                           NUMBER 13-13-00234-CV

                           COURT OF APPEALS

                 THIRTEENTH DISTRICT OF TEXAS

                    CORPUS CHRISTI - EDINBURG

AMERICAN GENERAL
LIFE INSURANCE COMPANY,                                                Appellant,

                                        v.

JUAN J. MANCILLAS, M.D., ET AL.,                                       Appellees.


                  On appeal from the 332nd District Court
                        of Hidalgo County, Texas.


                       MEMORANDUM OPINION
            Before Justices Rodriguez, Garza, and Benavides
              Memorandum Opinion by Justice Benavides
      American General Life Insurance Company (“American General”) appeals the trial

court’s summary judgment in favor of appellees Juan J. Mancillas, M.D. and Sylvia

Mancillas, individually, and as next friends of Carlo Landa Mancillas and Omar Landa

Mancillas (hereinafter “the Mancillases,” unless otherwise noted).   We reverse and
render.

                                          I.      BACKGROUND

        The present case is the last in a series of four lawsuits filed by the Mancillases

against American General.1 In 2005, the Mancillases filed the original lawsuit (Mancillas

I) against American General, the National Heritage Foundation, Inc., and others related

to the interests of two life insurance contracts.           The Mancillases eventually obtained an

approximately $9 million jury verdict against the National Heritage Foundation and

another party related to the claims brought forth in Mancillas I.

        On August 18, 2008, American General and the Mancillases settled Mancillas I by

a Rule 11 agreement, in which American General agreed to pay the Mancillases

$150,000 for a dismissal and the release of all claims against it. On that same day,

American General made a separate offer to rescind the policies in dispute in Mancillas I.

The written offer from American General’s counsel to the Mancillases’ counsel stated the

following:

        I write to memorialize the intent of American General Life Insurance
        Company and Juan and Sylvia Mancillas (“Mancillases”), on behalf of the
        Mancillas Family Trust, to enter into a contract regarding the two American
        General’s life insurance policies currently in force and insuring the
        Mancillases (“Policies”). In the putative contract, American General will
        agree to rescind the Policies if the [trial court of Mancillas I] declares and
        adjudges [in Mancillas I] that the Mancillas Family Trust is the owner of the
        Policies as [a] matter of law. Upon such a declaration and within thirty
        (30) days of its adjudication, American General, at the request of the
        Mancillases, will rescind the Policies and return the premiums paid, less
        $150,000, plus interest, to them. However, in the event of any appeal
        regarding said adjudication, the Mancillases agree to indemnify American
        General should such adjudication be reversed or modified. The putative
        contract will not be related to or dependent on the Confidential Settlement
        and Release Agreement to be entered into by the parties resolving

        1  Only the first and fourth lawsuits in this series are relevant to the present appeal. Therefore, we
will only address those two lawsuits in this memorandum opinion. See TEX. R. APP. P. 47.7.

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       plaintiffs’ claims against American General in [Mancillas I]. If this
       accurately comports with your understanding of our agreement, please
       sign where indicated below and return this letter to me.

       On September 16, 2008, counsel for the Mancillases wrote an email response to

one of American General’s attorneys and stated the following in relevant part:

       [The August 18, 2008] agreement does not reflect what you and I
       discussed. You will recall that my concern was that our clients cannot
       agree to surrender something they do not own and that we can’t agree to
       own something that we don’t because of how that would affect their case
       against [the National Heritage Foundation].

       I recall you thought about it over a weekend and came up with a solution
       that should be acceptable to our client and mine. I’m sure I have it written
       down somewhere but there is a pile of paper on my desk that accumulated
       while I was in trial. Refresh my memory so I can talk to my clients about
       what they want to do. Thanks.

       On September 23, 2008, counsel for the Mancillases sent a more detailed letter

regarding the August 18, 2008 offer to another of American General’s counsel, which

stated the following:

       Now that the trial against [the National Heritage Foundation] is over and
       I’ve had a chance to review your letter of August 18, 2008, I want to
       address certain issues. Your letter does not accurately reflect the
       discussions that [American General’s counsel] and I had nor the
       representations he made that induced my clients to agree to settle their
       lawsuit against American General. Since you did not participate in any of
       my discussions with Michael, I understand why you might have drafted a
       letter that does not even resemble what Michael and I discussed. I will try
       to address each issue in your letter.

       First, neither me nor my clients ever agreed to seek a declaration that the
       Mancillas Family Trust was the Owner of either policy. Throughout this
       litigation I have taken the position that the Mancillas Family Trust was not
       the Owner after various unilateral actions that [the National Heritage
       Foundation] took. I’ve always said that the only way a court can declare
       one to be the Owner is through the interpretation of the language in the
       policy. The policy’s language does not address the situation that occurred
       here where [the National Heritage Foundation] relinquished everything
       without naming a successor Owner. Therefore, there is no Owner and I
       cannot agree to try to seek a declaration that the Mancillas Family Trust is

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      the Owner. I’ve said that to you a hundred times and I repeated that to
      Michael in clear terms.

      Second, we never discussed seeking a declaration from the 404th Court in
      this very litigation. I am not willing to keep this case going in the district
      court just for a declaratory judgment that your client is still trying to get. I
      have a $9 million verdict that I’m sure [the National Heritage Foundation] is
      going to appeal. I would like that appeal to get started and don’t want it
      delayed because your client insists that a declaratory judgment be
      resolved in this very case. If there is a declaratory judgment, it will have to
      be done in a different case by a different court.

      Third, what [counsel] expressed was that American General wanted to be
      relieved of the possibility of paying the death benefits to the Sisters of the
      Incarnate Word, who is the current beneficiary. He and I discussed that
      his concern can be addressed by an agreement that that policies were
      terminated or rescinded in January 2000 when [the National Heritage
      Foundation] relinquished its ownership. You, your client and your expert
      all took the position that the policy cannot be without an Owner. The lack
      of an Owner effectively terminates or rescinds the policy. Therefore, we
      can agree that by virtue of the Court’s existing declaratory judgment that
      [the National Heritage Foundation] relinquished its ownership in January
      2000, that the policy does not provide for a successor Owner when the
      current Owner relinquishes its ownership without naming a successor
      Owner, and that the policy requires an Owner, in order to pay premiums
      and take the various actions that are required of an Owner, the policies
      were terminated and rescinded on January 12, 2000. Because the
      policies have already been terminated, your letter should not make
      reference to American General agreeing to “rescind” the policies. They
      have already been terminated and rescinded.

      Please draft an agreement that accurately sets forth the discussions that
      [American General’s counsel] and I had. Call me if you have any
      questions.

      On October 9, 2008, the Mancillas I trial court entered a final judgment against the

National Heritage Foundation.    On February 2, 2009, counsel for the Mancillases sent

another email to American General’s counsel which stated the following:

      As I said in our phone call AG would be protected if the Sister’s [sic]
      released the death benefits. Please think about what other concerns AG
      would have and let’s see if we cannot come up with a solution that would
      addresses [sic] AG’s concerns yet allow us to also serve our client’s
      interest in being paid the $220,000.

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In response, counsel for American General replied to the Mancillases’ attorney with the

following email on February 11, 2009:

       I have considered your proposal to have Sister’s [sic] release the death
       benefits on the policies insuring the lives of your clients and spoken with
       my client. While I appreciate your proposal, it does not adequately
       address American General’s concerns regarding the ownership of the
       policies. We remain willing to consider the proposal that was discussed
       with Michael, and which was memorialized in our August 18, 2008 letter.
       If the Court declares the Mancillas Family Trust the Owner of the policies,
       American General will agree to rescind the policies and return the
       premiums less the $150,000 you were paid in settlement subject to the
       terms and conditions set forth in that letter. Without a declaration of
       ownership, American General’s concerns cannot be adequately
       addressed. I would be happy to discuss this with you further at your
       convenience.

       On January 5, 2010, the Mancillases and the National Heritage Foundation

entered into a settlement agreement related to Mancillas I.        The National Heritage

Foundation, which had filed for Chapter 11 bankruptcy after the final judgment in

Mancillas I, agreed, among other consideration, to pay the Mancillases $3 million to

settle the Mancillas I judgment.       Additionally, the settlement agreement with the

National Heritage Foundation recited that the Mancillases had “no claim to or any

interest in the insurance policies” at issue and that the National Heritage Foundation was

“the sole owner” of the life insurance policies.

       On September 3, 2010, the National Heritage Foundation and the Mancillases

entered into a separate agreement, in which the National Heritage Foundation agreed to

surrender the life insurance policies at issue for the cash surrender value of the policies,

if the National Heritage Foundation was successful in a separate pending lawsuit.       On

November 22, 2010, the National Heritage Foundation surrendered and cancelled the

life insurance policies at issue.

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      On January 31, 2011, the Mancillases’ attorney sent the surrender forms to

American General’s counsel and stated that the Mancillases satisfied “the terms of the

settlement agreement between the Mancillas family and [American General].”

Furthermore, the Mancillases sought “all of the premiums paid” on the two life insurance

policies by February 4, 2011. On February 21, 2011, the Mancillases filed the instant

suit against American General and alleged causes of action for fraud, breach of contract,

and promissory estoppel related to the August 18, 2008 offer. On February 23, 2011,

American General responded to the Mancillases’ January 31, 2011 letter, rejected the

Mancillases’ interpretation of the August 18, 2008 offer, and noted that the offer

contained a condition precedent to rescission of the contract and return of the premiums.

      On January 17, 2012, American General filed a motion for summary judgment on

the ground that the Mancillases’ claims were based upon unenforceable oral promises.

The Mancillases filed a response to American General’s motion, as well as their own

motion for summary judgment, asserting that they accepted American General’s August

18, 2008 offer when they secured the surrender of both life insurance policies. The trial

court denied American General’s motion and subsequently granted the Mancillases’

motion for summary judgment, after concluding that an agreement was formed from the

August 18, 2008 offer when the Mancillases obtained the surrenders on the two life

insurance policies. The Mancillases then nonsuited their fraud and promissory estoppel

claims. This appeal followed.

                              II.    SUMMARY JUDGMENT




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       By one issue, American General contends that the trial court erred in granting the

Mancillases’ motion for summary judgment and denying American General’s motion for

summary judgment.

       A. Standard of Review

       We review the trial court’s summary judgment de novo.         Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).         When both sides move for summary

judgment and the trial court grants one and denies the other, we review both sides’

summary judgment evidence and determine all questions presented.                   FM Props.

Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). If we determine that

the trial court erred, we will render the judgment the trial court should have rendered.

Dorsett, 164 S.W.3d at 661.

       B. Discussion

       To prevail on a breach of contract claim, a plaintiff must prove:      (1) the existence

of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach

of the contract by the defendant; and (4) damages to the plaintiff resulting from that

breach.   First Nat’l Bank of Edinburg v. Cameron Cnty., 159 S.W.3d 109, 112 (Tex.

App.—Corpus Christi 2004, pet. denied).       The further requisites for a valid contract are:

(1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a

meeting of the minds; (4) each party’s consent to the terms; and (5) execution and

delivery of the contract with the intent that it be mutual and binding. Id.

       American General asserts that the Mancillases’ breach of contract claim fails as a

matter of law because the Mancillases did not accept its August 18, 2008 offer to enter

into a bilateral contract.   The Mancillases assert that the offer contemplated a unilateral


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contract, they were free to accept the offer in any manner that conveyed their assent,

and they “performed the offer.”

       We first examine the distinction between bilateral and unilateral contracts.      “A

bilateral contract is one in which there are mutual promises between two parties to the

contract, each party being both a promisor and a promisee.” Vanegas v. Am. Energy

Svcs., 302 S.W.3d 299, 302 (Tex. 2009) (internal quotations omitted).           A unilateral

contract is “created by the promisor promising a benefit if the promisee performs. The

contract becomes enforceable when the promisee performs.”          Id. Here, we conclude

that the August 18, 2008 offer contemplated a bilateral contract that involved mutual

promises between American General and the Mancillas:          American General agreed to

rescind the policies if the trial court in Mancillas I declared and adjudged that the

Mancillas Family Trust was the owner of the policies as matter of law within thirty days of

the declaration; and the Mancillases agreed to indemnify American General should such

adjudication be reversed or modified.       The offer does not contemplate a unilateral

contract, as the Mancillases contend, because acceptance is not contingent upon the

Mancillases’ performance or forbearance.      See id. (quoting 1 RICHARD LORD, W ILLISTON

ON CONTRACTS   § 1.17 (4th ed. 2007) (“A unilateral contract occurs when there is only one

promisor and the other party accepts, not by mutual promise, but by actual performance

or forbearance.”)).

       Next, we turn to the nature of the offer itself and the corresponding manner of

acceptance. The relevant portion of the offer states the following:

       In the putative contract, American General will agree to rescind the Policies
       if the [trial court of Mancillas I] declares and adjudges [in Mancillas I] that
       the Mancillas Family Trust is the owner of the Policies as matter of law.
       Upon such a declaration and within thirty (30) days of its adjudication,

                                             8
       American General, at the request of the Mancillases, will rescind the
       Policies and return the premiums paid, less $150,000, plus interest, to
       them. However, in the event of any appeal regarding said adjudication,
       the Mancillases agree to indemnify American General should such
       adjudication be reversed or modified. The putative contract will not be
       related to or dependent on the Confidential Settlement and Release
       Agreement to be entered into by the parties resolving plaintiffs’ claims
       against American General in [Mancillas I]. If this accurately comports with
       your understanding of our agreement, please sign where indicated below
       and return this letter to me.

       “A condition precedent may be either a condition to the formation of a contract or

to an obligation to perform an existing agreement.”      Hohenberg Bros. Co. v. George E.

Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976). “Conditions may, therefore, relate either

to the formation of contracts or to liability under them.”   Id.   Conditions precedent to an

obligation to perform are those acts or events which occur subsequently to the making of

a contract that must occur before there is a right to immediate performance and before

there is a breach of contractual duty.   Id.

       While no particular words are necessary for the existence of a condition,
       such terms as “if”, “provided that”, “on condition that”, or some other phrase
       that conditions performance, usually connote an intent for a condition
       rather than a promise. In the absence of such a limiting clause, whether a
       certain contractual provision is a condition, rather than a promise, must be
       gathered from the contract as a whole and from the intent of the parties.

Id.

       In this case, American General offered to promise to rescind the polices at issue if

the Mancillas I trial court declared and adjudged the Mancillas Family Trust as the owner

of the policies as a matter of law.      This amounted to a condition precedent to the

formation of the contract.    Furthermore, the offer required the Mancillases to request

rescission and payment of the premiums within thirty days of the Mancillas I trial court’s

declaration of ownership of the policies.          This amounted to a second condition


                                               9
precedent on American General’s obligation to perform, conditioned upon the Mancillas I

trial court’s adjudication and declaration that the Mancillas Family Trust was the owner of

the policies.

        The record is clear and undisputed that neither of these conditions precedent

took place in this case. Moreover, the January 5, 2010 settlement agreement between

the Mancillases and the National Heritage Foundation recited that the National Heritage

Foundation was “the sole owner” of the life insurance policies.           The conditions

precedent that trigger the August 18, 2008 offer are absent. Without them, no contract

was formed, and likewise, American General had no obligation to perform.      See id.

       Accordingly, we conclude that the trial court erred in granting the Mancillases’

motion for summary judgment and in denying American General’s motion for summary

judgment.       American General’s sole issue on appeal is sustained.

                                     III.   CONCLUSION

       We reverse the trial court’s order granting the Mancillases’ motion for summary

judgment, and we render judgment that because no contract arose from the August 18,

2008 offer, American General is entitled to summary judgment.



                                                         __________________________
                                                         GINA M. BENAVIDES,
                                                         Justice



Delivered and filed the
20th day of November, 2014.




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