AKB Hendrick, LP v. Musgrave Enterprises, Inc.

380 S.W.3d 221, 2012 WL 3594798, 2012 Tex. App. LEXIS 7017
CourtCourt of Appeals of Texas
DecidedAugust 22, 2012
DocketNo. 05-11-00251-CV
StatusPublished
Cited by37 cases

This text of 380 S.W.3d 221 (AKB Hendrick, LP v. Musgrave Enterprises, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AKB Hendrick, LP v. Musgrave Enterprises, Inc., 380 S.W.3d 221, 2012 WL 3594798, 2012 Tex. App. LEXIS 7017 (Tex. Ct. App. 2012).

Opinion

OPINION

Opinion By

Justice FILLMORE.

Appellant AKB Hendrick, LP appeals the summary judgment granted in favor of appellees Musgrave Enterprises, Inc., Musgrave & Musgrave, LLP, and Kenneth L. Musgrave. In its first issue, AKB asks this Court to determine whether the trial court implicitly granted or denied appel-lees’ objections to AKB’s summary judgment evidence. In its second issue, AKB asserts the trial court erred if it implicitly granted appellees’ objections to AKB’s summary judgment evidence. In its third, fourth, fifth, and sixth issues, respectively, AKB contends the trial court erred in granting summary judgment on its claims of fraud, breach of contract, tortious interference with contract, and negligent misrepresentation. We affirm the trial court’s judgment.

Factual Background

The AKB/JP Morgan Contract

In 2007, Hendrick Ranch (the Ranch), real property spanning approximately 42,-000 acres in west Texas, was held by JP Morgan Chase Bank, NA, as Trustee of the Hendrick Home for Children Trust (JP Morgan). On May 31, 2007, AKB Hen-drick Limited Partnership (AKB) executed a contract with JP Morgan for purchase of the Ranch (the AKB/JP Morgan Contract).1 In the AKB/JP Morgan Contract, [225]*225JP Morgan agreed that during the term of the contract, it would not market the Ranch or solicit or accept any backup offers to purchase the Ranch. The AKB/JP Morgan Contract permitted AKB up to ten months to raise the money to close the purchase of the Ranch, find other third party investors to fund the purchase of the Ranch, or withdraw from the contract.

The AKB/JP Morgan Contract required AKB to deposit $250,000 in escrow as initial earnest money. Because the AKB/JP Morgan Contract was still in effect sixty days after its execution, AKB was required to deposit an additional $250,000 in escrow as earnest money. The AKB/JP Morgan Contract provided for an initial inspection period to end on November 30, 2007, and three options to extend the inspection period by thirty days each, to a March 1, 2008 date for closing the sale. To exercise an option to extend the inspection period, AKB was to direct the title company to deduct and pay to JP Morgan $75,000 from the $500,000 earnest money deposit held in trust. Under the AKB/JP Morgan Contract, if AKB exercised its unrestricted right to terminate the contract at any time during the initial inspection period, AKB was entitled to a refund of its entire $500,000 earnest money deposit. However, for each optional extension of the inspection period that AKB exercised, the $75,000 extension fee deducted from the escrow account became nonrefundable and could not be used to pay any portion of the purchase price of the Ranch.

The Hendrick Ranch Alternate Contract Agreement

With the end of the initial inspection period under the AKB/JP Morgan Contract nearing, Jay Paul Hamilton, a “member” of AKB Investments, LLC, the general partner of AKB, approached Kenneth L. Musgrave (K.L.M.) regarding purchasing the Ranch. In his deposition, K.L.M. testified that Hamilton called and told him that AKB had the Ranch under contract, and Hamilton wanted to talk to him about the AKB/JP Morgan Contract. Kenneth P. Musgrave (K.P.M.), the son of K.L.M. and Vice President of Musgrave Enterprises, Inc. and a partner of Musgrave & Musgrave, LLP, stated in his affidavit that “[i]n or about October 2007,” AKB contacted the “Musgrave Entities” (Musgrave Enterprises, Inc. and Musgrave & Mus-grave, Inc.) to inquire whether the Mus-grave Entities would be interested in working with AKB to purchase the Ranch.

K.L.M. testified that he and K.P.M. informed Hamilton they were prepared to enter into an agreement with AKB whereby AKB would be paid to permit negotiation of a purchase of the Ranch despite the exclusivity provision of the AKB/JP Morgan Contract, provided AKB maintained its contract with JP Morgan. According to K.L.M., it was important that AKB maintain the AKB/JP Morgan Contract because it “locked in the price” for the Ranch.

K.L.M. planned to form a nonprofit entity, the Musgrave Foundation, as the entity that would purchase the Ranch. Hamilton expressed doubt to K.L.M. about the ability of a nonprofit foundation to purchase the Ranch. However, K.L.M. responded to Hamilton’s concern by expressing his confidence in the ability of the Musgrave Foundation to purchase the Ranch “or [he] certainly wouldn’t have been talking about it.” Hamilton also expressed his concern about the short period of time AKB had to make a payment under the AKB/JP Morgan Contract to extend the initial inspection period ending November 30, 2007. In his affidavit, Hamilton stated that he expressed his concern to K.L.M. about the [226]*226$75,000 per month fees to extend the inspection period under the AKB/JP Morgan contract and that K.L.M. stated he understood the cost of extending the AKB/JP Morgan Contract. According to Hamilton, K.L.M. said he “could ‘help out’ with those costs should they become an issue,” and Hamilton should not worry about that.2

As a result of the negotiations between K.L.M., K.P.M., and Hamilton, an agreement was reached between AKB and Mus-grave Enterprises, Inc., whereby an alternate offer of purchase of the Ranch by the Musgrave Foundation could be made to JP Morgan, despite the exclusivity provision of the AKB/JP Morgan Contract. The specific terms of the agreement were reduced to writing in the Hendrick Ranch Alternate Contract Agreement (the ACA), and the ACA was signed on November 21, 2007. The ACA was signed on behalf of AKB by Hamilton, a “member” of AKB Investments, LLC, the general partner of AKB, and on behalf of Musgrave Enterprises, Inc. by K.L.M., Managing Partner of Musgrave & Musgrave, LLP.

The ACA identifies the “Principals” to be AKB as “Buyer,” JP Morgan as “Seller,” and the Musgrave Foundation as “Alternate Buyer.” It is undisputed that at the time the ACA was signed, AKB was aware the Musgrave Foundation was not yet a legal entity.3 Nevertheless, the ACA expressly refers to an “alternate purchase contract” between the proposed Musgrave Foundation and JP Morgan:

The purpose of this document is to outline in general terms the arrangement whereby [AKB] agrees to coordinate the presentation of an alternate purchase contract from the Musgrave Foundation for consideration by [JP Morgan] for the purchase of the [Ranch]....

The ACA provides that ÁKB had requested the participation of Musgrave Enterprises, Inc. to facilitate the consummation of the purchase of the Ranch. As memorialized in the ACA, AKB and Mus-grave Enterprises, Inc. agreed to the following “tasks” to accomplish that objective: on or before November 21, 2007, AKB would deliver a written request to JP Morgan to consider an alternate contract for purchase of the Ranch from the Mus-grave Foundation; on or before November 26, 2007, after Musgrave Enterprises, Inc. had the opportunity to present the alternate contract for purchase of the Ranch by the Musgrave Foundation to JP Morgan, Musgrave & Musgrave, LLP would pay $25,000 to AKB as “good faith money”; and, on or before November 29, 2007, AKB would use its best efforts to secure an amendment to the AKB/JP Morgan Contract specifically limited to permitting JP Morgan to receive for consideration an alternate purchase contract from the Mus-grave Foundation.

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Cite This Page — Counsel Stack

Bluebook (online)
380 S.W.3d 221, 2012 WL 3594798, 2012 Tex. App. LEXIS 7017, Counsel Stack Legal Research, https://law.counselstack.com/opinion/akb-hendrick-lp-v-musgrave-enterprises-inc-texapp-2012.