Originally published by Guest Blogger Kevin M. Clark.
Recent court of appeals rulings in Texas have been split on issues involving email signatures.
The 1st Court of Appeals in Houston issued an opinion March 30 on Khoury v. Prentis B. Tomlinson Jr., No. 01-16-00006-CV, a case that arose from an agreement where John Khoury invested in PetroGulf, a company that Prentis Tomlinson ran and claimed he had a contract to sell oil from Iraq into Syria.
Khoury’s investment did not pay off and Tomlinson admitted that the claimed Syrian contract did not exist. Khoury and Tomlinson met and reached an oral agreement for Tomlinson to pay Khoury’s investment back. Khoury summarized the terms of the agreement in an email and Tomlinson responded “We are in agreement . . . ,” but his name did not appear in the body of the email. Tomlinson never repaid Khoury.
In turn, Khoury brought claims for fraud, breach of contract, and violation of the Texas Securities Act and the jury found for him on all three claims. But the trial court disregarded the jury’s findings on the breach of contract claim because the statute of frauds barred enforcement of the oral agreement that was summarized via email.
The 1st Court of Appeals reversed, holding that “[t]he question before us is whether the name or email address in the ‘from’ field constitutes a signature for purposes of the Statute of Frauds.” The court examined the Texas Uniform Electronic Transactions Act (Tex. Bus. & Comm. Code §§ 322.001–.022), caselaw interpreting the act, dictionary definitions, and the purpose of the statute of frauds to reach its conclusion that the appearance of someone’s name or email address in the “from” field of an email constitutes a signature satisfying the statute of frauds.
The case is noteworthy for that holding, but also because it conflicts with a holding of the 2nd Court of Appeals in Fort Worth. In Cunningham v. Zurich American Insurance Co., the court held that the signature line in an email did not constitute a signature, in part because “[t]here is nothing to show that the signature block was typed by [the sender] and not generated automatically by her email client.” 352 S.W.3d 519, 529–30 (Tex. App. Fort Worth 2011, pet. denied). Though Cunningham dealt with a Rule 11 agreement and Khoury is about the statute of frauds, both cases turned on an interpretation of the Texas Uniform Electronic Transactions Act and the Cunningham court analogized the signature requirements of Rule 11 to the statute of frauds. See id. & n. 33; Khoury, slip op. at 9. The Cunningham court differentiated between a manually typed signature and an electronically generated signature as the basis for its holding but did not offer an explanation for why that distinction had legal effect. The Khoury court noted that it agreed with the Northern District of Texas in its criticism of the 2nd Court of Appeals ruling in Williamson v. Bank of New York Mellon, 947 F. Supp. 2d 704, 710–11 (N.D. Tex. 2013).
In Texas, trial courts are bound by the decisions of the court of appeals that covers their district. See Perez v. State, 495 S.W.3d 374, 392 (Tex. App.—Houston [14th Dist.] 2016, no pet.). Parties and their lawyers should take venue into consideration when determining where to bring a claim that implicates the statute of frauds, the act, or any other claim that turns on the existence or validity of a signature.
Kevin Clark is a 2006 graduate of the University of Texas School of Law and a partner in King & Spalding’s commercial litigation practice. When he’s not representing clients in construction, energy, and healthcare litigation, he’s spending time with his family, his dog Shiloh, and his garden.
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