Background
Dr. Zhuo Chen, through SL Vision, LLC, operated an eye clinic on property owned by LC-TX Investment, LLC. LensHome Optic, LLC agreed to purchase the clinic for $330,000 under a Buy-Sell Agreement, and Dr. Qian Wu signed the agreement as LensHome’s manager. Wu paid the first installment but not the remaining $213,000. A separate five-year lease required $3,000 in monthly rent; Wu paid seven months and then stopped.
Wu and LensHome sued Chen and her companies for breach of contract and fraud. Chen and SL Vision counterclaimed under the Buy-Sell Agreement, and LC-TX pursued the unpaid rent. The trial court disposed of Wu and LensHome’s contract-illegality defense by no-evidence summary judgment and later directed a verdict that Wu signed the Buy-Sell Agreement in her individual capacity. A jury found Wu liable under both agreements, resulting in awards of $213,000 on the purchase agreement, $159,000 under the lease, and $120,000 in attorney’s fees.
The Court’s Holding
The court reversed the $213,000 judgment against Wu personally on the Buy-Sell Agreement. The agreement identified LensHome—not Wu—as the buyer, imposed obligations on the buyer and seller, and showed Wu signing as LensHome’s manager. Because the record did not conclusively establish that Wu was individually a party to the agreement, the trial court erred by directing a verdict on her personal liability. The court remanded that contract claim for further proceedings and vacated the attorney’s-fee award because it covered both contract claims without separating the results.
The court otherwise affirmed. Even assuming the agreement’s percentage-based revenue-sharing provision violated Texas’s statutory prohibition against splitting optometric fees, that provision was severable from the fixed-price clinic purchase obligation, so the agreement as a whole was not illegal. Conflicting versions of the lease and testimony about its signature page also supplied legally and factually sufficient evidence for the jury to find that Wu signed the lease individually. Finally, the trial court was not required to submit a separate jury question or instruction on termination because the broad-form breach question encompassed that theory.
Key Takeaways
- A company representative is not personally liable merely because she signed an agreement for an identified LLC; individual liability must be established by the contract or other evidence.
- An unlawful contractual provision may be severed when it is distinct from the agreement’s essential lawful obligations, particularly when the contract contains a severability clause.
- Conflicting contract copies and testimony about whether representative-capacity language was added later may create a credibility issue for the jury.
- When a single attorney’s-fee award covers multiple contract claims and one claim is reversed, the fee award may also require reconsideration on remand.
Why It Matters
The decision underscores the importance of identifying parties and representative capacity precisely in business-sale documents. Courts cannot impose personal contractual liability as a matter of law when the agreement identifies an LLC as the contracting party and its manager signs in that role.
The opinion also illustrates that potential illegality in one revenue-sharing term does not necessarily invalidate an entire transaction. Texas courts will examine whether the challenged provision can be separated from the contract’s lawful, independently enforceable promises.