RTKL Associates v. Transcontinental Realty Investors, Inc., No. 05-11-00786-CV

December 11, 2012

RTKL, an architecture firm, worked for Woodmont Investment Co., a real estate developer. In a prior case, Woodmont sued RTKL, seeking a declaratory judgment that it did not owe RKTL its remaining fees because the services agreement between the parties was invalid. That case settled for $700,000, with $140,000 to be paid to RTKL up front and the rest to be paid to it in monthly installments of $10,000. As the parties negotiated the settlement, it was determined that the entity paying the settlement would be Woodmont TCI Group XIII, LP (“XIII”), another Woodmont-related entity that developed one of the properties for which RTKL provided services. Several months after the settlement agreement was signed, however, XIII filed for bankruptcy.

When RTKL realized the XIII had no cash to pay the settlement it sued TCI (XIII’s parent) for fraud and breach of the settlement agreement. TCI moved for summary judgment on the breach of contract claim, which the trial court granted, and the jury found in TCI’s favor on the fraud claim. RTKL appealed the denial of summary judgment. The Court of Appeals examined the language of the release entered into as part of the settlement and found that TCI, as XIII’s parent, fell within its terms. It then found that the release included the claim related to the settlement agreement. Accordingly, the court affirmed the trial court’s summary judgment decision.