arose from an interesting and somewhat sordid set of facts:
A generous family donated a 978.6-acre tract of land in Jim Wells County (the “Ranch”) to the Diocese for the benefit of a church and school in Alice, Texas. The donation was intended to permit the Diocese to raise funds from leasing the property for deer hunting. In 2010, the Diocese entered into a Hunting and Grazing Lease Agreement with an individual who was a division manager for a company. The Lease was for a 15 year primary term and required the lessee to make certain improvements at the Ranch at his sole expense. Upon termination of the lease, the Diocese would retain ownership of any improvements.
After the execution of the lease, the lessee began to make improvements to the Ranch. Soon thereafter the Lessee’s employer discovered that the lessee had used the company’s materials, equipment, and labor to make improvements to the Ranch. The employee admitted use of company assets and was terminated.
Next, the company asserted a lien against the Ranch for approximately $500,000. The Diocese presented the lien to the Lessee, who failed to cure it.
And the Lawsuits Come…
The company then filed suit against the Diocese and its former employee (the Lessee) in Jim Wells County. As result, the Diocese terminated the Lease.
The company eventually dismissed its claims against the Lessee, but later refiled them in Nueces County. In the Nueces County suit, the company and Lessee ultimately entered into a settlement agreement that called for the entry of an agreed final judgment for $1.9 million in the company’s favor and required the Lessee to make monthly payments in satisfaction of the judgment.
The company then proceeded to trial against the Diocese in Jim Wells County, and a jury returned the unjust enrichment verdict in favor of the company.
The Diocese argued in the Jim Wells suit that it was entitled to credit for the Lessee’s settlement in the Nueces suit. This argument was predicated on the “One Satisfaction Rule” which provides that “a plaintiff is entitled to only one recovery for any damages suffered” even if “more than one wrongdoer contributed to bring about his injuries.” See Sky View at Las Palmas, LLC v. Mendez, 555 S.W.3d 101, 106 (Tex. 2018).
The trial court declined to apply the settlement credit, and the Diocese appealed.
The Fourth Court reversed, and applied a credit of over $1.7m resulting from the company’s voluntary settlement with the Lessee in the Nueces County case. The Court based its determination, in part, upon a finding that the company failed to show how rendering judgment based on the jury’s damages award from the Jim Wells County trial would not amount to its double recovery. The credit far exceeded the Jim Wells jury award. Thus, once the credit was applied, the company was left with a take nothing judgment.
Although the outcome is unfortunate for the company (who appears to be an innocent victim of the Lessee’s misdeeds), I believe that the Fourth Court got this one right.
While it is unlikely that the company will ever recover full value from the Lessee, this is not the Diocese’s fault. The law is clear:
The “fundamental consideration in applying the one-satisfaction rule is whether the plaintiff has suffered a single, indivisible injury—not the causes of action the plaintiff asserts.”
In this case, the company suffered but one injury. It should not have resolved that claim, and overly complicated the case by severing out its claims against the Lessee and then re-filing and ultimately settling them in another case.