Justice BOYD delivered the opinion of the Court.
The parties in this case dispute the validity of the plaintiffs attempt to accept the defendant's settlement offer under chapter 42 of the Civil Practice & Remedies Code and rule 167 of the Texas Rules of Civil Procedure. We hold that the plaintiff presented uncontroverted evidence that it accepted the material terms of the defendant's offer. We therefore reverse the court of appeals' judgment and remand for that court to consider the defendant's remaining challenges to the trial court's summary judgment in favor of the plaintiff.
Amedisys, Inc. and Kingwood Home Health Care, L.L.C. are competitors. After two Amedisys employees left to work for Kingwood and allegedly began soliciting business from Amedysis clients, Amedisys sued Kingwood for tortious interference with Amedisys's non-solicitation agreements with the employees.
Five days after receiving the settlement offer, Amedisys filed its designation of expert witnesses. After another five days, Kingwood filed its own expert designations and moved to strike Amedisys's designations on the ground that, because Amedisys was the party seeking affirmative relief, its deadline to designate experts had passed nearly a month earlier. Four days later, apparently to Kingwood's surprise, Amedisys sent a letter, by facsimile and as an email attachment, "accepting" Kingwood's $90,000 offer. As it turns out, Kingwood did not want Amedisys to accept the offer and made it only because Amedisys said it would not accept an offer under six figures. Instead, Kingwood made the offer merely to trigger a right to recover its litigation costs under rule 167.
A few days later, Kingwood attended the previously scheduled hearing on its motion to strike Amedisys's expert designations. Believing that the settlement mooted that motion, Amedisys did not file a response or attend the hearing. When it learned that Kingwood had appeared at the hearing and the trial court had granted Kingwood's motion to strike, Amedisys filed an emergency motion asking the court to enforce the settlement agreement, reconsider the order striking its expert designations, and stay the case until the settlement dispute was resolved. In response, Kingwood argued that the agreement was unenforceable because it lacked consideration and was fraudulently induced. Kingwood later filed a "Notice of Withdraw[al] of Consent to Alleged Settlement Agreement," and on the same day, Amedisys filed a "Notice of Rule 11 Agreement."
Amedisys amended its pleadings to assert a breach of contract claim based on the alleged settlement agreement and moved for summary judgment on that claim. In support of its motion, Amedisys submitted copies of the offer and acceptance letters and argued that the settlement agreement was binding on Kingwood as a settlement offer under rule 167, as a contract under general contract law, and as an agreement between attorneys under rule 11 of the Texas Rules of Civil Procedure. In its response, Kingwood agreed that general contract law applies but asserted that the agreement failed for lack of consideration because Amedisys failed to timely designate experts and that Amedisys fraudulently induced the offer by stating that it would not accept an offer less than six figures. Kingwood also argued that the settlement was unenforceable because it had withdrawn its consent. In reply, Amedisys asserted that Kingwood's fraud and failure of consideration defenses were legally inapplicable, that Kingwood had waived them by not pleading them, and that Kingwood had failed to support them with any competent summary judgment evidence.
The trial court granted Amedisys's summary judgment motion without stating its grounds for doing so. Kingwood appealed, arguing that it had created fact issues regarding its affirmative defenses of fraudulent inducement and failure of consideration.
A majority of the court of appeals agreed with Kingwood and reversed the trial court's judgment, concluding that no settlement agreement existed because Amedisys had not accepted all of the offer's material terms. 375 S.W.3d 397, 400-01. The court observed in a footnote that, even though Kingwood had not raised that argument in the trial court, it could "challenge for the first time on appeal the legal sufficiency of the evidence supporting Amedisys's motion, including the evidence supporting the existence of a contract." Id. at 400 n. 3. Having found that Amedisys failed to prove that it accepted the settlement offer, the majority did not address whether Kingwood had created a fact issue on its fraudulent inducement, failure of consideration, and withdrawal defenses. The dissenting justice concluded that Amedisys's acceptance letter and the email to which it was attached formed an enforceable agreement because they "indicate[d] a clear intention" to accept Kingwood's offer without challenging any of its terms. Id. at 402-03 (Jamison, J., dissenting). The dissent would thus have "proceed[ed] to address [Kingwood's] remaining issues and grounds for reversal." Id. at 403. We granted Amedisys's petition for review.
We begin by addressing whether Kingwood failed to preserve its argument that Amedisys did not accept all of the material terms of Kingwood's offer by failing to make that argument in the trial court. As the party moving for traditional summary judgment, Amedisys had the burden to submit sufficient evidence that established on its face that "there is no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law." TEX.R. CIV. P. 166a(c). See Broussard v. Moon, 431 S.W.2d 534, 536-37 (Tex.1968). When a movant meets that burden of establishing each element of the claim or defense on which it seeks summary judgment, the burden then shifts to the non-movant to disprove or raise an issue of fact as to at least one of those elements. See City of Houston v. Clear-Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex.1979) (discussing evolution and purpose of shifting burdens in summary judgment practice). But if the movant does not satisfy its initial burden, the burden does not shift and the non-movant need not respond or present any evidence. See id.; State v. Ninety Thousand Two Hundred Thirty-Five Dollars and No Cents in U.S. Currency ($90,235), 390 S.W.3d 289, 292 (Tex.2013). This is because "summary judgments must stand or fall on their own merits, and the non-movant's failure to answer or respond cannot supply by default the summary judgment proof necessary
Thus, a non-movant who fails to raise any issues in response to a summary judgment motion may still challenge, on appeal, "the legal sufficiency of the grounds presented by the movant." Id. "The nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense. The trial court may not grant summary judgment by default because the nonmovant did not respond to the summary judgment motion when the movant's summary judgment proof is legally insufficient." Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222-23 (Tex.1999) (citations omitted).
In this case, Amedisys had the burden to submit sufficient evidence to support each element of its breach of contract claim, and this burden required evidence that a contract in fact exists. Kingwood contends that the letter and email that Amedisys submitted to prove its acceptance of Kingwood's offer prove no such thing, but instead prove that Amedisys made a counteroffer by changing a material term of the offer. We therefore review Amedisys's letter and email to determine whether they constitute evidence that Amedisys accepted Kingwood's settlement offer. If they constitute evidence of acceptance, they were uncontroverted evidence because Kingwood did not present any evidence to disprove or create a fact issue on the acceptance element. But if the letter and email constitute no evidence of acceptance, Amedisys did not satisfy its burden of proof and was not entitled to summary judgment.
We now turn to the issue of whether the summary judgment evidence establishes that Amedisys accepted Kingwood's settlement offer. Amedisys contends that, in resolving this issue, the court of appeals erred by applying common law contract principles of offer and acceptance because rule 167 and chapter 42 govern the parties' dealings and displace the common law. Alternatively, Amedisys contends that, even under the common law, it accepted Kingwood's settlement offer. We hold that the common law governs Amedisys's breach of contract claim, but we agree with Amedisys that its email and letter constituted uncontroverted evidence of acceptance.
Amedisys first argues that the court of appeals erred by applying the common law rule that an acceptance is effective only if it matches the material terms of the offer to which it responds. See, e.g., United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d 360, 364 (Tex. 1968) ("It is well settled that an acceptance must not change or qualify the terms of the offer. If it does, the offer is rejected."). In support, Amedisys contends that chapter 42 and rule 167 govern the validity of the parties' settlement agreement, and they do not expressly require an acceptance to match the terms of the offer. Amedisys argues that imposing general contract law's acceptance doctrine on settlement offers under chapter 42 and rule 167 would undermine their purpose by impeding, rather than facilitating, settlement agreements. We disagree that chapter 42 and rule 167 govern here, and hold that Amedisys was required to prove a
When applicable, chapter 42 and rule 167 provide a method by which parties in certain cases who make certain offers to settle certain claims can recover certain litigation costs, if the offeree rejects the offer and "the judgment to be awarded [on those claims] is significantly less favorable to the offeree than was the offer." TEX.R. CIV. P. 167.4(a); see TEX. CIV. PRAC. & REM.CODE §§ 42.002-.005; TEX.R. CIV. P. 167.1-167.7. This applies only to "an offer made substantially in accordance with this rule," TEX.R. CIV. P. 167. 1, and "[a] settlement offer not made in compliance with this rule, or a settlement offer not made under this rule, or made in an action to which this rule does not apply, cannot be the basis for awarding litigation costs under this rule as to any party." TEX. R. CIV. P. 167.7. If the issue in this case were whether Kingwood is entitled to recover its litigation costs, rule 167 and chapter 42 would govern the resolution of that issue. But the issue here is whether Amedisys submitted sufficient evidence to obtain summary judgment on its claim for breach of a settlement agreement, not whether it can recover its litigation costs. Therefore, contract law governs resolution of the issue.
Certainly, the Legislature can alter, and in some circumstances has altered, the legal requirements for enforcing a settlement agreement.
We agree with Amedisys that Texas has a public policy preference for the settlement of legal disputes, and that chapter 42 and rule 167 encourage such settlements. But more fundamental Texas policies prohibit us from binding parties to contracts to which they never agreed. See Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 95-96 (Tex.2011) (observing that freedom of contract is a fundamental Texas policy and that "contracts when entered into freely and voluntarily shall be held sacred") (quoting Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 664 (Tex.2008)). We find that the authorities on which Amedisys relies are not persuasive in this case. See, e.g., Poster v. S. Cal. Rapid Transit Dist., 52 Cal.3d 266, 276 Cal.Rptr. 321, 801 P.2d 1072, 1075 (1990) (holding that judgment could be entered under California statute based on acceptance of offer during statutory 30-day period, even though the accepting party made counteroffers before accepting the original offer). Here, Amedisys sought to enforce a contract, not to recover litigation costs, and to prevail on that claim it had to establish the existence of a valid contract under the common law, including the elements of offer and acceptance.
Under the common law, an acceptance may not change or qualify the
Generally, the materiality of a contract term is determined on a contract-by-contract basis, in light of the circumstances of the contract. See T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992) ("Each contract should be considered separately to determine its material terms."); see also Parker Drilling, 316 S.W.3d at 74 ("Contracts should be examined on a case-by-case basis to determine which terms are material or essential.") (citing T.O. Stanley Boot, 847 S.W.2d at 221). In construing a contract, a court's primary concern is to ascertain the intentions of the parties as expressed in the instrument. See, e.g., J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003).
Here, the court of appeals concluded that "Amedisys did not accept all material terms of [Kingwood's] offer" because Kingwood offered to settle the claims "asserted or which could have been asserted" against Kingwood while Amedisys's acceptance referenced only the claims "asserted" against Kingwood. 375 S.W.3d at 400-01. In reaching this conclusion, the court did not analyze the materiality of this variation. See id. The dissent disagreed, concluding that the language in Amedisys's acceptance letter "is best viewed as merely a shorthand reference to the offer made" by Kingwood, and that Amedisys's communications "unconditionally responded to the offer using the same and similar language used in the offer." Id. at 402 (Jamison, J., dissenting). In the dissent's view, "[t]here is no indication in the response that material terms were being challenged, qualified, or changed." Id. at 402-03. We agree with the dissent that, under the summary judgment record in this case, the variation in language between Kingwood's offer and Amedisys's acceptance is not material and did not convert Amedisys's acceptance into a counteroffer.
The offer letter that Kingwood sent to Amedisys, titled "Rule 167 Statutory Offer of Settlement,"
(Emphasis added.)
Amedisys responded in a letter that it delivered both by facsimile and as an attachment to an email. The email stated: "Attached please find Amedisys' acceptance of the settlement offer you sent pursuant to Rule 167. Please let me know when you are available Monday to discuss the terms of the settlement agreement." (Emphasis added.) The attached letter stated:
(Emphasis added.)
Kingwood argues that Amedisys did not accept Kingwood's offer because "[c]onspicuously missing from Amedisys' letter was its acceptance to settle any claim that could have been asserted against [Kingwood] as well as all non-monetary claims such as the injunctive relief as had been asserted by Amedisys." We begin with an analysis of the materiality of the offer's reference to claims that "could have been asserted," and then address the reference to "non-monetary" claims.
First, we note that Kingwood's letter is itself internally inconsistent in its descriptions of the claims that Kingwood was offering to settle. Initially, it offers to settle "all monetary claims between the parties," omitting any reference to non-monetary claims and claims that had not been asserted between the parties. It then describes the claims as "all claims asserted or which could have been asserted," which includes claims not yet asserted and arguably could include non-monetary claims. But it then states that "the offer is for all monetary damages asserted," again omitting any reference to non-monetary claims and damages not asserted. Based on the second description, of "all claims asserted or which could have been asserted," we conclude that the offer was intended to settle all claims, including any that had not been asserted. But if this is what Kingwood intended by its second description, then it must have intended its first and third descriptions ("claims between the parties" and "damages asserted") as shorthand references to the second.
Moreover, Amedisys's failure to reference claims "that could have been asserted" is not material under these circumstances. There is no evidence in this summary judgment record that Amedisys has or had any claims or potential claims against Kingwood other than those that it asserted in this lawsuit. And even if there were such claims or potential claims, the record provides no basis to find that Amedisys could pursue those claims in any post-settlement action. Generally, once parties settle a lawsuit and a judgment is entered, res judicata bars the parties from subsequently pursuing any claims arising out of the subject matter of the lawsuit that they could have brought in the previous suit.
As to the issue of whether the offer's reference to "all claims" included non-monetary claims, we note that Kingwood did not argue in the court of appeals that Amedisys's acceptance was ineffective because it was limited to settlement of "monetary claims." To the extent Kingwood makes that argument here, we disagree. Amedisys's original petition requested injunctive relief, but only against its former employees, and it dropped those claims after it resolved its dispute with its former employees. According to the record before us, Amedisys never requested injunctive relief against Kingwood, and there were therefore no injunctive claims for Kingwood to settle.
Under these circumstances, we cannot conclude that the slight variation in language from Kingwood's offer to Amedisys's acceptance is sufficient, on its face, to convert Amedisys's purported acceptance into a counteroffer. The uncontroverted evidence demonstrates that Amedisys intended to accept Kingwood's offer, did not intend to make a counteroffer, and did not intend that the settlement be dependent on any alteration of the offer's terms. And Kingwood does not appear to have doubted Amedisys's intent to accept its settlement offer until this case was on appeal.
The shifting burden of proof in the summary judgment context is important to the disposition of this case. If the divergence in language between Kingwood's offer and Amedisys's purported acceptance was material on its face, Amedisys's letter and email would have been no evidence of acceptance and Amedisys would not have been entitled to summary judgment. Cf. Schriver v. Tex. Dep't of Transp., 293 S.W.3d 846, 851 (Tex.App.-Fort Worth 2009, no pet.) (holding that settlement offer to purchase all interests in property for specified amount was not accepted by response agreeing to convey only party's own interest in property when record demonstrated that parties had different understandings of whether settlement required conveyance of third parties' leasehold interests). Or if Amedisys's communications had been patently ambiguous about whether Amedisys intended to accept Kingwood's offer, the communications would have, themselves, created a fact issue on acceptance and Amedisys would not have been entitled to summary judgment. See Coleman v. Reich, 417 S.W.3d 488, 493-94 (Tex.App.-Houston [14th Dist.] July 2, 2013, no pet.) (holding that ambiguity prevented summary judgment when purported acceptance repeatedly stated that it constituted an offer to settle, rather than acceptance of previous offer, and included a place for other party to sign if accepted).
Here, however, Amedisys's email and letter constitute prima facie evidence of a clear intent to accept Kingwood's settlement offer and did not indicate that acceptance was conditioned on the alteration of any material terms. Amedisys thus satisfied its initial summary judgment burden, and the burden shifted to Kingwood to produce evidence raising an issue of fact. See Kerlin v. Arias, 274 S.W.3d 666, 668 (2008) (upholding summary judgment in favor of party who produced prima facie evidence of a valid deed and noting that party did not have burden to prove age or marital status of grantor because opposing party did not produce evidence raising a fact question on those issues) (citing Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995) ("Once the defendant produces sufficient evidence to establish the right to summary judgment, the plaintiff must present evidence sufficient to raise a fact issue.")). But Kingwood did not submit any contrary evidence, nor did it challenge the validity of the acceptance at all until after the trial court granted summary judgment. Under these circumstances, we conclude that Amedisys conclusively established through its summary judgment evidence that it accepted Kingwood's settlement offer.
Because we hold that the summary judgment evidence established that Amedisys
