Dynegy, Inc. v. Terry W. Yates, Individually, and Terry W. Yates, P.C.

Summary

The Supreme Court of Texas held that an oral promise by Dynegy, Inc. to pay attorney’s fees incurred by its former officer was subject to the statute of frauds’ suretyship provision. The Court held that Dynegy established the statute’s applicability and that Yates waived reliance on the main purpose doctrine by failing to plead, prove, and obtain findings on that exception. The Court reversed the court of appeals and rendered a take-nothing judgment in favor of Dynegy, including on Yates’s fraudulent inducement claim seeking benefit-of-the-bargain damages.

Holdings

1. Dynegy's oral promise to pay attorney's fees that were Olis's obligation was a promise to answer for another person's debt and therefore initially fell within the statute of frauds.
2. The party asserting the statute of frauds bears the initial burden of establishing its applicability; once that burden is met, the opposing party bears the burden of establishing an exception, including the main-purpose doctrine.
3. Yates waived the main-purpose exception by failing to plead, prove, and obtain favorable jury findings on the exception.
4. The statute of frauds rendered the oral agreement unenforceable, barred recovery on Yates's breach-of-contract claim, and barred his fraudulent-inducement claim to the extent it sought benefit-of-the-bargain damages.

Questions Presented

1. Whether Dynegy's oral promise to pay attorney's fees that were Olis's contractual obligation was a promise to answer for another person's debt within the statute of frauds.
2. Whether the burden of establishing the main-purpose exception to the statute of frauds rested on Yates after Dynegy established the statute's applicability.
3. Whether Yates waived the main-purpose exception by failing to plead, prove, and obtain jury findings on the exception.
4. Whether the statute of frauds barred Yates's breach-of-contract claim and his fraudulent-inducement claim seeking benefit-of-the-bargain damages.

Disposition

reversed