Hewitt v. Biscaro

353 S.W.3d 304 (Tex. App. 2011)

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Nature of the Case

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Facts

Ps allege Ds prepared private placement memoranda with knowledge of illegal activity and enabled the fraud that was committed upon them. Ps also allege Ds committed theft and misapplied fiduciary property. Ps sued D. Ps, and Ds executed a 'Settlement Agreement and Release' where Ds agreed to pay Ps a total of $1,300,000 through a series of periodic payments. The settlement agreement also specified that its terms were to be kept confidential. Ds paid $400,000 and then ceased payments. Ps amended their pleadings to include a claim that Ds breached the settlement agreement. Ps sought the remaining amount of $900,000 as damages and their attorney's fees. Ds filed an amended answer asserting the affirmative defense of impracticability or impossibility of performance, contending they 'have been prohibited from tendering any funds by the Securities and Exchange Commission (SEC). Ds also claim the cause of action for breach of the settlement agreement was barred because 'compliance with the agreement would violate federal law.' D had been ordered by the SEC to cease any payments to Ps and to cease any payments to any other individuals who invested funds in oil and gas projects, pending the completion of a formal SEC investigation involving Ds. The trial court granted Ps' motion for summary judgment. Ds appealed.