Bob E. Woody v. J. Black's, LP And J. Black's GP, LLC

Opinion

ACCEPTED

03-15-00293-CV

8312780

THIRD COURT OF APPEALS

AUSTIN, TEXAS

12/18/2015 5:38:37 PM

JEFFREY D. KYLE

CLERK

________________________________________________

NO. 03-15-00293-CV FILED IN 3rd COURT OF APPEALS

_________________________________________________

AUSTIN, TEXAS

12/18/2015 5:38:37 PM

In the Court of Appeals

JEFFREY D. KYLE

For the Third Judicial District of Texas Clerk Austin, Texas

____________________________________________________

BOB E. WOODY, Plaintiff-Appellant,

v.

J. BLACK’S, LP and J. BLACK’S, GP, LLC, Defendants-Appellees.

__________________________________________________________________

On Appeal from Cause No. D-1-GN-09-001436, In the 345th Judicial District Court of Travis County, Texas, The Honorable Steven Yelenosky Presiding

BRIEF FOR APPELLEES

Eric Taube State Bar No. 19679350 etaube@taubesummers.com Andrew Vickers State Bar No. 24084021 avickers@taubesummers.com Taube Summers Harrison Taylor Meinzer Brown LLP 100 Congress Avenue, Suite 1800 Austin, Texas 78701 Telephone: (512) 472-5997 Telecopier: (512) 472-5248

ATTORNEYS FOR APPELLEES

ORAL ARGUMENT REQUESTED

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................... i

INDEX OF AUTHORITIES......................................................................................v

ABBREVIATIONS ................................................................................................. ix

STATEMENT OF THE CASE ................................................................................ xi

REQUEST FOR ORAL ARGUMENT ................................................................. xiv

ISSUES PRESENTED.............................................................................................xv

STATEMENT OF FACTS ........................................................................................1

I. THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE SUBLEASE, UNDER WHICH J. BLACK’S WAS READY, WILLING AND ABLE TO PERFORM. ..............................................................................1

A. The Parties Entered a Sublease Agreement in August 2006 for a Three-Year Term with Four Extension Options. .........1

B. J. Black’s Properly Exercised its First Extension Option, Woody Improperly Rejected J. Black’s Exercise of the Extension Option and thereby Breached the Sublease. ........2

C. Woody Improperly Accused J. Black’s of default and disregarded the default terms of the Sublease. ......................4

D. J. Black’s was Ready, Willing, and Able to perform each and every one of its Obligations under the Lease. .................5

II. THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS ATTORNEY’S FEES. ...............................................................................6

A. The Parties Counter-Sued against Each Other: Woody Sought to Remove J. Black’s as the Tenant, and J. Black’s Sought to Remain in the Subleased Space. .............................6

B. J. Black’s First Motion for Partial Summary Judgment was Granted, Holding that J. Black’s Properly Exercised its Extension Option and that Woody Breached the Sublease. .7

i

C. Three Sanctions Orders were Granted in J. Black’s Favor .8

D. J. Black’s Second Motion for Partial Summary Judgment was Granted, Dismissing all of Woody’s Claims. ..................9

E. J. Black’s Third Motion for Summary Judgment was Granted, Resulting in a Final Judgment, which was then Partially Vacated. ......................................................................9

F. Woody’s Motion for Summary Judgment was Denied—and a Fourth Sanctions Order was Granted in J. Black’s Favor—because the Court had Already Conclusively Determined that J. Black’s Properly Exercised its Extension Option and that Woody was in Breach of the Sublease. .....11

G. J. Black’s Motion for Entry of a Final Judgment was Granted, and a Final Judgment was Entered in J. Black’s Favor.........................................................................................12

H. Appeal and Remand by Amarillo Court of Appeals ...........13

I. Grant of J. Black’s Final Summary Judgment and Entry of Final Judgment ........................................................................14 SUMMARY OF THE ARGUMENT ......................................................................15

ARGUMENT ...........................................................................................................21

I. WOODY BREACHED THE SUBLEASE ...................................................21

A. Woody’s Breach was established by the District Court ......21

B. Woody’s Breach affirmed by the Amarillo Court of Appeals ...................................................................................................23

C. Woody’s new defense that he did not actually “breach” the Sublease, but merely “repudiated” his obligations thereunder, is untimely and unsupported by legal authority or the facts of this case ............................................................24

II. THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT AWARDING SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO J. BLACK’S ON THE BASIS OF WOODY’S BREACH. ............................27

ii

A. J. Black’s is entitled to specific performance of the Sublease and its extensions because it was ready, willing and able to perform its own obligations under the Sublease at all relevant times...........................................................................28 1. J. Black’s was Ready, Willing and Able to perform its Obligations under the Sublease ......................................29

2. J. Black’s Remedies at Law are inadequate ...................31

B. Woody’s arguments against the availability of the award of specific performance are a school of red herrings. ..............33

1. Woody’s “Three-Way Characterization” finds no support in the record, or in the authority .....................................34

2. Woody’s claim that the decree of specific performance lacks a “mutuality of remedy” is incorrect .....................35

3. The grant of specific performance does not require “continuous supervision” of the parties. .........................37

4. The decree of specific performance does not deprive Woody of rights under the Sublease ...............................38

III. WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED SUMMARY JUDGMENT EVIDENCE AND THE EXCLUSION OF A PORTION OF HIS OWN AFFIDAVIT IS SPURIOUS ..................................39

A. The District Court Correctly Overruled Woody’s Objections to J. Black’s Summary Judgment Evidence .....40

B. The District Court correctly excluded the February 4, 2015 Affidavit of Bob E. Woody, and its exclusion was not material to the award of specific performance in this Case41

IV. J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER ATTORNEY’S FEES AS THE PREVAILING PARTY IN A BREACH OF CONTRACT CASE UNDER CPRC § 38.001. .........................................43

A. The Law permits the award of fees under Chapter 38 upon the award of specific performance ........................................43

iii

PRAYER ..................................................................................................................44

CERTIFICATE OF COMPLIANCE .......................................................................45

CERTIFICATE OF SERVICE ................................................................................46

iv

INDEX OF AUTHORITIES

Cases Albataineh v. Eshtehardi, 01-12-00671-CV, 2013 WL 1858864 (Tex. App.—Houston [1st Dist.] May 2, 2013, no pet.) .....................................................................................43

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (Tex. 2005) .................................................................. 14, 17

Azad v. Aaron Rents, Inc., No. 14-07-01087-CV, 2009 WL 4842761, (Tex. App.—Houston [14th Dist.] 2009, no pet.)...........................................34

Bd. of Trustees of Fire and Police Retiree Health Fund v.

Towers, Perrin, Forster & Crosby, Inc., 191 S.W.3d 185 (Tex.App.–San Antonio 2005, pet. denied) .......................39

Burford v. Pounders, 145 Tex. 460, 199 S.W.2d 141 (1947) ..........................................................30

City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967), writ refused NRE (Apr. 10, 1968) .......................................................... 13, 24

DiGiuseppe v. Lawler, 269 S.W.3d 588 (Tex.2008) ..........................................................................29

Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex.1985) ..........................................................................40

E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (Tex. Civ. App.—San Antonio 1932), writ granted (Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632 (Comm'n App. 1935) 36

Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833 (Tex. App.—Dallas 2008, pet. denied) ..............................28

First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (Tex. Civ. App.—San Antonio1942, writ ref’d w.o.m.) ....24

v

Fitzsimmons v. Anthony, 716 S.W.2d 719 (Tex. App.—Corpus Christi 1986, no writ) .......................28

Frank v. Kuhnreich, 546 S.W.2d 844 (Tex. App.—San Antonio 1977, writ ref’d n.r.e.) ....... 28, 32

Garner v. Fidelity Bank, N.A., 244 S.W.3d 855 (Tex.App.–Dallas 2008, no pet.) ........................................39

Hayes v. E.TS. Enterprises, Inc., 809 S.W.2d 652 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991) .....41

Henry S. Miller Co. v. Stephens, 587 S.W.2d 491 (Tex.Civ.App.-Dallas 1979, writ ref’d n.r.e.) ....................29

Hudson v. Wakefield, 711 S.W.2d 628 (Tex. 1986) .........................................................................24

Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (Tex. 1968) ...........................................................................35

In re Hecht, 213 S.W.3d 547 (Tex. Spec. Ct. Rev. 2006) .................................................31

Jarvis v. Peltier, No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, 2013 WL 1755797 (Tex.App.-Tyler Apr. 24, 2013, n.p.h.) .................................................. 30, 41

Jones v. Kelley, 614 S.W.2d 95 (Tex. 1981) ...........................................................................43

Jones v. Pesak Bros. Const.. Inc., 416 S.W.3d 618 (Tex. App.—Houston [1st Dist.] 2013, no pet.) .................42

Miller v. Compton, 185 S.W.2d 754 (Tex. Civ. App.—Eastland 1945, no writ) .........................36

Norra v. Harris County, No. 14-05-01211-CV, 2008 WL 564061, (Tex. App.—Houston [14th Dist.] 2008, no pet.)...........................................34

Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (Tex. App.—Fort Worth 2008, pet. denied) .......................40

vi

Parson v. Wolfe, 676 S.W.2d 689 (Tex. App.—Amarillo 1984, no writ) ................................36

Perez v. Williams, 01-14-00504-CV, 2015 WL 5076294 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.) .............................42

Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (Tex. App.—Houston [14th District] 2003, pet. denied) ....44

Redwine v. Hudman, 104 Tex. 21, 133 S.W. 426 (1911) ................................................................38

Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (Tex. App.—Austin 2003, pet. denied) ................................28

Rus-Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921 (Tex. App.—Tyler 2007, no pet.) .......................................31

S. Plains Switching, Ltd. v. BNSF Ry., 255 S.W.3d 690 (Tex.App.-Amarillo 2008, pet. denied) ..............................37

San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) ...36

Smith v. Dass, Inc., 283 S.W.3d 537 (Tex. App.—Dallas 2009, no pet.) .....................................28

Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530 (Tex. App.—Dallas 2007, pet. denied) ..............................28

Tello v. Bank One, N.A., 218 S.W.3d 109 (Tex. App.—Houston [14th Dist.] 2007, no pet.) ...............34

Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (Tex. App.—Dallas 2013, no pet.) .............................. 13, 23

United Coin Meter Co. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (Tex.Civ.App.--Fort Worth 1973, no writ) ........................16

vii

Statutes Tex. Civ. Prac. & Rem. Code § 38.001(8)...............................................................43

Tex. R. App. P. 38.1 ............................................................................................... xiv

Tex. R. App. P. 39.1 ............................................................................................... xiv

Tex. R. App. P. 43.4 .................................................................................................45

Tex. R. Civ. P. 139 ...................................................................................................45

viii

ABBREVIATIONS

For ease of reference, Appellees employ the following abbreviated

references to the record and the parties herein:

Abbreviation Reference

Woody Appellants/Plaintiffs and Counter-Defendants, Bob E. Woody and The Ranch, LLC (collectively, unless otherwise noted)

Cárdenas Plaintiffs’ Trial Counsel, Hector H. Cárdenas, Jr.

J. Black’s Appellees/Defendants and Counter-Plaintiffs, J. Black’s, L.P. and J. Black’s, G.P., L.L.C. (collectively, unless otherwise noted)

11CR Original Clerk’s Record, pgs. 1-959, filed 5/17/12

12CR Supplemental Clerk’s Record “B,” pgs. 1-1361, filed 5/31/12

15CR Clerk’s Record, pgs.1–1751, filed 7/20/ 15. 1 RR Reporter’s Record from Hearing on Woody’s Application for Temporary Restraining Order, 5/6/09

2 RR Vol. I-III Reporter’s Record from Hearing on Woody’s Motion for Temporary Injunction, 5/14/09;

Vol. I: Master Index Vol. II: Transcript Vol. III: Exhibits

3 RR Reporter’s Record from Hearing on J. Black’s Third/Final Motion for Summary Judgment, 12/20/10

ix

Abbreviation Reference

4 RR Vol. I-III Reporter’s Record from Hearing on J. Black’s Motion for Entry of Final Judgment, 1/5/12;

Vol. I: Master Index Vol. II: Transcript Vol. III: Exhibits

5 RR Reporter’s Record from Trial on issue of Attorney’s Fees, 3/25/15

x

STATEMENT OF THE CASE

Nature of Appellant Bob Woody (as Sublessor) and The Ranch (Woody’s the Case business entity) filed suit against Appellees J. Black’s L.P. (as Sublessee) and J. Black’s G.P., L.L.C. (its general partner), regarding various disputes over their commercial sublease agreement. (11CR 8-15). J. Black’s counter-sued to establish that it had properly exercised its unilateral option to extend the term of the Sublease and that Woody breached the Sublease by falsely accusing J. Black’s of default, rejecting the proper exercise of J. Black’s option, and demanding that J. Black’s vacate the premises or pay holdover rent. (11CR 99-93).

Course of The trial court granted J. Black’s First Motion for Partial Interlocutory Summary Judgment, holding that J. Black’s had properly Proceedings exercised its option while in good standing under the Sublease, and Woody breached the Sublease by his improper rejection of that exercise. (11CR 491-492).

The trial court granted three sanctions orders in J. Black’s favor based on Woody’s abuse of discovery. (11CR 493-494; 12CR 1068-1069). Woody and The Ranch did not appeal those orders.

The trial court granted J. Black’s Second Motion for Partial Summary Judgment, dismissing all of Woody’s and The Ranch’s claims because J. Black’s was not in default of (had not breached) the Sublease and was not liable for conversion, theft, or trespass. (11CR 710-711, 949). Woody and The Ranch do not appeal this order.

The trial court granted J. Black’s Third Motion for Summary Judgment, and issued a Final Judgment that affirmed the status of the pleadings and the conclusive legal determinations about Woody’s liability and J. Black’s non-liability, and awarded affirmative relief to J. Black’s on that basis. (11CR 946-948). The trial court later vacated only the portion of this order awarding relief to J. Black’s, reserving that issue for subsequent trial. (12CR 618). Woody and The Ranch did not appeal these orders.

xi

The trial court denied Woody’s Motion for Summary Judgment because all of the arguments made therein had been conclusively decided against them in the previous orders. (11CR 1080-1081).

The trial court granted J. Black’s Fourth Motion for Sanctions on the basis that Woody’s Motion for Summary Judgment was frivolous and filed for purposes of delay and harassment. (11CR 1080-1081).

The parties signed a Stipulation regarding the reasonable and necessary amount of attorney’s fees incurred by J. Black’s. (11CR 1164-1165).

Original Trial Upon a hearing before the Honorable Steven Yelenosky of the Court 345th District Court of Travis County on J. Black’s Motion for Disposition Entry of a Final Judgment, the trial court granted a Final Judgment, which incorporated the prior orders and the parties’ Stipulation and awarded J. Black’s specific performance, attorney’s fees, and interest based on Woody’s breach of the Sublease. (12CR 1302-1304).

Woody and The Ranch appealed (1) the orders granting J. Black’s First Partial Motion for Summary Judgment and denying Woody’s Motion for Summary Judgment, (2) the award of specific performance and attorney’s fees in the Final Judgment, and joined by their counsel Hector Cárdenas, (3) the fourth award of sanctions.

Disposition by The Amarillo Court of Appeals overruled Woody’s first, 7th Circuit second and third issues on appeal and determined that Woody Court of breached the sublease, finding Woody’s contentions to the Appeals contrary “meritless.” The Court of Appeals reversed the trial court on the issue of J. Black’s failure to prove it was “ready, willing and able” to perform its obligations under the Sublease, and on the sanctions levied against Woody and Cardenas. After determining the issue was not moot, the Court of Appeals remanded the case for further proceedings consistent with its opinion. (15CR 881–898; 15 CR 900).

xii

Subsequent After a hearing on the parties’ cross-motions for summary Trial Court judgment before the Honorable Judge Yelenosky of the 345th Disposition District Court of Travis County, the Court granted in part J. Black’s Motion for Final Summary Judgment, excluding only the amount of attorney’s fees, and denied the Motion for Summary Judgment of Counter-Defendants Bob E. Woody and the Ranch. (15CR 1639–1640).

Pursuant to the parties’ March 19, 2015 stipulation as to reasonable and necessary attorney’s fees (15CR 1645–1646), on March 31 2015, the Trial Court entered Final Judgment in this Cause, ordering Woody to specifically perform the entirety of his obligations under the Sublease Agreement dated August 21, 2006 as it has been extended and modified, finding that J. Black’s was entitled to recover its attorney’s fees under Tex. Civ. Prac. & Rem. Code §38.001, and awarding J. Black’s $173,438.85 in attorney’s fees (as well as an additional $40,000 in appellate fees conditioned on successfully prevailing on appeal). (15CR 1653–1654).

On May 6, 2015, Judge Yelenosky denied Woody’s Motion for New Trial and Alternative Motion to Modify Judgment. (15CR 1707). On May 13, 2015, Woody timely noticed his appeal. (15CR 1708 – 1709).

xiii

REQUEST FOR ORAL ARGUMENT Appellees J. Black’s L.P. and J. Black’s G.P., L.L.C. respectfully request

that this Court grant oral argument to aid in the Court’s decisional process.

Appellants have raised multiple issues on appeal that must be construed in light of

the arguments presented and legal rulings made through a series of interlocutory

proceedings, covering five years in the trial court, which ultimately resulted in a

Final Judgment. Oral argument will assist the Court in synthesizing the

substantive merits and procedural status of Appellants’ issues on appeal. Tex. R.

App. P. 38.1(e), 39.1.

xiv

ISSUES PRESENTED

Appellants have asserted three multifaceted issues, many of which complain

about the same decision and/or legal conclusion of the trial court. In response,

J. Black’s simplifies and restates the operative issues on appeal as follows:

ISSUE 1 Summary Judgment Rulings on Liability and Award of Specific Performance of Sublease:

Did the trial court err in granting summary judgment for J. Black’s and not for Woody on J. Black’s request for specific performance?

Responsive to Appellants’ Issues 1, 2, and 3.

ISSUE 2 Trial Court’s discretion in excluding and considering of evidence:

Did the trial court abuse its discretion and commit harmful error in excluding certain of Woody’s summary judgment evidence and failing to exclude certain of J. Black’s summary judgment evidence?

Responsive to Appellants’ Issue 2.

ISSUE 3 Award of fees, interest and costs:

Did the trial court err in awarding J. Black’s attorney’s fees, interest, and costs?

Responsive to Appellants’ Issue 1–3.

xv

STATEMENT OF FACTS

I. THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE SUBLEASE, UNDER WHICH J. BLACK’S WAS READY, WILLING AND ABLE TO PERFORM. The key dispute in this appeal –– framed by the prior appellate court

decision issued by the Amarillo Court of Appeals on October 23, 2013. and the

otherwise-undisturbed Orders granting J. Black’s various Motions for partial

Summary Judgment –– is whether the evidence shows J. Black’s was ready,

willing, and able to perform its obligations under the Sublease after Woody had

breached the Sublease and J. Black’s had given timely notice of the intent to

exercise the extension of the terms of the Sublease. As shown by the record, Judge

Yelenosky correctly decided this issue in J. Black’s favor based on the plain

language of the Sublease, the evidence of preparedness and actual performance of

the Sublease by J. Black’s, and the well-established law of this State.

A. The Parties Entered a Sublease Agreement in August 2006 for a Three-Year Term with Four Extension Options.

On August 21, 2006, Bob Woody (sublessor) and J. Black’s, LP (sublessee)

entered a sublease agreement (“the Sublease”) to allow J. Black’s to sublet the

ground floor of a two-story commercial building for the purpose of operating a

restaurant and bar in the popular “West 6th Street” entertainment district of Austin,

Texas. (11CR 19-52, 621). Woody leased the building (under a Master Lease with

Montwalk Holdings, Ltd.). (11CR 19). He used a portion of the building to

operate a bar and rooftop patio (called “The Ranch”) on the top floor and in part of

2

the ground floor adjacent to the space subleased by J. Black’s. (12CR 33–48).1

The interest in real property at this location contains intrinsic and intangible value

to J. Black’s business. (15CR 1199, at ¶ 2).

The original term of the Sublease was for 36 months (three years), from

September 1, 2006, to August 31, 2009. (11CR 21). Thereafter, J. Black’s was

given a unilateral option to extend the Sublease term for four successive periods of

36 months each (the four “Option Periods”), for a total of 144 additional months

(twelve additional years, through August 31, 2021). (11CR 21-22).

To exercise its extension option, J. Black’s had to be in good standing (i.e.,

not in default) under the Sublease, and had to send notice to Woody of its intent to

exercise the option at least 180 days prior to the expiration of the existing term.

(11CR 21, Sublease § 3.01, Term).

B. J. Black’s Properly Exercised its First Extension Option, Woody Improperly Rejected J. Black’s Exercise of the Extension Option and thereby Breached the Sublease.

In compliance with the Sublease, J. Black’s sent written notice to Woody,

stating its intention to exercise the first extension option on February 23, 2009,

1 Although originally named as a Plaintiff in this lawsuit, The Ranch, L.L.C. was not a party to either the Sublease or the Master Lease. (11CR 19, 33). And although the Sublease named J. Black’s, L.P. as the Sublessor, the Sublease was executed by Sean Fric, Manager of J. Black’s, G.P., L.L.C., on behalf of J. Black’s L.P. (12CR 30, 108).

3

which was more than 180-days before the expiration of the original sublease term.

(11CR 21-22, 162, 164). 2

Although Woody acknowledged that J. Black’s properly and timely mailed

its notice of extension to his stated address, Woody unconvincingly contended that

the notice did not extend the Sublease term because he claims to have not actually

“received” it. Based on this contention, Woody rejected J. Black’s timely exercise

of its extension option and, instead, demanded that J. Black’s vacate the premises

and/or pay holdover rent. (11CR 158–159, 171-173). Woody has never repudiated

the demand for holdover rent or notice to vacate.

The trial court granted J. Black’s November 20, 2009 Motion for Partial

Summary Judgment in full on its counterclaim for breach of contract related to the

rejection of the extension. (15CR 81–84, 95, 478, 769–771). The Amarillo Court

of Appeals affirmed the conclusion that the extension notice was properly and

timely sent to Woody in full compliance with the Sublease agreement, and did not

in any way disturb or reverse the trial Court’s December 17, 2009 Order granting

summary judgment on the counterclaim for breach of contract. (15CR 887–889).

2 The original term was set to expire on September 1, 2009, meaning that J. Black’s 180-day advance deadline to exercise its option was on March 4, 2009. (11CR 184, ¶ 13). J. Black’s sent the required notice more than a week ahead of the deadline.

4

C. Woody Improperly Accused J. Black’s of default and disregarded the default terms of the Sublease.

In furtherance of his efforts to eject J. Black’s from the subleased premises,

nine days after J. Black’s sent its extension notice, Woody for the first time

claimed that J. Black’s was in default under the Sublease. (11CR 108, 144–145).

Specifically, Woody manufactured claims that J. Black’s had “defaulted” by

providing “substandard food service” to The Ranch’s customers and by installing

an “offensive neon sign” outside the premises. (11CR 144). Woody later claimed

that J. Black’s was in default based on its installation of three gas heaters. (11CR

146-147). None of these actions were “defaults” contemplated by the Sublease’s

specific provisions and Woody’s “notices” were therefore also outside of the

parties’ agreement.

The trial court determined that the Sublease contained no requirements

regarding the type, quality, or quantity of food service by J. Black’s (other than to

state that “the only food sold or provided [at The Ranch] will be provided by

[J. Black’s]”), and J. Black’s had worked diligently to provide such service and

that J. Black’s fully complied with the Sublease when it installed a basic marquee

sign (11CR 28-29, 502–503, 511-515, 613-614, 616-623). The trial court also

determined that J. Black’s installation of the heaters did not violate the Sublease

but, even if it did, J. Black’s promptly cured the issue by removing the heaters and

5

paying Woody for any increased gas expenditure upon notice. (11CR 500-502,

505-510, 614-615; 15CR 636).

All of these facts were the subject of J. Black’s Second Motion for Partial

Summary Judgment, which was decided in J. Black’s favor, concluding as a matter

of law that J. Black’s was not in default of the Sublease, and dismissing all of

Woody’s claims on that basis. (11CR 497, 517, 949; 15CR 636). Woody did not

appeal from this Order. Hence, the record is conclusive that J. Black’s was not in

default (i.e., was in good standing) when it exercised its extension option by

sending written notice to Woody, and that it was Woody who in fact was in breach

of the Sublease.

D. J. Black’s was Ready, Willing, and Able to perform each and every one of its Obligations under the Lease.

Although Woody makes this the focus of his argument, on appeal there is no

serious dispute that J. Black’s was not at all times relevant to this dispute ready,

willing and able to perform its obligations under the lease, and did in fact perform

its obligations under the Lease. No evidence controverts J. Black’s clear testimony

–– from Mr. Sean Fric, a manager of J. Black’s with full knowledge of J. Black’s

ability to meet the entirety of its Sublease obligations at all relevant times –– of

J. Black’s readiness, willingness and ability to perform, and Woody’s only

challenge to such evidence comes through spurious legal objections to the affidavit

of Mr. Fric that were properly denied by the trial court.

6

II. THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS ATTORNEY’S FEES. On appeal, Woody seeks reversal of the relief awarded to J. Black’s (specific

performance and attorney’s fees). The record fully supports these awards,

however, and they should be affirmed.

A. The Parties Counter-Sued against Each Other: Woody Sought to Remove J. Black’s as the Tenant, and J. Black’s Sought to Remain in the Subleased Space.

Woody filed his Original Petition in May 2009 alleging causes of action

against J. Black’s for conversion, breach of contract (based upon alleged

contractual provisions that did not even exist), trespass and theft, and seeking

injunctive relief, damages, and attorney’s fees. (15CR 6–13; see also 12CR 921-

929). Woody complained about J. Black’s refusal to surrender the subleased

premises. (15CR 8). His goal was to terminate the Sublease and eject J. Black’s.

J. Black’s timely answered and counterclaimed, asserting claims for breach

of contract and fraud. (11CR 88-93; see also 12CR 495-49, 1138-1143). In its

answer and counterclaim, J. Black’s explained why none of its actions constituted

a default and that it had properly extended the Sublease term. (11CR 89-91).

J. Black’s further pled that, by refusing to acknowledge the extension of the

Sublease term and by improperly accusing J. Black’s of defaults under terms that

did not exist, and seeking a judicial determination that the Sublease was

7

terminated, Woody had breached the Sublease. (11CR 91). On this basis,

J. Black’s sought specific performance, damages, and attorney’s fees. (11CR 91-

92). By its pleadings, J. Black’s sought to maintain its successful business in the

subleased premises and compel Woody’s performance of the entirety of his

obligations under the Lease.

Following an evidentiary hearing, Woody and The Ranch’s request for a

temporary injunction was denied. (11CR 95; 1 RR Vol. 2, p. 99).

B. J. Black’s First Motion for Partial Summary Judgment was Granted, Holding that J. Black’s Properly Exercised its Extension Option and that Woody Breached the Sublease.

J. Black’s filed its first Motion for Partial Summary Judgment seeking an

affirmative finding on its counterclaim that Woody was liable for breaching the

Sublease. The crux of J. Black’s argument was that — because it had fully

complied with the Sublease’s extension notice provisions while in good standing

— Woody’s refusal to acknowledge the extension and his demand for holdover

rent constituted a material breach. (15CR 92-197). Woody filed a response, and

both parties filed additional replies. (15CR 163–477). 3

3 Woody filed a Cross-Motion for Partial Summary Judgment, contained within the same document as his Response. (11CR 174). J. Black’s objected to the Cross-Motion because it had been filed just seven days prior to the hearing. (11CR 475). The trial court correctly refused to hear the Cross-Motion, and Appellants have never asserted any error on that basis. Two years later, Woody filed another Motion for Summary Judgment (11 CR 624-645), which was properly denied. (12CR 948).

8

A hearing was conducted, and the district court granted J. Black’s Motion

“in full” on December 17, 2009. (15CR 478). The impact of this order was to

determine, as a matter of law, that because J. Black’s had properly exercised its

extension option while in good standing, Woody was liable for breach of contract

based on his refusal to acknowledge this extension, while reserving all relief to be

awarded on that breach for a later date. (15CR 478).

C. Three Sanctions Orders were Granted in J. Black’s Favor Thereafter, Woody engaged in discovery abuse, requiring J. Black’s to file

multiple motions for relief between June-August 2010. First, Woody refused to

appear for his properly-noticed deposition. (12CR 21-26). The district court

granted J. Black’s Motion to Compel the deposition, and awarded J. Black’s

$1,500.00 as sanctions. (11CR 493). Woody failed to appear as ordered by the

court, so J. Black’s filed a Motion for Contempt and for Sanctions. (12CR 55-57).

The district court also granted that motion, awarding J. Black’s an additional

$3,000.00 as sanctions against Woody. (12CR 494). Finally, the court awarded

J. Black’s an additional $1,000.00 in sanctions based on Woody’s improper motion

to compel discovery from J. Black’s on matters that had already been dismissed by

the prior summary-judgment ruling. (12CR 230-237, 1068-1069).

9

D. J. Black’s Second Motion for Partial Summary Judgment was Granted, Dismissing all of Woody’s Claims.

J. Black’s filed its Second Motion for Partial Summary Judgment in

August 2010. (15CR 481-631). That motion requested, on both traditional and no-

evidence grounds, that all of Woody’s claims be dismissed, including Woody’s

claim that J. Black’s had breached the Sublease. (15CR 501; see also 11CR 699-

701). Woody failed to respond to J. Black’s Second Motion for Summary

Judgment. (15CR 636; see also 11CR 700, 949).

Following a hearing, the Second Motion for Summary Judgment was

originally granted in October 2010, but the order was then twice amended. (15CR

636; 11CR 949). Ultimately, the order held that Woody and The Ranch shall “take

nothing by their claims that [J. Black’s] defaulted under the Sublease agreement”

and “for conversion, trespass to personal property, and theft.” (11CR 949). The

order also expressly reserved J. Black’s ability to seek affirmative relief on its

counterclaims at a later date. (11CR 949; 4 RR Vol. II, p. 13). 4 The Plaintiffs did

not appeal from this October 13, 2010 Order.

E. J. Black’s Third Motion for Summary Judgment was Granted, Resulting in a Final Judgment, which was then Partially Vacated.

Having successfully obtained the first summary judgment holding that

J. Black’s had properly extended the Sublease term and that Woody was in breach 4 Woody and The Ranch attempted an interlocutory appeal of this order. The Third Court of Appeals dismissed that appeal for want of jurisdiction. See Woody v. J. Black’s LP, No. 03-11- 00024-CV (Tex. App.—Austin June 28, 2011, no pet.) (unpublished mem. op.) (12 CR 1073).

10

of the Sublease and a second summary judgment dismissing all of Woody’s and

The Ranch’s claims, J. Black’s then sought a third, final summary judgment

awarding it specific performance and attorney’s fees. (15CR 637-647). This

Motion was granted, resulting in entry of a “final” judgment in January 2011.

(15CR 769–771). The judgment held, as a matter of law, that (1) J. Black’s

counterclaims, as set forth in its Original Answer and Counterclaim (including the

ability to obtain affirmative relief thereon) remained pending before the court; 5

(2) Woody and The Ranch shall take nothing by their claims; (3) Woody breached

the Sublease; (4) J. Black’s did not breach the Sublease; (5) J. Black’s properly

exercised its extension option, resulting in the Sublease continuing in full force and

effect; and (6) J. Black’s was entitled to specific performance, attorney’s fees, and

interest as sought in its third and final motion for summary judgment. (15CR 769–

771).

Woody filed a Motion to Modify/Motion for New Trial (15CR 772-849),

which was “granted only with respect to Defendant’s Motion for Final Summary

Judgment” in April 2011. (15CR 850). The basis of the court’s ruling was that the

attorney’s fee claim presented fact issues not appropriate for summary disposition.

(12 CR 1145; 4 RR Vol. II, p. 17). Hence, the order retained all portions of the 5 The district court determined that Woody had tried J. Black’s counterclaims by consent and that J. Black’s original counterclaim remained in force and effect, and would be accepted as a trial amendment. Additionally, the court granted J. Black’s permission to file an amended counterclaim as a trial amendment, which J. Black’s did. (11CR 947-948; 12CR 1138-1143). Appellees have not asserted any error relating to these procedural facts on appeal.

11

January 2011 judgment except for the affirmative relief (specific performance,

attorney’s fees, and interest) that had been awarded pursuant to J. Black’s final

motion. (See 4 RR Vol. II, p. 15-16, 18-19). Thus, as of April 2011, the final issue

pending for decision by the court was the relief to be awarded to J. Black’s based

on Woody’s breach.

F. Woody’s Motion for Summary Judgment was Denied—and a Fourth Sanctions Order was Granted in J. Black’s Favor— because the Court had Already Conclusively Determined that J. Black’s Properly Exercised its Extension Option and that Woody was in Breach of the Sublease.

Despite the fact that the district court had already conclusively ruled that

(1) J. Black’s properly exercised its extension option and was not in breach, and

that (2) Woody breached the Sublease by refusing to acknowledge J. Black’s

extension and demanding holdover rent, Woody moved for summary judgment in

October 2011 asking the court to again decide these same issues, but in the

opposite manner. (12CR 625-645). J. Black’s responded to this motion and

requested sanctions against Woody and Cárdenas based on their filing of a

harassing and frivolous motion, which asserted legal arguments that had already

been rejected at least three times. (12CR 930-948).

The district court denied Woody’s Motion for Summary Judgment and

granted J. Black’s Fourth Motion for Sanctions on November 21, 2011, awarding

12

an additional $6,958.00 as sanctions against Woody and Cárdenas. (12CR 1080-

1081).

G. J. Black’s Motion for Entry of a Final Judgment was Granted, and a Final Judgment was Entered in J. Black’s Favor.

J. Black’s filed a Motion for Entry of Final Judgment on December 21,

2011. (12CR 1144-1163). This motion incorporated all of the prior, interlocutory

rulings (which determined as a matter of law that J. Black’s had properly exercised

its option to extend the Sublease, that J. Black’s had not breached the Sublease and

was not liable for any other claim asserted by Woody, and that Woody had

breached the Sublease), and the parties’ stipulation on J. Black’s attorney’s fees

(which confirmed the reasonable and necessary amount of fees to be awarded to

J. Black’s). (12CR 1144-1163). Based on these prior orders and the stipulation,

there were no remaining fact issues, and the only step remaining was for the court

to exercise its discretion to award J. Black’s the legal equitable relief to which it

had shown itself entitled (specific performance, attorney’s fees, and interest).

(12CR 1146; 4 RR Vol. II, p. 21, 35-36).

The district court granted J. Black’s motion and entered a Final Judgment on

January 13, 2012. (15CR 868–870; 4 RR Vol. II, p. 41-45). The Final Judgment

specifically incorporated the prior summary-judgment and sanctions orders and

awarded J. Black’s specific performance, attorney’s fees in the exact amounts

13

stipulated by the parties, and post-judgment interest. (15CR 868–870). 6 Woody,

The Ranch, and Cardenas appealed. (12CR 1350).

H. Appeal and Remand by Amarillo Court of Appeals

In its decision issued October 18, 2013, the Amarillo Court of Appeals

overruled Woody’s first three points of error and thereby affirmed this Court’s

finding that the Sublease was validly extended and that Woody was in breach

thereunder. 7 (15CR 887, 889). Although Woody’s procedural (and sanctioned)

gamesmanship had lasted throughout nearly the entirety of the First Extension

Period, the Court of Appeals also raised and disposed of the argument that the

issue of whether J. Black’s was entitled to attorney’s fees might be moot because

“before briefing was completed on appeal, the first option period had expired.”

(15CR 889–890, at note 3). The Court of Appeals specifically held, sua sponte,

6 Woody filed a Motion to Modify/Motion for New Trial (12 CR 1216-1238), which was denied following a response by J. Black’s (12CR 1329-1343). 7 Specifically, Woody sought by its Issues number 1-3 that this Court’s grant of J. Black’s original Motion for Partial Summary Judgment (and the denial of Woody’s First Motion for Summary Judgment), were improper. J. Black’s first Motion for Partial Summary Judgment was granted on the explicit grounds that Woody had breached the Sublease. The Court of Appeals, by overruling the Appellants issues number 1-3 and thereafter addressing the issue of whether Specific Performance was appropriately granted as a remedy for Woody’s breach, therefore upheld the Order granting the first Motion for Partial Summary Judgment and the grounds upon which this Court granted the same. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139, 144 (Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial summary judgment is granted, the issues it decides cannot be litigated further, unless the trial court sets the partial summary judgment aside or the summary judgment is reversed on appeal”); City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (Tex. Civ. App. – Houston [1st Dist.] 1967), writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an interlocutory summary judgment has been merged, presents an opportunity for an appeal from the summary judgment. If the appeal results in a reversal on points not involved in the summary judgment, that portion of the case decided on summary judgment will not be remanded for a new trial”).

14

that “[t]he issue whether the trial court’s decree of specific performance was

correct might thus be moot…But, because J. Black’s award of attorney’s fees is

contested on appeal, and depends on the viability of the trial court’s decree of

specific performance, the issue is not moot.” (15 CR 889–890, at note 3)

(emphasis added), citing Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642–43

(Tex.2005) (appellee’s remaining issue in recovering attorney’s fees precluded

application of mootness doctrine).

On April 29, 2014, the Amarillo Court of Appeals then issued its mandate to

the trial court stating “it is ordered, adjudged and decreed that the judgment of the

trial court regarding J. Black’s timely notice of its intention to carry the sublease

into the first option period is affirmed. Otherwise the judgment is reversed and

remanded for further proceedings consistent with the opinion.” (15CR 900).

I. Grant of J. Black’s Final Summary Judgment and Entry of Final Judgment

The parties filed dueling motions for summary judgment heard before the

Court on March 5, 2015. (15CR 911–1271). In addition, the parties filed a variety

of objections to the summary judgment evidence that was heard on that same day.

(15 CR 1272–1291; 1570–1602; 1610–1616). On March 11, 2015, the Court

issued its Order on Motions for Summary Judgment, Objections and Attendant

Motions, thereby sustaining objections to the affidavit of Sean Fric to the extent it

offers a legal opinion (and otherwise overruling such objections) and the affidavit

15

regarding attorney’s fees of the undersigned counsel, granting in part J. Black’s

Motion for Summary Judgment (excluding only the amount of attorney’s fees) and

denying Woody’s Motion for Summary Judgment. (15CR 1639-1670). On

March 25, 2015, the parties appeared for trial on the issue of attorney’s fees, at

which time the Court accepted into evidence the stipulation of the parties as to the

amount of attorney’s fees accrued by J. Black’s. (RR. 3.25.15 4–26); 15CR 1644–

1646).

On March 31, 2015, the Court again entered Final Judgment in this suit.

(15CR 1652–1654). In the Final Judgment, the Court rendered judgment in favor

of J. Black’s and decreed that “Woody shall specifically perform the entirety of his

obligations under that certain Sublease Agreement dated August 21, 2006 as it has

been extended and modified and that J. Black’s was entitled to recovery of

attorney’s fees under Tex. Civ. Prac. & Rem. Code §38.001 in the amounts set

forth therein. (15CR 1652–1654). The Court then denied Woody’s Motion for

New Trial and Alternative Motion to Modify Judgment (15CR1658–1667; 1707).

On May 13, 2015, Woody noticed this appeal. (15 CR 1708–1710).

SUMMARY OF THE ARGUMENT

Throughout the history of this long and tortured case, J. Black’s has

prevailed on four separate summary-judgment motions (and successfully defeated

two others filed by Woody), in front of at least four separate district judges. In

16

ruling on those various summary judgment motions, both the trial courts and the

Amarillo Court of Appeals determined that J. Black’s had prevailed by proving

liability for its counterclaim that Plaintiff Bob Woody had breached the parties’

sublease agreement, and the Courts have disposed of all of Plaintiffs’ claims for

breach.

After upholding the trial court’s determination that J. Black’s had given

timely notice of the intent to exercise the extension of the terms of the Sublease,

the Amarillo Court of Appeals remanded to the Trial Court for the presentment of

evidence related to whether J. Black’s was ready, willing and able to perform its

obligations under the Sublease in order to be eligible for the remedy of specific

performance and be entitled to the recovery of attorneys’ fees. Although the

Court of Appeals noted at the time that it rendered its decision the “1st Extension”

period of the sublease had expired, it nevertheless specifically refused to hold the

claims made by J. Black’s had thereby been rendered moot, and instead instructed

the District Court to consider proof of whether the decree of specific performance

would be proper. 8 The controversy is no less alive and true now that Woody’s

8 Woody appears to have retreated from his “mootness” argument in this appeal, however, J. Black’s would note that the Amarillo Court of Appeals specifically stated: “The nub of the question concerns extending the sublease into the first option period, that is from August 31, 2009, through August 31, 2012. But before briefing was completed on appeal, the first option period had expired. The issue whether the trial court's decree of specific performance was correct might thus be moot. See United Coin Meter Co. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882, 890-91 (Tex.Civ.App.--Fort Worth 1973, no writ) (appellate challenge of trial court's refusal to order specific performance of lease dismissed as moot because secondary term of lease

17

procedural maneuvering has brought the parties through the Second and into the

Third Extension period, because the continuing viability of the Sublease depend

on the parties’ performance of all obligations throughout the original and all

extension terms of the Lease.

Mr. Woody has never repudiated or retracted his rejection of the 1st

Extension Option or his demand for holdover rent. To the contrary, and through

the first appeal, Woody has consistently asserted that the first extension was non-

compliant and ineffective, that J. Black’s ability to continue to operate in the

leased premises had expired, and that J. Black’s was subject to the holdover rent

provisions of the Sublease. While Woody would have this Court believe that his

failure to file a forcible entry and detainer action to exclude J. Black’s from the

property is significant and somehow insulates him from his breach, Woody

maintained throughout the pendency of the district court case and through the first

appeal that the Sublease had not been extended, that J. Black’s had no right to

occupy the property, and that he should be paid contractual hold over rent as a

consequence. He also ignored the default provisions of the Sublease and

expired while case was on appeal). But, because J. Black’s award of attorney's fees is contested on appeal, and depends on the viability of the trial court's decree of specific performance, the issue is not moot. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642-43 (Tex. 2005) (appellee's remaining issue in recovering attorney's precluded application of mootness doctrine)”) (emphasis added). (15CR 890). J. Black’s further noted below that had the Amarillo Court of Appeals believed that J. Black’s claims were mooted by operation of the Seventh Circuit Court’s decision, it could have reversed and rendered judgment on such claims, rather than reversing and remanding to the district court for a determination of whether J. Black’s was ready, willing and able to perform its obligations under the Sublease. (15CR 1010).

18

continuously asserted that J. Black’s was in default based on non-existent

breaches. Woody never repudiated such claims and required the Court of Appeals

to tell him that his demand to vacate or pay holdover rent was improper and in

violation of the Sublease. Without the grant of specific performance, and

especially in light of Woody’s demonstrated intent to improperly terminate the

Sublease for non-existent and non-contractual defaults, J. Black’s needed a

judicial direction entitling it to enforcement of the Sublease going forward.

On remand, the district court determined that J. Black’s had shown with

competent, uncontroverted summary judgment evidence that it was ready, willing

and able to perform its obligations under the Sublease, and that J. Black’s had no

adequate remedy at law, so as to be eligible for specific performance of that

agreement and that as a consequence, J. Black’s was therefore entitled to

attorneys’ fees in connection with its affirmative claim of breach under chapter 38

of the Texas Civil Practice and Remedies Code. Both the trial Court and the

Amarillo Court of Appeals thus determined and affirmed that Woody breached the

Sublease by, among other things, refusing to acknowledge that the Sublease

continues in full force and effect and has been properly extended by J. Black’s and

by, asserting unsupportable and contractually non-existent defaults and

demanding holdover rent.

19

On December 12, 2014, Woody filed its latest summary judgment motion

(the “Woody Motion for Summary Judgment”), seeking summary judgment that

specific performance and the granting of attorneys’ fees were not available. (15CR

911–995). That Fifth Summary Judgment Motion was merely a re-hash of the

same legal arguments that both the Trial and Appellate Courts already found

meritless –– first when this Court granted J. Black’s summary judgment motions

and overruled most of the arguments raised in the Counter-Defendants’ prior

motion for new trial; and subsequently when the Amarillo Court of Appeals

determined that J. Black’s was entitled to specific performance (and therefore its

consequent claim for attorney’s fees was not moot), if this Court found that

J. Black’s was ready, willing and able to perform the sublease. On January 27,

2015, J. Black’s filed its own Motion for Final Summary Judgment. (15CR 996–

1261). On March 11, 2015, the Court denied Woody’s Motion for Summary

Judgment, and granted J. Black’s Motion for Summary in part, excepting as to the

issue of attorney’s fees. (15CR1639–1640).

At trial on this case on the issue of attorney’s fees, held March 25, 2015,

Woody acknowledged that the only issues before the Court on remand were

“[J. Black’s] requests for relief for specific performance and attorney’s fees against

us.” (5 RR 13). Because the uncontroverted evidence before the Court shows that

J. Black’s was ready, willing and able to perform, and did in fact perform, its

20

obligations under the Sublease at all times, the district court complied with

instructions from the Court of Appeals and awarded J. Black’s the Specific

Performance of the Sublease and its extensions to which it is entitled, a decision

which this Court should affirm.

21

ARGUMENT

I. WOODY BREACHED THE SUBLEASE

A. Woody’s Breach was established by the District Court On November 20, 2009, J. Black’s filed its first Motion for Partial Summary

Judgment (the “First Motion for Summary Judgment”), by which it sought “partial

summary judgment on its breach of contract counterclaim, which alleges in part

that Woody has breached the Sublease by refusing to acknowledge the extension of

the Sublease and by demanding holdover rent,” and prayed the court grant it relief

on the basis of the same request. (15CR 87, 95). On December 17, 2009, the

Court granted the First Motion for Partial Summary Judgment “in full.” (15CR

478). Subsequently the Court granted J. Black’s second Motion for Partial

Summary Judgment filed August 27, 2010 (the “Second Motion for Summary

Judgment”), 9 and on the basis thereof and upon the basis of J. Black’s third Motion

for Final Summary Judgment filed November 23, 2010 (the “Third Motion for

Summary Judgment”), the Court entered its January 25, 2011 “Amended

9 The Second Motion for Summary Judgment prayed that the Court grant J. Black’s Motion for Summary Judgment “(a) J. Black’s has not breached the Sublease as alleged by Plaintiffs, (b) Woody has breached the Sublease by asserting groundless defaults, and (c) Plaintiffs' claims for conversion, trespass to personal property, and theft fail as a matter of law.” (15 CR 482, 501). The subsequent “Corrected Order Granting Defendants’ Second Motion for Partial Summary Judgment” and final “Amended Interlocutory Order Granting Defendants’ Second Motion for Partial Summary Judgment” granted the Second Motion for Partial Summary Judgment without reservation on the issue of breach. (15CR 636). Although Woody emphasizes the fact that one version of the Order crossed through the specific reference to a finding of breach, such a finding was not necessary to the granting in full of the Second Motion for Summary Judgment because Woody’s breach of the Sublease had already been established by the Court’s grant of the First Summary Judgment.

22

Interlocutory Order Granting Defendants’ Second Motion for Partial Summary

Judgment” and “Final Judgment on Defendants’ Motion for Final Summary

Judgment and Granting Defendants’ Request for Leave to File Trial Amendment.”

(15CR 636, 768, 769–771). The January 25, 2011 Judgment incorporated the prior

orders on the Defendants’ motion for summary judgment, granted the Third

Motion for Summary Judgment in all respects, and rendered final judgment.

(15CR 769-771).

After the January 25, 2011 Judgment was entered, the Court later granted a

new trial “only with respect to Defendants' Motion for Final Summary Judgment”

on April 27, 2011, and after a significant delay engendered by Woody’s refusal to

respond to requests to agree to a trial date, a new “Final Judgment” was entered on

January 13, 2013 (15 CR 850, 868-870). The new Final Judgment also

incorporated the prior Summary Judgment Orders and decreed that “Plaintiff Bob

E. Woody breached the Sublease between the parties,” that “Defendants properly

exercised their right to extend the Sublease for an additional term and the Sublease

continues in full force and effect” and that “specific performance of the contract is

equitable and necessary to afford Defendants sufficient relief; the Sublease

continues in full force and effect” and that “Defendants are entitled to recover

attorney fees under Tex. Civ. Prac. & Rem. Code 38.001.”

23

B. Woody’s Breach affirmed by the Amarillo Court of Appeals On Appeal of the original Final Judgment, the Amarillo Court of Appeals

overruled Woody’s first three issues, in which Woody’s “contend[ed] the trial

court erred in adjudging Woody breached the sublease by refusing to acknowledge

its extension by J. Black’s,” and in fact found such contentions “meritless.” (15CR

885, 887, 889).

Although the Court of Appeals sustained Woody’s subissue number 4(c) and

remanded for the trial court’s consideration of evidence as to whether J. Black’s

was “ready, willing, and able” to perform its obligations under the Sublease, the

court of appeals did not otherwise disturb the Court’s Final Judgment or the prior

Summary Judgment Orders determining Woody had breached the Sublease.

The issue of Woody’s breach was established by the Court’s Summary

Judgment rulings, 10 which were incorporated and merged into the Final Judgment,

and cannot be litigated further absent a reversal of summary judgment on that

issue. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139

(Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial summary

judgment is granted, the issues it decides cannot be litigated further, unless the trial

court sets the partial summary judgment aside or the summary judgment is

reversed on appeal”). The Final Judgment of the District Court was reversed by 10 Woody has admitted this point multiple times. See e.g, Appellant’s Brief at p. 12–13. (“…J. Black’s did obtain a finding from the trial court that Woody breached the sublease by “refusing to acknowledge” J. Black’s exercise of its first extension of the sublease…”).

24

the Amarillo Court of Appeals solely on the issue of whether J. Black’s was ready,

able and willing to perform. Therefore the Court’s prior ruling that Woody

breached the Sublease remains undisturbed, and Woody should not now be

permitted to challenge the determination of his breach for failure to acknowledge

the extension of the Sublease Agreement on appeal. See City of Houston v. Socony

Mobil Oil Co., 421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967),

writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an

interlocutory summary judgment has been merged, presents an opportunity for an

appeal from the summary judgment. If the appeal results in a reversal on points not

involved in the summary judgment, that portion of the case decided on summary

judgment will not be remanded for a new trial”).

C. Woody’s new defense that he did not actually “breach” the Sublease, but merely “repudiated” his obligations thereunder, is untimely and unsupported by legal authority or the facts of this case

Despite acknowledging that the Court had previously found (and the

Amarillo Court of Appeals affirmed) that Woody had breached the Sublease,

Woody argues the issue should be re-litigated because “the effect of the remand is

to re-open the case in its entirety on all factual issues,” citing Hudson v. Wakefield,

711 S.W.2d 628, 630 (Tex. 1986) and First State Bank of Bishop v. Grebe, 162

S.W.2d 165 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.). As shown

25

above, the Amarillo Court of Appeals did not reverse on the issue of Woody’s

breach and that issue was not reopened for the District Court.

Even were the issue of breach not already determined by the previous ruling

of the trial court and Amarillo Court of Appeals, however, the determination that

Woody breached the Sublease is still correct because (a) the issue of breach has

been decided as a matter of law and the effect of the district court’s granting each

of the prior Motions for Summary Judgment necessarily precludes the existence of

a material issue of fact; and (b) the Court did not limit its March 25, 2015 Final

Judgment solely to those determinations of breach made in the prior Summary

Judgment Orders. (5 RR 8). As such, even if this Court of Appeals does not deem

the issue of Woody’s breach to have been previously decided and affirmed by the

Courts before, the entirety of the record and evidence –– including the notices of

rejection of the 1st Option Extension, the notices of default for non-existent and

extra-contractual breach and demand for Holdover Rent made by Woody in

October 2009 –– before the trial Court was enough to sustain its finding of breach.

By rejecting the Sublease’s extension made pursuant to the terms thereunder,

Woody breached the agreement of the parties. Without citation to any relevant

authority or factual record, however, Woody argues that his actions in fact

constituted an “anticipatory repudiation,” and not an “actual” breach of the

26

Sublease. 11 Woody further argues that since J. Black’s determined to ignore the

repudiation and itself continued to perform its obligations under the Sublease, there

was no breach for which specific performance could be ordered. Woody’s

arguments in this regard are substantively without merit.

In addition to refusing to honor the extension after the necessary time of

performance, Woody also sent demands and notices of default based upon non-

existent and extra-contractual obligations (e.g. bad food quality). These fabricated,

and contractually non-existent, defaults were not simply a contemporaneous

repudiation of the effectiveness of the contract, but were also assertions of

contractual breaches that had no basis in fact or in the contract.

The parties agreed in the Sublease that certain specific activities (or the

failure to perform certain actions – e.g. timely payment of rent) would constitute

defaults. (15 CR 23–24). With respect to the variety of his claims of default, 12

however, Woody did not assert J. Black’s committed any act that the parties agreed

fit within the Sublease’s frame work for determining a “default,” but rather made

up provisions that were asserted as contractual defaults that are nowhere found in

the Sublease. In doing so, Woody further breached the terms of the Sublease by

asserting claims that were not within the four corners of the instrument and outside

the parties’ agreement.

11 Woody’s “Anticipatory Repudiation” argument is further refuted in Section II.B.1, below.

12 See 11CR 108, 144–145 158–159, 171-173; 15CR 8–11, 163–164.

27

Thus, by rejecting the continuing effectiveness of the Sublease before,

during and after the time for performance of Woody’s obligations, by demanding

holdover rent, and by asserting that certain factual situations constituted defaults

under the agreement (even though the Sublease contained no such terms) the

district court found that Woody’s acts properly constituted violations of the

Sublease found by the district court.

II. THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT AWARDING SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO J. BLACK’S ON THE BASIS OF WOODY’S BREACH. As shown above, on appeal, the Amarillo Court of Appeals overruled

Woody’s first three points of error and thereby affirmed this Court’s finding that

Sublease was validly extended and that Woody breached the lease. Then after

having determined that the question of Specific Performance was not moot, the

Court of Appeals reversed and remanded this Court’s decision on the sole issue of

whether J. Black’s had offered proof that it was ready, willing, and able to

perform the Sublease and extension, as would be required for specific

performance. On March 31, 2015, the district court, accounting for the Amarillo

Court of Appeals’ decision, the prior Summary Judgment Orders, and the

evidence before it, correctly determined that specific performance was an

available and equitable remedy and awarded such performance of the Sublease to

J. Black’s.

28

A. J. Black’s is entitled to specific performance of the Sublease and its extensions because it was ready, willing and able to perform its own obligations under the Sublease at all relevant times Specific performance is an equitable remedy that may be awarded upon a

showing of breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d

530, 535 (Tex. App.—Dallas 2007, pet. denied). The decision to award J. Black’s

specific performance of the Sublease based on Woody’s breach of contract was an

equitable matter wholly within the trial court’s discretion. See Roundville

Partners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex. App.—Austin 2003, pet.

denied) (whether to award specific performance is left to trial court’s discretion). 13

A trial court’s award of specific performance is reviewed for an abuse of

discretion, giving deference to the trial court’s decision. Smith v. Dass, Inc.,

283 S.W.3d 537, 542 (Tex. App.—Dallas 2009, no pet.). As an equitable remedy,

this Court should not disturb the trial court’s ruling on specific performance unless

it is arbitrary, unreasonable, and unsupported by guiding rules and principles.

Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 836

(Tex. App.—Dallas 2008, pet. denied); Fitzsimmons v. Anthony,

716 S.W.2d 719, 720 (Tex. App.—Corpus Christi 1986, no writ). Woody has

13 See also Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet. denied) (equitable remedy of specific performance may be awarded upon showing of breach of contract); Frank v. Kuhnreich, 546 S.W.2d 844, 848 (Tex. App.—San Antonio 1977, writ ref’d n.r.e.) (affirming summary judgment awarding plaintiff specific performance of lease upon proof that default claimed by sublessor had been cured by sublessee within time allowed by lease).

29

failed to establish an abuse of the trial court’s discretion in awarding specific

performance.

1. J. Black’s was Ready, Willing and Able to perform its Obligations under the Sublease As noted by the Amarillo Court of Appeals, “to obtain specific

performance, a party must, among other things, plead and prove it was ready,

willing and able to timely perform its obligations under the contract.” See

DiGiuseppe v. Lawler, 269 S.W.3d 588, 593 (Tex.2008). To do so, “a plaintiff

must show it could have performed its contractual obligations.” Id. (citing

Corzelius v. Oliver, 148 Tex. 76, 220 S.W.2d 632, 635 (1949) (“[T]o be entitled

to specific performance, the plaintiff must show that it has substantially performed

its part of the contract, and that it is able to continue performing its part of the

agreement. The plaintiff’s burden of proving readiness, willingness and ability is a

continuing one that extends to all times relevant to the contract and thereafter”);

see also Henry S. Miller Co. v. Stephens, 587 S.W.2d 491, 492 (Tex.Civ.App.-

Dallas 1979, writ ref’d n.r.e.) (noting a party seeking specific performance must at

all times remain ready, willing and able to perform its contractual responsibilities

according to the terms of the contract).

The Amarillo Court of Appeals also took note of a recent case decided by

the Tyler Court of Appeals, which determined it was “enough on a seller’s breach

for a purchaser to merely plead readiness, willingness and ability to perform,”

30

when the movant for summary judgment in that case “stated his readiness,

willingness and ability to perform in his summary judgment affidavit.” Jarvis v.

Peltier, No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, at *20, 2013 WL

1755797 (Tex.App.-Tyler Apr. 24, 2013, n.p.h.) (citing Burford v. Pounders, 145

Tex. 460, 199 S.W.2d 141, 145 (1947). J. Black’s proof far exceeded that

required by the various Courts of Appeal to address this issue.

The Affidavit of Sean Fric, a manager of J. Black’s GP, LLC, the general

partner of J. Black’s, L.P., attests that J. Black’s benefits immeasurably from its

downtown location and the brand associations related thereto. (15CR 1199).

While the ability, willingness and readiness of J. Black’s to perform under the

Sublease is not seriously in question, contained in the affidavit of Sean Fric is also

uncontroverted and incontrovertible evidence that J. Black’s was at all times

ready, willing, and able to perform, and did in fact perform, all of its obligations

under the Sublease, including without limitation all obligations to pay all rental

amounts due and owing and to provide all notices of extension under the terms of

the Sublease. (15CR 1199–1120, 1256–1261).

Further, the district court has repeatedly found, and Woody now freely

admits, that J. Black’s is not now, nor has ever been, in default of its obligations

under the Sublease –– despite the demands of Woody for performance that was

not required, and for the payment of Holdover Rent which would have only been

31

required as a result of wrongful possession after termination of the Sublease.

(15CR 481-631, 636; 11CR 949). As such, J. Black’s is entitled to the grant of

specific performance of the Sublease and its judgment that Woody be compelled

to comply with its obligation to allow J. Black’s to peaceably and quietly maintain

its right to possess and enjoy the Premises thereunder.

2. J. Black’s Remedies at Law are inadequate The district court found that J. Black’s had an inadequate remedy at law for

Woody’s breach of the Sublease as a prerequisite to its award of specific

performance. (15CR 869; 1005–1006; 1639–1640). This determination was of

course correct insofar as the Sublease granted to J. Black’s a unique interest in real

estate. 14 The Trial Court considered evidence on this issue from Mr. Fric as part of

J. Black’s Fourth Motion for Summary Judgment, who proved that J. Black’s

immeasurably benefits from its location and brand associations related thereto.

(15CR 1199). Although Woody has claimed that J. Black’s could have been made

whole if Woody were permitted to wrongfully and without cause in the Sublease

eject it from the premises and simply pay some amount of lost profits, this

argument overlooks the unique features of agreements for the use and possession

of real estate—location, location, location. See Rus-Ann Dev., Inc. v. ECGC, Inc.,

222 S.W.3d 921, 927 (Tex. App.—Tyler 2007, no pet.) (specific performance is 14 See In re Hecht, 213 S.W.3d 547, 550 (Tex. Spec. Ct. Rev. 2006) (recognizing "location, location, location" as the "appropriate axiom" in real estate to "capsulize the core of the undertaking").

32

more readily available as a remedy for the sale of real estate than for the sale of

personal property because damages are generally believed to be inadequate in

connection with real property). Woody argues (without evidence or any expert

opinion in support) that because there was an operating history for the business,

J. Black’s damages must be calculable. But the existence of an operating history

does not negate the uniqueness of the interest in real estate or make the loss of the

location any less irreparable. See e.g., Frank v. Kuhnreich, 546 S.W.2d 844,848

(Tex. App.—San Antonio 1977, writ ref’d n.r.e.) (affirming summary judgment

awarding plaintiff specific performance of lease upon proof that default claimed by

sublessor had been cured by sublessee within time allowed by lease, but remanding

on issue of calculation of lost profit damage award for same time period and on

cross-issue of whether to award specific performance of subsequent option to

renew).

The plain fact remains that the Sublease entitles J. Black’s to operate a bar

and restaurant in a very popular entertainment district of Austin, Texas. The

district court below was permitted to find, and did find, that mere damages for lost

profits would not adequately compensate J. Black’s if it were required to suddenly

lose its interest in the Subleased premises or move from this location, where it had

established a successful and well-known business. Specific performance is

therefore warranted because J. Black’s lacked an adequate remedy at law due to the

33

unique nature of this interest in real estate. In addition, Woody’s repeated and

continuing assertions of non-existent and contractually absent breaches of the

Sublease clearly justified the Court’s judicial remedy of specific performance, and

was required to preserve the unique interest in real estate possessed by J. Black’s

by virtue of the terms of the Sublease.

As such, J. Black’s is entitled to a grant of specific performance of the

Sublease and a judgment that Woody be compelled to comply with its obligation

to allow J. Black’s to peaceably and quietly maintain its right to possess and enjoy

the Premises thereunder.

B. Woody’s arguments against the availability of the award of specific performance are a school of red herrings.

Woody attempts to create his own new legal doctrines related to the law of

specific performance, by proffering unsupported arguments and extrapolations

from case law that is inapposite to the facts of this dispute. For example, Woody

asserts, without support, that there exists a “three way distinction between (1) an

actual breach of a performance obligation; (2) an anticipatory repudiation of a

performance obligation; and (3) a legal dispute” in the law related to specific

performance. See Appellant’s Brief, at p. 27. Woody’s arguments that “an order

of specific performance must compel performance by both parties,” and that this

award requires “continuing supervision” of the parties, and/or “deprives Woody of

future rights” are equally unpersuasive. See Appellant’s Brief at p. 31–32, 34.

34

These are simply a remix of arguments Woody has urged without success below,

and this court should not now be swayed by their inclusion again here.

1. Woody’s “Three-Way Characterization” finds no support in the record, or in the authority The argument that a “legal dispute” does not constitute a breach of a contract

is particularly confusing and unpersuasive with respect to this dispute. Even if

such an argument was not waived by Woody’s failure to raise it before the trial

court, 15 however, it finds no support in any authority cited by Woody, and is a

mischaracterization of the actual breach found multiple times by the district court,

and affirmed by the Court of Appeals.

Similarly, Woody’s arguments regarding “anticipatory repudiation” and the

district court’s failure to find Woody violated “present performance obligations”

are equally murky and inapplicable. Not only are the cases he cites regarding

anticipatory repudiation and present performance obligations inapposite and

inapplicable to cases related to the award of specific performance, either generally

15 See Norra v. Harris County, No. 14-05-01211-CV, 2008 WL 564061, *1 (Tex. App.— Houston [14th Dist.] 2008, no pet.) (although appellant labeled challenge as one to legal sufficiency, court “conclude[d] that these complaints are not challenges to the legal sufficiency of the evidence and are instead legal arguments that were not presented to the trial court. As such, [appellant] has failed to preserve error on these challenges, and we therefore affirm the judgment of the trial court.”); see also Azad v. Aaron Rents, Inc., No. 14-07-01087-CV, 2009 WL 4842761, *6 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (where appellants’ response to appellee’s motion for summary judgment focused on different issues than were raised in appellants’ brief, the appellants’ new challenges were not construed as ones to the legal sufficiency of evidence and were deemed waived); Tello v. Bank One, N.A., 218 S.W.3d 109, 119 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (appellant’s new legal challenge on appeal, claiming damages should be offset, was not a challenge to legal sufficiency, and was not adequately briefed in terms of legal sufficiency, and therefore was waived on appeal).

35

or to this case, but Woody’s undisputed breaches of the Sublease (which he

attempts to characterize as “repudiation”) were never found to be “anticipatory.”

Rather, the evidence upon which the district court relied in fact shows that Woody

rejected the 1st Extension of the Sublease, fabricated non-existent defaults under

the Sublease, and demanded holdover rent after his time for performance of the 1st

Extension (and subsequent extensions) had come. (15CR 17–28, 1254–1255; see

also 15CR 6–79). In fact, Woody’s attempted termination and unabated demand

for holdover rent due to the alleged expiration of the original term has itself never

been repudiated or withdrawn, imperiling the current viability of the Sublease and

requiring the Court’s award and enforcement to protect J. Black’s’ continuing

rights. While Woody attempts to make much of his failure to physically expel

J. Black’s from the location, the fact that Woody refused to acknowledge the

extension, asserted multiple factually and contractually non-existent defaults and

demanded holdover rent are no less breaches.

2. Woody’s claim that the decree of specific performance lacks a “mutuality of remedy” is incorrect To the extent Woody would argue J. Black’s be deprived of specific

performance on the basis that there is no “mutuality of remedy,” or complains that

the Judgment entered by the District Court does not “compel performance by both

parties” under the Sublease and its extension terms, Woody is plainly wrong.

Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92, 97 (Tex. 1968)

36

(where buyer of real estate timely communicated its unconditional exercise of

option to purchase, it was entitled to specific performance of option by seller);

Parson v. Wolfe, 676 S.W.2d 689, 692 (Tex. App.—Amarillo 1984, no writ) (in

contract for sale of real property, sellers had option to perform or pay damages;

thus, there was no lack of mutuality of remedies to bar specific enforcement);

Miller v. Compton, 185 S.W.2d 754, 757 (Tex. Civ. App.—Eastland 1945, no writ)

(option to purchase contained in lease agreement is not subject to attack on ground

that it lacks elements of a binding contract; right conferred thereby may be

enforced by suit for specific performance to compel seller to execute a conveyance

to tenant); San Antonio Joint Stock Land Bank v. Malcher,164 S.W.2d 197, 200

(Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) (where optionee tendered

money for purchase of realty and optionor refused to accept the tender, optionee

was entitled to specific performance). The case cited by Woody to prove

otherwise, E.M. Goodwin, Inc. v. Stuart,52 S.W.2d 311, 314 (Tex. Civ. App.—San

Antonio 1932), writ granted (Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632

(Comm'n App. 1935), is completely inapposite, because the Court in E.M.

Goodwin simply refused to uphold specific performance when the contract

required on the one hand the personal services of one of the parties, which personal

services can never be compelled by specific performance because the amount to

indentured servitude.

37

Here, J. Black’s is merely asking for the performance of a Sublease for real

property, which is entirely capable of performance by each party upon order of the

Court. The extension of the Sublease is only one aspect of performance, which

merely extends the term of the Sublease, but continues all of the mutual obligations

of the parties to it. These further obligations remain mutual and interdependent.

Woody’s remedies for any future breach by J. Black’s under the Sublease (which

this Court has determined did not previously exist) remain, and the argument that

there is lack of mutuality related to the extension fails to contemplate that the

Sublease as a whole contains mutual obligations which have not been eradicated

by the granting of specific performance.

3. The grant of specific performance does not require “continuous supervision” of the parties.

The equitable remedy of specific performance by its very nature operates to

compel a party violating a duty under a valid contract to comply with its

obligations. S. Plains Switching, Ltd. v. BNSF Ry., 255 S.W.3d 690, 703

(Tex.App.-Amarillo 2008, pet. denied). By its grant of specific performance, the

district court required Woody to treat J. Black’s as a tenant in good standing, allow

it to peacefully exist in the subleased space pursuant to the terms of the Sublease as

executed, and not continuously demand holdover rent at an increased rate. Thus,

there were obligations of Woody to be “specifically performed” under the

agreement. The fact that the Sublease contains more than a single responsibility

38

Woody is obliged to uphold over the course of the term of the Sublease and its

extensions should not prohibit the Court from ordering its performance, nor does it

require any onerous supervision on this Court’s behalf. In fact, so long as the

parties comply with the obligations in the Sublease as they originally agreed to do,

this Court’s involvement should no longer be required at all.

4. The decree of specific performance does not deprive Woody of rights under the Sublease

Woody makes the unsupported allegation that a decree of specific

performance of the Sublease might somehow “deprive Woody of future contractual

rights under the sublease that might arise on J. Black’s defective future

performance or non-performance under the sublease.” 16 Woody cites a century-old

case, Redwine v. Hudman, for this proposition, but Redwine is clearly inapposite to

the facts at issue in this suit. See 104 Tex. 21, 26, 133 S.W. 426, 429 (1911). In

Redwine, the Supreme Court declared it could not decree specific performance of

an option contract, because it could not compel the performance of a contract to

sell real property on the basis that the non-performing party had the contractual

right to make an election of how to perform the contract. In this case, Woody has

no election of whether to perform its obligations under the Sublease for so long as

J. Black’s exercises its sole discretion to extend the terms of the Sublease, and

therefore, the Court can and should decree the specific performance of Woody’s

16 See Plaintiff’s Motion for Summary Judgment, at ¶ 6.

39

obligations under the Sublease and its extensions. Further, as set forth above in

sections B(2) and B(3) for so long as the terms of the Sublease are in existence,

Woody will maintain all of his rights thereunder.

III. WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED SUMMARY JUDGMENT EVIDENCE AND THE EXCLUSION OF A PORTION OF HIS OWN AFFIDAVIT IS SPURIOUS This Court will review a trial court's ruling sustaining or overruling

objections to summary judgment evidence for an abuse of discretion. Garner v.

Fidelity Bank, N.A., 244 S.W.3d 855, 859 (Tex.App.–Dallas 2008, no pet.); Bd. of

Trustees of Fire and Police Retiree Health Fund v. Towers, Perrin, Forster &

Crosby, Inc., 191 S.W.3d 185, 192–93 (Tex.App.–San Antonio 2005, pet. denied).

Woody complains that the district court abused its discretion in accepting and

considering the testimony of Sean Fric, a manager of the general partner in the

entities that operate and control the business of J. Black’s with knowledge of

J. Black’s business, and asks this Court to find error with the decision to overrule

Woody’s objection thereto. (15CR 1288–1291, 1613–1616, 1639). Woody is

incorrect, as the affidavit of Mr. Fric was competent evidence of J. Black’s

readiness, willingness, and ability to perform its obligations under the Sublease,

and such evidence as was offered by Mr. Fric has been repeatedly found sufficient

to prove the prerequisite conditions to the award of specific performance.

40

A. The District Court Correctly Overruled Woody’s Objections to J. Black’s Summary Judgment Evidence To determine whether a trial court abused its discretion, this Court must find

the trial court acted without reference to any guiding rules or principles; in other

words, whether the act of the trial court was arbitrary or unreasonable. Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985). Woody

attempts to challenge the affidavit testimony of Sean Fric by arguing about the

quantum of the evidence provided about willingness and ability of J. Black’s to

perform under the Sublease. Woody suggests that J. Black’s could have provided

more evidence of ability to perform by providing bank account statements and

other operating history, but J. Black’s was not required to provide such evidence to

demonstrate the effectively undisputed fact that it was ready and able to perform its

obligations under the Sublease and did exactly that. Mr. Fric’s affidavit provides

sufficient factual certainty to the determination that J. Black’s was financially

capable to perform, and as referenced in other portions of Woody’s briefing, did

perform the Sublease through and past the first extension of it.

Simply put, the evidence proffered by J. Black’s to show it was ready, able,

and willing to perform its obligations under the contract, and that J. Black’s lacked

adequate remedy at law, has been found sufficient in analogous cases. See

Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559, 575 at fn 6 (Tex.

App.—Fort Worth 2008, pet. denied) (obligor averred additional funds were

41

available to supplement pre-payment penalty); Jarvis v. Peltier,

400 S.W.3d 644, 654 (Tex. App.—Tyler 2013), review denied (Aug. 30,

2013)(evidence sufficient for award of specific performance when movant for

summary judgment stated he was “ready, able and willing” to perform and

“included this language in his first amended petition, in his motion for summary

judgment, and in his affidavit submitted as summary judgment evidence”). As

such, Woody’s point of error number 2 should be overruled.

B. The District Court correctly excluded the February 4, 2015 Affidavit of Bob E. Woody, and its exclusion was not material to the award of specific performance in this Case Woody further complains that the district court struck paragraph 3 of Bob E.

Woody’s February 4, 2015 affidavit (“Woody’s February 2015 Affidavit”). In

addition to having been filed after the 21-day notice required for affirmative

evidence in support of Woody’s own Motion for Summary Judgment, Woody’s

February 2015 Affidavit’s statements to the effect that he had, as of February 4,

2015, “accepted, acknowledged and agreed” that J. Black’s “timely exercised its

third option to extend the Sublease” was a declaration of his own mental state, and

inappropriate, self-serving and conclusory testimony made by an interested

witness, and was therefore properly struck. See e.g., Hayes v. E.TS. Enterprises,

Inc., 809 S.W.2d 652, 657 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991).

(15CR 1270, 1610-1612).

42

In addition to being an improper attempt to introduce incontrovertible

testimony of “mental workings of an individual’s mind,” Woody fails to show

how the excluded testimony from paragraph 3 of his February 2015 Affidavit was

material to any of the dispositive issues on this case and “probably caused the

rendition of an improper judgment,” as is required to show the district court

abused its discretion. See e.g, Perez v. Williams, 01-14-00504-CV, 2015 WL

5076294, at *11 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.), citing

Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618, 632 (Tex. App.—Houston [1st

Dist.] 2013, no pet.). The single statement by Woody that he had accepted,

acknowledged, and agreed that the 3rd Extension Option had been exercised –– in

addition to being a complete contradiction of his repeated acts in breach of the

parties’ agreement throughout five years of legal maneuvering –– does not

counteract or in any way cure his prior and continuing breaches of the Sublease or

vitiate the need and availability of the award of specific performance and

attorney’s fees). The exclusion was therefore proper, and not an abuse of the

district court’s discretion.

43

IV. J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER ATTORNEY’S FEES AS THE PREVAILING PARTY IN A BREACH OF CONTRACT CASE UNDER CPRC § 38.001.

A. The Law permits the award of fees under Chapter 38 upon the award of specific performance

Woody claims that J. Black’s is not entitled to recover its attorney’s fees

under Texas Civil Practice and Remedies Code § 38.001, despite J. Black’s having

fully prevailed on a breach of contract claim, because the affirmative relief

awarded to J. Black’s was specific performance rather than monetary damages.

Like the other arguments that Woody has made over several years of this dispute,

Woody’s argument is legally untenable. The award of fees to J. Black’s must be

affirmed.

Chapter 38 of the Texas Civil Practices and Remedies Code provides that a

“prevailing party” may recover its attorneys’ fees in a suit based upon breach of

contract. See Tex. Civ. Prac. & Rem. Code § 38.001(8) (allowing recovery of

attorney’s fees “in addition to the amount of a valid claim” for breach of contract).

The law is clear that a “valid claim” for purposes of Section 38.001(8) includes a

claim for specific performance. See Jones v. Kelley, 614 S.W.2d 95, 96, 100-01

(Tex. 1981) (awarding attorney’s fees under predecessor statute to section 38.001

in suit for specific performance of earnest money contract); See also Albataineh v.

Eshtehardi, 01-12-00671-CV, 2013 WL 1858864, at *2 (Tex. App.—Houston [1st

Dist.] May 2, 2013, no pet.) (“A judgment requiring specific performance of a

44

material contract right can support an award of attorney's fees”); Rasmusson v.

LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th District]

2003, pet. denied) (where party sought attorney’s fees in addition to claim for

specific performance, its failure to recover other money damages did not preclude

award of attorney’s fees). Because J. Black’s prevailed on its breach of contract

claim against Woody, it is entitled to recover its attorney’s fees –– in the amount

stipulated to by the parties and awarded in the Final Judgment, in addition to the

additional and necessary attorneys fee accrued in further litigating this case upon

remand and to protect the Final Judgment during the pendency of this second

appeal –– pursuant to Section 38.001.

PRAYER

Based on the foregoing, Appellees J. Blacks, L.P. and J. Black’s G.P.,

L.L.C. respectfully pray that this Court overrule each of the issues presented by

Appellant Bob E. Woody, and, on that basis, affirm the relief awarded by the trial

court in its entirety, specifically including (1) the trial court’s grant of J. Black’s

Motion for Summary Judgment and its denial of the Appellants’ Motion for

Summary Judgment; and (2) the specific performance, attorney’s fees, and interest

awarded to J. Black’s in the Final Judgment.

45

Appellees further pray that this Court tax all costs against Appellants, in this

Court and below, and award Appellees any such other relief at law or equity to

which they may be justly entitled. Tex. R. App. P. 43.4; Tex. R. Civ. P. 139.

Respectfully submitted,

By: /s/ Eric J. Taube

Eric J. Taube State Bar No. 19679350 etaube@taubesummers.com Andrew P. Vickers State Bar No. 24084021 avickers@taubesummers.com 100 Congress Avenue, Suite 1800 Austin, Texas 78701 Telephone: (512) 472-5997 Telecopier: (512) 472-5248

ATTORNEYS FOR APPELLEES

CERTIFICATE OF COMPLIANCE I hereby certify that this Appellees’ Brief complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a conventional typeface no smaller than 14-point for text and 12-point for footnotes. This document also complies with the word-count limitations of Tex. R. App. P. 9.4(i)(2)(B). According to the word count tool of the computer program used to prepare this document, this Brief contains 11,093 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).

/s/ Eric J. Taube Eric J. Taube

CERTIFICATE OF SERVICE

Pursuant to the Texas Rules of Appellate Procedure and Local Rule 4(d), a true and correct copy of the foregoing was served, via e-filing and via email on counsel listed below, on the 18th day of December, 2015.

Tom C. McCall tmccall@themccallfirm.com David B. McCall dmccall@themccallfirm.com THE MCCALL FIRM 3660 Stoneridge Road, Suite F-102 Austin, TX 78746-7759 Telephone: (512) 477-4242 Telecopier: (512) 477-2271

Jeremy J. Gaston jgaston@hmgllp.com HAWASH, MEADE & GASTON LLP 1221 McKinney Street, Suite 3150 Houston, TX 77010-2034 Telephone: (713) 658-9007 Telecopier: (713) 658-9011

Hector H. Cárdenas, Jr. hcardenas@cardenas-law.com THE CÁRDENAS LAW FIRM 2600 Via Fortuna, Suite 200 Austin, TX 78746 Telephone: (512) 477-4242 Telecopier: (512) 477-2271

/s/ Eric J. Taube

Eric J. Taube etaube@taubesummers.com

7440-2\00546688.001 46

AUTHORITIES

Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013) 2013 WL 1858864

the restrictive covenant is of value, and affords a recovery of attorney's fees to the aggrieved partner as a prevailing party.

2013 WL 1858864

We affirm.

Only the Westlaw citation is currently available.

SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS. Background MEMORANDUM OPINION Hossein Eshtehardi and Mohamed Albataineh were partners Court of Appeals of Texas, in operating the Joy of Houston Sports Bar, a sexually Houston (1st Dist.). oriented business. To comply with a Harris County regulation prohibiting sexually oriented businesses from operating Mohamed ALBATAINEH, Appellant within 1,500 feet of a residence, they purchased a nearby v.

property specifically to prevent it from becoming a residence.

Hossein M. ESHTEHARDI, JK & HE Business, LLC d/b/a Joy of Houston Sports Bar, Appellees. In December 2010, the partners had a falling out. As part of a buy-out settlement agreement, Albataineh received title No. 01–12–00671–CV. | May 2, 2013.

to the property. Eshtehardi formed JK & HE Business, On Appeal from the 80 District Court, Harris County, Texas, LLC to run the club. In their “Transfer and Settlement Trial Court Cause No.2011–51347. Agreement” the parties prohibited the use of the property as a residence, because the club's continued operation under Attorneys and Law Firms Harris County regulations depended upon this restriction.

A special warranty deed transferring the property contained Adolph R. Guerra Jr., for Mohamed Albataineh. a restrictive covenant to the same effect. In May 2011, Albataineh leased the property to Michael Leo. The lease Casey Todd Wallace, Benjamin Allen, for Hossein M.

agreement expressly required that Leo use the property for Eshtehardi, JK & HE Business, LLC d/b/a Joy of Houston residential purposes only. Eshtehardi and the corporation he Sports Bar.

formed sued Albataineh for breach of the agreement and Panel consists of Justices JENNINGS, BLAND, and restrictive covenant. MASSENGALE.

Discussion

MEMORANDUM OPINION

Standard of Review

JANE BLAND, Justice. We review a trial court's award of attorney's fees based on breach of contract for an abuse of discretion. Weaver v.

*1 In this restrictive covenant case, a partner in a strip Jamar, 383 S.W.3d 805, 813 (Tex.App.-Houston [14th Dist.]

club venture sued his former partner, later ousted from 2012, no pet. h.). The test for an abuse of discretion is whether the business, for breach of a settlement agreement and for the trial court's decision was arbitrary or unreasonable. Id.

declaratory and injunctive relief. After a bench trial, the trial court found a breach of the agreement. The breach arose from the former partner's violation of a restrictive covenant prohibiting residential use of property near the strip club, Analysis property that had been parceled out to the former partner in Albataineh contends that Eshtehardi could not recover the settlement agreement. Although the trial court awarded no attorney's fees under section 38.001(8) of the Texas Civil money damages, it enjoined the ousted partner from using the Practice and Remedies Code, because Eshtehardi did not property as a residence, and it awarded the aggrieved partner recover monetary damages. Section 38.001(8) provides for $119,000 in attorney's fees. On appeal, the ousted partner the recovery of reasonable attorney's fees in a claim on an challenges the award of attorney's fees. We conclude that the oral or written contract “in addition to the amount of a trial court's injunctive relief requiring specific performance of valid claim and costs.”TEX. CIV. PRAC. & REM.CODE

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Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013) 2013 WL 1858864

ANN. § 38.001(8) (West 2008). A “Valid claim” under Eshtehardi obtained a permanent injunction prohibiting section 38.001(8) is not limited to a claim for monetary Albataineh from using the property as a residence—an award damages. Butler v. Arrow Mirror & Glass, 51 S.W.3d 787, of specific performance of the parties' settlement agreement 797 (Tex.App.-Houston [1st Dist.] 2001, no pet.). Instead, and of the restrictive covenant in the special warranty it includes any claims for which the party recovers “at least deed. The trial court heard evidence that the injunction was something of value.” Id. (quoting Rogers v. RAB Ins., Ltd., necessary, because enforcement of the restrictive covenant 816 S.W.2d 543, 551 (Tex.App.-Dallas 1991, no writ)). An has intrinsic value to Eshtehardi's continuing business award of an injunction to enforce specific performance under operations. A judgment requiring specific performance of a a contract is something of value. Id. (holding that injunction material contract right can support an award of attorney's fees.

enforcing covenant not to compete was something of value);

See Butler, 51 S.W.3d at 797.

Williams v. Compressor Eng'g Corp., 704 S.W.2d 469, 474 (Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e) (same);

Accordingly, we hold that the trial court did not abuse its Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 discretion in awarding attorney's fees under section 38.001(8)

(Tex.App.-Houston [14th Dist.] 2003, pet. denied) (holding of the Texas Civil Practice and Remedies Code. See Butler, that award of specific performance permitted recovery of 51 S.W.3d at 797.

attorney's fees under section 38.001).

*2 Albataineh contends, citing MBM Financial Corporation v. Woodlands Operating Company, L.P., that money damages Conclusion in particular are required to recover attorney's fees under section 38.001. 292 S.W.3d 660, 670 (Tex.2009).MBM We affirm the judgment of the trial court. Financial held that “a client must gain something before attorney's fees can be awarded.”Id. at 663.It does not stand All Citations

for the proposition that injunctive relief awarding specific performance precludes the recovery of attorney's fees under Not Reported in S.W.3d, 2013 WL 1858864 chapter 38. See id. at 670.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005) 48 Tex. Sup. Ct. J. 474

fees in insurer's declaratory judgment action; the controversy remained live because a finding of KeyCite Yellow Flag - Negative Treatment a duty to defend would necessitate a remand to Disagreed With by ACMAT Corp. v. Greater New York Mut. Ins. Co., the trial court to consider an award of attorney Conn., May 29, 2007 fees. V.T.C.A., Civil Practice & Remedies Code 159 S.W.3d 640 § 37.009.

Supreme Court of Texas.

44 Cases that cite this headnote ALLSTATE INSURANCE COMPANY, Petitioner, v. [2] Action Ruth HALLMAN, Respondent. Moot, Hypothetical or Abstract Questions A case becomes moot if a controversy ceases No. 03–0957. | Argued Oct. 20, to exist or the parties lack a legally cognizable 2004. | Decided March 11, 2005.

interest in the outcome.

Synopsis 57 Cases that cite this headnote Background: Homeowners' insurer brought action against insured for declaratory judgment that policy did not cover her liability to neighbors for property damage and [3] Insurance bodily injury caused by limestone mining companies that Pleadings leased property from insured. Insured counterclaimed for To determine liability insurer's duty to defend, declaratory judgment. The 86th Judicial District Court, courts look at the allegations in the pleadings and Kaufman County, Glen M. Ashworth, J., entered summary the insurance policy's language. judgment in favor of insurer, but denied requests for attorney fees. Insured appealed. The Dallas Court of Appeals, Wright, 6 Cases that cite this headnote J., 114 S.W.3d 656, reversed and remanded. Insurer's petition for review was granted.

[4] Insurance

Pleadings

If the pleadings do not allege facts within the [Holding:] The Supreme Court, Jefferson, C.J., held as a scope of the policy's coverage, a liability insurer matter of first impression that the insured's lease of her does not have a duty to defend. property for limestone mining was a “business pursuit” within the meaning of business pursuits exclusion of liability 8 Cases that cite this headnote coverage.

[5] Insurance

Pleadings

Reversed and rendered.

In the event of an ambiguity, courts construe the pleadings liberally in the suit against the insured, resolving any doubt in favor of coverage and the West Headnotes (7) liability insurer's duty to defend.

11 Cases that cite this headnote [1] Declaratory Judgment Appeal and Error

Judgment for insured in underlying tort suit for [6] Insurance which liability insurer had provided defense did Business Pursuits not render moot a determination whether the The “business pursuits” inquiry as an exception insurer owed a duty to defend and indemnify the to liability coverage involves two elements: (1) insured, where she continued to seek attorney continuity or regularity of the activity, and (2) a

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Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005) 48 Tex. Sup. Ct. J. 474

profit motive, usually as a means of livelihood, mining on her property. Hallman sought coverage under her gainful employment, earning a living, procuring homeowners insurance policy (“the policy”) with Allstate subsistence or financial gain, a commercial Insurance Company (“Allstate”), requesting that Allstate transaction or engagement; the profit need not defend and indemnify her in the lawsuit. Allstate and Hallman be realized since the issue is the expectation or both sought a declaratory judgment to determine whether anticipation for profit in the future and business the policy covered the underlying litigation. The trial court ventures often result in a loss. granted summary judgment in Allstate's favor. The court of appeals reversed the trial court's judgment and remanded 6 Cases that cite this headnote for further proceedings, holding that Allstate had a duty to defend and indemnify Hallman in the limestone mining [7] Insurance litigation. 114 S.W.3d 656, 663. Because we conclude that Business Pursuits damages to third parties caused by commercial limestone mining conducted on an insured's property fall within the Insured's lease of her property for limestone policy's business pursuits exclusion, we reverse the court of mining was a “business pursuit” within the appeals' judgment and render judgment for Allstate.

meaning of business pursuits exclusion of liability coverage in homeowners' insurance policy; although the insured executed only one lease, she was perpetually engaged in the I continuous act of leasing her property to the mining company until the lease expired, and Background

even though the pleadings in the neighbors' suit against the insured did not contain any reference In 1995, Hallman leased property she owns in rural Kaufman to a pecuniary interest in the lease or expound on County to Norton Crushing, Inc. (“Norton”) for limestone insured's motive for leasing her property, a profit mining. 1 In 1996, neighboring landowners sued Hallman, motive could be inferred from the nature of the Norton, and all subcontractors involved in the mining project, activity.

alleging that the blasting from the mining damaged their 13 Cases that cite this headnote property and their health. Hallman filed a claim under the policy requesting defense and indemnification. Allstate agreed to defend Hallman under a reservation of rights but filed this declaratory judgment action seeking a determination that Hallman's claim was not covered under the policy's terms.

Attorneys and Law Firms Hallman counterclaimed seeking a declaration that Allstate *641 Roy L. Stacy, Pamela J. Touchstone, Stacy & Condor, had a duty to defend and indemnify her in the underlying LLP, Dallas, for Petitioner. litigation. Both parties sought attorney's fees.

David Taubenfeld, Erika Lea Blomquist, Matthew Scott Allstate moved for summary judgment, arguing that the Carol, Charles George Orr, Haynes and Boone, LLP, Dallas, injuries and damages relating to the limestone mining did for Respondent. not constitute an “occurrence” as required for coverage under the policy, and alternatively, that the mining operations were Opinion excepted from coverage under the policy's business *642 Chief Justice JEFFERSON delivered the opinion of the Court. pursuits exclusion. Hallman moved for partial summary judgment, asserting that she was entitled to a defense because In this case we must determine whether, under a homeowners her neighbors' allegations constituted an “occurrence” as insurance policy's terms, an insurer has a duty to defend defined in the policy. The trial court granted Allstate's and indemnify an insured's potential liability for damages motion, denied Hallman's, and denied both parties' requests resulting from limestone mining operations conducted on for attorney's fees. The court of appeals reversed, concluding the insured's property. Neighboring property owners sued that the policy covered Hallman's claim because: (1) the Ruth Hallman (“Hallman”) for damages related to limestone mining damages constituted an “occurrence,” and (2) the

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Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005) 48 Tex. Sup. Ct. J. 474

business pursuits exclusion did not apply. 114 S.W.3d at 663. The Texas Employment Commission appealed, arguing that The court of appeals remanded the attorney's fees issue to the amendment rendered the case moot. Id. The farm workers the trial court for further proceedings. Id. at 663–64. We cross-appealed, contesting the denial of attorney's fees. Id. granted Allstate's petition for review to determine whether the The court of appeals held that the case was moot and that policy covers potential liability for damages from commercial attorney's fees were barred by sovereign immunity. Id. at 150– limestone mining. 47 Tex. Sup.Ct. J. 753 (July 2, 2004). 151. We disagreed, holding:

During oral argument before this Court, the parties announced Clearly, a controversy exists between that the underlying lawsuit between Hallman and her the farm workers and TEC. The “live” neighbors had recently concluded with a jury verdict issue in controversy is whether or in Hallman's favor. Allstate provided Hallman with a not the farm workers have a legally defense throughout the trial and does not intend to seek cognizable interest in recovering their reimbursement for the defense costs. attorney's fees and costs. The fact that the Legislature wisely undertook action to bring the farm workers within the scope of TUCA does not II moot or void the workers' interest in obtaining attorneys *643 fees and Mootness costs for the successful disposition of their claim. Contrary to the court of [1] As a preliminary matter, we must consider whether the appeals' suggestion, the attorney's fees conclusion of the underlying litigation renders this case moot. issue need not be severed in order to The main issue here is whether Allstate has a duty to defend be considered; it is an integral part of and indemnify Hallman in the mining litigation. Allstate, the farm workers' claim and as such however, has already provided the requested defense, for breathes life into the appeal. Due to which it will not seek reimbursement. Additionally, because the existence of the “live” issue of Hallman was not found liable at trial, there is nothing for attorney's fees and costs, we hold that Allstate to indemnify. Nevertheless, both parties maintain that the suit was not moot. a justiciable controversy remains because Hallman continues to seek an award of attorney's fees for expenses incurred in Id. at 151. defending against Allstate's declaratory judgment action and in pursuing her own declaratory relief. Similarly, Hallman's remaining interest in obtaining attorney's fees “breathes life” into this appeal and prevents [2] We agree with the parties that this case is not it from being moot. See id. The parties correctly point moot. A case becomes moot if a controversy ceases to out that in order to resolve the attorney's fees dispute, exist or the parties lack a legally cognizable interest we must first determine whether Allstate had a duty to in the outcome. Bd. of Adjustment of San Antonio v. defend and indemnify under the policy. In a declaratory Wende, 92 S.W.3d 424, 427 (Tex.2002). In Camarena judgment proceeding, the trial court has the discretion to v. Texas Employment Commission, 754 S.W.2d 149, 151 award “equitable and just” attorney's fees. Tex. Civ. Prac. (Tex.1988), we held that a dispute over attorneys fees is a & Rem.Code § 37.009. Here, the trial court, having found live controversy. In that declaratory judgment action, farm against Hallman on the coverage issue, also denied her workers sued to challenge the constitutionality of the Texas request for attorney's fees. Because the court of appeals found Unemployment Compensation Act's (“TUCA”) agricultural that Hallman prevailed on the coverage issue, it remanded exemption. Id. at 150. The trial court held that the act the attorney's fees question to the trial court. 114 S.W.3d was unconstitutional but found that sovereign immunity at 663–64. Our decision in this case will resolve whether barred the farm workers' request for attorney's fees. Id. Four Allstate had a duty to defend. The controversy is live because months later, the Legislature amended the TUCA, rectifying an affirmative answer would necessitate a remand to the the offending provision. Id. Consequently, the trial court trial court to consider whether an award of attorney's fees is modified its judgment, holding that the amended act was appropriate in light of the changed status of prevailing parties. constitutional and enjoining the former act's enforcement. Id.

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Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005) 48 Tex. Sup. Ct. J. 474

Accordingly, we will address the merits of this coverage or financial gain, a commercial transaction or engagement.” dispute. Id. at 780 (citations omitted). Regarding the second element, the court further noted: “The profit need not be realized—the issue is the expectation or anticipation for profit in the future —since often business ventures result in a loss.” Id.

III

Most jurisdictions follow similar versions of this two-part Discussion inquiry when construing business pursuits exclusions. See, e.g., Sun Alliance Ins. Co. of P.R., Inc. v. Soto, 836 F.2d [3] [4] [5] To determine an insurer's duty to defend, we 834, 836 (3d Cir.1988); Stuart v. Am. States Ins. Co. 134 look at the allegations in the pleadings and the insurance Wash.2d 814, 953 P.2d 462, 465 (1998); Frankenmuth Mut. policy's language. Nat'l Union Fire Ins. Co. of Pittsburgh, Ins. Co. v. Kompus, 135 Mich.App. 667, 354 N.W.2d 303, Pa. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 307–308 (1984); see also Lee R. Russ & Thomas F. Segalla, (Tex.1997); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., Couch on Insurance § 128:13 (3d ed. 1997 & Supp.2004). A 387 S.W.2d 22, 24 (Tex.1965). If the pleadings do not allege few jurisdictions, however, limit the exclusion's application facts within the scope of the policy's coverage, an insurer to those activities that constitute an insured's principal does not have a duty to defend. Am. Physicians Ins. Exch. v.

occupation. See, e.g., Brown v. Peninsular Fire Ins. Co., 171 Garcia, 876 S.W.2d 842, 848 (Tex.1994). However, in the Ga.App. 507, 320 S.E.2d 208, 209 (1984); Asbury v. Ind.

event of an ambiguity, we construe the pleadings liberally, Union Mut. Ins. Co., 441 N.E.2d 232, 239 (Ind.Ct.App.1982). resolving any doubt in favor of coverage. Merchs. Fast Motor Because the policy's definition of business as “including Lines, Inc., 939 S.W.2d at 141; Heyden Newport Chem.

trade, profession or occupation” encompasses more than Corp., 387 S.W.2d at 26. an insured's primary occupation, we conclude that the majority approach more accurately describes the exclusion's Under the terms of the policy, Allstate has a duty to defend parameters. Accordingly, we adopt the two-part standard Hallman against a suit alleging damages caused by an articulated in Pennington for determining whether a claim “occurrence.” However, the policy specifically excludes from is excluded from coverage under the business pursuits coverage: “bodily injury or property damage arising out of exclusion. See Pennington, 810 S.W.2d at 780.

or in connection with a business engaged in by an insured. But this exclusion does not apply to activities which are [7] Applying the Pennington standard, the court of appeals ordinarily incidental to non-business pursuits.” “Business”

concluded that the underlying petition did not allege is defined as “includ[ing] trade, profession or occupation.”

continuity of activity because Hallman entered into only one Allstate argues that Hallman's claim is barred from coverage lease agreement, which was executed nearly ten years ago.

under this business pursuits exclusion.

114 S.W.3d at 662. The court further noted the petition's failure to allege that Hallman leased her property as a means [6] Although the business pursuits exclusion is a fairly of livelihood, or earning a living, or that her principal business common provision of insurance policies, we have never was leasing property. Id. Based on these conclusions, the directly addressed its application. 2 The parties and the court of appeals held that the business pursuits exclusion did court of appeals relied on the standard set forth by the San not apply to Hallman's claim. See id. at 662–63. Antonio Court of Appeals in United Services Automobile Ass'n v. Pennington, 810 S.W.2d 777, 778–80 (Tex.App.- We disagree. By narrowly limiting its focus to Hallman's San Antonio 1991, writ denied), a case involving a business initial execution of the lease, the court of appeals pursuits exclusion provision substantially *644 identical misconstrued the nature of commercial leasing activity. The to the one here. The Pennington court, after reviewing pleadings establish that the mining activity conducted on the dictionary definitions of “trade,” “profession,” and Hallman's property pursuant to the lease began in 1995, was “occupation,” as well as case law from other jurisdictions, ongoing at the time the plaintiffs initiated their suit in 1996, defined the “business pursuits” inquiry as involving two and remained ongoing at the time the plaintiffs filed their elements: “(1) continuity or regularity of the activity, and sixth amended petition in 2001. Although Hallman executed (2) a profit motive, usually as a means of livelihood, only one lease, until that lease expires, she is perpetually gainful employment, earning a living, procuring subsistence engaged in the continuous act of leasing her property to the

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Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005) 48 Tex. Sup. Ct. J. 474

Furthermore, as numerous courts have recognized, the mining company. Thus, the limestone mining lease meets the purpose of the business pursuits exclusion is to lower continuity requirement of the business pursuits exclusion.

homeowners insurance premiums by removing coverage for activities that are not typically associated with the operation Next, we consider whether profit was Hallman's motivation and maintenance of one's home. See, e.g., Buirkle v. Hanover for leasing her property. The court of appeals, noting Ins. Cos., 832 F.Supp. 469, 486–487 (D.Mass.1993); Kepner that courts are limited to the language in the pleadings v. W. Fire Ins. Co., 109 Ariz. 329, 509 P.2d 222, 223 (1973);

and the policy when determining an insurer's duty to LeBlanc v. Broussard, 396 So.2d 535, 536 (La.Ct.App.1981).

defend, concluded that the lease failed to meet the profit Commercial limestone mining is not an activity typically motive requirement. 114 S.W.3d at 662–63. Admittedly, the associated with owning and maintaining a home. Thus, the pleadings do not contain any reference to Hallman's pecuniary limestone mining lease at issue here is exactly the type of interest in the lease, nor do they expound on her motive commercial enterprise that the business pursuits provision for leasing her property. However, *645 we conclude that, was designed to exclude.

in this circumstance, a profit motive can be inferred from the nature of the activity. One generally does not allow We hold that Hallman's lease to Norton constituted a business limestone mining with dynamite blasting to occur on his pursuit and therefore the allegations in the underlying or her property without some expectation of remuneration litigation are excluded from coverage under the policy.

or monetary gain. See Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 128:13 (3d ed.1997) (noting that courts look “particularly to the nature of the activity” when determining if an activity constitutes a “business pursuit”); IV cf. In re San Juan Dupont Plaza Hotel Fire Litig., 789 F.Supp. 1212, 1220 (D.P.R.1992) (holding that business Conclusion

pursuits exclusion defeated coverage because “[i]nvestment activities are commercial ventures which, by their very Therefore, even if the allegations in the underlying lawsuit nature, are entered into with the intent to earn profit”); Vallas state an “occurrence,”—a question we do not reach—we v. Cincinnati Ins. Co., 624 So.2d 568, 571 (Ala.1993) (finding nevertheless conclude that the business pursuits exclusion business pursuits exclusion applicable and noting “we cannot applies and bars coverage. Because the trial court reached say that the limited partnership, which was formed to buy the same conclusion and denied Hallman's request for fees, and sell investment real property for capital gain, was not there is no need to remand this case to the trial court for ‘an undertaking ... for gain [or] profit’ ”); State Farm Fire & a determination of Hallman's request for attorney's fees. Cas. Co. v. Drasin, 152 Cal.App.3d 864, 199 Cal.Rptr. 749, Accordingly, we reverse the court of appeals' judgment and 750, 753 (1984) (claims arising from partnership agreement render judgment for Allstate. See Tex.R.App. P 60.2(c). to acquire mining leases fell under business pursuits exclusion where “[t]he purpose of acquiring the mining leases was to enjoy the production of income, profits and write-offs All Citations incidental to the mining operations”).

159 S.W.3d 640, 48 Tex. Sup. Ct. J. 474

Footnotes 1 Meridien Aggregates, Co., L.L.P. (“Meridien”) purchased Norton's interest in 1999 and now operates the lease. 2 We have, however, addressed the “activities incidental to non-business pursuits” exception to the exclusion. See State Farm Fire & Cas. Co. v. Reed, 873 S.W.2d 698, 698–701 (Tex.1993).

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

Bradley M. Whalen, Stephen H. Lee, N. Kimberly Hoesl, for 2009 WL 4842761 Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron Only the Westlaw citation is currently available. Rents, Inc.

SEE TX R RAP RULE 47.2 FOR Panel consists of Chief Justice HEDGES and Justices DESIGNATION AND SIGNING OF OPINIONS. ANDERSON and SEYMORE.

SUBSTITUTE MEMORANDUM

OPINIONON REHEARING Court of Appeals of Texas, SUBSTITUTE MEMORANDUM Houston (14th Dist.). OPINIONON REHEARING

Hardam S. AZAD and Manohar S. Mann, Appellants CHARLES W. SEYMORE, Justice.

v.

*1 On appellants' motion for rehearing, we deny the AARON RENTS, INC., d/b/a Aaron Rents, requested relief, but withdraw our opinion filed August 13, Inc., d/b/a Texas Aaron Rents, Inc., Appellee. 2009, and issue this substitute memorandum opinion.

No. 14–07–01087–CV. | Dec. 17, 2009.

In this commercial lease case, Hardam S. Azad and Manohar S. Mann (collectively, the landlords) appeal a summary West KeySummary judgment in favor of, and an award of attorney's fees to, Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron Rents, Inc. (“Aaron”). In three issues, the landlords contend 1 Landlord and Tenant (1) the pleadings and summary judgment proof precluded Breach by lessor the trial court from granting summary judgment on Aaron's Landlord and Tenant affirmative defenses of breach of quiet enjoyment and breach What constitutes breach of covenant of conditions subsequent, (2) the pleadings and summary Landlords committed material breach of judgment proof precluded granting summary judgment on commercial lease's quiet-enjoyment provision, an earlier summary judgment motion (which the court, and thus tenant was discharged from further in fact, denied), and (3) the lease contract precluded the performance of lease. The provision required trial court from rendering a judgment on attorney's fees. that the tenant be able to enjoy the premises Because all dispositive issues of law are settled, we issue this without hindrance. Landlords' failure to follow memorandum opinion and affirm. SeeTex.R.App. P. 47.4. city's requirements for proper water and sanitation easement prevented tenant from obtaining a certificate of occupancy. I. FACTUAL AND PROCEDURAL BACKGROUND Cases that cite this headnote In October 2001, the landlords leased Aaron approximately 7,500 square feet of the South Village Shopping Center. The initial term of the lease was five years, but the lease contained a provision that, if the anchor tenant, Auchan Hypermart, at On Appeal from the 333rd District Court, Harris County, any time ceased business, Aaron could terminate the lease Texas, Trial Court Cause No.2004–53200. between the thirty-sixth and the forty-eighth month of the term by giving a ninety-day notice. The lease also contained Attorneys and Law Firms the following warranty of quiet enjoyment: William F. Harmeyer, for Hardam S. Azad and Manohar S.

35. Quiet Enjoyment.Landlord Mann.

warrants that it has good and indefeasible fee simple title to the Center, including the premises, and

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

has the lawful authority to enter into this Lease. Landlord further b. Landlord will provide Tenant with all reasonable warrants that Tenant, subject to the assistance to aid Tenant in obtaining the aforesaid permits terms and conditions of this Lease, and approvals. will peaceably and quietly hold and c. If any of the aforesaid conditions subsequent is not enjoy the Premises and use the satisfied ... upon notice to Landlord, Tenant may elect to Common Areas during the Term terminate this Lease....

without hindrance or interruption, so long as no Default by Tenant shall Finally, the lease provided for attorney's fees in actions to occur.

enforce, defend, or interpret the rights under the lease:

Additionally, pursuant to Paragraph 37 of the lease, Aaron's 30. Attorney's Fees.In any action, suit performance was conditioned on its ability to obtain the or proceeding to enforce, defend or necessary permits and certificates to complete its build-out of interpret the rights of either Landlord the leased premises and to operate its business. Paragraph 37 or Tenant under the terms of this provided, in relevant part: lease or to collect any amount due landlord or Tenant hereunder, the 37. Conditions Subsequent. prevailing party, pursuant to a final order of a court having jurisdiction a. Landlord and Tenant agree that their obligations under over said matter as to which applicable this Lease are expressly contingent upon the following:

periods within which to appeal have (i) The ability of Tenant to secure, through the exercise elapsed, shall be entitled to recover of due diligence and good faith efforts, ... a Certificate of all reasonable costs and expenses Occupancy and such use and other permits and approvals incurred by said prevailing party in from all appropriate zoning and other governmental enforcing, defending or interpreting its and quasi-governmental authorities as are necessary to rights hereunder, including, without permit Tenant to ... conduct its business ... without any limitation, all collector [sic] and court requirement that ... Tenant alter or improve the Premises costs, and reasonable attorney's and or any ... sewer ... or other system ... which is contained paralegal fees, whether incurred out on or about the Premises ...; of court, at trial, on appeal, or in any bankruptcy proceeding.

(ii) The ability of Tenant to secure, through the exercise of due diligence and good faith efforts, all building and On January 2, 2002, Aaron opened for business in the leased related permits necessary for Tenant to make its intended premises although many of the renovations and alterations Initial Alterations ...; required under the lease were not complete. Aaron prepared to complete its build-out of the leased premises and applied *2 ...

for building permits from the City of Houston (“the City”).

(iv) The ability of Tenant to secure, through the exercise of due diligence and good faith efforts, ... all necessary On January 16, 2002, the City's Utility Analysis Section, permits, ... easements and approvals pertaining to the Water/Wastewater Department sent two letters, addressed to Building, occupancy ... and any other governmental the landlords, describing defects with the landlords' property. permits which, in the sole judgment of Tenant, are In the first letter, the City explained there was no record necessary to permit it to construct the Alterations and of an easement connecting the landlords' property to the operate upon the Premises.... Landlord agrees to execute nearby city sanitary sewer. In the second letter, the City any applications or other documents requested by Tenant explained the landlords' property was built over an existing in order to obtain any permits ... and approvals.... water line and an existing storm sewer easement and the City would require documentation allowing the encroachments. In the second letter, the City stated it would issue no building permit until the problems described in the letter

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

were resolved: “Until such time that proper documentation leased premises the following day and intended to seek is presented to this office allowing this encroachment or the reimbursement and damages. water line/easement is abandoned and relocated through the City's Joint Referral Committee, a building permit cannot be On September 24, 2004, the landlords sued Aaron, alleging issued.”The City included an identical statement regarding claims for breach of the lease. Aaron answered, raising, the storm sewer easement. Milton Wells, the landlords' among other matters, the affirmative defense of prior breach property manager, immediately went to the City, explained by the landlords based on their failure to (1) obtain a the City's records were in error, and asked the City to certificate of occupancy, (2) complete all improvements withdraw their letters. 1 The City refused to do so. by October 31, 2001, (3) provide electrical, mechanical, plumbing, sewer, and heating and ventilation systems *3 Willie Chandler, Aaron's construction manager, also met in good order, and (4) secure all necessary permits, with City personnel. According to Chandler, Wells had given licenses, variances, easements and approvals. Aaron also Chandler a “single 8 ½ x 11 inch document plat showing counterclaimed against the landlords for expenses incurred in the layout of the shopping center where the lease[d] premises partially building out the leased space and for its attorney's was [sic] located.”The City told Chandler the document was fees and expenses, pursuant to both the lease and “applicable insufficient to solve the easement problem and the landlords Texas Code and Statutes.” would have to resolve the problem themselves.

In May 2005, Aaron filed a traditional motion for summary In January and February 2002, the landlords and Aaron judgment. It argued the landlords could not enforce a contract exchanged correspondence regarding Aaron's late or non- they had breached before Aaron vacated the premises. payment of rent and the landlords' failure to obtain a permit Specifically, Aaron argued the landlords had breached the before beginning improvements and their failure to complete contract by failing to deliver a certificate of occupancy and the improvements. By letter dated February 7, 2002, Aaron to complete the improvements by October 31, 2001. The trial also asked the landlords to resolve the easement issues court orally denied the motion and noted the denial on the immediately. According to Wells, in April 2002, he gave docket sheet. Chandler all the surveys he had obtained in his research and Chandler said he would take care of what was needed to *4 In March 2006, Aaron again moved for traditional obtain a certificate of occupancy. summary judgment on the grounds of the landlords' prior breach of the lease. In the 2006 motion, Aaron specifically Without a building permit, Aaron could not complete its relied on the landlords' obligations under Paragraphs 35 build-out of the space and could not obtain a certificate of (quiet enjoyment) and 37 (conditions subsequent). After occupancy. A certificate of occupancy is necessary for a considering the pleadings, the motion, the response, and business to operate. According to the landlords' designated the summary judgment evidence, the trial court granted expert, if the City learns a business is occupying a building the motion. 2 Aaron subsequently non-suited its claims for without a certificate of occupancy, the City will give it thirty breach-of-contract damages, but maintained its claims for days to obtain one, and if it cannot do so, the City will lock the attorney's fees and expenses. premises. The landlords and their designated expert agreed that Aaron would not be allowed to obtain the final building The landlords filed a motion for a take-nothing judgment on permit or the certificate of occupancy until the easement Aaron's claim for attorney's fees. The trial court denied the issues were fully resolved. The landlords also agreed the motion. easement issues affected the landlords' ownership of the entire property, not just the portion leased by Aaron, and knew they Following a non-jury trial on attorney's fees, the trial court had to resolve these issues in order to re-lease the property. rendered final judgment, decreeing that the landlords take The landlords did not fulfill these conditions while Aaron nothing on their claims against Aaron. The trial court occupied the leased property. found Aaron was the prevailing party, and ordered that Aaron recover the following amounts from the landlords: (1)

In March 2003, Auchan closed. By letter dated April 29, $75,000 attorney's fees for trial, (2) $15,291.77 for costs and 2003, Aaron notified the landlords it was vacating the expenses of trial, (3) $15,000 if Aaron prevailed in the court of appeals, (4) $5,000 if either landlord filed a petition for

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

review and the supreme court denied the petition, (5) $10,000 In reviewing a traditional summary judgment, we examine the if Aaron prevailed in any appeal to the supreme court by entire record in the light most favorable to the non-movant, any party, and (6) post-judgment interest. The court further indulging every reasonable inference and resolving any ordered as follows: (1) if no valid appeal were filed, the doubts against the motion. Yancy v. United Surgical Partners trial level amounts would become due and owing on dates Int'l, Inc., 236 S.W.3d 778, 782 (Tex.2007). When a trial corresponding to the deadlines set forth in Texas Rule of court's order granting summary judgment does not specify Appellate Procedure 26.1; and, (2) depending on whether the grounds on which it was granted, we will affirm the Aaron prevailed on appeal and in any supreme court review, judgment if any theory advanced in the motion is meritorious. the corresponding appellate level amounts would become due See Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). Thus, and owing on the dates the mandate issued from the court of to prevail on appeal, the landlords must show that each of appeals or the supreme court. Aaron's theories is meritless. See Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex.1995).

Aaron's summary judgment motion rested on the affirmative II. THE TAKE–NOTHING SUMMARY JUDGMENT defenses that the landlords had first breached the lease in In issue one, the landlords contend “[t]he pleadings and two ways—by violating the quiet-enjoyment provision and summary judgment evidence precluded” the trial court from by violating the conditions-subsequent provision of the lease. rendering summary judgment (1) on Aaron's “breach of When one party to a contract commits a material breach quiet enjoyment affirmative defense” and (2) on Aaron's of that contract, the other party is discharged or excused “conditions subsequent affirmative defense.” In issue two, from further performance. Mustang Pipeline, Inc. v. Driver the landlords make the same argument regarding Aaron's Pipeline, Inc., 134 S.W.3d 195, 196 (Tex.2004) (per curiam). affirmative defense of the landlords' prior breach for failing to (1) timely complete improvements and (2) obtain a certificate In Paragraph 35 of the lease, captioned “Quiet Enjoyment,”

the landlords warranted they had “good and indefeasible fee of occupancy. 3 simple title” to the shopping center and the premises leased to Aaron. Paragraph 35 also provided, “Landlord further A party moving for traditional summary judgment must warrants that Tenant, subject to the terms and conditions of establish that no genuine issue of material fact exists and it this Lease, will peaceably and quietly hold and enjoy the is entitled to judgment as a matter of law. SeeTex.R. Civ.

Premises and use the Common Areas during the Term without P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, hindrance or interruption, so long as no Default by Tenant 128 S.W.3d 211, 215–16 (Tex.2003). To be entitled to shall occur.”Thus, under the plain language of Paragraph 35, traditional summary judgment, a defendant must conclusively breach by the landlords occurred if Aaron could not “enjoy negate at least one essential element of each of the plaintiff's the Premises ... without hindrance.”

causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, The record contains the following, undisputed, summary 941 S.W.2d 910, 911 (Tex.1997); Brown v. Hearthwood judgment proof:

II Owners Ass'n, 201 S.W.3d 153, 159 (Tex.App.-Houston [14th Dist.] 2006, pet. denied). A party conclusively • Two letters sent January 16, 2002, from the City establishes a matter if reasonable people could not differ of Houston to the landlords in response to the about the conclusion to be drawn from the evidence. See City landlords' December 20, 2001 applications concerning of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex.2005). the availability of city water and waste water facilities to the shopping center;

*5 We review de novo both a trial court's grant of traditional summary judgment and its interpretation of an unambiguous in one letter, the City explained there was no record of contract. See Knott, 128 S.W.3d at 215 (regarding summary an easement connecting the landlords' property to the judgment); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983) nearby city sanitary sewer; (stating, if written instrument is so worded it can be given certain or definite legal meaning or interpretation, it is not in the other letter, the City explained the landlords' ambiguous and court will construe contract as matter of law). property was built over existing water line and existing storm sewer easements, the City required documentation

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

allowing the encroachments, and the City stated it would Despite the preceding summary judgment proof, the issue no building permit until the problems described in landlords, on appeal, argue “[t]he pleadings and summary the letter were resolved; judgment evidence precluded the trial court from entering summary judgment on Aaron Rents' breach of quiet *6 • Deposition testimony of Milton Wells, the landlords' enjoyment affirmative defense.”In their response to Aaron's property manager, that the matters raised in the January motion for summary judgment, the landlords did not address 16 letters affected the landlords' entire property, as well Aaron's affirmative defense based on the landlords' purported as that of the tenants; breach of the “quiet enjoyment” provision in the lease.

Instead, the landlords focused solely on Aaron's defense • The deposition testimony of Hardam S. Azad that based on the landlords' purported breach of conditions the landlords were responsible for “removing” or “dissolving” the easement problem; subsequent. 5 To the extent the landlords are now presenting an issue other than legal insufficiency of the evidence to • The affidavit of Willie Chandler, Aaron's construction support summary judgment in favor of Aaron on its breachmanager , in which he stated it was important for Aaron of-quiet-enjoyment defense, they have waived this issue. to secure a building permit to allow it to finish its build- See City of Houston v. Clear Creek Basis Authority, 589 out of the leased space, and without a permit, Aaron was S.W.2d 671, 678 (Tex.1979) (“With the exception of an attack unable to begin construction; on the legal sufficiency of the grounds expressly raised by the movant in his motion for summary judgment, the non-

• The deposition testimony of the landlords' designated movant must expressly present to the trial court any reasons expert, Neresh Dham, former Division Manager for seeking to avoid movant's entitlement....”); Augusta Court the Plan Review Section of the Public Works and Co–Owners' Ass'n v. Levin, Roth & Kasner, 971 S.W.2d Engineering Department, that, until the Department was 119, 122 (Tex.App.-Houston [14th Dist.] 1998, pet. denied) satisfied an easement existed, a building permit would (“[I]ssues a non-movant contends avoid summary judgment not issue, “[t]hen, depending on the building permit, the that are not expressly presented to the trial court by written certificate of occupancy would not issue”; answer or other written response to the summary judgment motion are waived on appeal.”).

• The deposition testimony of Rudolfo Moreno, an engineer in the Department of Public Works, that generally *7 Additionally, in this court, the landlords have only speaking, he believed that, without a building permit, minimally briefed their argument that summary judgment was one could not get a certificate of occupancy;

precluded on Aaron's breach-of-quiet-enjoyment affirmative • Dham's deposition testimony that, without a certificate defense. The landlords' entire argument on the quietof occupancy, Aaron's occupancy of the premises was enjoyment ground comprises (1) quotation of Paragraph illegal and could be terminated after thirty days' notice 35 of the lease, (2) conclusory statements there was no and failure to correct the problem; summary judgment proof the landlords did not have good and indefeasible fee simple title to the shopping center or that • Moreno's and Azad's testimony the City and landlords did Aaron was not in exclusive, peaceful and quiet possession not resolve the easement issue until August, 2004; and of the premises, and (3) an assertion the summary judgment evidence indicated Aaron had exclusive, continuous, and • Wells's testimony the landlords eventually resolved the uninterrupted possession of the premises from the time it easement matters because they were considering reaccepted possession until it vacated the premises, without leasing locations and knew the easement matters had to any claims or demands by the landlords, City, or any be resolved eventually if the new tenants were to obtain third party, that it cease conducting business or vacate the building permits.

premises. 6 Other than case law setting forth the general Viewing this proof in the light most favorable to the landlords, standard of summary judgment review, the landlords cite no we conclude, at a minimum, it conclusively establishes Aaron law. Their sole record citation comprises twenty consecutive pages of summary judgment proof consisting of Wells's twowas unable to enjoy the premises without hindrance. 4 page affidavit with the attached documents. 7 They do not direct this court to any specific parts of that proof.

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

To present an issue on appeal properly, an appellant must to recover all reasonable costs and expenses incurred by provide a clear and concise argument for the contentions said prevailing party in enforcing, defending or interpreting made, with appropriate citations to the record and authorities. its rights hereunder, including, without limitation, all Tex.R.App. P. 38.1(i). It is not our responsibility to sift the collector [sic] and court costs, and reasonable attorney's record to find error or evidence in support of an appellant's and paralegal fees, whether incurred out of court, at trial, argument. Melendez v. Exxon Corp., 998 S.W.2d 266, 280 on appeal, or in any bankruptcy proceeding. (Emphasis (Tex.App.-Houston [14th Dist.] 1999, no pet.). added.)

In sum, we conclude the landlords have not shown that a The landlords argue that, pursuant to this paragraph, there can fact issue exists that would defeat summary judgment on be no “prevailing party” until a final court order, which is Aaron's defensive theory of prior breach of the promise of not subject to further appeal, is in place. Put differently, they quiet enjoyment in Paragraph 35 of the lease; the landlords argue an unappealable order is a condition precedent to any have not shown this summary judgment ground is meritless. party's entitlement to, claim for, and recovery of, attorney's We therefore affirm summary judgment in favor of Aaron fees. The landlords further argue Aaron was required to prove on this ground and need not address the landlords' argument performance of all conditions precedent and failed to do so. challenging summary judgment on the ground of breach of the conditions-subsequent provision. See Star–Telegram, 915 Under Paragraph 30, a party is “entitled” to attorney's fees S.W.2d at 473; Carr, 776 S.W.2d at 569. if it is “the prevailing party, pursuant to a final order ...

[for] which applicable periods within which to appeal have Accordingly, we overrule the landlords' first issue. As noted elapsed....” Even if one construes this language to mean above, we have overruled the landlords' second issue, directed that all possibilities for appeal must have expired before the at an earlier summary judgment motion, as moot. 8 ultimately “prevailing” party may receive its attorney's fees, there is no language in Paragraph 30 that precludes a party from making its claim for attorney's fees before that time or that precludes the court from making a conditional award of III. ATTORNEY'S FEES

those fees before disposition of the final appeal. 9 In issue three, the landlords argue “the parties' lease contract precluded the trial court from entering a judgment on The court made such a conditional award in the present case. attorney's fees.”The landlords do not dispute the amounts According to the judgment, if the landlords did not file a valid awarded, but challenge the award of any attorney's fees before appeal from the judgment, the award for trial attorney's fees rendition of a final, nonappealable judgment. would become due and payable to Aaron according to the deadlines set forth in Texas Rule of Appellate Procedure 26.1;

The parties to a contract are free to adopt the standard of their and, depending on whether Aaron prevailed on appeal and in choice for recovery of attorney's fees, and we are bound by any supreme court review, attorney's fees would become due that choice. See One Call Sys., Inc. v. Houston Lighting & and owing on the dates the mandate issued from the court of Power, 936 S.W.2d 673, 676 (Tex.App.-Houston [14th Dist.] appeals or the supreme court. 1996, writ denied). In construing the parties' contract, we give the language its plain and grammatical meaning unless it In short, the trial court's award of attorney's fees is consistent would defeat the parties' intentions. Id. at 675.In the present with the attorney's fees provision in the lease. Accordingly, case, the landlords rely on Paragraph 30 of the lease, which we overrule the landlords' third issue. provided:

*8 Attorney's Fees.In any action, suit or proceeding to IV. CONCLUSION

enforce, defend or interpret the rights of either Landlord or Tenant under the terms of this Lease or to collect Having overruled the landlords' three issues, we affirm the any amounts due Landlord or Tenant hereunder, the judgment of the trial court. prevailing party, pursuant to a final order of a court having jurisdiction over said matter as to which applicable periods within which to appeal have elapsed, shall be entitled

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Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009) 2009 WL 4842761

All Citations

Not Reported in S.W.3d, 2009 WL 4842761

Footnotes 1 Wells was unsure whether he spoke with Rodolfo Moreno in the Public Works Department or to someone else. 2 In an initial order granting Aaron's motion for summary judgment, the trial court stated the landlords had not filed a response. The landlords filed a motion for new trial, and the trial court granted the motion and subsequently entered a second order granting Aaron's motion.

3 Aaron asserted these latter two grounds in its May 2005 motion for summary judgment. Both parties agree the trial court denied the May 2005 summary judgment motion and that Aaron did not repeat the May 2005 grounds in its second summary judgment motion. Accordingly, we overrule issue two as moot.

4 We take no position on whether the lack of a sewer easement and encroachments on water and storm sewer easements constituted a defect in the landlords' title.

5 The landlords attached and incorporated by reference their response to Aaron's May 2005 motion for summary judgment.

In that response, the landlords addressed Aaron's defense that the landlords had breached the lease by not providing a certificate of occupancy. That defensive ground is not the same as Aaron's 2006 ground based on the landlords having not resolved the easement problems, a breach that led to Aaron's inability to obtain a certificate of occupancy.

6 This third component of the landlords' argument appears to raise an issue other than a “no evidence” issue. 7 The landlords filed the affidavit and documents with their response to Aaron's May 2, 2005 motion for summary judgment, and Wells's statements in the affidavit are responsive to the grounds raised in the May 2, 2005 motion. See note 3, supra.

8 See note 3, supra. 9 The landlords' interpretation of Paragraph 30 would result in the necessity of a second lawsuit for the prevailing party in the contract suit to recover its attorney's fees for the contract suit. Such piecemeal litigation is generally disfavored. See Fid. Mut. Life Ins. Co. v. Kaminsky, 820 S.W.2d 878, 882 (Tex.App.-Texarkana 1991, writ denied) (stating (1) for policy purposes, allowing separate suit for attorney's fees arising out of a transaction encourages multiplicity of suits and delays in litigation, and (2) facts and complexity of suit is before court at time of initial action, and neither judicial economy nor litigants' and counsels' time is well served by allowing separate suits).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

A professional malpractice claim is based on negligence.

KeyCite Yellow Flag - Negative Treatment Declined to Extend by In re Enron Corp. Securities, Derivative & Cases that cite this headnote ERISA Litigation, S.D.Tex., June 1, 2009

191 S.W.3d 185 [2] Negligence Court of Appeals of Texas, Elements in general San Antonio. In an action for negligence, the plaintiff must prove that there is a duty owed to him by the BOARD OF TRUSTEES OF THE FIRE AND defendant, a breach of that duty, that the breach POLICE RETIREE HEALTH FUND, San proximately caused the plaintiff injury and that Antonio and The Fire and Police Retiree damages occurred.

Health Care Fund, San Antonio, Appellants, v. 1 Cases that cite this headnote TOWERS, PERRIN, FORSTER & CROSBY, INC., Gary L. Gross, and Michael Rodriguez, Appellees. [3] Negligence Necessity of causation

No. 04–04–00027–CV. | Nov. 23, Negligence

2005. | Rehearing Overruled Feb. 2, 2006.

Substantial factor

Synopsis Negligence Background: Fire and Police Retiree Health Care Fund and Foreseeability its Board of Trustees brought actuarial malpractice action The two elements of proximate cause are cause against actuary firm, alleging that inaccurate estimates of in fact, or substantial factor, and foreseeability. health care costs and inaccurate conclusions regarding the necessary pre-funding rate proximately caused millions of Cases that cite this headnote dollars of damage to the Fund. The 45th Judicial District Court, Bexar County, David Peeples, J., granted firm's motion [4] Negligence

for summary judgment, and Fund appealed.

In general; degrees of proof Cause in fact and foreseeability cannot be satisfied by mere conjecture, guess, or Holdings: The Court of Appeals, Sarah Duncan, J., held that: speculation.

[1] firm did not cause injury to Fund, and 1 Cases that cite this headnote

[2] lay testimony by union negotiators that union and [5] Negligence

city would have adopted higher rates was speculative and “But-for” causation; act without which inadmissible.

event would not have occurred Negligence

Affirmed. Substantial factor “Cause in fact” is established when the act or omission was a substantial factor in bringing about the injuries, and without it, the harm would West Headnotes (11)

not have occurred.

[1] Negligence 1 Cases that cite this headnote Trades, Special Skills and Professions [6] Accountants

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

Actions

2 Cases that cite this headnote In an accountant malpractice case, expert testimony is usually necessary to establish the causal link between the plaintiff's damages and [10] Evidence the accountant's negligence. Facts Forming Basis of Opinion The requirement that lay testimony be based on 1 Cases that cite this headnote the witness's perception presumes the witness observed or experienced the underlying facts.

[7] Insurance Rules of Evid., Rule 701.

Actuaries

2 Cases that cite this headnote Negligence Miscellaneous particular cases Actuary firm which provided actuarial report [11] Evidence to city and unions did not cause injury to Fire Facts Forming Basis of Opinion and Police Retiree Health Care Fund, which A speculative opinion, such as an opinion on was underfunded due to inaccurate estimates what someone else was thinking at a specific of health care costs and inaccurate conclusions time, does not help the jury to either understand regarding the necessary pre-funding rate; city the witness' testimony better, or decide the and union were not required to raise contribution question of the other person's intent; mere rates if firm had recommended a higher funding conjecture does not assist the jury. rate, and city and unions had failed to follow firm's previous recommendation for an increase 1 Cases that cite this headnote in the contribution rates.

Cases that cite this headnote Attorneys and Law Firms

[8] Evidence *187 G. Wade Caldwell, Perry C. Robinson, Martin, Facts Forming Basis of Opinion Drought & Torres, Inc., San Antonio, for appellants.

Lay testimony by union negotiators that union and city would have adopted higher rates of George H. Spencer, Jorge E. Canseco, Clemens & Spencer, contribution to the Fire and Police Retiree Health P.C., San Antonio, for appellees. Care Fund if actuarial firm had recommended higher rate was speculative and inadmissible Sitting: CATHERINE STONE, Justice, PAUL W. GREEN, in professional malpractice action against firm; Justice (not participating), SARAH B. DUNCAN, Justice. testimony was based not on their perceptions but on their conclusions regarding what the city's negotiators, the members of the city council, and OPINION hundreds of members of the union would have SARAH DUNCAN, Justice.

done if firm had recommended a higher pre- funding rate. Rules of Evid., Rule 701. The Fire and Police Retiree Health Care Fund, San Antonio and its Board of Trustees appeal the trial court's take-

1 Cases that cite this headnote nothing judgment against them in their actuarial malpractice suit against Towers, Perrin, Forster & Crosby, Inc.; Gary [9] Evidence L. Gross; and Michael Rodriguez. We hold the trial court Facts Forming Basis of Opinion correctly granted Towers Perrin's no-evidence motion for The perception underlying the lay witness's summary judgment on causation and acted within the ambit testimony may be what was seen, heard, smelled, of its discretion in sustaining Towers Perrin's objections to tasted, touched or felt. Rules of Evid., Rule 701.

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

the Fund's causation evidence. We therefore affirm the trial San Antonio and its governing Board (collectively, “the court's judgment. Fund”).

Pursuant to its statutory authority, the Board retained Towers, Perrin, Forster & Crosby, Inc. “to provide ...

FACTUAL AND PROCEDURAL BACKGROUND actuarial valuation[s] to determine the actuarial liability and “Because of the lasting health consequences associated with appropriate pre-funding rate 2 for the Fund.” One of these the stressful nature of the professions of firefighting and valuations, “conducted as of July 1, 2000,” resulted in a report law enforcement,” the Texas Legislature created the Fire dated November 9, 2000. The 2000 Report is signed by a and Police Retiree Health Care Fund “to provide health care principal of Towers Perrin, Gary L. Gross. Also working on benefits for persons who retired on or after October 1, 1989, the project was Michael Rodriguez. from [certain] municipal fire or police department[s]....” TEX.REV.CIV. STAT. ANN.. art. 6243q, § 1.01 (Vernon The 2000 Report recommended that, based on “[t]he 2003). An article 6243q fund is a statutory trust, id. § 1.04(a), assumptions outlined in Appendix B ... and agreed upon by that is administered by a board of trustees, id. § 1.04(b), the [Board],” the pre-funding rates be 9.4% of the City's composed of various city officials, two active firefighters payroll and $20 per month for each employee. Based upon and two active police officers, and retiree representatives of these assumptions and recommended pre-funding rates, the the fire and police departments. Id. § 2.01(a). Because the 2000 Report concluded it would take twenty-five years board of an article 6243q fund “administer[s] and hold[s] to amortize the Fund's $110,640,506 unfunded accrued in trust the assets of the fund for the exclusive benefit of liability. 3 The recommended pre-funding rate of 9.4% plus the beneficiaries of the fund,” id. § 1.04(b), its “board has $20 was adopted by the City and the unions in their 2002 complete authority and power to ... administer the fund for collective bargaining agreements. the exclusive benefit of the beneficiaries of the fund; ... order payments from the fund; ... independently control the In 2001, after a billing dispute with Towers Perrin, the Board fund; and ... conduct all litigation on behalf of the fund.” engaged Rudd and Wisdom, Inc. to produce another actuarial Id. § 3.01(a). The board also has final responsibility for the evaluation of the Fund; this evaluation, which measured the investment of the reserve funds, id. § 6.04(d), which are Fund as of October 1, 2001, resulted in a report dated May defined as all assets other than “a reasonably safe amount of 20, 2002. The 2002 Report concludes in part as follows: surplus necessary to defray reasonable expenses of the fund.” Id. § 6.03(a)-(b). So that a board may properly perform its 1. The Fund will have a long term inadequate financing duties, it is given statutory authority to enter into contracts arrangement if monthly contributions remain at the with various professionals, including actuaries. *188 1 Id. present level of $20 per active participant and 9.4% of § 6.05(a). “Membership in the fund,” “[c]ontributions to the covered payroll *189 by the City of San Antonio and fund,” and “[r]etirement health benefits” are determined in if present health benefits are left unchanged. accordance with the collective bargaining agreements. Id. §§ 2. In order to have an adequate financing arrangement, 4.01, 4.02(a), 5.01.

contributions will have to be significantly increased. Our best estimate is that effective October 1, 2002 total The collective bargaining agreements involved in this contributions should be increased to 13.94% of covered case are those between the City of San Antonio and payroll assuming continuation of the active participant the firefighters' and police officers' unions—Local 624 contribution of $20 per month.

International Association of Firefighters and the San Antonio Police Officers' Association. See id. §§ 1.02(4), 1.03 .... (“This Act applies to a paid fire and police department of a municipality with a population of 750,000 or 6. The significant increase in the actuarially recommended more that has adopted Chapter 174, Local Government level of contributions can be attributed primarily to Code.”). Accordingly, shortly after passage of article 6243q, changes in actuarial assumptions for (a) current annual these entities adopted collective bargaining agreements health benefit claims costs, and (b) future annual establishing the Fire and Police Retiree Health Care Fund, increases in benefit claims costs (trend).

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

(emphasis in original). If the 13.94% pre-funding rate were c. There is no evidence that any claimed failure of any adopted in the 2002 collective bargaining agreements, the Defendant to meet the applicable standard of care with City's contribution would increase by approximately $7.9 respect to the sensitivity tests provided for under certain million. The 2002 Report also concluded that the Fund's circumstances by Actuarial Standard of Practice 6, and/ unfunded accrued liability was $263,347,529. Although this or with Defendant Towers Perrin's own internal policies unfunded accrued liability could be amortized in forty years at relating to one method available for the development of a the recommended 13.94% pre-funding rate, it would take an claims cost assumption was a proximate cause of damage “infinite” number of years to amortize the unfunded accrued to the Plaintiff or the Intervenor; liability at the present pre-funding rate of 9.4%.

d. There is no evidence that any claimed negligent act or Rudd and Wisdom's 2003 Report, which evaluated the Fund omission of any Defendant was a proximate cause or an as of October 1, 2002 and which was dated January 21, actual cause of damage to the Plaintiff or the Intervenor; 2003, presented a yet bleaker picture. According to the e. There is no evidence that any Defendant failed to meet 2003 Report, the Fund's estimated liabilities would not be the applicable standard of care by failing to include in the amortized over the long term unless the existing contribution Actuarial Study as of July 1, 2000 the recommendation rates were “substantially increased” to “19.93% of covered that an increase in the funding to 15.39% was needed to payroll in addition to the assumed continuation of the active amortize the unfunded actuarial accrued liability of the participant contributions that would be made if the collective Plaintiff or the Intervenor;

bargaining agreements in effect October 1, 2002 were to continue indefinitely ($20 per month for police officers and f. There is no evidence that any Defendant failed to meet $70 per month for fire fighters after fiscal year 2003–2004).” the applicable standard of care by failing to conclude in the The recommended pre-funding rate of 19.93% could be Actuarial Study as of July 1, 2000 that the Plaintiff or the accomplished with a ten-year phase-in at 1.38% per year. Intervernor had an unfunded actuarial accrued liability of Without the phase-in, the City's contributions would increase $263,347,529; by approximately $20 million the first year. 4 g. There is no evidence that the Plaintiff or the Intervenor Alleging Towers Perrin's inaccurate estimates of health care [has] sustained any legally recoverable damages as a result costs and inaccurate conclusions regarding the necessary of anything any of the things Defendants allegedly did or pre-funding rate proximately caused millions of dollars of failed to do; and damage to the Fund, the Fund filed suit against Towers h. There is no evidence that the Plaintiff or the Intervenor Perrin, Gross, and Rodriguez (collectively, “Towers Perrin”)

[has] sustained any damages in connection with the for professional negligence. On March 17, 2003, in response matters in controversy in this case which are not wholly to Towers Perrin's argument that the Fund lacked standing, speculative.

the Fund's Board of Trustees intervened. Later that year, Towers Perrin filed a motion for summary judgment alleging After ruling on Towers Perrin's objections to the Fund's there is no evidence on the following elements of the Fund's and its Board's summary judgment evidence, the trial court negligence cause of action: granted Towers Perrin's motion for summary judgment on all eight grounds and rendered a take-nothing judgment. The a. There is no evidence that any Defendant failed to meet Fund appealed.

the applicable standard of care with regard to the estimated medical cost increases reflected in the Actuarial Study as of July 1, 2000;

APPLICABLE LAW

*190 b. There is no evidence that any Defendant failed to meet the applicable standard of care with regard to the [1] [2] [3] [4] [5] [6] A professional malpractice estimated claims and administrative expenses reflected in claim is “based on negligence.” Cosgrove v. Grimes, 774 the Actuarial Study as of July 1, 2000; S.W.2d 662, 664 (Tex.1989) (attorney malpractice). In an action for negligence, “[t]he plaintiff must prove that there is a duty owed to him by the defendant, a breach of that

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

duty, that the breach proximately caused the plaintiff injury Burgess Mktg., Inc., 744 S.W.2d 170 (Tex.App.-Waco 1987, and that damages occurred.” Id. at 665. “The two elements writ denied) ].” Contrary to the Fund's assertions, however, of proximate cause are cause in fact (or substantial factor) this case is entirely unlike Greenstein. and foreseeability.” IHS Cedars Treatment Ctr. of Desoto, Texas, Inc. v. Mason 143 S.W.3d 794, 798 (Tex.2004). In Greenstein, the plaintiffs—Burgess Marketing, its “These elements cannot be satisfied by mere conjecture, principal owner Jack Burgess, and his wife—sued Burgess guess, or speculation.” Id. at 798–99. “Cause in fact is Marketing's accounting firm, Greenstein, Logan & Company, established when the act or omission was a substantial factor for accounting malpractice. Id. at 177. The plaintiffs alleged, in bringing about the injuries, and without it, the harm and the jury found, that Greenstein Logan's negligent failure would not have occurred.” Id. at 799. In an accountant to discover during its 1984 and 1985 audits that Burgess malpractice case, “[e]xpert testimony is usually necessary to Marketing had underpaid its federal excise tax proximately establish ... the causal link between the plaintiff's damages caused Burgess Marketing $3.5 million in damages. Id. On and the accountant's negligence.” Greenstein, Logan & Co. v. appeal, the court rejected Greenstein Logan's challenge to the Burgess Mktg., Inc., 744 S.W.2d 170, 185 (Tex.App.-Waco sufficiency of the evidence to support the jury's proximate 1987, writ denied) (citing Kemmerlin v. Wingate, 274 S.C. 62, cause finding, holding “[t]he jury could have reasonably 261 S.E.2d 50, 51 (1979)). concluded ... that the negligent failure of Greenstein Logan to perform the 1984 and 1985 audits in accordance with generally accepted auditing standards was a substantial factor in bringing about Burgess Marketing's bankruptcy, CAUSATION

and that the damage would not have occurred but for such The Fund argues the trial court erred in granting a summary negligence” from evidence that, “as soon as the underpayment judgment against it *191 on causation because “[t]here is was discovered,” “Burgess Marketing immediately resumed more than a scintilla of evidence from which a jury could paying the correct federal excise tax each month”; “Burgess reasonably infer the Health Fund was damaged as a result of immediately increased prices on non-gasoline items sold at [Towers Perrin's] negligent 2000 Study.” We disagree. [its] convenience stores”; Burgess “imposed stringent cost controls”; and “[t]hese management decisions resulted in the company's operations again becoming profitable within six months.” Id. at 186. According to the plaintiffs' experts, Standard of Review “if Greenstein Logan had discovered the underpayment during the 1984 audit when the company's liability was We review a summary judgment de novo. Joe v. Two Thirty only $287,229, Burgess could have then made the same Nine Joint Venture, 145 S.W.3d 150, 156 (Tex.2004). We will management decisions which he later made.” Id. (emphasis therefore reverse an order granting a “no evidence” motion for added).

summary judgment under Rule 166a(i) only if the respondent produced summary judgment evidence raising a genuine issue As indicated by the emphasized “he” in the previous sentence, of material fact on each challenged element. See TEX.R. CIV.

Burgess was the principal owner of Burgess Marketing and P. 166a(i). “When reviewing a summary judgment, we take thus able to cause the company to “resume[ ] paying the as true all evidence favorable to the [respondent], and we correct federal excise tax each month”; “increase [ ] prices indulge every reasonable inference and resolve any doubts in on non-gasoline items sold at [its] convenience stores”;

the [respondent's] favor.” Joe, 145 S.W.3d at 157.

and “impose[ ] stringent cost controls”—unilaterally and immediately. In this case, on the other hand, the City and hundreds of union members must negotiate the pre-funding Discussion rate during the collective bargaining process; neither can unilaterally or immediately change the pre- *192 funding [7] To support its argument, the Fund points to “evidence rate. Indeed, when Towers Perrin recommended a significant showing the City and the unions relied on past Towers Perrin increase in the pre-funding contribution rate to 10.6% in studies to determine the contribution rate and that higher 1992, that recommendation was not followed; instead, a pre-funding rates probably would have been adopted if they contribution rate of 8.5% by October 1997 was adopted. And had been known” and asserts this evidence “is identical to that 2.1% difference pales in comparison to the difference the permissible predicting in Greenstein [, Logan & Co. v.

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

between the 9.4% pre-funding rate adopted in the 2002 in collective bargaining agreements. Because the summary collective bargaining agreements and the 13.94% and 19.93% judgment record does not contain even a scintilla of evidence rates recommended in the 2002 and 2003 Reports, which on this issue, we hold the trial court correctly granted a norepresented increases for the City of $7.9 million and $20 evidence summary judgment against the Fund on causation. million, respectively. As a result, as Towers Perrin points out, any “evidence that [the] City and the Firefighters Union previously followed Towers Perrin's recommendations is not OBJECTIONS TO SUMMARY

competent evidence that these entities ... would have agreed JUDGMENT EVIDENCE

in the collective bargaining process to ... raise contribution rates.” Towers Perrin also points out yet another significant The causation issue was addressed in the affidavits of George distinction between Greenstein and this case: Unlike Burgess Suther and John Anderson Jr.; but Towers Perrin's objections Marketing, which was legally required to pay its excise taxes, to this evidence were sustained. Accordingly, in its final the City and the unions were not required to raise contribution issue, the Fund argues the trial court abused its discretion in rates, legally or otherwise; they had simply “agreed in sustaining Towers Perrin's objections to certain of the Fund's principle, in 1995, that, once an actuarially sound fund was summary judgment evidence. In light of our holding that the established by current contribution levels, the responsibility *193 trial court correctly granted a no-evidence summary for future contributions ... would be jointly shared by the judgment against the Fund on causation, we address only the parties, and would be quantified and allocated by negotiation propriety of the trial court's rulings on the objections to the in future agreements, as necessary.” In short, this case is affidavit testimony of the two witnesses offered by the Fund entirely unlike Greenstein. to establish causation—George Suther and John Anderson Jr.

The Fund also cites The Orthopaedic Clinic of Monroe v. Ruhl, 34,700 (La.App. 2 Cir. 5/11/01), 786 So.2d 323, writ denied, 2001–1727 (La.10/5/01), 798 So.2d 970. Again, Standard of Review however, the evidence in Ruhl was held to be sufficient to We review a trial court's evidentiary rulings under the abuse establish causation because the record included testimony of discretion standard. See United Blood Servs. v. Longoria, from both the plaintiffs' and the defendants' experts “that 938 S.W.2d 29, 30 (Tex.1997).

[the] plaintiffs suffered financially as a result of the failure to terminate,” which was caused by the defendant actuary's failure to timely provide the needed actuarial calculations. 786 So.2d at 331 (emphasis added). No such testimony Discussion appears in this summary judgment record.

[8] Anderson was the firefighters' union's chief negotiator in the 2002 collective bargaining process. He testified that The Fund also argues there is “expert evidence of causation”

he is “familiar with the history of the negotiations with the and points to the affidavits of Dr. Carl M. Hubbard City of San Antonio over the funding of the ... Fund;” both and Lawrence Mitchell and the deposition testimony of the union and the City “relied on the recommendations of Robert May. Hubbard authored a report that concluded the Towers Perrin” in negotiating the 1999 and 2002 collective economic loss to the Fund of using the contribution rates bargaining agreements; and, “given the long history of relying recommended by Towers Perrin and agreed to in the 2002 on the Towers Perrin recommended contribution rates, and Firefighters' Collective Bargaining Agreement instead of the the history of [the union] and the City of San Antonio rate recommended in the Rudd and Wisdom 2002 report adopting these rates, it is my opinion, which I believe is is $16.5 million. Mitchell and May concluded that Towers well founded, that there is a reasonable certainty that [the Perrin's conduct fell below the standard of care and resulted union] and the City of San Antonio would have adopted in a recommended pre-funding rate in the 2000 Report that higher contribution rates in the 2002 Firefighters CBA if it was too low. As evidenced by their conclusions, however, had been known that the contribution rates recommended Hubbard, Mitchell, and May testified on the issues of breach in the 2000 Towers Perrin study were too low.” Suther, and damages. None even purported to testify on causation, president of the firefighters' union and one it's the lead i.e., if Towers Perrin had recommended a higher pre-funding negotiators in the negotiations leading up to the firefighters'

rate, it would have been adopted by the City and the unions 2002 collective bargaining agreement, testified to the same

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

such as an opinion on what someone else was thinking effect. The trial court sustained Towers Perrin's objection at a specific time, does not help the jury to either (1)

that this testimony was “opinion testimony by a person never understand the witness' testimony better, or (2) decide the designated as an expert witness on this topic by the [Fund]

question of the other person's intent. Mere conjecture does under the controlling provisions of [the] Court's Scheduling not assist the jury.” *194 Fairow v. State, 920 S.W.2d Order entered on April 23, 2003.” The Fund does not argue 357, 361 (Tex.App.-Houston [1st Dist.] 1996), aff'd, 943 that it designated Anderson and Suther as expert witnesses;

S.W.2d 895 (Tex.Crim.App.1997). “Speculate” means “to rather, the Fund argues it was not required to designate take to be true on the basis of insufficient evidence.”

them “as experts in order [for them] to give [their] opinion WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY on matters which involve lay testimony.” In support of its 1133 (Merriam–Webster Inc.1988).

argument, the Fund cites Texas Rule of Evidence 701.

We hold the Rule 701 test is not met by Anderson's and [9] [10] [11] Rule 701 provides as follows:

Suther's causation testimony. This testimony was based not If the witness is not testifying as on their perceptions but on their speculative conclusions an expert, the witness' testimony in regarding what the City's negotiators, the members of the the form of opinions or inferences is San Antonio City Council, and hundreds of members of the limited to those opinions or inferences firefighters' union would have done if Towers Perrin had which are (a) rationally based on recommended a higher pre-funding rate. Accordingly, we the perception of the witness, and hold the trial court did not abuse its discretion in sustaining (b) helpful to a clear understanding Towers Perrin's objections to this testimony. of the witness' testimony or the determination of a fact in issue.

TEX.R. EVID. 701. “The perception underlying the lay CONCLUSION witness's testimony may be what was seen, heard, smelled, Because the summary judgment evidence fails to raise a tasted, touched or felt.” State v. Brainard, 968 S.W.2d genuine issue of material fact on causation, the trial court 403, 412 (Tex.App.-Amarillo 1998) (citing HULEN D.

correctly granted Towers Perrin's motion for a no-evidence WENDORF, ET AL., TEXAS RULES OF EVIDENCE summary judgment on this ground. And the trial court MANUAL VII–5 (3d ed.1991)), aff'd in part and rev'd properly sustained Towers Perrin's objections to the only in part on other grounds, 12 S.W.3d 6 (Tex.1999). Thus, evidence tendered by the Fund on the causation issue because “Rule 701's requirement that the testimony be based on it is based not on perception but speculation. We therefore the witness's perception presumes the witness observed affirm the trial court's judgment. or experienced the underlying facts, thus meeting the personal-knowledge requirement of [R]ule 602.” Turro v. State, 950 S.W.2d 390, 403 (Tex.App.-Fort Worth 1997, All Citations pet. ref'd) (citing Bigby v. State, 892 S.W.2d 864, 889 (Tex.Crim.App.1994), cert. denied, 515 U.S. 1162, 115 S.Ct. 191 S.W.3d 185 2617, 132 L.Ed.2d 860 (1995)). “A speculative opinion,

Footnotes 1 An actuary is “[a] statistician who computes insurance and pension rates and premiums on the basis of experience tables.” BLACK'S LAW DICTIONARY 34 (5th ed.1979).

2 The pre-funding or contribution rate is the amount contributed by the City and the police officers and firefighters to “prefund ” their expected retiree health care benefits; the pre-funding rate is expressed in the collective bargaining agreements as a percentage of the City's payroll and a monthly contribution for an employee.

3 The Fund's unfunded accrued liability was explained in the 2000 Report:

Prior to 1992, $117 per month was contributed for each active police officer and fire fighter to prefund the postretirement medical benefits for the members and their spouses. An actuarial valuation of the liabilities performed as of October 1, 1992 indicated that a prefunding rate of $341 (or 10.6% of payroll) was necessary to adequately fund the retireee medical liability. Because this was such a large increase, the parties involved agreed to gradually

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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)

increase the contribution levels reaching the rate of 8.5% of payroll for police officers and $234 per active per month for fire fighters for the fiscal year beginning October 1, 1997. In 1997 Towers Perrin updated the valuation results and determined that a funding rate of 9.4% was appropriate.

4 According to the 2003 Report, this “significant increase” “can be attributed primarily to these changes: (a) the change in the amortization period from 40 years to 30 years, (b) the change in the payroll increase assumption from 7% to 6% per year, (c) the 1% increase in assumed annual increases in future benefit claims costs (trend) for the first 9 fiscal years after the valuation date, (d) the 5% increase in assumed benefit claims costs for the fiscal year ending September 30, 2002, and (e) the change in the investment return assumption from 8.5% to 8.25% per year.” “Another source of increase in the recommended contribution rate was adverse experience (worse than assumed) during fiscal year 2001–2002, including both adverse investment experience and adverse claims costs.”

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Burford v. Pounders, 145 Tex. 460 (1947) 199 S.W.2d 141

Where lease referred to premises as “being block 145 Tex. 460 No. 10 of a subdivision of a 66 3 /10 acres of Supreme Court of Texas. the Archer Survey located about 2½ miles West of the City of Tyler on the Dallas Highway”, BURFORD although no plat showing block No. 10 was of v. record in the county deed records, description POUNDERS et al. in lease was sufficient to authorize admission of extrinsic evidence to explain the terms used No. A-862. | Jan. 22, 1947. therein, and, where extrinsic evidence identified land, lease was not void under the statute of Error to Court of Civil Appeals of Sixth Supreme Judicial frauds for want of sufficient description of land.

District.

Vernon's Ann.Civ.St. art. 3995.

Trespass to try title suit by W. R. Pounders against S. Cases that cite this headnote O. Burford, wherein defendant cross-complained against plaintiff and R. E. Beaird for specific performance of an option to purchase contained in a lease and in the alternative [3] Specific Performance for damages against R. E. Beaird for alleged breach of Necessity contract. To review a judgment of the Court of Civil Appeals, Where promissor openly refuses to perform 192 S.W.2d 914, affirming a judgment for the plaintiffs, the contract or declares his intention not to perform, defendant brings error. promisee need not make tender of payment of consideration before suing for specific Reversed and remanded. performance, but it is sufficient if promisee is ready and willing and offers to perform in his pleadings.

West Headnotes (6) 17 Cases that cite this headnote

[1] Specific Performance [4] Vendor and Purchaser Bona Fide Purchasers Questions for Jury Vendor and Purchaser Whether time is of essence of contract giving By Tenant option to purchase realty is ordinarily a question Where lease contract was not filed for record of fact. but tenant was in visible physical possession of 1 Cases that cite this headnote premises at time of sale thereof by landlord, purchaser had constructive notice of lease and was not innocent purchaser for value, and was [5] Appeal and Error in no better position than landlord to defend Implied Findings in General tenant's suit for specific performance of option to The rule that supplemental findings necessary to purchase contained in lease. support judgment are presumed is not applicable when findings and conclusions disclose the basis 9 Cases that cite this headnote for judgment, and the court does not find such necessary supplemental facts.

[2] Evidence Sufficiency of Description to Admit Parol 10 Cases that cite this headnote Evidence Frauds, Statute Of [6] Specific Performance Contents of Instrument Necessity

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Burford v. Pounders, 145 Tex. 460 (1947) 199 S.W.2d 141

Specific Performance was engaged in the real estate business and had sold some of Payment of Consideration Into Court the other tracts of the subdivision. In the interest of brevity A tenant offering in his pleadings to do equity it is stated here that the Court of Civil Appeals held (and we could maintain suit for specific performance of are in accord with its holding) that constructive notice of the option to purchase contained in lease without contents of the lease contract was visited upon Pounders at the tendering the agreed price to landlord who time he received the deed; and that as pointed out by the Court repudiated option by selling to third person in its opinion, ‘Under the pleadings supported by the above without notice to tenant as required by option, facts and other evidence not necessary to detail, Pounders was and tenant would be awarded land on paying not an innocent purchaser for value.’ Ramirez v. Smith, 94 into court the agreed price as tendered in his Tex. 184, 59 S.W. 258; 43 T. J., Vendor-Purchaser, Sec. 389. pleadings. He knew some one was in possession and Beaird told him it was Burford. There were visible circumstances indicating 20 Cases that cite this headnote that Burford was in possession. It is well to note here also that Pounders (not being an innocent purchaser) was in no better position that his grantor (Beaird) to defend Burford's suit for specific performance. Langley v. Norris, 141 Tex. 405, 173 Attorneys and Law Firms S.W.2d 454, 148 A.L.R. 555. See also in this connection the well considered case of Driebe v. Fort Penn Realty Co., *461 **141 Lasseter, Spruiell, Lowry, Potter & Lasater 331 Pa. 314, 200 A. 62, 117 A.L.R. 1091. Pounders, with and Wilbert Lasater, all of Tyler, for petitioner. notice, involved himself in the lease contract relations of Beaird an Burford. It makes for brevity also to note at this John Y. Lawhon, of Tyler, for respondents.

point our agreement with the Court of Civil Appeals that Opinion the description of the land given in the lease contract was sufficient to authorize the admission of the extrinsic evidence TAYLOR, Justice. referred to in the opinion ‘to explain the terms' used in the lease, and to make feasible the identification of the land;

W. R. Pounders filed this suit against S. O. Burford in trespass and that ‘under such status, the lease contract was not afoul to try title to a small tract of land, the last remaining unsold of the statute of frauds (Vernon's Ann.Civ.St. art. 3995).’ of 11 similar tracts of the R. E. Beaird Subdivision located See discussion in the opinion and authorities there cited. At about two and a half miles west of the City of Tyler on the Beaird's home on March 5, 1943, Beaird and Burford agreed Dallas highway. Burford duly answered and filed a cross upon the terms of the lease. After writing and signing it, action against Pounders, joining R. E. Beaird as codefendant, Beaird sent it to Burford. Burford signed it, and, according seeking primarily specific performance of contract; and in the to a stipulation of the parties, attached his check for $25 and alternative, recovery of damages. No question of defective on March 12, 1943, mailed both the contract and the check to pleadings is urged by any of the parties. Upon trial without Beaird. There were no further negotiations between them and a jury judgment was for Pounders and Beaird, and against there is no question of mutual mistake, accident or fraud, in Burford on his cross action. The Court of Civil Appeals the case. For convenience we *463 set out at this point the affirmed the judgment. 192 S.W.2d 914, 915. body of the lease contract without paragraphing: ‘The lease is for two years. Consideration Twenty-five dollars per year *462 The controversy arose out of a two-year lease contract payable in advance each year. This lease is for the purpose of made on March 5, 1943, **142 whereby Beaird as lessor pasturing and gardening * * *. R. E. Beaird, Lessor, agrees to (also the owner) gave Burford, the lessee, a ‘refusal to permit the lessee, S. O. Burford, to remove from the premises purchase’ the land for an agreed price of $1,000. The contract any improvements, that may be put there by the Lessee, when is copied in the Court of Civil Appeals opinion. The trial this lease expires. * * * Burford, lessee, agrees to vacate court's findings of fact and conclusions of law, the statement the premises on notice of the sale,-at any time-of the above of facts, and also certain stipulations made by the parties upon described acreage, on the return of whatever unearned portion the trial, constitute a part of the record before us.

of the rent money by R. E. Beaird or by any one to whom he [1] [2] It appears that Beaird, about five months before the may sell the same. * * * Beaird agrees to give S. O. Burford lease expired, and while Burford was in possession of the land the refusal of purchase of the above described land before he using it for garden and pasture, deeded it to Pounders, who

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Burford v. Pounders, 145 Tex. 460 (1947) 199 S.W.2d 141

sells the same to any one else. Also, that whatever amount option * * * Beaird purported to sell such property to crossof rent money having been paid will apply on purchase price defendant, W. R. Pounders, on or about October 18, 1944, of same. The price agreed upon by this contract shall be One while said lease contract was in * * * effect and without giving Thousand Dollars for the 6 1/3 acres.’ (Italic ours.) cross-plaintiff an opportunity to exercise his option * * *. That on or about February 20, 1945, cross-plaintiff gave notice to * * * Beaird of his election to exercise said option * * *. At Beaird testified that Burford duly paid him the $50 called that time cross-plaintiff had paid * * * as rent under the * * for in the contract, $25 a year in advance, and that he told * lease; and on or about February 20, 1945, * * * tendered Pounders that Burford had a written lease contract. It was * * * $950.00 * * * in cash to * * * Beaird, and requested admitted by Beaird that he deeded the property to Pounders a conveyance of said property in compliance with the terms without letting Burford know he contemplated selling it and of said contract. That * * * Beaird refused to accept said without giving him an opportunity to buy it, and the trial court money and * * * Beaird and Pounders have refused to make found that Burford knew sometime before Christmas, 1944, conveyance of said property * * *, and still refuse to do so. that Beaird had sold the land. On February 20, 1945, Burford That cross-plaintiff * * * tenders * * * $950.00 * * * in court, wrote Beaird that he was formalizing (by means of the letter) and asks that cross-defendants perform said contract.’ the prior verbal notice of his desire to exercise his option to purchase the land; and that he was therewith tendering the The trial court found that when Beaird sold the land to consideration provided in the contract, **143 ‘to wit, the Pounders, Burford (not having ‘sold his property in Houston’) sum of $1000.00 less the $50.00 I have paid you in rent.’ ‘was not then in position to have bought and paid for the land Burford stated in the letter that he would be within his legal at that time.’ Beaird testified it was his intention all along to rights to remain in possession after the expiration of the lease sell the land for.$1000.00 only in event ‘of an emergency’; contract, that he was sending Pounders a copy of the letter, that while he wrote and signed the above contract, it was and finally, that ‘you will consider this a formal notice that not the contract he and Burford entered into; that he put in I do now claim, and shall continue to claim, the exclusive the ‘refusal-to-purchase’ clause not as an option, but ‘as a right of possession.’ Beaird testified that Burford brought a matter of courtesy to a young man * * * he was trying to do check to the house ‘and handed it to me, and I didn't even something for’; and that the reason behind his adding ‘that look at it’; that he told him he had already sold the place to clause’ was to give Burford ‘the first shot at it’ if he had to sell Pounders ‘would have nothing further to do with that part for $1,000. Beaird was straight-forward in his statement that of it.’ Before stating the remaining pertinent facts we quote he harbored such mental reservation, in that when questioned from a recent general statement, 49 American Jurisprudence, further as *465 to why he put in the option clause he replied: Special Performance, the following general statement of the ‘I just made a mistake, that's all.’ The date mentioned, it will applicable law: ‘Whatever difference of opinion there may be be noted, was well within the two-year contract period. as to the necessity of tender of performance before suit when the defendant *464 is not in default, it is clear that a tender The trial court's conclusions of law on which he predicated is unnecessary if the defendant repudiates the contract before his judgment against Burford were as follows: suit, or it appears that he would have refused the tender if ‘III. The ‘Option’, not specifying any time within which it it had been made. * * * If the defendant puts himself in an might, or should, be exercised, and the land being for sale at attitude of default, resists the performance, and insists that he all times while rented by Burford, time was necessarily of the is not bound by the contract, tender to him is unnecessary. * essence of such an ‘option’, and the same was invalid for lack * * Consequently, all that is required in such case is that the of a provision of time for the exercise thereof. plaintiff place himself in favor with the court, and this may be done by a proper offer in the pleadings.’ (Italics ours.) ‘IV. Burford, not being in position to have purchased the land at the time it was **144 sold to Pounders, and it being Burford, it appears from the following pleading contained in subject to sale all of the time since it was rented to Burford, his trial cross-petition, made such proper offer: ‘That said the failure to notify Burford to then exercise his option if he lease contract contained a provision giving the cross-plaintiff wanted to, would have been a futile thing, as under his own an option to purchase the above described property at any time testimony he could not then have performed by then buying during the term of the lease for the sum of * * *. $1000.00 * the land, and there being no provision binding Beaird to hold * *, less whatever * * * cross-plaintiff might have previously the sale of the land for him to any particular time, Burford paid as rent for the property. * * * That in violation of the suffered no injury by the sale to Pounders without notice to

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Burford v. Pounders, 145 Tex. 460 (1947) 199 S.W.2d 141

him (Burford) of the sale, and, therefore cannot recover either specific performance or damages.’ (Italics ours.)

The Court of Civil Appeals recognized in the concluding paragraph of its opinion that ‘Beaird was in default in failing It will be observed that the trial court concluded as matters of to give Burford the refusal to purchase,’ but excused his law as a basis for his judgment, (1) and that the option was default on the authority of a statement quoted from 58 C.J., invalid because the contract contained no provision fixing a Specific Performance, Sec. 316 (sound law but not applicable time for its exercise, (2) that Beaird repudiated his contract here). The law applicable to the present case is pointed by selling the land without giving Burford the refusal to out by subsequent statement in the same section that ‘on purchase, and (3) that Burford suffered an injury for the the contrary, complainant ordinarily is entitled to specific reason he was not in position at the time the land was sold to performance where he alleges and proves that he * * * is exercise his option. It will be observed also that he was careful ready, able and willing to perform.’ The author, in addition to not to hold that the date upon which he found Burford had the stating the law as just quoted, points by footnote references money (February 21, 1945) was not within a reasonable time to subsequent sections (342 and 348-350) dealing with the for exercising the option. specific subjects of ‘Tender Excused’ and ‘Tender or Offer [3] The Court of Civil Appeals affirmed the judgment based Excused,’ respectively. In a footnote (2, f) under section 342 on the above holdings as matters of law, and Burford applied dealing with specific performance in ‘Suit by Purchaser,’ it for writ of error. He alleged among other points of error is stated that ‘In Texas' an actual tender ‘is not necessary in his application, that the Court of Civil Appeals erred in where the purchaser pleads and proves a willingness to pay, upholding the trial court's conclusions stated in No. IV, supra, but is entitled to relief provided that, within a time fixed and urged in support of the point that under the circumstances in the decree, he shall pay the amount due,’ citing among of this case it was not incumbent on Burford to make a other **145 cases, Kalklosh v. Haney, and Lockwood v. tender in the matter *466 of exercising his option within Frost, supra. *467 In section 348 it is stated that ‘whatever a reasonable time after learning of the sale, but that it was difference of opinion may exist as to the original necessity sufficient for him to offer to do equity in his pleadings. of a tender of the consideration before suit, * * * it appears This contention is in exact accordance with the statement to be quite well settled that a formal tender is excused where of the law quoted above, 199 S.W.2d 143, and with the a tender would be a useless and idle ceremony’; and that settled law of Texas. The Court of Civil Appeals was in error a ‘tender is also excused where defendant repudiates the in rendering judgment against Burford. The applicable law contract’; and further that ‘tender in pleadings (is) sufficient’ has been definitely settled in this state. Regester v. Lang, where plaintiff sets forth that he is ready, able and willing ‘or Tex.Com.App., 49 S.W.2d 715; Kalklosh v. Haney, opinion * * * pays the consideration into court.’ In section 349 dealing by Judge Tarlton, 4 Tex.Civ.App. 118, 23 S.W. 420; Babcock with ‘Repudiation of Contract,’ it is stated that ‘the necessity v. Lewis, 52 Tex.Civ.App. 8, 113 S.W. 584 (wr. ref.); Taylor of a tender is dispensed with where defendant repudiates v. Kaufman, Tex.Civ.App., 267 S.W. 526; Lockwood v. the contract, or makes any declaration which amounts to a Frost, Tex.Civ.App., 285 S.W. 874; San Antonio Joint Stock repudiation, * * *,’ citing the Texas cases, Taylor v. Kaufman Land Bank v. Malcher, Tex.Civ.App., 164 S.W.2d 197 (ref. and Babcock v. Lewis, supra. In the following section (350) want merit); 58 C.J., Specific Performance, Secs. 348-350. In it is stated that ‘if a tender of the purchase price or other sums the case first cited (in which the promissor denied he had ever before suit is necessary, it is excused where the vendor or made the contract under consideration) the court pointed out seller has put it out of his power to perform, as where he has that a tender ‘would have been a vain and useless thing,’ (49 conveyed the property * * * to a third person.’ S.W.2d 717) and said: ‘It is thoroughly settled that where a defendant has openly and avowedly refused to perform his The assignment under which it was urged that it was not part of a contract, or declared his intention not to perform it, a incumbent on Burford to make tender of the amount due as plaintiff need not make tender of payment of the consideration therein set out, is sustained. It appears from the trial court's before bringing suit. It is sufficient if he is ready and willing conclusions of law that he not only did not find as a fact and offers to perform in his pleadings.’ See in this connection that Burford did not make such offer within a reasonable the following well considered cases in other jurisdictions: time before suit and within a reasonable time under the Cummings v. Nielson, 42 Utah 157, 129 P. 619; Casto v. circumstances, but that he was careful not to so hold. He Cook, 91 W.Va. 209, 112 S.E. 502; and Driebe v. Fort Penn merely held, as appears from the court's concluding finding Realty Co., supra. of fact, that Burford, ‘took no action then (when he learned

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Burford v. Pounders, 145 Tex. 460 (1947) 199 S.W.2d 141

the findings and conclusions disclose the basis therefor, and Beaird had sold the property) * * * because he had not sold’

that the court did not find such necessary supplemental facts.

his Houston property and did not have the money ‘until about February 21, 1945.’

[6] Since Beaird put himself in an attitude of default, and There was no question that the value of the land materially repudiated the contract by selling to Pounders, a tender to changed. The court's finding was that the market value was Beaird was unnecessary. It was sufficient for Burford to offer the same at the time of the sale in October, at the time of in his pleadings to do equity. This Burford has done. The only the trial, and at the time Burford tendered his check. While matter remaining to be done by the trial court is to direct that the Court of Civil Appeals apparently held that Burford had payment be made into court by Burford forthwith as tendered a reasonable time within which to make tender it did so, not in his pleadings; and that upon the making of such payment upon a fact finding of the court below, but as a matter of into court, judgment be entered denying Pounders recovery law, saying (in conclusion III) that the contract was invalid. of the land and awarding Burford judgment for title and writ This was incorrect. The material consideration is that Burford of possession. offered in his pleadings to do equity. Cases and authorities cited 199 S.W.2d 144, and authority quoted 199 S.W.2d 143, The judgments of the courts below are reversed and set both supra.

aside and the cause is remanded for further proceedings in [4] [5] It conclusively appears that whether time was of accordance herewith. It is so ordered.

the essence of the contract (ordinarily a question of fact) was taken out of the case by Beaird's testimony, and that it would have been an idle ceremony to tender the agreed SIMPSON, J., not sitting. price at any time, since *468 he made it clear that it was his intention to sell at that price only in the event of an All Citations emergency. The rule that supplemental findings necessary to 145 Tex. 460, 199 S.W.2d 141 support the judgment are presumed, has no application when

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City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)

reversed on appeal. Rules of Civil Procedure, rule 166–A.

421 S.W.2d 427

Court of Civil Appeals of Texas. 12 Cases that cite this headnote Houston (1st Dist.).

The CITY OF HOUSTON, Appellant, [3] Appeal and Error v. On Motion for Judgment SOCONY MOBIL OIL COMPANY, Inc., Appellee. An interlocutory summary judgment is not appealable until a final judgment is entered No. 15118. | Nov. 16, 1967. disposing of all parties and issues in the cause.

| Rehearing Denied Dec. 7, 1967. Rules of Civil Procedure, rule 166–A.

Action for damage resulting to realty from lowering of grade 6 Cases that cite this headnote of street by defendant. The District Court, Harris County, W. Sears McGee, J., entered judgment in favor of plaintiff and defendant appealed. The Court of Civil Appeals, Coleman, [4] Appeal and Error J., held that grant of summary judgment establishing liability Ordering New Trial of Certain Issues Only of city for damage to real estate resulting from lowering of An appeal from a final judgment, in which grade was properly entered based on unsworn pleadings of an interlocutory summary judgment has been the parties, and defendant's answer was insufficient to raise merged, presents an opportunity for an appeal issues of fact precluding summary judgment in view of fact from the summary judgment, and if the appeal matter sought to be raised constituted affirmative defenses results in a reversal on points not involved and defendant failed to carry burden of submitting evidence in the summary judgment, that portion of the in support thereof. case decided on summary judgment will not be remanded for a new trial.

Judgment affirmed.

9 Cases that cite this headnote

[5] Appeal and Error

West Headnotes (9)

Specification of Errors A question not presented in a point of error or [1] Judgment by argument under points of error in appellant's Partial Summary Judgment brief cannot be considered.

Purport of rule providing for an interlocutory summary judgment on issue of liability although 3 Cases that cite this headnote there is a genuine issue as to amount of damages is to make issues determined on such motion for [6] Judgment partial summary judgment final. Rules of Civil Presumptions and Burden of Proof Procedure, rule 166–A. Burden is on movant for summary judgment to demonstrate by evidence that there is no material 3 Cases that cite this headnote factual issue upon elements of his claim, and upon going forward with such evidence he is [2] Judgment entitled to such judgment unless his opponent Construction and Operation comes forward with a showing that there is a Once an interlocutory summary judgment is disputed fact issue. entered, the issues decided cannot be further litigated unless the judgment is set aside by the 2 Cases that cite this headnote trial court, or unless the summary judgment is

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City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)

[7] Pleading Opinion Anticipating Defenses

COLEMAN, Justice.

It is not incumbent upon plaintiff to incorporate in his pleading allegations which negative an This is a suit for the damage resulting to real estate from the affirmative defense. lowering of the grade of Long Point and Foley Streets by the City of Houston. After appellee secured an interlocutory 1 Cases that cite this headnote summary judgment decreeing *429 liability, the cause was tried to a jury on the question of damages. Based on the [8] Appeal and Error jury verdict and the interlocutory summary judgment, the trial Matters Occurring After Judgment court entered a final judgment in favor of appellee. Admissions of fact and response to Appellant contends that the trial court erred in overruling interrogatories and evidence introduced at trial its motion for judgment non obstante veredicto because the on a bill of exceptions could not be considered evidence established that the City of Houston levied a paving in determining propriety of grant of a partial assessment on the property in question and appellee failed summary judgment which was entered prior to to appeal from such assessment in the manner provided filing of admissions of fact and prior to trial on by law, and, further, estopped itself from denying that the bill of exceptions.

property was enhanced in value by the paving by paying the Cases that cite this headnote assessment, which was based on the enhanced value of the property. By its other point appellant contends that the trial court erred in entering judgment for appellee for the same [9] Judgment reasons.

Evidence and Affidavits in Particular Cases Grant of summary judgment establishing The summary judgment establishing liability was based on liability of a city for damage to real estate the unsworn pleadings of the parties and the answers made to resulting from lowering of grade was properly certain requests for admissions of fact. In its petition appellee entered based on unsworn pleadings of the alleged ownership of certain real property fronting 125 feet parties, and defendant's answer was insufficient on Long Point Road and 125 feet on Old Campbell Road to raise issues of fact precluding summary (Foley Street) within the City of Houston. This property was judgment in view of fact matter sought to improved by the construction of a modern gasoline service be raised constituted affirmative defenses and station. In connection with a street improvement program defendant failed to carry burden of submitting the City of Houston lowered the grade on Long Point Road evidence in support thereof. and Foley Street from two to three feet, thereby destroying all approaches to and entries upon the plaintiff's premises.

2 Cases that cite this headnote It was alleged that as a result of the steep grades between the plaintiff's lot and the streets resulting from this work, it is impossible to construct suitable driveways to the filling station and that in order to restore the premises to a suitable Attorneys and Law Firms condition for use as a filling station it would be necessary to remove all improvements and lower the grade of the lot. The *428 William A. Olson, City Atty., Homer T. Bouldin, petition alleged damage in the sum of $21,205.00. Trial Supervisor, Joseph G. Rollins, Senior Asst. City Atty ., Houston, for appellant. In its answer the City of Houston alleged that by Ordinance No. 61—1982 enacted by the City on November 1, 1961, the William H. Tabb, John A. Berke, Jr., David R. Latchford, City Council of the City of Houston determined the necessity Jerome, E . Dawkins, Dallas, for appellee. for the paving of Long Point Road and of assessing the various abutting property owners, including plaintiff, for this work; that thereafter, and in compliance with law, due notice was given to plaintiff of this paving assessment and opportunity

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City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)

was afforded and plaintiff to protest same and present any motion for new trial appellant complained of the failure to claims for damages but, instead, on April 4, 1963 it did grant an instructed verdict; alleged error in submitting the voluntarily pay the full amount of the paving assessment case to the jury, and alleged error in that the court refused assessed against it for net benefits and enhancements to its motion for judgment non obstante veredicto. There was plaintiff's property resulting from such paving; hence, any no complaint made to the court entering the final judgment claim for diminution in market value to its premises which that the 113th District Court had erred in entering the partial plaintiff might otherwise have had has been expressly waived summary judgment at any stage of the proceeding, unless by said plaintiff. such complaint can be implied from the recitation in the judgment that the defendant duly excepted and gave notice of The plaintiff's unsworn motion for summary judgment was appeal. filed on October 21, 1965, and alleged that the attached interrogatories and admissions show that, except for the Appellant has no point in its brief in this Court specifically amount of damages, there is no genuine issue as to any complaining of the action of the trial court in granting the material fact. This motion was set for hearing on November partial summary judgment. The summary judgment is not 8, 1965. On this date the City filed its unsworn answer to mentioned by appellant in its argument under either of the the motion for summary judgment in which it stated that in points presented. addition to the question of damages there remained to be proved other facts in order to establish the liability of the During the trial of the damage issue before the jury, City, and that the burden of proving such facts rested on the the trial court sustained appellee's objection to appellant's plaintiff. proffered evidence concerning the paving assessment. The final judgment incorporated the partial summary judgment The trial court proceeded to hear the motion and, on and was based thereon. November 8, 1965, entered a decree sustaining the motion and ordering that the cause proceed to trial on the sole issue Rule 166—a, Texas Rules of Civil Procedure, specifically of damages. provides that a summary judgment, interlocutory in character, may be rendered on the issue of liability alone although After the entry of this decree the plaintiff filed a supplemental there is a genuine issue as to the amount of damages. It is petition in answer to certain special exceptions contained in provided that the judgment shall be rendered on the pleadings, the City's answer. On the 6th day of June, 1966, the special depositions, admissions, and affidavits on file, and that no exceptions were heard and the trial court entered an order oral testimony shall be received at the hearing . If there is no overruling them with the exception of one bearing on the issue genuine issue as to a material fact developed on the basis of of damages. this evidence, the movant is entitled to a judgment. The rule also provides that when judgment is not rendered on the whole The cause proceeded to trial on the issue of damages on case or for all the relief asked, the trial court shall ascertain November 14, 1966, and a judgment was entered on the 19th if practicable, what material facts exist without substantial day of *430 December, 1966, reciting the fact that the issue controversy and shall set out such facts in an order. On the of liability had been established by the order of the 113th final trial such facts shall be deemed established and the trial Judicial District Court on November 8, 1965, and setting out shall be conducted accordingly. the issues on damages together with the answers of the jury. [1] [2] [3] It is the clear purport of this rule to make The judgment then decreed that the plaintiff recover the sum the issues determined on the motion for summary judgment of $7,750.00, representing the difference in the market value final. Once an interlocutory summary judgment is entered, the of the property immediately before and immediately after the issues decided cannot be further litigated unless the judgment damage. is set aside by the trial court, or unless the summary judgment is reversed on appeal. An interlocutory summary judgment Appellant presented the matters it relies on for reversal in its is not appealable until a final judgment is entered disposing motion for judgment non obstante veredicto and in its motion of all parties and issues in the cause. Maples v. Klimist, 377 for new trial. In its motion for judgment it alleged that it S.W.2d 774 (Tex.Civ.App., Texarkana, 1964).

was entitled to an instructed verdict by reason of the failure to appeal from the special assessment and the subsequent [4] An appeal from a final judgment, in which an payment thereof. There was no mention of the summary interlocutory summary judgment has been merged, presents judgment and, of course, no motion to set it aside. In the

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City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)

an opportunity for an appeal from the summary judgment. If the appeal results in a reversal on points not involved in Appellant's points do not challenge the propriety of the the summary judgment, that portion of the case decided on summary judgment except insofar as a material question of summary judgment will not be remanded for a new trial. fact is raised as to the failure of appellee to appeal from Coleman v. Hudson Gas & Oil Corporation, 403 S.W.2d 482 the order levying the special assessment and finding that the (Tex.Civ.App ., Beaumont, 1966, ref. n.r.e.). property was enhanced in value by the street improvements, and insofar as a question of waiver of damage was raised by [5] A question not presented in a point of error, or by appellee's action in voluntarily paying the assessment. argument under the points of error, in appellant's brief, cannot [8] [9] There were no affidavits, depositions, or admissions be considered. Lott v. Lott, 370 S.W.2d 463 (Tex.Sup., 1963). on file as of November 8, 1965, tending to raise issues of fact as to any of these matters. Plaintiff's supplemental petition and brief in support of the petition, filed April 26, *431 If by liberal construction we may hold that the question 1966, and the admissions of fact filed on March 19, 1966, of waiver of damages by reason of failure to appeal from in response to interrogatories, cannot be considered since the action of the City Council in finding that the street the summary judgment was entered prior thereto. For the improvements enhanced the value of the property of appellee same reason the evidence introduced at the trial on the bill and levying an assessment, which was paid by appellant, was of exceptions cannot be considered. There was no summary presented to this Court by appellant's points, we find no merit judgment evidence to support the allegations in appellant's in the points. [6] [7] The propriety of the action of the trial court in answer. Since we are of the opinion that the matters sought to be raised constituted affirmative defenses, appellant had granting the summary judgment depends on the facts properly the burden of submitting evidence raising issues of fact with before the Court at the time the judgment was entered. The reference thereto. Gulf, Colorado & Santa Fe Railway Co. v.

burden was on the movant for a summary judgment, in an McBride, supra.

action in which the defendant has pleaded an affirmative defense, to demonstrate by evidence that there is no material factual issue upon elements of his claim. He is then entitled The judgment of the Trial Court is affirmed. to his judgment unless his opponent comes forward with a showing that there is such a disputed fact issue upon his All Citations affirmative defense. It is not incumbent upon the plaintiff to incorporate in his pleading allegations which negative the 421 S.W.2d 427 affirmative defense. Gulf, Colorado & Santa Fe Railway Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1959).

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

KeyCite Yellow Flag - Negative Treatment Affirmed in part, reversed in part, and remanded.

Distinguished by Bishop v. Miller, Tex.App.-Hous. (14 Dist.), September 12, 2013 Paul W. Green, J., filed a dissenting opinion in which 269 S.W.3d 588 Jefferson, C.J., O'Neill and Johnson, JJ., joined. Supreme Court of Texas.

Nick DiGIUSEPPE d/b/a Southbrook Development West Headnotes (14)

Co. and Frisco Master Plan, Petitioners, v.

Roger LAWLER, Respondent. [1] Specific Performance Nature and grounds of duty of plaintiff No. 04–0641. | Argued Oct. 20, An essential element in obtaining the equitable 2005. | Decided Oct. 17, 2008. remedy of specific performance is that the party | Rehearing Denied Dec. 19, 2008. seeking such relief must plead and prove he was ready, willing, and able to timely perform his Synopsis obligations under the contract. Background: Vendor brought action against purchaser of real property for a declaration that the parties' land 12 Cases that cite this headnote sale contract was terminated, and requested damages for breach of contract and also sought to quiet title. Purchaser [2] Specific Performance counterclaimed for breach of contract, among other claims, Nature and grounds of duty of plaintiff and sought specific performance. After jury determined that vendor breached contract, the 219th Judicial District It is a general rule of equity jurisprudence Court, Collin County, granted judgment in favor of purchaser in Texas that a party must show that he has and ordered specific performance. Vendor appealed. The complied with his obligations under contract Dallas Court of Appeals, 2004 WL 1209569, affirmed in to be entitled to specific performance of the part and reversed in part. Purchaser appealed. The Supreme contract, and as a consequence, a plaintiff Court initially declined review, but then granted motion for seeking specific performance, as a general rehearing and petition for review. rule, must actually tender performance as a prerequisite to obtaining specific performance.

16 Cases that cite this headnote Holdings: Sitting en banc, the Supreme Court, G. Alan Waldrop, J., sitting by assignment, held that:

[3] Specific Performance Nature and grounds of duty of plaintiff [1] remedy provision in contract did not eliminate or waive purchaser's burden to prove all essential common law When a defendant refuses to perform or elements for obtaining specific performance; repudiates a contract, the plaintiff may be excused from actually tendering his or her [2] purchaser was not entitled to a deemed jury finding that performance to the repudiating party before he was ready, willing, and able to perform under the contract; filing suit for specific performance.

1 Cases that cite this headnote [3] purchaser's pleaded allegations did not satisfy his burden to prove that he was ready, willing, and able to perform his obligations when they came due; but [4] Specific Performance Nature and grounds of duty of plaintiff [4] purchaser did not waive for appellate review his request When a defendant refuses to perform or for a refund of earnest money. repudiates a contract, a plaintiff seeking

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

specific performance is excused from tendering performance pre-suit and may simply plead 6 Cases that cite this headnote that performance would have been tendered but for the defendant's breach or repudiation; this [8] Appeal and Error exception to the general rule requiring actual Failure to Urge Objections tender is grounded in the notion that actual pre-

Ordinarily, failure to brief an argument on suit tender of performance should be excused appeal waives the claimed error, but this rule is when it would be a useless act, an idle ceremony, relaxed when fact issues are not germane to the or wholly nugatory.

resolution of the issue and the issue is a question 4 Cases that cite this headnote of law involving constitutional ramifications or fundamental error.

[5] Specific Performance 1 Cases that cite this headnote Nature and grounds of duty of plaintiff Even when pre-suit tender of performance is [9] Specific Performance excused, a plaintiff is still obligated to plead Trial or hearing and prove his readiness, willingness, and ability Purchaser was not entitled to a deemed jury to perform at relevant times before specific finding that he was ready, willing, and able to performance of contract may be awarded.

perform under land sale contract with vendor so 10 Cases that cite this headnote as to permit him to obtain specific performance despite submission of a jury question on such claim, even though jury question had been [6] Jury submitted as to whether purchaser complied with Issues of Fact in Equitable Actions land sale contract and jury returned a verdict When contested fact issues must be resolved finding that vendor had breached the contract; before a court can determine the expediency, whether purchaser complied with contract or necessity, or propriety of equitable relief, a party was excused from complying with contract, is entitled to have a jury resolve the disputed fact remedy of specific performance still required issues. proof that he was ready, willing, and able to perform, and existence of jury question relating 3 Cases that cite this headnote to vendor's breach of contract claim did not provide fair notice of purchaser's claim for [7] Specific Performance specific performance. Vernon's Ann.Texas Rules Enforcement by purchaser Civ.Proc., Rule 279.

Specific Performance 1 Cases that cite this headnote Nature and grounds of duty of plaintiff Provision in land sale contract which set forth [10] Specific Performance that one of purchaser's available remedies for Nature and grounds of duty of plaintiff breach of contract would be to seek to enforce specific performance did not create an automatic Offering to perform on a contract does not right to specific performance upon a finding establish the ability to perform, nor does having of breach on the part of vendor, and did not the ability to perform demonstrate a tender of eliminate or waive purchaser's burden to prove that ability, and the law requires a demonstration all essential elements under common law for of both before specific performance may be obtaining specific performance, including that he awarded, unless the requirement of tender is was ready, willing, and able to perform under the excused. contract.

1 Cases that cite this headnote

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

specific performance, and raised the earnest [11] Specific Performance money issue as soon as he was aware of the Nature and grounds of duty of plaintiff reversal of the trial court's judgment by the Court In order to obtain specific performance of a of Appeals. contract, a plaintiff must prove that he was ready, willing, and able to perform his obligations when 3 Cases that cite this headnote they came due, and pleading an offer to perform at the time the lawsuit is filed does not satisfy or replace the need to demonstrate the ability to perform at the relevant time. Attorneys and Law Firms

8 Cases that cite this headnote *590 Craig T. Enoch, Melissa Prentice Lorber, Winstead PC, Austin, James Robert Krause, Lawrence J. Friedman, Jeffrey Thomas Hall, Friedman & Feiger, L.L.P., Dallas, TX, [12] Specific Performance for Petitioner.

Necessity

Purchaser's pleaded allegation, that he was Hilaree A. Casada, Hermes Sargent Bates, L.L.P., Julia F. ready, willing and able to fund the purchase of Pendery, Attorney At Law, David W. Shuford, Law Office of land from vendor on a given date of zoning David W. Shuford, Daon M. Ward, Godwin Pappas Langley approval, did not satisfy his burden to prove Ronquillo, LLP, Dallas, TX, for Respondent. that he was ready, willing, and able to perform his obligations when they came due as was Douglas Laycock, University of Michigan Law School, Ann required to obtain specific performance of the Arbor, MI, for Amicus Curiae. land sale contract, where evidence on the Opinion

question of whether the said zoning approval date triggered purchaser's obligation to perform Justice WALDROP 1 delivered the opinion of the Court, was conflicting, and the jury was not asked to in which Justice HECHT, Justice WAINWRIGHT, Justice resolve the dispute.

BRISTER, and Justice WILLETT joined.

5 Cases that cite this headnote This case involves a claim for specific performance of a real estate purchase contract. After a trial in which the jury [13] Pleading found that the seller breached the contract, the trial court Denials rendered judgment in favor of the buyer and ordered specific A fact cannot be proved by a controverted performance. The court of appeals reversed on the basis that pleading; the pleading simply puts the matter at the buyer did not obtain a finding of fact or prove that he was issue. ready, willing, and able to perform. The court of appeals also concluded that the buyer had waived an alternative claim for Cases that cite this headnote refund of his earnest money by failing to file a notice of appeal as to that alternative basis for relief. We affirm the judgment of the court of appeals with respect to the claim for specific [14] Appeal and Error performance, reverse with respect to the finding of waiver on Nature or form of remedy

the alternative claim for refund of earnest money, and remand Purchaser did not waive for appellate review the case to the trial court for further proceedings.

his request for a refund of earnest money, as an alternative theory of recovery to his request for specific performance of land sale contract, even though he did not file notice of appeal I. Factual and Procedural Background from trial court judgment against him on the In October 1998, Nick DiGiuseppe d/b/a Southbrook issue, where purchaser had obtained favorable Development Co. entered into a contract with Richard Lawler judgment from trial court on his request for to purchase approximately 756 acres of Lawler's land near

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

Frisco, Texas, for $40,000 an acre. 2 The contract made filed the purchase contract in the deed records. 3 On April closing of the *591 purchase contingent on obtaining 14, 2000, Lawler filed suit against DiGiuseppe in Collin acceptable rezoning of the property from the City of Frisco to County District Court seeking a declaration that the purchase accommodate DiGiuseppe's development plans, and provided contract was terminated, requesting damages for breach of that closing that would occur on the fifteenth day after contract, and also seeking to quiet title as a result of the filing successful completion of rezoning. The purchase contract also of the purchase contract in the deed records. DiGiuseppe provided for a three-stage deposit of earnest money with the counterclaimed for breach of contract, quantum meruit, title company: (1) $100,000 upon the signing of the contract; breach of a duty of good faith and fair dealing, statutory fraud, (2) $100,000 upon the submission to the City of Frisco of promissory estoppel, *592 and specific performance. 4 the application to rezone the property; and (3) $400,000 upon “approval by the planning and zoning commission of the City The purchase contract limited the remedies available to the of Frisco of zoning acceptable to Purchaser of the ‘Land’ as parties in the event of a breach. In the event DiGiuseppe applied for.” DiGiuseppe made the first two earnest money failed to close, Lawler's “sole and exclusive” remedy was deposits. However, a dispute arose as to whether the events to retain the earnest money as liquidated damages, and he that would trigger the requirement for the third deposit had expressly waived any right to claim any other damages or occurred. specific performance from DiGiuseppe. In the event Lawler defaulted in performing his obligations under the contract In late November 1999, after numerous meetings and a for any reason other than DiGiuseppe's default or a proper number of revisions to the rezoning application, the Planning termination of the contract under its provisions, DiGiuseppe and Zoning Commission approved new zoning for the could choose between two remedies: (1) terminate the property at issue. This new zoning was approved by the contract and receive a full and immediate refund of the earnest City Council on January 4, 2000. Although the new zoning money, or (2) “seek to enforce” specific performance of the differed from the zoning that the parties had applied for in contract. DiGiuseppe also expressly waived any right to claim their original application, it was acceptable to DiGiuseppe. damages.

On January 12, 2000, Lawler faxed a letter to DiGiuseppe The case was ultimately tried to a jury and the parties' breach notifying him that Lawler considered DiGiuseppe in default of contract claims were submitted on broad-form questions of the purchase contract for failing to make the third earnest inquiring as to whether either party failed to comply with money deposit. Lawler took the position that the requirement the contract. The jury answered favorably to DiGiuseppe for the third ($400,000) earnest money deposit had been that Lawler had failed to comply with the contract and that triggered when the Planning and Zoning Commission had DiGiuseppe had not failed to comply. A damages question approved zoning that DiGiuseppe found acceptable. The was also submitted and the jury found that DiGiuseppe had January 12 letter also declared the contract “cancelled”

suffered $295,696.93 in damages. 5 Although disputed at and demanded release of the earnest money on deposit to trial, no question was requested by either party or submitted Lawler. DiGiuseppe objected to Lawler's notification that the to the jury with respect to specific performance or whether contract was terminated, taking the position that the third DiGiuseppe was ready, willing, and able to perform under the earnest money installment had not been triggered because contract at the time he alleged the transaction should have the new zoning was not approved “as applied for.” He also closed.

declared that he was moving forward with the transaction and demanded that Lawler continue to move toward closing.

On DiGiuseppe's post-verdict motion, the trial court rendered a take-nothing judgment against Lawler and granted Acting on the belief that the contract with DiGiuseppe was DiGiuseppe specific performance of the purchase contract terminated, Lawler signed a new purchase contract for the together with an award of attorneys' fees in the amount of property with DRHI, Inc.—the parent company of DR Horton $75,000. The trial court also appointed a receiver to take —on February 1, 2000. DiGiuseppe, acting on the belief that possession of the property and effectuate a closing of the the contract was not terminated, proceeded with finalizing purchase contract in accordance with its terms.

his side of the transaction and demanded that Lawler close. The transaction did not close. Both parties alleged the other The court of appeals reversed the trial court's order granting was responsible for the failure to close. DiGiuseppe then specific performance, holding that DiGiuseppe had failed to

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

conclusively establish, or to request and obtain a finding obtained a favorable judgment as to specific performance in of fact on, an essential element of his claim for specific the trial court, DiGiuseppe argues he was not obligated to performance—that he was ready, willing, and able to file a notice of appeal in the court of appeals to preserve the perform under the terms of the purchase contract. Lawler option of pursuing a refund of his earnest money in the event v. DiGiuseppe, 2004 WL 1209569 (Tex.App.-Dallas 2004) an appellate court reversed the trial court's award of specific (mem.op.). The court of appeals also held that the omitted fact performance. We granted the motion for rehearing and the finding on specific performance was not necessarily referable petition for review. 48 TEX. SUP.CT. J. 878 (June 17, 2005). to a submitted theory and declined to imply a finding that DiGiuseppe was ready, willing, and able to perform. The court of appeals upheld the award of attorneys' fees, however, II. Specific Performance

on the theory that Lawler *593 had pursued a Declaratory Judgment Act claim, and that statute allows the trial court to [1] An essential element in obtaining the equitable remedy award fees as are just and equitable. 6 The court of appeals of specific performance is that the party seeking such relief declined to render judgment for the $295,696.93 in damages must plead and prove he was ready, willing, and able to found by the jury on the basis that there was no evidence timely perform his obligations under the contract. In 1938, to support the finding. 7 The court also declined to award we stated: “ ‘The doctrine is fundamental that a party seeking DiGiuseppe any portion of the $200,000 in earnest money that the remedy of specific performance ... must show himself he had deposited on the basis that he had waived this claim to have been ready, desirous, prompt, and eager.’ These by not filing a notice of appeal on that issue. principles have been long recognized and respected by the Courts of Texas.” Ratcliffe v. Mahres, 122 S.W.2d 718, 721– DiGiuseppe sought review in this Court on two grounds: (1) 22 (Tex.Civ.App.-El Paso 1938, writ ref'd) (quoting 4 JOHN the purchase contract provided for the remedy of specific NORTON POMEROY, JR., A TREATISE ON EQUITY performance in the event of a breach by Lawler regardless of JURISPRUDENCE § 1408, at 2779 (3d ed.1905)); see also whether DiGiuseppe obtained a finding of fact that he was DeCordova v. Smith's Adm'x, 9 Tex. 129, 146 (1852); cf. ready, willing, and able to perform; and, (2) in the alternative, Gober v. Hart, 36 Tex. 139, 140 (1871–1872). We reaffirmed if he is not entitled to specific performance, the court of *594 the rule in Corzelius v. Oliver, 148 Tex. 76, 220 appeals erred in failing either to award the damages found S.W.2d 632, 635 (1949) (notwithstanding defendant's refusal by the jury or to allow DiGiuseppe to recover the $200,000 to perform her obligations under contract, plaintiff was in earnest money he paid. In his briefing on the merits, required to show that he could have performed his contractual DiGiuseppe included a related point that he had also argued obligations to obtain specific performance), and it has been in the court of appeals: that a finding relating to the omitted followed by other courts of appeals in reported decisions in jury question on his being ready, willing, and able to perform addition to the court of appeals in this case. 17090 Parkway, should be deemed found pursuant to Texas Rule of Civil Ltd. v. McDavid, 80 S.W.3d 252, 257–59 (Tex.App.-Dallas Procedure 279 as an omitted element “necessarily referable” 2002, pet. denied); Chessher v. McNabb, 619 S.W.2d 420, to a theory submitted without objection. After considering 421 (Tex.Civ.App.-Houston [14th Dist.] 1981, no writ); briefing on the merits, this Court initially declined review. 48 Hendershot v. Amarillo Nat'l Bank, 476 S.W.2d 919, 920– TEX. SUP. CT. J. 440 (Mar. 14, 2005). 21 (Tex.Civ.App.-Amarillo 1972, no writ). “[T]o be entitled to specific performance, the plaintiff must show that it has DiGiuseppe then filed a motion for rehearing stressing that the substantially performed its part of the contract, and that it purchase contract gave him the option to obtain at least one of is able to continue performing its part of the agreement. two potential remedies in the event of a breach by Lawler— The plaintiff's burden of proving readiness, willingness and either seeking to enforce specific performance or terminating ability is a continuing one that extends to all times relevant the contract and receiving a refund of the earnest money to the contract and thereafter.” 25 RICHARD A. LORD, deposited. DiGiuseppe adamantly contended on rehearing WILLISTON ON CONTRACTS § 67:15, at 236–37 (4th that, even if this Court declined to review the court of ed.2002) (citations omitted). appeals judgment with respect to specific performance, the Court should grant relief with respect to the $200,000 in [2] It is also a general rule of equity jurisprudence in earnest money paid to Lawler because the jury had found that Texas that a party must show that he has complied with Lawler breached the contract and DiGiuseppe did not. Having his obligations under the contract to be entitled to specific

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performance. Glass v. Anderson, 596 S.W.2d 507, 513 at issue had already been sold to a third party and the (Tex.1980) (“A party who asks a court of equity to compel lawsuit was a suit by the third party for possession of the specific performance of a contract must show his own land). However, even when pre-suit tender of performance compliance with the contract.”); Bell v. Rudd, 144 Tex. is excused, a plaintiff is still obligated to plead and 491, 191 S.W.2d 841, 844 (1946); see also Wilson v. prove his readiness, willingness, and ability to perform at Klein, 715 S.W.2d 814, 822 (Tex.App.-Austin 1986, writ relevant times before specific performance may be awarded. ref'd n.r.e.) (“Generally speaking, it is a prerequisite to theCorzelius, 220 S.W.2d at 635; Burford, 199 S.W.2d at 144; equitable remedy of specific performance that the buyer 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d 252, 256 of land shall have made an actual tender of the purchase (Tex.App.-Dallas 2002, pet. denied); Chessher v. McNabb, price ... [unless] actual tender would have been a useless 619 S.W.2d 420, 421 (Tex.Civ.App.-Houston [14th Dist.] act .... “ (citation omitted)). As a consequence, a plaintiff 1981, no writ); Hendershot v. Amarillo Nat'l Bank, 476 seeking specific performance, as a general rule, must actually S.W.2d 919, 920 (Tex.Civ.App.-Amarillo 1972, no writ). tender performance as a prerequisite to obtaining specific The rule relating to excusing pre-suit tender of performance performance. McMillan v. Smith, 363 S.W.2d 437, 442–43 together with its corollary that a plaintiff must plead and (Tex.1962). prove readiness, willingness, and ability to timely perform before specific performance may be awarded was succinctly [3] [4] A corollary to this rule is that when a defendant stated in Hendershot v. Amarillo National Bank: “One of refuses to perform or repudiates a contract, the plaintiff may the essential equitable elements in obtaining a decree of be excused from actually tendering his or her performance specific performance is that the party seeking the decree to the repudiating party before filing suit for specific must plead and prove that he is ready, willing and able performance. In such a circumstance, a plaintiff seeking to perform, even though a tender of the purchase price specific performance is excused from tendering performance may be excused.” 476 S.W.2d at 920 (citing Corzelius, pre-suit and may simply plead that performance would have 220 S.W.2d at 635; Burford, 199 S.W.2d at 143–44). As been tendered but for the defendant's breach or repudiation. one treatise explains, “[a]lthough a repudiation [by the Id.; Corzelius v. Oliver, 220 S.W.2d at 632, 634; Burford defendant] usually will excuse the plaintiff from actually v. Pounders, 145 Tex. 460, 199 S.W.2d 141, 143–44 tendering performance, courts require that the plaintiff (1947). This exception to the general rule—that actual demonstrate his own readiness, willingness, and ability to tender of performance is a prerequisite to obtaining specific perform on the date set by the contract before ordering the performance—is grounded in the notion that actual pre-suit defendant to perform.” EDWARD YORIO, CONTRACT tender of performance should be excused when it would be a ENFORCEMENT: SPECIFIC PERFORMANCE AND “useless act, an idle ceremony, or wholly nugatory.” Wilson, INJUNCTIONS § 6.4, at 144–45 (1989) (citation omitted). 715 S.W.2d at 822 (citing POMEROY, supra ). This Court acknowledged this reasoning in Burford: “[I]t appears to be In this case, the only questions submitted to the jury relating quite well settled that a formal tender is excused where a to the breach of the purchase contract were: tender would be a useless and idle ceremony; and that a tender is also excused where defendant repudiates the contract....” (1) Did Lawler fail to comply with the contract? 199 S.W.2d at 145 (citation and internal quotation marks (2) Did Di[G]iuseppe fail to comply with the contract?

omitted); see also Regester v. Lang, 49 S.W.2d 715, 717 (Tex. Comm'n App.1932, holding approved) (holding that tender The jury answered “Yes” as to Lawler and “No” as to of performance before bringing suit is not required when it DiGiuseppe. Neither party requested a question as to whether would be a “vain and useless thing” given defendant's open DiGiuseppe was ready, willing, and able to perform at the repudiation of the contract). relevant time. Nor did either party object to the omission of such a question. Consequently, there is no finding of [5] The concept of excusing pre-suit tender of performance fact in this case or objection to a lack of a finding of fact when such tender *595 would be useless or futile has with respect an essential element of specific performance been recognized in Texas equity jurisprudence for over one —that DiGiuseppe was ready, willing, and able to perform hundred years. Ward v. Worsham, 78 Tex. 180, 14 S.W. at relevant times. Notably, the evidence on DiGiuseppe's 453, 453 (1890) (excusing actual tender of payment by readiness and ability to perform—all from the testimony a settler with a right to purchase school land when land of DiGiuseppe—was equivocal and conflicting. DiGiuseppe

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testified that he did not have the funds to close at the time point is sufficient, DiGiuseppe contends, to trigger his right originally specified by the purchase contract, or any written to specific performance regardless of whether he had shown commitments from third parties to fund the closing at that that he was ready, willing, and able to perform. DiGiuseppe's time, and that he could not close. 8 He later testified that he basic contention is that the remedy provisions of the purchase contract negate or waive the requirement under Texas law that “had the *596 means to close the contract.” 9 he prove his readiness, willingness, and ability to perform as

[6] When contested fact issues must be resolved before a a condition to obtaining specific performance. 10 court can determine the expediency, necessity, or propriety of equitable relief, a party is entitled to have a jury resolve Lawler responds that specific performance was not automatic the disputed fact issues. See State v. Tex. Pet Foods, Inc., under the purchase contract in the event he defaulted. He 591 S.W.2d 800, 803 (Tex.1979) (holding that litigant has a asserts that the purchase contract's reference to DiGiuseppe right to have ultimate issues of fact submitted to a jury in an having the right to “seek to enforce” specific performance equitable action); see also Hollywood Park Humane Soc'y v. does not equate to a right to automatically receive specific Town of Hollywood Park, 261 S.W.3d 135, 139 (Tex.App.- performance. Rather, he argues, the remedy provision is no San Antonio 2008, no pet.) (“[W]e recognize that the right more than a contractual acknowledgment between the parties to a jury trial extends to material, disputed issues of fact that specific performance would be an available remedy in equitable proceedings.”); Casa El Sol–Acapulco, S.A. v. for DiGiuseppe in the event of a default by Lawler, and it Fontenot, 919 S.W.2d 709, 715–16 (Tex.App.-Houston [14th did not eliminate or waive the requirement that DiGiuseppe Dist.] 1996, writ dism'd by agr.); see also WILLISTON ON demonstrate that he is entitled to specific performance CONTRACTS, supra, § 67:15, at 237 (“A trial court's finding under the law. Lawler contends that the “may ... seek to in a specific performance action regarding a purchaser's enforce” language expresses the parties' intent that specific financial inability to purchase involves a factual issue.”). performance would be an available remedy in the event of Lawler did not concede or stipulate in the trial court that breach—as distinct from an action for damages, recission, DiGiuseppe was ready, willing, and able to perform. The or other remedy—if DiGiuseppe can show that he meets the issue was disputed and it was an issue on which DiGiuseppe requirements for the grant of specific performance. —as the party seeking specific performance—had the burden of proof. Corzelius v. Oliver, 148 Tex. 76, 220 S.W.2d 632, We agree with Lawler and the court of appeals that the remedy 634 (1949); 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d provision at issue here does not entitle DiGiuseppe to obtain 252, 256 (Tex.App.-Dallas 2002, pet. denied); Hendershot v. specific performance merely upon a showing of a breach or Amarillo Nat'l Bank, 476 S.W.2d 919, 920 (Tex.Civ.App.- default by Lawler. The provision at issue limits the available Amarillo 1972, no writ). remedies to either (1) terminating the contract and receiving a refund of earnest money, or (2) seeking to enforce specific [7] [8] DiGiuseppe does not raise an issue with respect to performance. It does not in any way alter the requirements the state of the applicable law, but contends that the parties' for obtaining specific performance in the event DiGiuseppe contract alters the manner in which the law applies to this decides *598 to seek such a remedy. The provision states case. He concedes that he did not request a finding by the only that DiGiuseppe “may, at [his] option, ... seek to enforce jury on the issue of whether he was ready, willing, *597 specific performance of [the] Contract.” This language does and able to perform under the terms of the purchase contract. not speak to altering the legal requirements for obtaining He complains that the court of appeals misinterpreted and specific performance. Nor does it purport to make obtaining misapplied the remedy provisions of the purchase contract. specific performance automatic in the event of a default or He argues that, because the parties had agreed in the purchase breach by Lawler. contract that one of his available remedies would be to seek to enforce specific performance, he had a right to specific To the contrary, the provision plainly grants DiGiuseppe performance in the event Lawler breached or defaulted on the only the right to “seek to enforce” specific performance, contract without the need for any further proof. According leaving open the possibility that he may seek to enforce it, to DiGiuseppe, the only material disputed fact issue—by but be unable to do so. The unambiguous language of the virtue of the language of the remedy provision in the contract provision makes two remedies available to DiGiuseppe in —is whether Lawler failed to comply with the contract. the event of a default by Lawler, and in effect excludes Consequently, the finding by the jury against Lawler on this all others. One of those remedies is specific performance.

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It is available as a remedy, but nothing in the provision with the contract, without more, is not “necessarily referable” suggests DiGiuseppe is relieved of his obligation to prove to specific performance as a ground of recovery. he is entitled to it under the law. Therefore, we construe the provision in the purchase contract limiting DiGiuseppe's Moreover, the question submitted to the jury as to remedies in the event of a default by Lawler to neither waive DiGiuseppe's compliance with the contract addressed nor negate DiGiuseppe's obligation to plead and prove all Lawler's breach of *599 contract claim against DiGiuseppe. essential elements under Texas common law for obtaining As the Houston Court of Appeals articulated in Superior specific performance, including that he was and is ready, Trucks, Inc. v. Allen: willing, and able to perform under the contract.

The purpose of the “necessarily [9] As an alternative basis for relief, DiGiuseppe argues referable” requirement in Rule 279 is that the omitted jury finding as to his readiness, willingness, to give parties, against whom issues and ability to perform may be deemed found in his favor are to be deemed, fair notice of a pursuant to Texas Rule of Civil Procedure 279. His theory is partial submission, so that they have that specific performance was at least partially submitted to an opportunity to object to the charge the jury in the form of a question regarding his compliance or request submission of the missing with the contract, and Lawler failed to object to the omission issues to the ground of recovery or of a “ready, willing, and able” question. We agree with the defense. Once a party is on notice of court of appeals that a deemed finding under Rule 279 is not the independent ground of recovery available here. or defense due to the existence of an issue “necessarily referable” thereto, If no element of an independent ground of recovery that if that party fails to object or request is not conclusively established by the evidence is included submission of the missing issues, he in the charge without request or objection, the ground of cannot be heard to complain on appeal, recovery is waived. TEX. R. CIV. P. 279. As we have as he is said to have consented to the noted, DiGiuseppe did not conclusively establish his claim court's findings on the missing issues. for specific performance from an evidentiary standpoint.

664 S.W.2d 136, 144 (Tex.App.-Houston [1st Dist.] 1983, Under Rule 279, if at least one element of an independent writ ref'd n.r.e.). The existence of the question relating to ground of recovery was submitted to the jury and is Lawler's claim for breach of contract, standing alone, did not “necessarily referable” to that ground of recovery, an omitted give Lawler fair notice of a partial submission of a claim finding that is supported by some evidence shall be deemed by DiGiuseppe for specific performance such that Lawler found by the court in such a manner as to support the should have known to object to a missing question regarding judgment. Id. DiGiuseppe contends that the submission of DiGiuseppe's readiness, willingness, and ability to perform.

a question as to whether he complied with the contract Pursuant to Rule 279, the question regarding DiGiuseppe's is the submission of at least one of the elements of a compliance with the contract, therefore, is not necessarily claim for specific performance and is necessarily referable referable to an omitted question relating to DiGiuseppe's to that ground of recovery. However, as the court of appeals readiness, willingness, and ability to perform. DiGiuseppe pointed out, DiGiuseppe's compliance with the contract is had the burden to prove that he was ready, willing, and able neither essential nor necessarily referable to his request for to perform. He also had the obligation to request a question specific performance. As discussed previously, DiGiuseppe's on this issue. He did not. Rule 279 does not operate to shift tender of performance under the contract could have been the burden to Lawler to request such a jury question regarding excused due to Lawler's breach without altering in any specific performance or to object to its absence under these way DiGiuseppe's obligation to prove that he was and is circumstances.

ready, willing, and able to perform. Whether DiGiuseppe complied with the contract or was excused from complying with the contract, he would still be required to prove that he was ready, willing, and able to perform to obtain specific III. Tender of Performance vs. Readiness, performance. Therefore, the question as to his compliance Willingness, and Ability to Perform

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[10] The dissent argues that a non-breaching plaintiff in effect, eliminate the plaintiff's contractual obligation to be seeking specific performance satisfies the requirement of capable of performance at the time the contract required, and showing he is ready, willing, and able to perform by simply grant the plaintiff the option to enforce the contract at any time offering to perform in his pleadings as opposed to actually he might become capable of performing before limitations proving to the finder of fact that he is and was—in fact— runs. A defendant's breach or repudiation should not alter the ready, willing, and able to perform. 11 This conflates two contract and give the non-breaching party a contract different distinct concepts: (1) the tender (or offer) of performance from what he had. The plaintiff must prove that he was ready, and (2) the proof that one has actually been ready, willing, willing, and able to perform his obligations when they came and able to perform. As noted above, in circumstances where due. Otherwise, he would be able to take unfair advantage a defendant has not repudiated or refused to perform, the of the defendant by requiring the defendant's performance law requires a plaintiff seeking specific performance to show without showing that he also could and would have performed both that he was ready, willing, and able to perform at the as required by the contract. relevant time and that he tendered that performance. These two requirements are not the same thing. One can be perfectly [12] [13] A standard requiring proof of ability to perform, capable of performing contractual obligations and yet not rather than a mere pleading to that effect, is essential to tender or offer that performance. Likewise, a party could serving the interest of equity underlying the remedy of very well tender or offer performance, but not be capable specific performance. Allowing a plaintiff to simply plead of performing. Offering to perform does not establish the a willingness to tender is no substitute for requiring him to ability to perform, nor does having the ability to perform produce evidence showing that he was ready, willing, and demonstrate a tender of that ability. The law requires a able to perform his contractual obligations at the relevant demonstration of both before specific performance may be time. Whether a plaintiff was ready, willing, and able to awarded unless the requirement of tender is excused. perform his contractual obligations when they came due, and would have done so but for the defendant's breach or It is entirely reasonable for the law to distinguish between repudiation is a question of fact. A fact cannot be proved by a tender of performance and ability to perform when providing controverted pleading. The pleading simply puts the matter at the remedy of specific performance. For example, it is issue. 12 In this case, DiGiuseppe alleged in pleadings that he sensible to excuse pre-suit tender of performance if it would “was ready, willing and able to [fund the purchase of property be useless or if it has been frustrated by the *600 defendant, from Lawler] on March 3, 2000,” the date DiGiuseppe says such as in cases of repudiation by the defendant or an open his obligation to do so was triggered. The evidence on declaration of a refusal to honor the contract by the defendant. the subject was conflicting, and the jury was not asked to A plaintiff need not actually tender performance when the resolve the dispute. The dissent would hold that DiGiuseppe's defendant has repudiated his own obligations. Otherwise, the pleading was all he needed, that a plaintiff satisfies the need plaintiff would be required to go further than the defaulting to establish a relevant fact by alleging the truth of the fact. If defendant to obtain specific performance. On the other hand, allegations were the equivalent of proof, there would be no ordering specific performance without requiring the plaintiff need for trials. The equivocal and conflicting evidence as to to show that he was capable and willing to perform at the time DiGiuseppe's ability to close illustrates one of the problems required by the contract grants the plaintiff more than he is with the dissent's view. What if the evidence establishes entitled to under the contract. A plaintiff's pleading that he is that a plaintiff could not and cannot perform? Under the ready, willing, and able to perform at the time the lawsuit is dissent's theory, such a plaintiff would be awarded specific filed says nothing about whether he was ready, willing, and performance based solely on his pleading even if he, in *601 able to perform at the time required by the contract. A plaintiff fact, could not and cannot perform. Without proof that he who could not arrange funding in time for closing may be able could perform as required by the contract, the plaintiff gets to marshal all the funds he needs by the time he files pleadings more than he bargained for—an inequitable result. Without in a lawsuit for specific performance. proof that he can perform at the time of the award, the award is pointless.

[11] The dissent's view that merely pleading an offer to perform at the time the lawsuit is filed satisfies or replaces By combining the pleading and proof requirements, the the need to demonstrate the ability to perform at the relevant dissent would nullify the proof requirement and encourage time would essentially rewrite the parties' contract. It would, gamesmanship. A purchaser who lacked funds to close a

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transaction when called for in a contract could later compel his purchase right within a reasonable time. Id. at 145. The performance by a seller who balked. A seller who is unable to Court in Burford noted with approval the accepted general deliver title at the agreed time for closing could later compel rules of equity relating to specific performance, stating that a performance by a remorseful buyer. If a plaintiff was, in fact, plaintiff “ordinarily is entitled to specific performance where unable to perform at the relevant time, a defendant's breach he alleges and proves that he ... is ready, able and willing or repudiation is harmless and equity should not provide a to perform.” Id. at 144 (emphasis added). The Court agreed remedy in such a situation. The law does not and should not that “it was not incumbent on Burford to make a tender in allow pleading readiness, willingness, and ability to perform the matter of exercising his option within a reasonable time to substitute for proof of that fact. after learning of the sale, but that it was sufficient for him to offer to do equity in this pleadings.” Id.(emphasis added). The The dissent's view is unique. There is no Texas case that Court then held that since Beaird had repudiated the purchase has adopted such a rule and we have found none in any option by selling to Pounders, a tender to Beaird by Burford other jurisdiction. The dissent's discussion of the Texas was unnecessary. Id. at 145. At no point did the Court hold cases that have addressed the issue raised by the dissent or suggest that proof by Burford of readiness, willingness, —Burford, Corzelius, Parkway, Chessher, and Hendershot— and ability to perform was unnecessary or waived by Beaird's fails to distinguish between pleading tender of performance actions. Burford was required to prove that he was ready, and proving readiness, willingness, and ability to perform. willing, and able to exercise his option to purchase, but This distinction is crucial. In each of these cases, pre-suit because the parties had not specified a deadline for exercising tender of performance was excused due to a repudiation the option, Burford was not required to prove his ability to or breach by the party against whom specific performance perform at the time of the illicit sale to Pounders. was sought. None of the cases hold that the repudiation or breach relieved the party seeking specific performance from Burford makes two things clear: (1) pleading an offer to the obligation to prove readiness, willingness, and ability to perform is in lieu of tender; and (2) adducing proof that a perform. Each of these cases is entirely consistent with the plaintiff was ready, willing, and able to perform, as required rule that a plaintiff seeking specific performance must plead by the pertinent authorities constitutes an entirely separate and prove (1) compliance with the contract including tender requirement from tender. This distinction is consistent with of performance unless excused by the defendant's breach or available authorities on the subject and has been consistently repudiation, and (2) the readiness, willingness, and ability to followed by Texas courts. The dissent reads the statements in perform at relevant times. 13 Burford as confusing, but we do not. Burford was required to prove he was ready, willing, and able to perform, and he did The seminal case of Burford v. Pounders, upon which later so. The issue in the case was whether Burford would have to cases rely, illustrates the point. 145 Tex. 460, 199 S.W.2d show he was ready, willing, and able to perform at the time of 141, 141–42 (1947). Beaird leased land to Burford, with the sale to Pounders, or within a reasonable time. The lower an option allowing Burford to purchase the property for courts held that Burford was required to show his capacity $ 1000, less the rent paid. Beaird ignored the option to to perform at as of the time of the sale to Pounders—a point purchase and, five months before the lease expired, sold the at which it was undisputed Burford was not in a position to property to Pounders, who was aware of Burford's lease. perform. This Court held that, because there was no deadline Id. at 142. According to an undisputed finding by the trial in the lease for the purchase option, Burford could meet his court, Burford was not in a position at the time of the sale to burden by showing the ability and willingness to perform Pounders to exercise his option to purchase the property. Id. within a reasonable time for exercising his option. Burford at 143. Neither Beaird nor Pounders told Burford of the sale. made this showing. Two months before the lease expired, Burford attempted to exercise his option and tendered $950 to Beaird, which Beaird The dissent also reads Corzelius as confusing and seeks refused. Id. at 142–43. Burford sued for specific performance to distinguish its holding by reference to the contractual and the case was tried to the bench. Because he did not know period for performance in the contract at issue in the case. of the sale, Burford did not make any tender of performance We view Corzelius as completely consistent with Burford on the option at the time of the sale. However, the lease *602 and the other authorities cited above which point out the did not specify when the option was to be exercised and distinction between tender of performance and proof of ability the trial court did not find that Burford had failed to invoke to perform. The fact that Corzelius needed to show the ability

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to perform at any point in a contractually agreed time frame issue. However, this Court has held that a litigant who has does not alter the fact that he needed to show the ability to obtained a favorable judgment and has no reason to complain perform as required by the contract. How such proof could in the trial court is not required to raise an issue regarding an be made rather than whether it must be made was at issue in alternate ground of recovery until an appellate court reverses Corzelius. The Court rejected the claim that Corzelius was the judgment. Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., obliged to produce binding commitments for financing in 747 S.W.2d 785, 787 (Tex.1988). Consequently, DiGiuseppe order to raise an issue of fact. The Court was careful to note was not required to raise his alternate theory of recovery until other competent evidence in the record, including evidence the judgment in his favor about which he had no complaint showing the value of the property he sought to purchase was reversed. Id. As soon as he was aware of the reversal of via a mortgage and testimony from a bank officer and his the judgment by the court of appeals, DiGiuseppe raised the brother on their willingness to lend money for the purchase, as issue of his alternative ground for recovery both in the court of evidence supporting a finding that Corzelius was in a position appeals and in this Court. The issue is not waived. Since it has to perform per the contract. Corzelius v. Oliver, 148 Tex. 76, been determined on appeal that DiGiuseppe is not entitled to 220 S.W.2d 632, 635–36 (1949). specific performance as awarded by the trial court, he should be allowed to present his alternative ground for recovery to *603 The dissent also argues that policy considerations the trial court for a determination in the first instance as to weigh in favor of its view because non-breaching buyers whether he should recover under that alternative theory. would be put at a disadvantage by having to demonstrate at the time of the lawsuit that they were capable of performing as called for by the contract. However, this overlooks the fact V. Conclusion

that if the buyer was not able to perform his obligations as required by the contract, the breach by the seller did no harm. We affirm the holding of the court of appeals that the From an equitable standpoint, it would be unfair to reward the contract at issue in this case does not alter DiGiuseppe's buyer with a result that he could not have achieved—specific obligation to prove and secure a finding of fact that he was performance at a later date based on later acquired capability ready, willing, and able to perform his obligations under the —simply because of a breach by the seller. purchase contract as a prerequisite to obtaining the equitable relief of specific performance. In affirming this part of the All of the language relied on by the dissent from Parkway, court of appeals' judgment, we hold that an essential element Chessher, Hendershot, and Regester v. Lang, as suggesting in obtaining the equitable remedy of specific performance is that a pleading alone is sufficient to satisfy part of the that the party seeking such relief must plead and prove he plaintiff's burden, refers to tender of performance when is ready, willing, and able to timely perform his obligations the defendant has repudiated. None of the cases stand for under the contract. We also affirm the holding of the court of the proposition that merely pleading readiness, willingness, appeals that such a finding cannot be deemed based on the and ability to perform is sufficient to obtain an award jury charge as submitted under Rule 279. Finally, we reverse of specific performance. The dissent's theory merges the the court of appeals's holding that DiGiuseppe waived his concepts of tender of performance and proof of ability to claim to the alternate ground of recovery under the purchase perform. The cases do not. The dissent's view is inconsistent contract relating *604 to refund of the earnest money, and with established case law and would be unique to equity hold that he should have an opportunity to present this claim jurisprudence. to the trial court for disposition. Accordingly, we affirm the judgment of the court of appeals in part, reverse in part, and remand the cause to the trial court for further proceedings IV. Refund of Earnest Money consistent with this opinion.

[14] DiGiuseppe argues that if the judgment in his favor for specific performance is reversed, he should be allowed to Justice GREEN filed a dissenting opinion, in which seek recovery on his alternative remedy under the purchase Chief Justice JEFFERSON, Justice O'NEILL, and Justice contract of termination and recovery of earnest money he JOHNSON joined.

paid. We agree. The court of appeals held that DiGiuseppe waived this option by failing to file a notice of appeal on the Justice MEDINA took no part in the decision of the case.

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discovery of financial portfolios on the question of whether the buyer was sufficiently capable of purchasing the property Justice GREEN, joined by Chief Justice JEFFERSON, Justice at the time required by the contract. Unscrupulous sellers O'NEILL, and Justice JOHNSON, dissenting.

will be virtually immunized from the penalty of specific The Court requires an innocent buyer, otherwise excused performance, the most severe consequence of breaching a from his contractual obligations by the seller's breach, to contract of sale, and disorder will be the order of the day nevertheless prove, in a suit for specific performance, that he in volatile real *605 estate markets. Because the Court's could have fully performed those obligations had the seller holding lacks common sense and adheres to a misreading of not breached. 269 S.W.3d at 590. This makes no sense for at least two reasons. First, it provides the breaching seller our precedents, I respectfully dissent. 1 information he was not entitled to under the contract. A seller entering into a real estate transaction is rarely entitled to know I agree with the Court that it has long been part of the the details of how the buyer intends to finance the transaction. jurisprudence of this state that, to obtain the equitable At closing, the buyer will either perform or not, and in the remedy of specific performance, a party must show himself latter event, the contract will provide remedies for the breach. to have been “ready, willing, and able” to timely perform But if the seller breaches the contract before closing and the his obligations under the contract being enforced. See 269 buyer sues to enforce the deal, the Court now says the buyer S.W.3d at 593; see also Ratcliffe v. Mahres, 122 S.W.2d must prove to a fact-finder, at a trial many months or years 718, 721–22 (Tex.Civ.App.-El Paso 1938, writ ref'd) (quoting after the sale was originally supposed to close, that he was, 4 JOHN NORTON POMEROY, JR., A TREATISE ON at the time specified by the contract, “ready, willing, and EQUITY JURISPRUDENCE § 1408, at 2779 (3d ed.1905)). able” to perform. Id. at 590. To do this, the innocent buyer But it has likewise been a long-standing Texas rule that a nonwill necessarily be required to reveal his plan for financing breaching plaintiff seeking specific performance need only the transaction—information a seller generally would not be make such a showing by offering to perform in his pleadings. privy to under agreed contract terms. Burford v. Pounders, 145 Tex. 460, 199 S.W.2d 141, 144 (1947). The Court's insistence that a party seek and obtain Second, and perhaps most important, the Court's holding a jury finding that he is ready, willing, and able to perform makes no sense because a finding that the buyer was ready, before being entitled to the remedy departs from that rule. willing, and able to perform at the closing time specified in the contract is irrelevant. Although the Court does not say Specific performance is an equitable remedy that rests in the what the trial court is supposed to do with such a finding, sound discretion of the trial court. Kress v. Soules, 152 Tex. presumably it would order a date for the transaction to 595, 261 S.W.2d 703, 704 (1953); Am. Apparel Prods., Inc. v. close within a reasonable time. But what if the buyer was Brabs, Inc., 880 S.W.2d 267, 269 (Tex.App.-Houston [14th able to close on the original contract date and is unable to Dist.] 1994, no writ). Generally, to be entitled to specific close on the court-appointed date? The whole exercise is performance, a party must prove that it has complied with rendered meaningless. The only thing that makes sense is to all the contract's terms. Glass v. Anderson, 596 S.W.2d do precisely what the trial court did in this case, which is to set 507, 513 (Tex.1980). When a seller breaches a real estate a closing date within a reasonable time after a finding that the contract, however, we have long held that the buyer need not seller breached. While it is true that the buyer might gain some actually tender the purchase price in order to seek specific benefit by getting a reprieve from the original contract closing performance. Ward v. Worsham, 78 Tex. 180, 14 S.W. 453, date, it is just as likely, particularly in light of today's troubled 453 (1890). financial times, that he will be worse off and be unable to The practice in equity in similar cases close. But at least this has the virtue of being meaningful and is not to require a tender or a payment of not placing impractical burdens on an innocent party, both into court of the purchase money....

features that are lacking in the Court's rule.

When [the buyer] pleads his right he should offer to pay, and the court, The Court's holding will also tend to severely limit or if judgment should be given for him, eliminate specific performance as a viable remedy for a should decree a payment within a seller's breach of a real estate contract. In large transactions, reasonable time, and that, in default of it is doubtful that many non-breaching buyers would be willing to subject themselves and/or their investors to open

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a compliance, his right should cease matter remaining to be done by the trial court is to direct that and be determined. payment be made” and that the sale be completed, awarding the purchaser judgment for title. Id. at 145 (emphasis added).

Id. This has remained the law in Texas for well over 100 years, as the Court recognizes. See 269 S.W.3d at 594. Until today, One statement in Burford, however, appears to have given however, the Court has not required a non-breaching buyer rise to the confusion of the lower courts on this issue. to make the “useless and idle” showing of proof of ability to Quoting from Corpus Juris, the Court in Burford stated that complete the transaction when the seller's repudiation of the a “complainant ordinarily is entitled to specific performance contract excused the buyer from tendering the purchase price. where he alleges and proves that he ... is ready, able, and See Burford, 199 S.W.2d at 145. willing to perform.” Id. at 144 (quoting 58 C.J. Specific Performance § 316 (1932)) (emphasis added). After citing The issue of a party's own performance as a condition to that general rule, though, the Court went on to explain the obtaining specific performance is a matter to be contemplated exception that excuses tender for non-breaching buyers, citing by the trial court's judgment, not the jury's verdict. See additional Corpus Juris sections and comments: Regester v. Lang, 49 S.W.2d 715, 716–17 (Tex. Comm'n App.1932, holding approved) (holding it was reversible error [Regarding a specific performance suit brought by a for a defendant to argue to the jury that the plaintiff had purchaser, under a footnote to section 342], it is stated that not paid the purchase money into the court registry, and that “In Texas” an actual tender “is not necessary where the specific performance might result in the defendant delivering purchaser pleads and proves a willingness to pay, but is his property *606 without being paid). “It is sufficient if entitled to relief provided that, within a time fixed in the [the party seeking specific performance] is ready and willing decree, he shall pay the amount due”.... In section 348 it and offers to perform in his pleadings.” Id. at 717. To is stated that “whatever difference of opinion may exist as require anything more would be futile because, as this Court to the original necessity of a tender of the consideration recognized in Regester, the buyer “would be required under a before suit, ... it appears to be quite well settled that a formal proper decree of specific performance to pay this sum before tender is excused where a tender would be useless and he could obtain any interest” in the property. Id. idle ceremony”; and that a “tender is also excused where defendant repudiates the contract”; and further that “tender We reiterated these principles in Burford v. Pounders, in pleadings (is) sufficient” where plaintiff sets forth that he instructing that when a seller has refused to perform and the is ready, able and willing “or ... pays the consideration into buyer's tender would be futile, “the material consideration is the court.” In section 349, ... it is stated that “the necessity that [the buyer] offered in his pleadings to do equity,” and of tender is dispensed with where defendant repudiates the nothing more is required. 199 S.W.2d at 145. The plaintiff contract, or makes any declaration which amounts to a Burford was a tenant in possession with an option to buy repudiation....” In the following section (350) it is stated under a right of first refusal. Id. at 141–42. The lessor, that “if a tender of the purchase price or other sums before ignoring Burford's option, conveyed the property to defendant suit *607 is necessary, it is excused where the vendor or Pounders. Id. at 142. Two months after the sale, Burford seller has put it out of his power to perform, as where he attempted to exercise his option, eventually seeking specific has conveyed the property ... to a third person.” performance. Id. at 142–43. Burford would not have been able to make payment at the time of the sale to Pounders, but Id. at 144–45 (emphasis removed). The Court never returned would have been able to pay two months later. Id. at 143–44. to any discussion of the general rule that requires proof of Because Burford had to exercise the option to buy within a ability to pay, instead holding that the seller defaulted and “reasonable time,” the issue in the case was whether Burford repudiated by selling the property to Pounders. Id. at 145. was required to tender performance within a reasonable time For a non-breaching buyer, “[t]he material consideration is of learning of the sale to Pounders, or whether it was sufficient that [he] offer[s] in his pleadings to do equity.” Id. The for Burford to later offer to perform in his pleadings. Id. at court emphasized this rule with italics: “[A]ll that is required 144–45. Citing Regester, we again emphasized that all that in such case is that the plaintiff place himself in favor was necessary in such a case is that the party seeking specific with the court, and this may be done by a proper offer performance be ready and willing and offers to perform in his in the pleadings.” Id. at 143 (quoting 49 Am.Jur. Specific pleadings. Id. at 144 (citing Regester, 49 S.W.2d at 717). And Performance § 144, at 167 (1943)) (italics in original). when a party offers in his pleadings to do equity, “[t]he only Because Burford had made the sufficient showing by offering

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in his pleadings to do equity, the Court held that Burford Contrary to the Court's conclusion, see 269 S.W.3d at 693, was entitled to specific performance. Id. at 145. The Court nowhere does Corzelius indicate that a non-breaching buyer, later confirmed that holding, saying that Burford adopted under a non- *608 option contract, must prove ability to the substance of the rule that “if, because of defects in the perform at the time specified in the contract when tender vendor's title, which he fails or refuses to cure, ... a tender of payment is excused. Corzelius is distinct from the nonof performance by the vendee would be a useless act ..., his option contract case because the timing of the buyer's ability failure to make such tender will not preclude in his behalf to pay was relevant to whether the buyer had exercised his the equitable relief of specific performance, at least where option to purchase and therefore the seller had an obligation he tenders performance in his bill or petition.” McMillan to convey the property. Even when a buyer must show ability v. Smith, 363 S.W.2d 437, 442–43 (Tex.1962) (quoting 79 to pay, a buyer need not show a firm financing commitment A.L.R. 1240). to be entitled to specific performance, but need only put on evidence of his financial capacity and creditworthiness.

Although the Court claims Burford holds that a non-breaching Corzelius, 220 S.W.2d at 635 (recognizing that financing plaintiff is required to prove he was ready, willing, and able sources would probably be reluctant to execute a commitment to perform, and somehow distinguishes between tender and for financing to complete a sale of lands the owner had proof of ability to pay, the Court misrepresents the rule in that decided not to convey). Notwithstanding the evidence offered case. In Burford, the Court held that when a seller repudiates at trial and the jury's finding, “Corzelius [was not] bound to the contract, tender is excused and “all that is required” is do more here than make the tender which was contained in that the plaintiff offer to do equity, which can be done in the his pleadings.” Id. pleadings. 199 S.W.2d at 143. Burford does not support the Court's new rule, and neither do the other cases relied on by It appears that misreading of the brief statements in Burford the Court. and Corzelius led courts of appeals to rule erroneously that a plaintiff seeking specific performance must always prove to a The Court cites Corzelius v. Oliver, another case involving fact-finder that he is ready, willing, and able to perform under the buyer's ability to pay within a contractual time limit for the contract. See 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d exercising an option. 148 Tex. 76, 220 S.W.2d 632, 633 252, 256 (Tex.App.-Dallas 2002, pet. denied); Chessher v. (1949). In Corzelius, the plaintiff had a one-year option to McNabb, 619 S.W.2d 420, 421 (Tex.Civ.App.-Houston [14th reacquire lands conveyed to his ex-wife as part of a divorce Dist.] 1981, no writ); Hendershot v. Amarillo Nat'l Bank, settlement. Id. Although the plaintiff attempted to exercise 476 S.W.2d 919, 920 (Tex.Civ.App.-Amarillo 1972, no writ). the option, his ex-wife (the defendant) refused because she Those cases did not offer any reasoning as to why proof objected to his source of financing, and eventually a jury before a fact-finder is necessary even though actual tender found for the plaintiff. Id. at 633–34. At trial, one of the is excused when a seller has breached. On this point, 17090 issues before the jury was whether the plaintiff could have Parkway simply cites Chessher and Hendershot. 80 S.W.3d made payment within the one-year time limit contemplated at 256. Chessher cites only Hendershot. 619 S.W.2d at 421. by the contract. Id. at 634. The jury found that, but for the Hendershot cites only this Court's decisions in Burford and defendant's actions, such a payment could have been timely Corzelius without any analysis and without recognizing that made. Id. On appeal, the only issue was the defendant's those cases involved option contracts containing conditions contention that “there was no evidence to show that Corzelius precedent to the seller's obligation to convey the property. See was ready and able to perform within the time limit of the 476 S.W.2d at 920. Hendershot's misreading of Burford and option.” Id. In addressing that point, the Court noted that Corzelius therefore resulted in repeated error in the courts of “it would appear but reasonable” for Corzelius to show that appeals, which now repeats itself in this Court, eclipsing the he could have performed under the agreement, id. at 635, long-standing rule that a party seeking specific performance and then detailed the evidence to conclude that there was need only offer to perform in its pleadings. at least some evidence to support the jury's finding in that regard. Id. Certainly, taken alone, this part of Corzelius could Lawler cites a number of cases in support of his position that arguably support an interpretation that proof of the ability to ability to pay must be proven at trial, but I am not persuaded pay is an appropriate subject for a fact-finder's consideration that such a rule exists in Texas. 2 As already discussed, the in a specific performance case. But such a reading is not cases requiring proof of ability to pay at trial are perpetuating accurate and has given rise to confusion in the lower courts. Hendershot's erroneous reading of our opinions in Burford

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and Corzelius, which did not distinguish, as the Court does, must make that showing. EDWARD YORIO, CONTRACT between an excused tender requirement and an unexcused ENFORCEMENT: SPECIFIC PERFORMANCE AND requirement to prove ability to pay. The Court contends INJUNCTIONS § 6.4, at 145 (1989 & Supp.2004). Yorio that such a distinction is “entirely reasonable,” noting that acknowledges the Texas rule in a footnote, however, by a party could well offer performance but not be capable quoting a Seventh Court of Appeals case holding that “when of performing. *609 269 S.W.3d at 599. But when the the seller has conspicuously breached the contract, it is seller's breach relieved the buyer of his obligation to appear only necessary that the purchaser be ready and willing, and at closing and perform as required under the contract, it offers to perform within his pleadings.” Id. at n. 10 (quoting may be impossible for anyone to know whether the buyer Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d 518, could have performed. Continued efforts to perform such as 527 (Tex.App.-Amarillo 1998, pet. denied), which relied on arranging financing or appearing at the scheduled closing Burford, and also citing 17090 Parkway ). Comment b to would be useless, just as the Court recognizes that tendering section 363 of the Restatement (Second) of Contracts, which payment would be. The Court erroneously concludes that addresses securing performance for an agreed exchange ordering specific performance without requiring the non- and states that specific performance may be refused if breaching buyer to prove ability to pay at the time required “performance is not secured to the satisfaction of the court,” by the contract “grants the plaintiff more than he is entitled supports the long-standing Texas rule: to under the contract.” Id. at 600. In fact, the opposite is true. When a contract provides for simultaneous performance The desired security can often be afforded by the terms by both seller and buyer, the seller must give the buyer of the order itself. If performance by the injured party the full opportunity to perform as provided by the contract, is already due or will be due simultaneously with the or face remedies for breach in cutting off that opportunity. performance of the party in breach, the order may be Requiring a buyer to prove that it could have performed at made conditional on the injured party's rendition of his a time when the seller's breach eliminated that obligation performance.... and when the subject property was under contract for sale *610 The question of security does not arise until the to a third party imposes a much higher burden on the buyer time for issuance of an order. At the pleading stage, than the contract requires. The seller's own breach cannot a mere allegation by the plaintiff that he is ready and impose an extra-contractual obligation on the buyer to prove willing to perform is usually sufficient in a suit for useless financing commitments. The Court contends that my specific performance or an injunction. Actual performance view would “essentially rewrite the parties' contract” and or tender is generally not required.

“eliminate the plaintiff's contractual obligation to be capable of performance at the time the contract required.” 269 S.W.3d Restatement (Second) of Contracts § 363 cmt. b (1981). at 600. In fact, it is actually the breaching seller who altered Because DiGiuseppe need only offer to perform in his those contractual obligations when he breached the contract pleadings to establish his entitlement to specific performance, by agreeing to sell the property to a third party. the only disputed fact issue to be resolved by the jury was whether Lawler breached the contract. See White v. Sw. Bell The Court relies on contracts treatises as support for its Tel. Co., 651 S.W.2d 260, 262 (Tex.1983) (holding that only claim that requiring a non-breaching buyer to prove ability disputed factual issues are presented to the jury). to pay is an entrenched rule in Texas jurisprudence. 269 S.W.3d at 593. The author of the primary treatise relied on Aside from the doctrinal reasons for this rule, there are by the Court cites law from various jurisdictions, seemingly important policy considerations at stake here. Requiring favoring Montana and Connecticut, but the only citation advance proof of an ability to pay puts the breaching seller to Texas law is to a case that does not mention or in a better position than he would have been if the deal had discuss the showing a plaintiff must make to obtain specific gone through as contemplated in the contract by allowing him performance. 25 RICHARD A. LORD, WILLISTON ON greater security in the solvency of the transaction. Unless the CONTRACTS § 67:15, at 236–38) (4th ed.2002); see contract provides otherwise, sellers must wait until closing to Shuler v. Gordin, 644 S.W.2d 446, 447–49 (Tex.1982). find out whether the buyer can and will actually go through Edward Yorio's treatise, which states the general rule that with the deal. If a seller suspects that a buyer cannot perform, a plaintiff must show readiness, willingness, and ability to the seller faces a choice: (1) wait until closing to see if perform, is silent on whether or how a non-breaching buyer the buyer tenders the required payment, or (2) breach the

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contract and face remedies for breach. The Court introduces is not to burden the fact-finder with a speculative inquiry the concept of harmless breach, concluding that a seller's into the buyer's finances and potential financing prospects, breach “does no harm” when the seller, in advance of closing, but rather for the trial court to set a prompt closing date, believes a buyer will not be capable of performing under the supervised by the court, during which DiGiuseppe may tender contract and prematurely eliminates the buyer's opportunity performance. Only then must DiGiuseppe prove ability to to complete the transaction. 269 S.W.3d at 603. But such a pay, by tendering the payment due. If DiGiuseppe is unable breach, which cuts off a buyer's opportunity to show that he is to close, Lawler will then be entitled to remedies the contract in fact capable of performing at the time performance is due, provides. is inherently harmful.

In my view, once a party has pled the remedy of specific Requiring a non-breaching buyer to demonstrate ability to performance with sufficient specificity, nothing else is pay imposes a burden on buyers to secure firm funding required with regard to ability to pay. It is understood that commitments well in advance of closing and disclose funding by bringing the action (and undertaking the costs and risk sources, a burden that typically would not exist in transactions involved in such litigation), the party is ready and willing to performed under a property sales contract. Until today, we consummate the transaction should the court render judgment have never required a non-breaching purchaser to put on in its favor. Here, DiGiuseppe has done all that is required. 3 such proof. Cf. Corzelius, 220 S.W.2d at 635 (explaining His first pleading in the trial court and his cross-petition that it would not be necessary for a purchaser “to produce a requested the remedy of specific performance and stated firm commitment for an adequate loan” and recognizing that that, as soon as acceptable zoning was approved, he was “[b]anks, insurance companies, and others loaning money ready, willing, and able to satisfy his funding obligations would probably be reluctant to execute a commitment for under the contract. DiGiuseppe's pleadings indicated that a loan to complete a sale of lands which the owner had he “possessed the necessary capital to move forward with declared she would not convey”). The sale of property often the acquisition of the Property.” Moreover, during trial, he becomes a complex transaction that may involve developers testified that he was ready and able to close after March 7, with many properties, numerous lenders, investors who may 2000, the date the city council approved acceptable zoning. 4 wish to remain confidential until closing, and other sources DiGiuseppe stated that he had three homebuilders who would of cash flow that may not come together until the last minute.

have funded the purchase and that “if there hadn't been Sellers find out at closing whether a buyer can pay, and buyers another contract in place, [they] would have closed the deal.”

need not choose a source of financing or secure a financing Though the Court finds DiGiuseppe's testimony “equivocal commitment until shortly before closing. See Shuler, 644 and conflicting” because DiGiuseppe did not demonstrate S.W.2d at 448 (indicating that the time for buyer and seller that would not have been able to close the transaction on to show their ability to perform is at closing). I see no reason his own, 269 S.W.3d at 600, I am satisfied that DiGiuseppe to change this state of affairs simply because a seller has, for presented at least some evidence of his ability, with the help whatever reason, breached his agreement and forced a nonof investors he had secured, to tender the money required breaching plaintiff to seek judicial enforcement. And, in a case such as this, in which the buyer testified that he was ready under the contract. 5 See Corzelius, *612 220 S.W.2d at 635 and able to close when acceptable zoning was approved and (holding that a buyer is obligated to do no more than offer continued to be ready and able to close, equity demands no to perform in his pleadings, but a buyer who put on some more of a non-breaching buyer. evidence of creditworthiness and willing funding sources sufficiently established ability to pay). Contrary to the Court's Finally, it is entirely possible that a buyer who is ready, suggestion, DiGiuseppe was not required to prove that he willing, and able to perform at the time of trial may find had cash in hand or that a written financing agreement was his *611 fortunes diminished by the time the closing date in place. DiGiuseppe offered to do equity in his pleadings, arrives such that he is no longer able to make payment. Just and he presented some evidence of his willingness and ability as we do not require tender of payment when it would be a to perform under the contract. When a seller's repudiation “useless and idle ceremony,” we cannot require a showing of of a contract makes the buyer's tender of payment useless ability to perform at the time of trial when it, in many cases, and excuses that requirement, there is no principled reason would be equally meaningless. See Burford, 199 S.W.2d at to impose on the innocent buyer an obligation to establish 145. The most efficient way to ensure DiGiuseppe's payment pre-closing funding arrangements, which is not required by the contract and has never been required by this Court.

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DiGiuseppe did all that is required to show that he is entitled to the remedy of specific performance. I believe that, upon All Citations

the jury's finding that Lawler breached the contract and DiGiuseppe did not, the trial judge had authority to order 269 S.W.3d 588, 52 Tex. Sup. Ct. J. 29 specific performance. Because the Court holds otherwise, I respectfully dissent.

Footnotes 1 Hon. G. Alan Waldrop, Justice, Court of Appeals for the Third District of Texas at Austin, sitting for JUSTICE MEDINA by commission of Hon. Rick Perry, Governor of Texas, pursuant to Section 22.005 of the Texas Government Code.

2 The parties contemplated a final purchase price of approximately $28 million. The written contract was initially prepared by DiGiuseppe. The signed version included a typewritten main body with a few handwritten deletions and interlineations initialed by the parties, a typewritten addendum with additional handwritten deletions and interlineations, and a two-page, handwritten addition to the addendum relating to earnest money. The contract also included an August 1999 amendment as well as exhibits describing the property and the development plans.

3 Lawler also did not close with DRHI. The failure of that transaction was the subject of separate litigation. 4 After the dispute arose, but before he counterclaimed in the lawsuit, DiGiuseppe transferred his interest in the purchase contract to a Texas limited partnership called Frisco Master Plan LP. The parties do not dispute the validity of the assignment to Frisco Master Plan LP or that Frisco Master Plan is controlled by DiGiuseppe. Therefore, for simplicity, we refer to DiGiuseppe, Southbrook Development, and Frisco Master Plan LP collectively as “DiGiuseppe.”

5 The jury charge consisted of eight questions, none of which dealt with fact issues related to specific performance. In addition to the two questions on breach of the contract, Question 3 inquired as to damages for Lawler's failure to comply with the contract. Question 4 was a waiver question as to Lawler's claims (unanswered). Question 5 was the liability question on DiGiuseppe's promissory estoppel claim. Question 6 inquired as to damages relating to the promissory estoppel claim. Question 7 inquired whether DiGiuseppe performed compensable work for Lawler. Question 8 inquired as to the value of any compensable work performed by DiGiuseppe (also unanswered).

6 Lawler has not challenged this ruling. 7 The court did not address the purchase contract language whereby each of the parties expressly waived any claims for damages.

8 The following exchange occurred during examination by Lawler's counsel:

Q. Mr. DiGiuseppe, you personally did not have the money to close this contract, did you? A. I did not. Q. When you assigned—when you entered into this contract, you had a right to assign it, right? A. That's right. Q. And so you were going to have to find a third party or parties to assign this contract in order for it to close, correct? A. That's exactly what [Lawler] was saying. Q. I'm just asking you. That's what had to happen, isn't it? A. Yes. Q. You couldn't close the contract? A. No. Q. How did you intend for [Lawler], then, to close this contract? A. For [Lawler]— Q. For you to close the contract, for you to make the purchase or for somebody to make the purchase of this contract? A. Well, normally what I do is—dealing with a piece of property like this, I'll put it under contract, do the work, do the zoning. And through that process, I usually put together parties to be the investors in the deal. And they, then, close on the contract, and they would fund the development of the property and so on. And I would be the development arm of that entity usually. Q. You never had any written agreement from any third parties to close this contract, did you? A. I haven't gotten a written agreement with the parties that were going to close it with me, no. That's not the way I do business. Q. You don't use contracts?

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

A. No. What I mean is if somebody tells me they are going to do something, I expect them to do it. Q. Well, in your deposition, didn't you tell me that you felt that there would be three different home builders that might participate and provide that money to close this deal?

***

A. Three different home builders were going to close the deal with me, yes. Q. But you didn't have any written agreement from them that they were going to close the deal? A. Not a written agreement, no.

***

Q. When you sent the letter that said you were ready, willing and able to close this contract, you, individually, couldn't close that contract, could you? A. I, individually, never intended to close that contract. Q. You didn't have the funds to close the contract, did you? A. Not personally, no.

9 The following exchange occurred during examination by DiGiuseppe's counsel:

Q. Mr. DiGiuseppe, you had the means to close the contract, didn't you? A. Yes. In fact, a month later, we closed one that was $24 million.

10 We note that DiGiuseppe's argument on this point is not that the law does not normally require proof of readiness, willingness, and ability to perform before specific performance will be awarded, but that his contract with Lawler negated or waived this requirement by agreement. The dissent argues that DiGiuseppe was not required to prove and obtain a finding of fact that he was ready, willing, and able to perform because Texas law does not require such proof where the defendant has repudiated or breached the contract. However, this argument was not raised or briefed because it is not the position DiGiuseppe takes in the case. Ordinarily, failure to brief an argument waives the claimed error. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 410 (Tex.1997). This rule is relaxed when fact issues are not germane to the resolution of the issue and the issue is a question of law involving constitutional ramifications. Id. The rule may also be relaxed where the issue is one involving fundamental error. W.J. McCauley v. Consol. Underwriters, 157 Tex. 475, 304 S.W.2d 265, 266 (1957) (“[T]he Supreme Court is authorized to and will consider fundamental error even though not assigned by the parties.”). The dissent's argument is not of constitutional dimension, and, even if we agreed with this analysis, we would not view it as raising a point of fundamental error.

11 As noted above, supra footnote 10, this issue was not raised by DiGiuseppe as a point of error nor briefed by the parties. 12 TEX.R. CIV. P. 92 (“A general denial of matters pleaded by the adverse party which are not required to be denied under oath, shall be sufficient to put the same in issue.”).

13 The dissent also points to the comments to section 363 of the Restatement (Second) of Contracts as supporting its position. However, section 363 deals with the issue of securing the ability to perform by a party seeking specific performance at the time of the order granting specific performance. RESTATEMENT (SECOND) OF CONTRACTS § 363 (1981). This section of the Restatement notes that if performance by the injured party cannot be secured to the satisfaction of the court at the time of the requested order of specific performance, specific performance may be refused. Section 363 does not address the question of whether proof of the willingness and ability to perform at the time required by the contract is a prerequisite to obtaining specific performance in any way.

1 In footnote 10, the Court takes the position that DiGiuseppe did not raise or argue that he was not required to prove or obtain a finding of fact that he was ready, willing, and able to perform, suggesting that such an argument should not be addressed in this dissent. 269 S.W.3d at 597. Yet that is the basis for the court of appeals' decision, –––S.W.3d ––––, ––––, and the Court provides exhaustive discussion on this very issue in its opinion. Id. at 593. In the first issue raised in his petition for review, DiGiuseppe claims that “[t]he court of appeals erred in reversing the trial court's award of specific performance to DiGiuseppe.” I believe, as the Court appears to, that DiGiuseppe's issue sufficiently raised the question of whether Texas law requires such proof from a non-breaching buyer.

2 See Kress, 261 S.W.2d at 704 (recognizing that specific performance is an equitable remedy); 17090 Parkway, 80 S.W.3d at 256 (relying on erroneous and distinguishable courts of appeals' cases, as explained above); Lazy M. Ranch, Ltd. v. TXI Operations, LP, 978 S.W.2d 678, 683 (Tex.App.-Austin 1998, pet. denied) (rejecting specific performance because the buyer breached the contract and had unclean hands); Am. Apparel Prods., 880 S.W.2d at 269–70 (rejecting specific performance because the buyer unilaterally rescinded the contract); Gordin v. Shuler, 704 S.W.2d 403, 408 (Tex.App.- Dallas 1985, writ ref ‘d n.r.e.) (rejecting specific performance because the buyer failed to comply with the contract terms and failed to disclose material information); Chessher, 619 S.W.2d at 421 (same); Hendershot, 476 S.W.2d at 920 (erroneously interpreting Burford and Corzelius, as explained above).

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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008) 52 Tex. Sup. Ct. J. 29

3 Strictly speaking, the pleadings filed by DiGiuseppe did not request the remedy of specific performance. Frisco Master Plan, the limited partnership to which DiGiuseppe transferred his interest under the contract, requested specific performance as a third-party plaintiff to the suit between DiGiuseppe and Lawler. Accordingly, the trial court's judgment granted specific performance in favor of Frisco Master Plan, not DiGiuseppe. Because DiGiuseppe was acting on behalf of Frisco Master Plan and Southbrook Development Company, I have not distinguished between these three parties for the purposes of this opinion.

4 DiGiuseppe testified as follows:

Q. Could you close after March 7th [the date DiGiuseppe accepted the zoning changes]? A. Absolutely. Q. Could Mr. Lawler close after March 7th? A. No. Q. Were you ready and able to close after March 7th? A. We were. Q. Are you ready and able to close today? A. We are.

***

Q. You want to close this contract in accordance with its terms, don't you? A. Yes, I do.

5 Though, as the Court points out, DiGiuseppe did not have cash in hand to personally tender payment under the contract, DiGiuseppe testified that he had secured financing sources.

Q. Now, you had no ability to close this transaction yourself, did you? A. I, personally, was not going to close the deal myself, no. Q. You were going to get some investors to do it, weren't you? A. I had them.

***

Q.... Is there any question—I want you to tell the jury—is there any question that you have the commitments and have the money to close this deal? A. Not at all—

***

Q. And can you close this deal now? A. Yes.

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 19

Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)

Amendment or modification Trial court's plenary jurisdiction gives it not only KeyCite Yellow Flag - Negative Treatment authority but responsibility to review any pretrial Holding Limited by TransAmerican Natural Gas Corp. v. Powell, Tex., June 19, 1991 order upon proper motion, and in doing so, it is presumed that court is familiar with entire 701 S.W.2d 238 record of case up to and including motion to be Supreme Court of Texas. considered.

Ida E. DOWNER, Petitioner, 8 Cases that cite this headnote v.

AQUAMARINE OPERATORS, INC., Respondent.

[3] Pretrial Procedure

Striking pleadings

No. C–4141. | Dec. 4, 1985. | Rehearing Denied Jan. 15, 1986. Pretrial Procedure Dismissal or default judgment Wife of deceased seaman brought action for damages In refusing to grant new trial and reinstate against shipowner. Trial court struck shipowner's answer as party's answer which had been struck at prior discovery abuse sanction and signed interlocutory default hearing on Motion for Sanctions as discovery judgment as to liability. Jury trial on issue of damages was had sanction, trial court could consider evidence in the 334th District Court, Harris County, Ken Harrison, J. introduced subsequent to original sanctions Shipowner appealed. The Court of Appeals, 689 S.W.2d 472, hearing. Vernon's Ann.Texas Rules Civ.Proc., reversed judgment of trial court. Wife appealed. The Supreme Rule 215a(c) (Repealed). Court, Wallace, J., held that: (1) trial court had authority under rule regarding failure of party to appear at oral deposition to 35 Cases that cite this headnote strike answer of shipowner; (2) trial court correctly imposed discovery sanction of striking shipowner's answer; and (3)

[4] Appeal and Error

trial court correctly refused to admit evidence of contributory Abuse of discretion

negligence.

Test for whether trial court abused its discretion Judgment of Court of Appeals reversed and judgment of trial is whether court acted without reference to any court affirmed. guiding rules and principles, i.e., whether the act was arbitrary or unreasonable, and mere fact that trial judge may decide matter within his discretionary authority in different manner West Headnotes (8) than appellate judge in similar circumstance does not demonstrate that an abuse of discretion has occurred.

[1] Pretrial Procedure Corporate officers, agents, and employees 3513 Cases that cite this headnote President of company which was party to action was a “party” within meaning of Rule 215a(c)

[5] Pretrial Procedure

regarding failure of party to appear at oral Striking pleadings

deposition, where president testified he was in complete charge of all operations of the Pretrial Procedure company. Vernon's Ann.Texas Rules Civ.Proc., Dismissal or default judgment Rule 215a(c) (Repealed). Trial court correctly imposed discovery sanction of striking defendant's answer and signing 27 Cases that cite this headnote interlocutory default judgment as to liability under Rule 215a(c)(Repealed) regarding failure [2] Pretrial Procedure of party to appear at oral deposition, where

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Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)

shipowner voluntarily sent crew to sea rather than producing them for depositions as agreed Terry P. Ayre and Thomas A. Brown, Brown, Sims, Wise & on two occasions, attorney for wife of deceased White, Houston, for respondent. seaman stated shipowner's attorney waited until Opinion

one hour past deposition time to advise wife's attorney that wife's attorney would have to fly WALLACE, Justice. to another city to take depositions on following day, and shipowner failed to produce president This is an appeal from a judgment for damages in a suit of shipowner and immediate supervisor of brought under the Jones Act and under admiralty law. The captain for deposition and did not explain this trial dealt only with damages because the trial court struck the failure. Vernon's Ann.Texas Rules Civ.Proc., defendant's answer as a discovery abuse sanction and signed Rule 215a(c) (Repealed). an interlocutory default judgment as to liability. The court of appeals reversed the trial court judgment, holding that the 17 Cases that cite this headnote action of *240 that court was an error of law and an abuse of discretion. 689 S.W.2d 472. We reverse the judgment of the [6] Appeal and Error court of appeals and affirm the judgment of the trial court.

Sustaining challenge or excusing juror The issues before us are whether TEX.R.CIV.P. 215a(c), as Alleged error of trial court in refusing to strike it existed prior to the amendment effective August 1, 1984, a juror for cause did not result in harm, where authorized the trial court to strike defendant's answer, and, if challenged juror was a spare.

so, whether the exercise of that authority constituted an abuse 1 Cases that cite this headnote of discretion.

Edward P. Downer was a seaman aboard the vessel Four [7] Damages Point IV. He drowned while attempting to free a line that Scope of issues and questions considered had fouled the vessel's propeller. Ida E. Downer, his widow, Trial court correctly refused to admit evidence brought this action against Aquamarine Operators, Inc., the of contributory negligence in trial to determine owner and operator of the vessel. The case was filed in the damages, where defendant's answer had been 151st District Court of Harris County. Both Downer and struck and default judgment rendered as to Aquamarine are residents of Harris County, Texas. liability and defendant had no pleading to support contributory negligence. Downer filed Notice of Intent to Take the Depositions of All Members of The Crew on June 1. The notice identified 14 Cases that cite this headnote each crew member, including the captain, Chester P. Dalfrey, by name only. Downer also requested depositions of the [8] Appeal and Error immediate supervisor of Chester Dalfrey and the custodian of Amount of recovery or extent of relief Edward Downer's personnel file. On June 1, Aquamarine Alleged error of trial court in awarding notified Downer that the crew was at sea and would not prejudgment interest was not presented to trial appear. Aquamarine at that time agreed to produce the court and was thus waived on appeal. requested persons on June 22. On June 21, Aquamarine again notified Downer that the crew was at sea and would not 4 Cases that cite this headnote appear. It agreed to produce them on July 5.

Downer filed written Notice of Intent to Take Depositions of the same individuals for July 5. On that date, the requested Attorneys and Law Firms deponents did not appear, whereupon Downer filed a Motion for Sanctions. A hearing on the Motion for Sanctions was *239 John O'Quinn, Frank M. Staggs, Jr., O'Quinn & set for August 22. Aquamarine made no appearance at the Hagans, Houston, for petitioner.

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Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)

hearing; the trial court granted the Motion for Sanctions and With the above information before it, the trial court overruled signed an Order Striking Aquamarine's Answer. Aquamarine's Motion to Reconsider the Sanctions and to reinstate its answer. The court signed an order granting an Downer filed a Motion for Interlocutory Default Judgment interlocutory default judgment as to liability. Aquamarine to which Aquamarine responded. The response contained filed a Motion to Set Aside the Default Judgment. The Aquamarine's reasons for not producing the requested motion contained practically the same information as the individuals for depositions and its failure to appear at the Motion to Reconsider Sanctions set out above. The trial court sanctions hearing. considered this motion and overruled it. On April 16, 1984, the case was preferentially set for trial for June 4, and the trial The reason offered for the first two occasions was that work court refused to consider Aquamarine's Second Motion to for the FOUR POINT IV was scarce and, when work was Set Aside the Interlocutory Default Judgment and Reinstate available, it was necessary to send the vessel and crew to Defendant's Pleadings. sea rather than produce them for depositions. On the third occasion, the vessel was in port at New Iberia, Louisiana, A jury trial was had in a different court, the 334th District, but Coast Guard regulations required a skeleton crew to be on the issue of damages. At the trial, Chester Dalfrey testified kept aboard at all times. Aquamarine's attorney stated that that he was captain of the FOUR POINT IV and as such he he notified Downer's attorney on July 1 of the necessity was in complete charge of the vessel with authority over all of to take the depositions in New Iberia. Downer's attorney its operations. Mr. Clark Ivans testified that he was president stated that he first learned that the individuals would not of Aquamarine at all times pertinent to this case, and that as appear as noticed when Aquamarine's attorney called him an such, he was the immediate supervisor of Chester Dalfrey. hour after the depositions were scheduled to commence. Both agreed that Aquamarine requested that the depositions be [1] We now address the issue of whether the trial court had taken in New Iberia on July 6. However, Downer's attorney authority under Rule 215a(c) to strike Aquamarine's answer. stated that he could not do so because he was preferentially That rule stated in pertinent part: set for trial in Houston starting at 9:00 a.m. on July 6.

If a party or an officer or managing The reason given by Aquamarine for not appearing at agent of a party, except for good the sanctions hearing was that Hurricane Alicia had struck cause shown, fails to appear before La Porte, the residence of Mr. Ayres, Aquamarine's lead the officer who is to take his oral counsel, four days previously. Mr. Ayres was involved in deposition ... the court in which the cleaning up after the hurricane and mitigating the damages action is pending on motion and notice to his home. Also, he had a hearing set in federal court in may strike out all or any part of Beaumont on the following day and was directing all of his the pleading of that party or dismiss available attention to that matter. the action or proceeding or any part thereof....

To his Motion to Reconsider the Sanctions, Mr. Ayres As noted above, Ivans testified that as president of attached an affidavit from his secretary, which stated that she Aquamarine he was in complete charge of all operations of had called the clerk of the court on July 7, and had advised the company. Thus he was a party as contemplated by Rule her that Mr. Ayres had to make a docket call in Angleton on 215a(c).

August 22. She understood the clerk to say that the sanctions hearing would be reset for September 6. In response to this [2] [3] The next question is whether the trial court, in motion, Downer's attorney advised the court by letter of his refusing to grant a new trial and reinstate Aquamarine's version of the circumstances leading up to the non-appearance answer, could consider the evidence introduced subsequent on July 5, and the time when he was first advised *241 to the original sanctions hearing. Aquamarine contends that that the named individuals would not appear. Attached to this the trial court, in imposing sanctions, could consider only letter to the court was a copy of a letter dated July 28, written the evidence before it at the time of the sanctions hearing, by Mr. Bales, an associate of Mr. Ayres, which confirmed that and not any evidence subsequently produced. A trial court's the sanctions hearing was set for August 22.

plenary jurisdiction gives it not only the authority but the responsibility to review any pre-trial order upon proper

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Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)

motion. In doing so, it is presumed that the court is familiar case, and now embodied in Rule 215. The use of sanctions with the entire record of the case up to and including the by trial courts to prevent discovery abuse has developed motion to be considered. The plenary jurisdiction of the trial steadily over the past several years. These changes reflect the court in this case continued through the final judgment and continuing pattern both to broaden the discovery process and overruling of Aquamarine's motion for new trial. When to encourage sanctions for failure to comply. considering the motion for new trial, the court had before it the reasons advanced by Aquamarine for not appearing The United States Supreme Court in National Hockey League for depositions or the sanctions hearing; Downer's response v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. to Aquamarine's motions; and the evidence produced at the 2778, 49 L.Ed.2d 747 (1976) approved the use of sanctions trial on damages. Thus, the court of appeals erred in holding not only to assure compliance with the discovery process but that the trial court did not have authority under Rule 215a(c) also to deter those who might be tempted to abuse discovery to strike Aquamarine's answer. in the absence of a deterrent.

We now turn to the court of appeals holding that the trial This court and various courts of appeals have also followed court abused its discretion in striking Aquamarine's answer. this progression. See, e.g., Dyson v. Olin Corp., 692 S.W.2d The court of appeals concluded its review of the abuse of 456 (Tex.1985), (Kilgarlin, J., concurring) (unnamed witness discretion issue by stating: “The facts of the case simply do not permitted to testify); Jarrett v. Warhola, 695 S.W.2d 8 not, in our opinion, show this to be an appropriate case to (Tex.App.—Houston [14th Dist.] 1985, writ ref'd), (plaintiff's impose the ultimate sanctions of striking the pleadings and cause of action dismissed); City of Houston v. Arney, entering default judgment.” We interpret that statement to 680 S.W.2d 867 (Tex.App.—Houston [1st Dist.] 1984, mean that the court of appeals disagreed with the decision of no writ) (defendant's answer struck for failure to answer the two trial judges who reviewed the matter. interrogatories); Southern Pacific Transportation v. Evans, 590 S.W.2d 515 (Tex.Civ.App.—Houston [1st Dist.] 1979, [4] The test for abuse of discretion is not whether, in writ ref'd n.r.e.) (defendant's answer struck and interlocutory the opinion of the reviewing court, the facts present an default judgment rendered as to liability), cert. denied, 449 appropriate case for the trial court's action. Rather, it is U.S. 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980). a question of whether the court acted without reference to any guiding rules and *242 principles. Craddock v. In various speeches and law review articles, different Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126 members of this court have encouraged trial judges to use (Tex.Comm.App.—1939, opinion adopted). Another way sanctions to the degree necessary to assure compliance with of stating the test is whether the act was arbitrary or discovery procedures and deter abuse of the process. Barrow unreasonable. Smithson v. Cessna Aircraft Co., 665 S.W.2d and Henderson, 1984 Amendments to the Texas Rules of Civil 439, 443 (Tex.1984); Landry v. Travelers Insurance Co., Procedure Affecting Discovery, 15 ST. MARY'S L.J. 713 458 S.W.2d 649, 651 (Tex.1970). The mere fact that a trial (1984) (presented to the Texas College of the Judiciary Nov. judge may decide a matter within his discretionary authority 29, 1984); Kilgarlin and Jackson, Sanctions for Discovery in a different manner than an appellate judge in a similar Abuse Under New Rule 215, 15 ST. MARY'S L.J. 767 (1984); circumstance does not demonstrate that an abuse of discretion Pope and McConnico, Practicing Law With the 1981 Texas has occurred. Southwestern Bell Telephone Co. v. Johnson, Rules, 32 BAYLOR L.REV. 457 (1981); Spears, The Rules 389 S.W.2d 645, 648 (Tex.1965); Jones v. Strayhorn, 159 of Civil Procedure: 1981 Changes In Pretrial Discovery, 12 Tex. 421, 321 S.W.2d 290, 295 (Tex.1959). ST. MARY'S L.J. 633 (1981).

To determine the trial judge's guiding rules and principles The trial court in this case was free to examine the factors in imposing sanctions for discovery abuse, we must look before it to determine whether to levy sanctions. Among these to the Texas Rules of Civil Procedure as promulgated were the following: (1) whether voluntarily sending the crew and amended by this Court as well as the decisions of to sea rather than producing them for depositions as agreed on appellate courts of this State and of the United States. The two occasions was in conscious disregard of this court's rules; Texas Rules of Civil Procedure pertaining to discovery and (2) whether the contradictory statements of both attorneys sanctions for noncompliance have been amended several indicated that Aquamarine's attorney did in fact wait until times, culminating in Rule 215a as it existed at the time of this one hour past the scheduled time for depositions on July 5,

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Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)

[6] The second point was that the trial court improperly to advise Downer's attorney that he would have to fly to refused to strike a juror for cause. After the court had ruled on New Iberia and take depositions on the following day; (3)

challenges for cause, there were 26 names left on the jury list.

whether Aquamarine's attorney consciously disregarded the Each party was given six jury strikes, so, after making those sanctions hearing in preference to his personal needs and strikes, 14 names remained on the list. The challenged juror the federal court case set the following day; (4) whether was Number 14 and was thus a spare. There was no harm in the information contained in the secretary's affidavit as to refusing to dismiss him for cause.

the date of the sanctions hearing conflicted with the letter from an attorney *243 in that law firm confirming that the [7] The third point was that the trial court improperly refused hearing was set on August 22; and (5) the unexplained failure to admit evidence of Downer's contributory negligence.

of Aquamarine to produce for depositions on any of the Contributory negligence is an affirmative defense which occasions in question Clark Ivans, the immediate supervisor must be pleaded. Aquamarine's answer had been struck and of Chester Dalfrey and the president of Aquamarine.

default judgment rendered as to liability. Thus, defendant had no pleading to support contributory negligence, so the court [5] The record contains no indication that the trial court did not err in refusing to admit the requested evidence.

was capricious, arbitrary, or unreasonable. Thus, the court of appeals erred in holding that the trial court abused its [8] Aquamarine's remaining point before the court of discretion.

appeals was that the trial court erred in awarding prejudgment interest in a Jones Act case tried to a jury. This point was not In determining whether to reverse and render this cause or to presented to the trial court and was thus waived.

remand it to the court of appeals, we must look to the four points of error raised by Aquamarine before the court of Aquamarine's points of error presented to the court of appeals but not addressed by that court. If those points raise appeals but not considered by that court concerned questions questions of law, as opposed to questions of fact, they can be of law over which we have jurisdiction. There is no merit to addressed by this court.

these points so it is not necessary for this cause to be remanded to the court of appeals.

The first point was that Downer's First Amended Original Petition was insufficient to support the judgment. The The judgment of the court of appeals is reversed and the contention is that the facts supporting the cause of action judgment of the trial court is affirmed.

were not pleaded. TEX.R.CIV.P. 47 requires that a petition contain a short statement of the cause of action sufficient to give fair notice of the claim involved. Our rules do not require All Citations

pleadings to contain evidence or factual detail. That point is overruled. 701 S.W.2d 238

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

relief unless it is arbitrary, unreasonable, and unsupported by guiding rules and principles.

252 S.W.3d 833

Court of Appeals of Texas, 4 Cases that cite this headnote Dallas.

W.R. EDWARDS, Jr., Appellant [3] Appeal and Error v. Consideration and effect of findings or MID–CONTINENT OFFICE DISTRIBUTORS, failure to make findings L.P. and Inwood Office Furniture, Inc., Appellees. When a trial court makes written findings of fact following a non-jury trial, these assist No. 05–06–01421–CV. | April 25, 2008. in appellate court's review of the trial court's exercise of its discretion by revealing the trial Synopsis court's reasoning and analysis and help assure Background: Lender, a member of an informal lending both the reviewing court and the litigants that cartel, brought action for money had and received against the trial court's decision resulted from thoughtful office furniture supply company for damages in its failure to deliberation.

repay money used by furniture store to purchase receivables. The 95th Judicial District Court, Dallas County, Karen Gren Cases that cite this headnote Johnson, J., entered take-nothing judgment in favor of supply company. Lender appealed.

[4] Appeal and Error

Allowance of remedy and matters of procedure in general

[Holding:] The Court of Appeals, Lang-Miers, J., held that If the evidence is sufficient to support the trial money fronted to furniture supply did not in equity and good court's findings and conclusions, the trial court conscience belong to lender.

did not abuse its discretion.

11 Cases that cite this headnote Affirmed.

[5] Implied and Constructive Contracts Nature of right

West Headnotes (9)

The claim for money had and received belongs conceptually to the doctrine of unjust [1] Implied and Constructive Contracts enrichment.

Money Received

23 Cases that cite this headnote The claim for money had and received seeks equitable relief, and a trial court exercises broad discretion in balancing the equities involved in a [6] Implied and Constructive Contracts case seeking equitable relief. Restitution The doctrine of unjust enrichment applies the 9 Cases that cite this headnote principles of restitution to disputes that are not governed by a contract between the parties; it [2] Appeal and Error characterizes the result of a failure to make Trial in Equitable Actions restitution under circumstances that give rise Appeal and Error to an implied or quasi-contractual obligation to Effect in Equitable Actions return those benefits.

The Court of Appeals will not disturb a trial 11 Cases that cite this headnote court's ruling on a claim seeking equitable

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

[7] Implied and Constructive Contracts Darrell G. Noga, Elizabeth Flora, Fee, Smith, Sharp, Vitullo, Nature of right LLP, Robert H. Renneker, Dallas, for Appellees.

Implied and Constructive Contracts Before Justices LANG, LANG–MIERS, and MAZZANT.

Defenses

To prove a claim for money had and received, a plaintiff must show that a defendant holds money OPINION

which in equity and good conscience belongs to him; a defendant may present any facts or raise Opinion by Justice LANG–MIERS. any defenses that would deny a claimant's right to recover under this theory. W.R. Edwards, Jr. appeals the trial court's judgment for appellees, Mid–Continent Office Distributors, L.P. and 25 Cases that cite this headnote Inwood Office Furniture, Inc., following a bench trial on a claim for money had and received. For the reasons that follow, [8] Implied and Constructive Contracts we affirm.

Consideration or Purpose for Which Money Was Received Money fronted to furniture supply company BACKGROUND on behalf of furniture store by lender, a member of an informal lending cartel, as a The trial testimony showed that Edwards was a member means to allowing store to obtain furniture of an informal lending cartel. He met Matthews through orders, did not, in equity and good conscience, a mutual cartel acquaintance and subsequently loaned him belong to lender, thus precluding lender's claim $10,000. Matthews repaid that loan on time. A few months against company for money had and received; later, Matthews approached Edwards seeking another loan. transaction represented a high-risk scheme He told Edwards that his company, MAC Group, L.L.C. whereby store proposed to assign the value of (collectively Matthews or MAC), a furniture broker, needed the furniture to lender and sell the furniture on to borrow money in connection with three of its customer lender's behalf, if lender agreed to pay off the orders. He explained that three customers placed furniture suppliers so the furniture could be delivered. orders with MAC, each gave MAC a fifty percent deposit, but his suppliers would not deliver the furniture until Cases that cite this headnote MAC paid them the full amount. Matthews proposed to sell the receivables for these customers to Edwards at a discounted value if Edwards would agree to pay off the [9] Implied and Constructive Contracts suppliers so the furniture could be delivered. Together, Nature of right

Matthews and Edwards drafted a “Factoring Agreement”

In an action for money had and received, the which reflected the terms of their agreement. It listed the absence of proof of detrimental reliance by three customers, with total payments owed to MAC of a defendant does not assure the plaintiff of approximately $70,000.00; and seven suppliers to whom recovery; instead, detrimental reliance is one MAC owed a total of $62,052.93, including $28,272.22 to of the factors that a trial court considers in Mid–Continent, a furniture wholesaler, and $15,292.34 to balancing the equities in a claim for money had Inwood, a furniture manufacturer. and received.

At Matthews' request, Edwards called Pat Henin, an 6 Cases that cite this headnote operations manager at Mid–Continent, to verify the amount MAC owed. The telephone conversation lasted five minutes or less, and there is conflicting testimony about what was said. However, Edwards testified that Henin confirmed the balance Attorneys and Law Firms MAC owed and that he understood her to say Mid–Continent *834 Kent Frank Brooks, Dallas, for Appellant. was holding orders for these MAC customers until it received

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

full payment. 1 Based on this conversation, Edwards did not the judgment denying him relief. Those reviews involve think he needed to call Inwood or the other suppliers to overlapping standards of review. 6 confirm that they were also holding orders for these MAC customers, 2 *835 and he signed the Factoring Agreement, *836 [1] [2] [3] [4] The claim for money had and agreeing to purchase MAC's receivables. He obtained a received seeks equitable relief. See Stonebridge Life Ins. cashier's check for $28,272.22 payable to Mid–Continent and Co. v. Pitts, 236 S.W.3d 201, 203 n. 1 (Tex.2007) (per authorized Matthews to pick up the cashier's check and hand curiam); Acoustical Screens in Color, Inc. v. T.C. Lordon Co., deliver it to Mid–Continent. The cashier's check contains the Inc., 524 S.W.2d 346, 350 (Tex.Civ.App.-Dallas 1975, writ ref'd n.r.e.). And a trial court exercises broad discretion in notation “MAC 908.” 3 Edwards also wrote personal checks balancing the equities involved in a case seeking equitable on his Schwab account to the remaining suppliers, including relief. See In re Gamble, 71 S.W.3d 313, 317 (Tex.2002)

a check to Inwood for $15,292.22. 4 All of those checks (orig.proceeding); Craddock v. Sunshine Bus Lines, Inc., 134 contained the notation, “MAC Group Payment,” in the “For” Tex. 388, 393, 133 S.W.2d 124, 126 (1939). We will not line. disturb a trial court's ruling on a claim seeking equitable relief unless it is arbitrary, unreasonable, and unsupported Matthews wrote letters to the three MAC customers advising by guiding rules and principles. See Cire v. Cummings, them that their accounts had been sold to Edwards and 134 S.W.3d 835, 838 (Tex.2004). When a trial court makes to forward their payments to Edwards. When Edwards did written findings of fact following a non-jury trial, these assist not receive their payments, he called them to find out in our review of the trial court's exercise of its discretion why they had not paid him. The customers told him they by revealing the trial court's reasoning and analysis and help never received the furniture. Edwards then called Matthews. assure both the reviewing court and the litigants that the Matthews admitted he deceived Edwards and told him the trial court's decision resulted from thoughtful deliberation. payments Edwards made to the vendors were for past-due See Williams v. Chisolm, 111 S.W.3d 811, 815 (Tex.App.- balances on orders for other customers, not the customers Houston [1st Dist.] 2003, no pet.). If the evidence is sufficient whose receivables Edwards purchased. to support the trial court's findings and conclusions, the trial court did not abuse its discretion. See Reese v. Duncan, 80 Edwards sued Mid–Continent and Inwood for damages. 5 S.W.3d 650, 659 (Tex.App.-Dallas 2002, pet. denied); El The parties waived a jury and tried the case to the Paso County Hosp. Dist. v. Gilbert, 64 S.W.3d 200, 203–04 court. Edwards contended that he paid the money to Mid– (Tex.App.-El Paso 2001, pet. denied). Continent and Inwood by mistake “based [on] a fraudulent representation of another party” and appellees owed him We review challenges to the sufficiency of the evidence the money he had paid them. The trial court disagreed to support findings of fact under the same standards for and entered a take-nothing judgment in favor of Mid– reviewing evidence to support a jury's verdict. Walker Continent and Inwood. It subsequently issued findings of fact v. Cotter Prop., Inc., 181 S.W.3d 895, 899 (Tex.App.- and conclusions of law. In two issues on appeal, Edwards Dallas 2006, no pet.). In evaluating the legal sufficiency specifically challenges the legal and factual sufficiency of of the evidence to support a finding, we must determine certain of the trial court's findings of fact. He contends that whether the evidence as a whole rises to a level that would he proved the claim for money had and received against enable reasonable and fair-minded people to differ in their appellees and the trial court erred by granting a take-nothing conclusions. Columbia Med. Ctr. Subsidiary, L.P. v. Meier, judgment against him. 198 S.W.3d 408, 414 (Tex.App.-Dallas 2006, pet. denied)

(citing City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.2005)). Anything more than a scintilla of evidence is legally sufficient to support a challenged finding. Walker, STANDARD OF REVIEW

181 S.W.3d at 899. When we review a finding for factual Appellant complains about the findings of fact issued by sufficiency, we consider all of the evidence and will set the court to support its judgment denying his claim for aside a finding only if it is so contrary to the overwhelming money had and received. However, a review of the findings weight of the evidence as to be clearly wrong and unjust. of fact in this case does not end our inquiry. Instead, we See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 review those findings in the context of whether they support (Tex.2001) (per curiam); Cain v. Bain, 709 S.W.2d 175, 176

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

(Tex.1986) (per curiam). And we review a trial court's legal the plaintiff.” Staats, 150 Tex. at 584, 243 S.W.2d at 687– conclusions de novo. See Walker v. Anderson, 232 S.W.3d 88 (internal quotations and citations omitted). To prove the 899, 908 (Tex.App.-Dallas 2007, no pet.). We evaluate claim, a plaintiff must show that a defendant holds money those conclusions independently to determine whether the which in equity and good conscience belongs to him. See Best trial court correctly drew the conclusion from the facts. Id. Buy Co. v. Barrera, 248 S.W.3d 160, at 162–63 (Tex. 2007) Unchallenged findings of fact are conclusive on appeal unless (per curiam) (citing Staats, 150 Tex. at 584, 243 S.W.2d at the contrary is established as a matter or law or there is no 687). A defendant may present any facts or raise any defenses evidence to support the findings. Toles v. Toles, 45 S.W.3d that would deny a claimant's right to recover under this theory. 252, 265 n. 6 (Tex.App.-Dallas 2001, pet. denied) (citing Id. at 162–63 (citing Stonebridge, 236 S.W.3d at 205–06 and McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex.1986)). Staats, 150 Tex. at 584, 243 S.W.2d at 687).

Consequently, we first determine whether the evidence Texas courts have allowed restitution for these types of claims is sufficient to support the challenged findings and then in a variety of cases: by a defrauded party against the party determine whether the trial court's judgment—as a decision of who committed the fraud, see Staats, 150 Tex. at 583–85, a claim seeking equitable relief—is arbitrary, unreasonable, 243 S.W.2d at 686–88; Wiseman v. Baylor, 69 Tex. 63, 64– or unsupported by guiding rules and principles. 66, 6 S.W. 743, 743–44 (Tex.1887); by a party that made an overpayment, Benson v. Travelers Ins. Co., 464 S.W.2d 709, 710–13 (Tex.Civ.App.-Dallas 1971, no writ); and by a party that paid or credited money to the wrong person or account, *837 CLAIM FOR MONEY HAD AND RECEIVED see Amoco Prod. Co., 946 S.W.2d at 163–65 (payment to [5] [6] Edwards contends that he established each element wrong person); Doss v. Homecomings Fin. Network, Inc., of his claim for money had and received. As we noted, a cause 210 S.W.3d 706, 710–11 (Tex.App.-Corpus Christi 2006, pet. of action for money had and received is equitable in nature. denied) (payment applied to wrong account); *838 Lyman Stonebridge Life Ins. Co., 236 S.W.3d at 203 n. 1; Acoustical D. Robinson Family Ltd. P'ship v. McWilliams & Thompson, Screens in Color, Inc., 524 S.W.2d at 350. The claim “belongs P.L.L.C., 143 S.W.3d 518, 520 (Tex.App.-Dallas 2004, pet. conceptually to the doctrine of unjust enrichment.” Amoco denied) (earnest money released to wrong client). Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex.App.-El Paso Conversely, some Texas courts have rejected a claim for 1997, no writ). 7 The doctrine of unjust enrichment applies restitution and held that money paid under a unilateral mistake the principles of restitution to disputes that are not governed of fact cannot be recovered. See, e.g., Pacific Molasses by a contract between the parties. Id. It characterizes the result Co. v. Graves, 451 S.W.2d 294, 298 (Tex.Civ.App.-San of a failure to make restitution under circumstances that give Antonio 1970, writ ref'd n.r.e.); Sellman v. Am. Nat'l Ins.

rise to an implied or quasi-contractual obligation to return Co., 281 S.W.2d 150, 154 (Tex.Civ.App.-Texarkana 1955, those benefits. Id.

writ dism'd). And other courts have held that as between two innocent parties, the party that must suffer the loss is [7] The courts describe this claim in general principles.

the one that mistakenly created the situation and was in the For example, courts have stated that a claim for money had best position to have avoided it. See Holden Bus. Forms and received seeks to restore money where equity and good Co. v. Columbia Med. Ctr. of Arlington Subsidiary, L.P., 83 conscience require restitution, see id.; it is not premised on S.W.3d 274, 278 (Tex.App.-Fort Worth 2002, no pet.) (selfwrongdoing , but seeks to determine to which party, in equity, insured employer denied restitution of insurance benefits paid justice, and law, the money belongs, Staats v. Miller, 150 Tex.

to hospital before employer discovered claim not covered by 581, 584, 243 S.W.2d 686, 687 (1951); and it seeks to prevent plan); Lincoln Nat'l Life Ins. Co. v. Rittman, 790 S.W.2d 791, unconscionable loss to the payor and unjust enrichment to 794 (Tex.App.-Houston [14th Dist.] 1990, no writ) (insurer the payee. Bryan v. Citizens Nat'l Bank in Abilene, 628 denied restitution of benefits paid to hospital after coverage S.W.2d 761, 763 (Tex.1982). As these broad and general terminated); Lincoln Nat'l Life Ins. Co. v. Brown Schools, descriptions demonstrate, a cause of action for money had Inc., 757 S.W.2d 411, 415 (Tex.App.-Houston [14th Dist.]

and received is “less restricted and fettered by technical rules 1988, no writ) (same).

and formalities than any other form of action. It aims at the abstract justice of the case, and looks solely to the inquiry, whether the defendant holds money, which ... belongs to

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

In some cases, the trial court's ruling was reversed because deliver this order until Matthews paid all outstanding sums the intermediate court of appeals concluded that the trial owed to Mid–Continent. Edwards contends that the lack of court abused its discretion in affording equitable relief. See, evidence to support the challenged findings shows that Mid– e.g., London v. London, 192 S.W.3d 6, 13–14 (Tex.App.- Continent and Inwood did not prove that they detrimentally Houston [14th Dist.] 2005, pet. denied) (trial court's order relied on his payments. Edwards also appears to argue that denying father's claim for money had and received reversed without sufficient evidence to support these factual findings, on ground that evidence sufficient to support claim for there is no evidence to support the trial court's conclusion that equitable restitution because child support payments were he did not meet his burden of proof. made pursuant to court order later reversed on appeal); Austin v. Duval, 735 S.W.2d 647, 649–50 (Tex.App.-Austin We have reviewed the record and agree with Edwards that the 1987, writ denied) (trial court's judgment that holders of evidence is legally insufficient to show that Inwood shipped lapsed option contract entitled to restitution of earnest money furniture orders to MAC after Inwood received Edwards's reversed because earnest money forfeited under express terms check; that Inwood was deprived of other possible remedies of option contract); Singer v. St. Paul Mercury Ins. Co., 478 by the delay in Edwards seeking a refund; and that Mid– S.W.2d 579, 583 (Tex.Civ.App.-San Antonio 1972, writ ref'd Continent received product for the third order in July 2003, n.r.e.) (trial court's judgment in favor of insured reversed but would not ship the order until Matthews made payment because insurer issued stop-payment order on check when in full. However, we disagree that the insufficient evidentiary determined no coverage). See also Pope v. Garrett, 147 Tex. support for these findings leads to the determination that there 18, 24–25, 211 S.W.2d 559, 561–62 (1948) (court of appeals' is no support for the trial court's conclusion that Edwards did judgment that constructive trust should not be impressed upon not meet his burden of proof. interests of defendants who did not participate in wrongful act reversed by supreme court because, but for wrongful acts, [9] First, Edwards does not cite, and we have not found, a innocent defendants would not have inherited property). case stating that a defendant must show detrimental reliance to defeat recovery. And the cases he cites do not apply in The common thread in these decisions is that they are all an action for money had and received, or are distinguishable. dependent upon a balancing of the equities in each unique See, e.g., Bryan, 628 S.W.2d at 761–64 (reconciling common case. law right to restitution with provisions of business and commerce code to lawsuit by bank to recover funds paid over stop-payment order); Monarch Marking Sys. Co. v. Reed's Photo Mart, Inc., 485 S.W.2d 905, 905–07 (Tex.1972) (action DISCUSSION

for rescission of contract based on unilateral mistake); Nat'l [8] In two issues, Edwards contends that he established Indem. Co. v. Spring Branch State Bank, 162 Tex. 521, 522– each element of his claim for money had and received. The 27, 348 S.W.2d 528, 528–31 (Tex.1961) (adopting “federal” first issue addresses the evidence relating to Inwood, and or “equitable” rule relating to bank's use of depositor's the second issue addresses the evidence relating to Mid– funds); Am. Nat'l Ins. Co. v. Gifford–Hill & Co., Inc., 673 Continent. S.W.2d 915, 916–22 (Tex.App.-Dallas 1984, writ ref'd n.r.e.)

(interpretation of loan agreement relating to allegation of He first contends that the evidence is insufficient to support unilateral mistake). 9 Consequently, the absence of proof of factual findings 17, 18, 19, and 23 8 insofar as those findings detrimental reliance by appellees does not assure Edwards's state that Inwood shipped furniture orders *839 to MAC recovery. Instead, detrimental reliance *840 is one of the after it received Edwards's check. He also contends that the factors that a trial court considers in balancing the equities evidence is insufficient to support factual finding 24, which in a claim for money had and received. See Best Buy Co., states, “The time delay of over four months from Plaintiff's 248 S.W.3d at 162–63 (concluding that defenses of actual payment to his claim for return of the funds caused Defendant knowledge and unclean hands are not matters of avoidance Inwood to be deprived of other possible remedies to its but instead relate to equities necessary to determine liability detriment.” And in his second issue, Edwards challenges the in the first instance). sufficiency of the evidence to support finding of fact 5, a similar finding insofar as it finds that Mid–Continent received Additionally, as the claimant, it was Edwards's burden product for the third order on July 29, 2003, but would not to prove that appellees held money which in equity and

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

good conscience belonged to him. See id. Because the bill). He did not pay the wrong suppliers. See Lyman D. court concluded that he did not fulfill his burden, we must Robinson Family Ltd. P'ship, 143 S.W.3d at 520 (restitution allowed when earnest money released to wrong client); Doss, determine whether the court abused its discretion in making 210 S.W.3d at 710–11 (restitution authorized when financial that decision.

institution applied note payment to wrong note); Amoco Prod. Co., 946 S.W.2d at 165 (restitution allowed when company It is undisputed that appellees held money. But the issue is paid royalty interests to wrong person). And he was not whether Edwards also proved that the money, in equity and defrauded by Mid–Continent or Inwood. See Staats, 150 Tex.

good conscience, belonged to him. To determine whether at 584–85, 243 S.W.2d at 687–88 (recovery authorized when the court abused its discretion in deciding that he did not, creditor refused to return surplus arising on sale of security we first determine whether there was sufficient evidence to for debt); Wiseman, 69 Tex. at 65, 6 S.W. at 743–44 (same).

support the unchallenged findings that explain the court's reasoning and analysis. Then we determine, based on the Nevertheless, Edwards argues that the trial court erred by evidence, whether the decision was arbitrary, unreasonable not balancing the equities in his favor for several reasons:

or unsupported by guiding rules and principles. We conclude Mid–Continent and Inwood engaged in business practices that there was and it was not.

whereby they shipped merchandise to MAC before they knew whether or not MAC's check was covered by sufficient funds;

The undisputed evidence shows that MAC owed money to MAC had these unpaid account balances with Mid–Continent Mid–Continent and Inwood for furniture orders; Edwards and Inwood before Edwards sent his payments to them;

knew MAC owed money to Mid–Continent and Inwood requiring Mid–Continent and Inwood to refund Edwards's for furniture orders; Edwards agreed to purchase certain of money would put them in the position they were in before they MAC's receivables even though he knew it was a highreceived Edwards's payments; the payments were not used risk transaction; Edwards confirmed the amount owed to for Edwards's benefit; Mid–Continent and Inwood did not Mid–Continent and issued a cashier's check payable to Mid– contact Edwards about how the payments should be applied;

Continent for that amount; Edwards did not confirm the Edwards's check to Inwood was not for the full amount of amounts owed to Inwood or the other suppliers, but instead the account balance, as Inwood had been told it would be;

paid the suppliers the amounts listed in the agreement he and Edwards was deceived by Matthews. We conclude that, had with MAC; Edwards did not request copies of invoices although these are some of several types of factors courts may or orders to compare to MAC's receivables; Edwards paid consider in balancing the equities, they are not determinative Inwood $15,292.22; the check to Inwood contained the of the outcome in this case.

notation that it was for “MAC Group Payment”; and Edwards advised Mid–Continent and Inwood to credit the payments We conclude that the trial court's decision was not arbitrary, to MAC's accounts without specifying which invoices the unreasonable or unsupported by guiding rules and principles payments were intended to cover. This evidence is legally and and, as a result, the court did not abuse its discretion.

factually sufficient to support the trial court's unchallenged findings of fact. 10 And these unchallenged findings *841 We affirm the trial court's judgment.

also demonstrate that, unlike some cases where the claimant was awarded restitution, Edwards unconditionally paid the amounts he intended to pay to the parties he actually paid in All Citations order to satisfy debts owed by Matthews. He did not overpay Mid–Continent and Inwood. See Benson, 464 S.W.2d at 712– 252 S.W.3d 833 13 (restitution allowed for overpayment of automobile repair

Footnotes 1 Henin testified that she would not know the names of MAC's customers because furniture orders were typically shipped to an installer, not directly to the customer.

2 Edwards also reviewed a copy of MAC's invoices to these customers, but Matthews did not provide, and Edwards did not ask to see, the orders MAC placed with Mid–Continent, Inwood, and the other furniture suppliers to compare to MAC's

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

customer invoices. Matthews also provided a copy of “MAC Group's Income History & Projections” from 2002 through December 2003 but Edwards testified that he did nothing to verify the numbers contained in that report.

3 The evidence shows that “908” is Mid–Continent's customer number for MAC. 4 Although the check to Inwood was twelve cents less than the amount listed in the agreement, Edwards testified that the check he wrote to Inwood corresponded to the same payable in the agreement.

5 Edwards did not sue Matthews, MAC, or the other five suppliers. He sued both Inwood and Mid–Continent for money had and received. He also sued Mid–Continent for breach of contract, fraud, negligent misrepresentation and unjust enrichment. This appeal involves only the claim for money had and received.

6 In cases involving overlapping standards of review, Texas courts have held that a reviewing court must first determine whether the trial court had sufficient information upon which to exercise its discretion and then whether the trial court erred in applying that discretion. See, e.g., Reese v. Duncan, 80 S.W.3d 650, 659 (Tex.App.-Dallas 2002, pet. denied) (trial court does not abuse discretion if evidence is sufficient to support findings of fact); In re C.A.M.M., 243 S.W.3d 211, 220–21 (Tex.App.-Houston [14th Dist.] 2007, no pet. h.) (legal and factual insufficiency are not independent grounds for reversal but instead are factors to be considered in determining whether trial court abused discretion); Sotelo v. Gonzales, 170 S.W.3d 783, 787 (Tex.App.-El Paso 2005, no pet.) (once reviewing court determines whether sufficient evidence exists upon which trial court could exercise its discretion, then must decide whether trial court made reasonable decision); El Paso County Hosp. Dist. v. Gilbert, 64 S.W.3d 200, 203–04 (Tex.App.-El Paso 2001, pet. denied) (after analyzing legal and factual sufficiency issues, reviewing court then determines whether, based on evidence, trial court made reasonable decision or whether it is arbitrary and unreasonable).

7 In fact, many courts use the term “money had and received” interchangeably with other terms for similar claims. See Friberg–Cooper Water Supply Corp. v. Elledge, 197 S.W.3d 826, 832 & n. 38 (Tex.App.-Fort Worth 2006) (recognizing that courts focus on facts alleged and recovery sought to categorize action as one for money had and received or for restitution), rev'd on other grounds, 240 S.W.3d 869 (Tex.2007) (per curiam); see also Tri–State Chemicals, Inc. v. Western Organics, Inc., 83 S.W.3d 189, 193–95 (Tex.App.-Amarillo 2002, pet. denied) (assumpsit); Amoco Prod. Co., 946 S.W.2d at 164–65 (unjust enrichment, implied and constructive contracts and trusts); Greer v. White Oak State Bank, 673 S.W.2d 326, 329–30 (Tex.App.-Texarkana 1984, no writ) (restitution).

8 These factual findings state:

17. On or about August 22, 2003, Edwards issued six other checks to Matthews's creditors:

No. 123 to Inwood Office Furniture for $15,292.22 No. 124 to HBF for $3,075.60 No. 125 to Shelby Williams for $2,659.43 No. 126 to Nienkamper ICF for $1,250.00 No. 127 to Bratrud Furniture for $4,143.40 No. 128 to Mai Space for $7,359.95 None of the foregoing checks were delivered with transmittal letters or letters of instruction. 18. The check Plaintiff sent to Inwood Office Furniture in the amount of $15,292.22, which was the amount (less 12 cents) owed by Hal Matthews d/b/a/ the MAC Group for one of two invoices that Inwood shipped after receiving the payment. 19. Inwood Office Furniture was never paid for the second invoice shipped that date, in the amount of $1,960.92, and that amount was written off in December of 2003, so that Inwood remains unpaid for that invoice.

***

23. Defendant Inwood manufactured and properly shipped by common carrier the one shipment of two invoices ordered by Hal Matthews d/b/a/ the MAC Group, and it was delivered by Nancy Baer Trucking and accepted.

9 Edwards also cites cases from other jurisdictions and an unpublished 1980 Tyler court of appeals case. See Pickett v. Republic Nat'l Bank of Dallas, Trustee, No. 1303, 1980 Tex.App. LEXIS 3119 (Tex.App.-Tyler Feb. 28, 1980). The opinion in that case was withdrawn and a new opinion substituted at Pickett v. Republic Nat'l Bank of Dallas, Trustee, 601 S.W.2d 405 (Tex.Civ.App.-Tyler 1980), aff'd, 619 S.W.2d 399 (Tex.1981). Edwards does not cite to or state how the substituted opinion supports his argument.

10 This evidence supports the following unchallenged findings of fact:

9. The transaction between [Edwards] and Matthews was a high-risk transaction through which [Edwards] hoped to make a significant profit. Although the transaction was high-risk, [Edwards] neither requested copies of purchase orders that Matthews had submitted to any of his vendors nor did he compare any purchase orders with the accounts that he was purchasing from Matthews.

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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)

***

13. On August 18, 2003, Matthews and [Edwards] entered into an agreement entitled “Factoring Agreement” whereby Matthews sold the Billingsley, Hance Scarborough, and Senior Management invoices to [Edwards] for the sum of $62,052.81. Matthews did not provide Edwards—nor did Edwards request—copies of Matthews's purchase orders to or the invoices from Mid–Continent, Inwood Office Furniture, or other vendors. [Edwards] drafted and prepared the Factoring Agreement himself.

***

15. On August 18, 2003, [Edwards] telephoned Mid–Continent's office in Houston and spoke with Pat Henin to inquire whether certain furniture had been shipped. [Edwards] did not request copies of the purchase orders submitted by Matthews or the invoices Mid–Continent had submitted to Matthews to compare the items included in those documents with the accounts he was purchasing from Matthews. [Edwards] did not ask for any written verification or detail concerning the items remaining to be shipped, nor did he specifically ask Henin where the items were being shipped. Other than placing this one call, [Edwards] took no other steps to confirm or verify the accuracy of the accounts that he was purchasing from Matthews. 16. On August 18, 2003, [Edwards] caused a cashier's check payable to “Mid Continent Furniture Distributors, Inc.”

in the amount of $28,272.22 to be issued and delivered to Matthews....

***

20. These were the only two invoices Inwood had with the MAC Group. [Edwards] paid Inwood Office Furniture in the amount of $15,292.22 representing that he was paying Inwood on Hal Matthews or the MAC Group's behalf for the merchandise order placed by the MAC Group. The payment sent by [Edwards] stated on the face of the check that it was a “MAC Group Payment.” No cover letter or instructions were sent accompanying the check sent by [Edwards] to Inwood Office Furniture. 21. Inwood Office Furniture did not represent to [Edwards] that they were holding furniture for shipment, or for a particular destination. 22. [Edwards] knew the amount owed Defendant Inwood by the MAC Group and he asked no questions about any other accounts or invoices.

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

One who contracted to develop and sell another's land and who had not performed his part of 52 S.W.2d 311

contract could not have specific performance, Court of Civil Appeals of Texas, San Antonio.

since contract called for his personal services and E. M. GOODWIN, INC., could not be specifically enforced against him.

v.

6 Cases that cite this headnote STUART ET AL.

No. 8791. | April 6, 1932. | Rehearing Granted June 22, 1932. | Rehearing Overruled July 20, 1932. Attorneys and Law Firms

Appeal from District Court, Hidalgo County; Chas. E. *311 Hill & Greer, of Mission, and James R. Dougherty, of Thompson, Judge. Beeville, for appellant.

Strickland, Ewers & Wilkins, of Mission, Davenport, West Suit by E. M. Goodwin, Inc., against R. T. Stuart and others.

& Ransome, of Brownsville, and Bonner & Childress, of From a judgment dismissing the cause, plaintiff appeals.

Wichita Falls, for appellees.

Affirmed. Opinion

FLY, C. J.

West Headnotes (4) This is an appeal from the judgment of the district court sustaining a general demurrer to the petition and dismissing the cause. This is a second appeal of this cause; the opinion [1] Pleading given by this court on the former appeal being found in Statement of Cause of Action in General Stuart et al. v. E. M. Goodwin, Inc., 25 S.W.(2d) 166, Petition must be tested on its own allegations. 167. An attempt was made to obtain a writ of error in the Supreme Court, but the application was dismissed for Cases that cite this headnote want of jurisdiction. The former appeal was prosecuted by Stuart and others from an order appointing a receiver to take [2] Pleading charge of certain land and a temporary injunction to restrain Hearing and Determination on Demurrer interference with the receiver in the discharge of his duties.

When assailed through general demurrer, every We copy the following statement from the former opinion: reasonable intendment must be indulged and “Appellee [E. M. Goodwin, Inc.] claims an interest in the read into petition.

land subject to the deed of trust under a conveyance from Cases that cite this headnote E. M. Goodwin, which was executed on the ______ day of ______, 1928. The deed of trust on the land was executed on November 3, 1918, by the owner, Eloisa Vela Dougherty, [3] Specific Performance to secure a debt due by her to F. G. Oppenheimer and Ben Mutuality of Remedy F. Levy. The debt and deed of trust were kept alive by Where remedy of specific performance is extensions, so that the debt amounting to $21,811.69 would unavailable to one party because of nature of not be barred by limitations until December 3, 1929. The contract, it is unavailable to the other party. debt and lien are now owned by R. T. Stuart & Co. The land in question, after the extension of the debt, was sold by the 3 Cases that cite this headnote owner to J. C. Marks and George Hartnagel, nonresidents, subject to the lien and debt. On February 3, 1926, a written [4] Specific Performance contract was entered into between Marks and Hartnagel, and Mutuality of Remedy it is through that instrument that E. M. Goodwin claims an

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

interest. On June 7, 1929, Marks and Hartnagel conveyed furnish each purchaser an abstract of title, and all deeds, notes, the land to Edward L. Stallcamp, and he conveyed it to and deeds of trust necessary to be used in the sale of the the American Land & Development Company, one of the land, and that all contracts of sale should be furnished by appellants herein.” Goodwin. The fifth paragraph is an obligation upon the part of Goodwin to use diligence in the sale of the land, to give the It is stated by appellant in its brief that “the record on this necessary advertising and conduct excursions. By the sixth appeal is a little out of the ordinary,” but an inspection of clause Goodwin is given exclusive control of the sale of the the record by this court leads to the conclusion that it is one land for five years, and it provides for his remuneration and of the most extraordinary records that has ever been brought for the sums to be paid the owners, and in clause 7 all money to its attention. Appellant has inserted in the record a bill of over and above a certain sum per acre was made a trust fund to exceptions taken in a proceeding involving the vacating of be used as therein directed. The eighth clause gives Goodwin a receivership and the discharge *312 of the receiver. The power to sell the land upon the terms and conditions he may bill of exceptions proper contains 116 pages of the record, elect, providing that no tract smaller than 5 acres shall be sold, and attached thereto are exhibits of the transcript on the and that vendor's lien notes shall not run for a longer period former trial containing 123 pages, and the statement of facts than ten years, and that notes should be made payable to a used on the former appeal containing 254 pages. The bill trustee to be named, and that all damages received for failure of exceptions, with monstrous exhibits, has no pertinency to to enter into contracts should be the property of Goodwin. nor connection with the case on appeal, as fully admitted The ninth clause is as to the time limit given Goodwin to by appellant in its brief. No reason is given for including make sales, and stipulates the amount of land to be sold each the bill of exceptions in the record. The order vacating the year. The tenth clause disclaims the agency of Goodwin in receivership is not before this court. the sale of land, and the eleventh section grants the privilege to Goodwin to acquire and develop lands contiguous to the This appeal is not prosecuted from any order in regard to 5,600-acre tract.

the receiver, but only from a judgment sustaining a general demurrer and special exceptions to the petition. Nine of the “As some stress is placed on paragraph 12, we copy as twelve assignments of error assail the action of the court in follows: ‘12. Said parties of the first part hereby obligate vacating the receivership, and are all overruled because that and bind themselves to convey to a trustee to be selected by matter is not before this court through the appeal bond. The said parties of the first part and approved by said party of order in regard to the receivership was separate and distinct the second part, all of the lands described in this contract from the final judgment, and is not mentioned therein. The not later than thirty days prior to the time when said lands other three assignments of error assail the action of the court are prepared and ready for placing on the market, and shall in sustaining the general demurrer and a special exception furnish to said party of the second part a complete abstract with six subdivisions. of title to said lands, showing said trustee to be vested with a good merchantable title thereto, and said parties of the first This suit is based, as on the former appeal, on a certain part shall also furnish with said abstract of title the opinion contract, and of which a full analysis was given on that appeal.

of an attorney to be approved by party of the second part, We adopt that analysis, and it is copied and made a part of showing said trustee to be vested with an unencumbered and this opinion:

merchantable title to said lands. It is further provided that “The first paragraph of the contract asserts ownership in said trustee shall be a resident of Hidalgo County, and shall Marks and Hartnagel, gives the reasons for making the maintain his office at Mission, Texas, and all remuneration contract with E. M. Goodwin, agrees to furnish him the land received by him for his services shall be determined and paid for the purposes and on the terms thereinafter set out, and for by parties of the first part.’ gives a full description of the land. The second paragraph “The thirteenth clause provides for the laying out of 50 acres, binds the owners to have made a survey of the land and in 10-acre tracts, by the owners, at different points on the tract, maps and other data in view of irrigation. The third paragraph and the fourteenth for the execution of all deeds by the trustee binds the owners to survey the land into 40-acre tracts and of the owners to the different purchasers.”

lay out all necessary roads and plat the same and furnish [1] [2] The contract is not on its face incapable of specific other necessary means to sell the land, and pay for such performance sought through the petition, and appellant had improvements. In the fourth paragraph the owners agreed to the right to have his petition tried on its own merits. The

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

petition was not to be tested by testimony that had been up if appellant had not. They seem well satisfied with the given or might be presented, but on its own allegations. In increased cost of the record, and no one has the right to so testing it, when assailed through a general demurrer, every complain. reasonable intendment must be indulged and read into it. The petition was not subject to attack from the general or the The judgment is reversed, and the cause remanded. special demurrer, and the facts alleged should have been tried before the court or jury on the merits of the case. On Motion for Rehearing.

PER CURIAM.

We are asked to test the sufficiency of the petition by facts heard by the judge in a trial had on a plea theretofore filed [3] [4] Upon a full reconsideration of the facts in the case, by appellees seeking to vacate and set aside a receivership we have reached the conclusion that it was erroneously held granted in the case. In other words, the petition is to be that the pleadings or evidence disclosed a contract capable declared in conflict with the *313 facts developed on the of being specifically enforced in a judicial proceeding. hearing of a question growing out of and subject to the facts Appellant had not performed his part of the contract, but on the merits. We recognize the existence of cases in which had allowed the limit for the existence of the contract to it has been held that, if the allegations in a petition are in be reached. Appellant had not performed services for which conflict with the facts brought out on a former trial of the he could demand payment, and the contract was executory cause, the judge may in view of such conflict hold that the and incapable of specific performance. We have considered a petition does not state a cause of action and consequently is number of authorities on the subject, and some of them have subject to a general demurrer. This rule has not been more been fully reviewed and quoted from herein. forcefully or clearly stated in any case than in the case of Snow v. Cook, 278 S. W. 520, which was written for this There is a full statement of the allegations of the petition court by Associate Justice Smith. In that case the action was in the former opinion, which is retained, and it is therefore to set aside a judgment theretofore rendered in the case on a unnecessary to make another statement.

full hearing of the facts, and it was held that in determining the sufficiency of the petition in the second suit the court It is perfectly obvious that Hartnagel and Marks selected and could take cognizance of the record in the case in which the employed Goodwin as their agent to sell their land because of assailed judgment was rendered, and from that record could his experience, training, and presumed skill in such projects. determine whether there was basis in fact for destroying the He was to use diligence in the sale of the land, to advertise former judgment. That case had been fully developed and a it, to locate and interest prospective buyers in northern states judgment rendered on facts offered by the opposing parties. who were disposed and financially able to purchase the lands While we are not disposed to question the decision in the case in small tracts; he was to assemble these prospects into cited, still the rule therein enunciated has been carried to its trainloads, move them to the site of the lands, convert them limit, and we do not believe that the rights of appellant should into buyers at prices which would net Hartnagel and Marx be determined on facts offered in a hearing on an affair merely $62.50 per acre. He was to perform innumerable personal appurtenant to the main case. The question in the motion to services which could be efficiently performed only by those vacate the receivership was not presented to try the right of trained and skilled in such matters. The contract is purely appellant to recover, but to set aside a receivership not deemed executory, since Goodwin has sold none of the land. necessary to be continued in the case. We are unwilling to sustain the contention that sustaining the motion denied to Let us suppose, now, that Goodwin should lose interest in the appellant the right to recover on his demand against appellees. project, or was diverted into other fields of activity more to his There is no such conflict shown between the facts in that liking, or which promised greater or quicker or more pleasing proceeding and the allegations in the petition as would destroy returns. What, in such case, could Hartnagel and Marks do to the latter. prevent him from abandoning the project for the new venture?

Certainly they could not exact specific performance of any The costs of including transcript and statement of facts of his obligations. They would be utterly helpless before his connected with the former appeal would be assessed against inaction or indifference or refusal or failure, for any reasons, appellant but for the fact that appellees insist that they are to perform. properly included and state they would have brought them

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

The remedy of specific performance being therefore And again: “If, at the time of the filing of the bill in equity, unavailable to one of the parties, because of the nature of the the contract being yet executory on both sides, the defendant, contract, it is not available to the other party. himself free from fraud or other personal bar, could not have the remedy of specific performance against the plaintiff, then This rule is specifically applicable to a contract of agency the contract is so lacking in mutuality that equity will not to sell land, which “could not be specifically enforced by compel the defendant to perform but will leave the plaintiff either party against the other”-- it was an employment of to his remedy at law.” Id. § 769. Goodwin “as agent to sell the land,” and therefore “specific performance could not be had.” Chief Justice Brown in The rule is thus stated in 36 Cyc. 581: “Although the Ansley Realty Co. v. Pope & Smith, 105 Tex. 440, 151 S. W. contract may be one that is otherwise proper to be specifically 525, 527. enforced, if, at the time of the decree, there remain to be done, on plaintiff's side, personal services or other acts of a kind The contract being for the personal services of Goodwin, which, in accordance with the general rule, the court cannot upon whose personal will the performance thereof rests, it compel to be done, specific performance is usually refused on cannot be specifically enforced against him; and, since it the principle that the remedies in equity must be mutual.” cannot be enforced against him, it lacks essential mutuality and cannot be enforced against the other party. 4 Pom. Eq. And again (36 Cyc. 629) it is said that “relief (of specific Jur. pp. 2760, 2765, §§ 1401, 1402, note 1; 6 Pom. Eq. Jur. performance) is refused where * * * the contract calls for * * §§ 759, 769; 36 Cyc. pp. 581, 621, 629; 25 R. C. L. pp. 232, * business services, such as agent, manager * * * etc.” 305; Rutland Marble Co. v. Ripley, 10 Wall. 339, 359, 19 L. Ed. 955; *314 Ansley Realty Co. v. Pope & Smith, 105 Tex. Further (36 Cyc. 579) the rule is more elaborately stated: 440, 151 S. W. 525; Prusiecke v. Ramzinski (Tex. Civ. App.)

“Personal Services or Business Employment--a. In General.

81 S. W. 771, 773; Carrico v. Stevenson (Tex. Civ. App.) 135 In cases of this character a decree for specific performance is S. W. 260, 261; Galbreath v. Farrell (Tex. Civ. App.) 249 S.

open not only to the objection that it calls for an undue amount W. 277, 280; Parrish v. Weber (Tex. Civ. App.) 17 S.W.(2d)

of supervision by the court, but to still graver objections, 106.

which are well stated in a very recent case: ‘Any system or It is said by Mr. Pomeroy that “as an almost universal rule plan by which the court could order or direct the physical contracts for personal acts will not be directly enforced” (4 coercion of the laborer would be wholly out of harmony with Pom. Eq. Jur. note 1, § 1402); that courts “cannot enforce the spirit of our institutions, and his imprisonment would take a decree” of specific performance in “contracts for personal away his power to make specific performance. Even if such services, where the full performance rests upon the personal authority existed its exercise would be undesirable. If the will of the contracting party” (note 10, § 1406); that it relation of employer and employee is to be of value or profit to “follows, therefore, that the remedial right” of specific either it must be marked by some degree of mutual confidence performance, “if it exists at all, must be mutual; each party and satisfaction, and when these are gone and their places must be able to enforce the remedy against the other” (note usurped by dislike and distrust, it is to the advantage of all 1, § 1401); that “if for any reason” either of the parties to a concerned that their relations be severed.’ ” contract “is not bound, he cannot compel performance by the And: “On the same principle the direct specific performance other” (note 3, § 1405).

has been refused of contracts to act as agent, manager, or Mr. Pomeroy says, further, on this point: “It is a familiar superintendent, or in other business capacity, although the rule that contracts for personal services, where the full employment may not be one calling for skill and judgment.” performance rests upon the personal will of the contracting In 25 R. C. L. (p. 303) it is said that “Chancery will not as party, will not be specifically enforced against him. It is a rule enter an affirmative decree directing the performance also generally true that they will not be enforced where the of personal services by an adult. Nor will it in this manner plaintiff is the one who has contracted to render the services, enforce contracts requiring either continuous acts involving and there has been no full performance on his part, since skill, judgment and technical knowledge, or, as the rule is mutuality in the equitable remedy is then lacking.” 6 Pom.

sometimes stated, those which require special skill, judgment Eq. Jur. § 759.

and discretion. This is especially true where the contracts are

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

continuous in their nature and run through a number of years of the nature of the work required by the contract to be done or an indefinite period of time. This rule is based on the futility by him, the court could not properly compel him to perform of the attempt by a court to command one person to render it. It is entirely clear that the court could not properly compel personal services to another, or to direct the performance of appellant to perform his part of the contract. It involved, duties which it is impossible for the court to superintend.” not only personal service by him, but, independent of this, the character of the work to be done, that is, the clearing And that (page 305) “By reason of the doctrine of mutuality, a of a large body of land, about 25,000 acres, as stated in the court of equity will refuse to decree the specific performance contract, which by the terms of the contract was to extend of an executory contract wherever it creates a duty from the over a considerable period of time, with many complicated plaintiff of such confidential or personal nature that the court provisions regarding the details of the work, would require could not have enforced it at the instance of the defendant.” of the court such supervision of the work to be done by appellant as it could not properly undertake. We think that it Again (Id. p. 232): “It is frequently stated as a general is universally held that a court of equity will not undertake principle of equity that a contract will not be specifically to decree specific performance of contracts of this nature. 6 enforced unless it has such mutuality that it may be enforced Pom. Eq. Juris. (3d Ed.) §§ 757-760. This is not controverted by either party, and the language adopted by numerous courts by appellant, but he seeks to avoid the application of this is to the effect that equity will grant a decree of specific principle upon the ground that he is ready, able, and willing performance only in cases where there is a mutuality of and offers to perform. This is not sufficient for appellee's obligation and of remedy. In accordance with this doctrine of protection. If the contract on the part of a plaintiff who seeks mutuality it is held that when a contract for any reason cannot this remedy is not such as he can be compelled to perform, be enforced against one of the parties such party will not be if he has in fact done so, he would be in a position to require permitted to enforce it specifically against the other party, specific performance on the part of the defendant, who would although except for this particular rule the contract would not be allowed to defend on the ground that plaintiff could otherwise have been enforceable.”

not, on account of the nature thereof, be compelled to perform In the case of *315 Rutland Marble Co. v. Ripley, supra, the his part, but that is as far as the plaintiff's rights extend on this Supreme Court of the United States said that: “It is a general point. ‘Before plaintiff has performed the personal service, principle that when, from personal incapacity, the nature he could not have specific performance, but after his part is of the contract, or any other cause, a contract is incapable executed he can get the land.’ 6 Pom. Eq. Juris. (3d Ed.) § of being enforced against one party, that party is equally 771. That equity will not compel one party to a contract to incapable of enforcing it specifically against the other, though perform, where it cannot also compel specific performance by its execution in the latter way might in itself be free from the the other party, is, we think, well settled. 6 Pom. Eq. Juris. § difficulty attending its execution in the former.” 769 et seq.; Waterman, Sp. Perf. § 198; Redwine v. Hudman [104 Tex. 21], 133 S. W. 426; [Rutland] Marble Co. v. Ripley, It was said by Judge Neill, of this court, in Prusiecke v. 77 U. S. [10 Wall.] 359, 19 L. Ed. 955.” Ramzinski, supra: “When a contract is of such a character that a court of equity is without power to enforce it as against one The rule is thus stated in Galbreath v. Farrell, supra: “As we or the other of the parties, the party against whom it cannot understand the rule under the authorities in cases of this kind, be enforced cannot, until he has fully performed his part of before a court of equity will enforce affirmative promises the agreement, though the other party could be forced to made by defendant in behalf of the plaintiff, it must also be perform his, obtain a decree of specific performance. Ikerd v. able to enforce the affirmative promises made by plaintiff in Beavers, 106 Ind. 483, 7 N. E. 326, 328. For a court of equity behalf of the defendant. Such court never deems it wise or just will not attempt to enforce a contract specifically unless it to enforce one or more of the promises in a contract until it can be done mutually and completely, and so as to secure can enforce all of the contract outstanding at the time of the substantially beyond question all that the parties contemplate. suit, including the promises of the plaintiff as well as those of If this is impracticable, the remedy, if any exists, is to be found the defendant. Northern Texas Realty & Construction Co. v. elsewhere.” Lary (Tex. Civ. App.) 136 S. W. 843; Williston on Contracts, vol. 3, § 1430.”

We quote from the opinion in Carrico v. Stevenson, supra: “But we think it is an insuperable objection to the relief by specific performance prayed for by appellant that, on account

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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)

Being fully convinced that our judgment of reversal is not All Citations

sustained by the authorities, it is set aside, and the judgment of the trial court will be affirmed. 52 S.W.2d 311

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)

Cases that cite this headnote KeyCite Yellow Flag - Negative Treatment Distinguished by Town House Dept. Stores, Inc. v. Ahn, Guam Terr., March 7, 2003 [2] Appeal and Error

Effect of Decision of Higher Court on 162 S.W.2d 165 Subsequent Appeal to Intermediate Court Court of Civil Appeals of Texas, San Antonio. Where Supreme court in former appeal found an additional fact which the trial court expressly FIRST STATE BANK OF BISHOP refused to find, in the absence of the statement v.

of facts in the former appeal, the Court of Civil GREBE.

Appeals, on appeal from judgment entered by trial court on return of mandate from Supreme No. 11110. | March 18, 1942.

Court, was required to assume that the record | Rehearing Denied May 20, 1942.

before the Supreme Court in the former appeal Appeal from District Court, Nueces County, 117th District; conclusively disclosed the fact found. Cullen W. Briggs, Judge.

Cases that cite this headnote

Suit by Florine Ella Grebe, a minor, by her next friend, Louis Hauptreif, against the First State Bank of Bishop, to recover [3] Appeal and Error a sum equal to one-half of the deposit in defendant bank of Compliance with Mandate or Directions the community funds of plaintiff's deceased father and her Order of an appellate court reversing and mother. On return of mandate of Supreme Court reversing remanding a cause to the trial court carries with judgment for defendant and remanding cause for further it the necessary instruction, whether express or proceedings consistent with its opinion, plaintiff moved for not, that all further proceedings in the case in the judgment and defendant filed, inter alia, amended answer trial court must be consistent with the opinion of setting up matters not adjudicated and demanded jury. From the reversing court. a judgment entered on plaintiff's motion without a retrial, defendant appeals. 5 Cases that cite this headnote

Reversed and remanded for another trial in consonance with [4] Appeal and Error

opinion of Supreme Court.

Compliance with Mandate or Directions Where Supreme Court remanded cause to trial See, also, Tex.Civ.App., 106 S.W.2d 382; 136 Tex. 226, 150 court for “further proceedings consistent with S.W.2d 64.

this opinion” but refused to render judgment or direct trial court to do so, the order to the trial court was, in effect, that the trial judge proceed West Headnotes (5) with a new trial and render judgment upon the new record in accordance with the principles announced in the opinion of the Supreme Court.

[1] Appeal and Error Authority to Find Facts 4 Cases that cite this headnote It is not the prerogative of the Supreme Court to make findings of fact upon disputed issues [5] Appeal and Error

appearing in the record before them but it is Granting New Trial or Rehearing within their province to take notice of undisputed facts of record and, if material, give them effect Where Supreme Court remanded cause to trial in their decision. court for further proceedings consistent with the opinion of the Supreme Court, but refused to render judgment for plaintiff or direct trial

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First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)

court to do so and defendant interposed amended the opinion of the Supreme Court without any further answer, setting up new matter not previously proceedings following the return of the mandate. litigated, reversal of defendant's demand for a retrial on the merits was error. We quote from the majority opinion of the Supreme Court:

2 Cases that cite this headnote *167 “We shall designate the parties as plaintiff and defendant, as they were designated in the trial court.

“Plaintiff seeks a reversal of the judgments of the trial court and of the Court of Civil Appeals mainly upon two principal Attorneys and Law Firms grounds. The first ground is as follows: That the funds on deposit in the bank in the name of W. F. Grebe were *166 Boone, Henderson, Boone & Davis, of Corpus Christi, community property of W. F. Grebe and his surviving wife, for appellant.

and that one-half belonged to plaintiff and the other half Kleberg, Eckhardt & Lowe, of Corpus Christi, and Fuchs & belonged to her mother, as the sole surviving heirs of the Fuchs, of New Braunfels, for appellee. deceased W. F. Grebe; and that after all the community debts were paid, the bank had no authority to transfer the minor's Opinion share of such deposit to her mother, without requiring the mother to qualify as survivor in community, administratrix, SMITH, Chief Justice. or guardian, when it had knowledge of the status of the parties and the nature of the fund.

This action was brought by appellee, Florine Ella Grebe, a minor, by her next friend and stepfather, Louis Hauptreif, “The trial court filed findings of fact, among which are the against appellant, First State Bank of Bishop. The case has following: been twice tried and appealed. The first trial resulted in judgment in favor of the Bank and on appeal that judgment “(1) That W. F. Grebe died intestate on March 1, 1924, was affirmed by this Court. Grebe v. First State Bank, 106 leaving surviving him as his heirs at law his wife, Mrs. W. S.W.2d 382. On writ of error the Supreme Court reversed the F. Grebe, and a minor child, the plaintiff in this suit, and that judgment of this and the trial court, and remanded the cause, no administration of any kind was had on his estate or on the Mr. Justice Critz dissenting. 136 Tex. 226, 150 S.W.2d 64, 65. estate of said minor; which facts the officers of the bank knew.

On the return of the mandate of the Supreme Court to the “(2) That at the time of his death W. F. Grebe had $3,956.47 trial court, appellee filed a motion for judgment in the latter on deposit with the bank. That on April 2, 1924, Mrs. W. court. Appellant filed a plea in abatement, an amended answer F. Grebe had deposited to her account in the bank the sum including prayer that additional parties be made defendants in of $1,242.37, proceeds from the sale of cotton made by her the suit, and set up various additional matters not adjudicated deceased husband before his death, and that the officers of in prior proceedings. The trial judge overruled appellant's the bank knew the source of said money and knew it to be plea in abatement, disregarded its amended answer, refused community property. to allow its demand for a jury and thereupon, refusing to hear any testimony and granting appellee's motion, rendered “(3) That on May 14, 1924, Mrs. Grebe, having paid the judgment for appellee for the amount of her claim plus interest funeral expenses and all debts of the deceased from the computed at the time by the trial judge. The original trial of deposit in the name of W. F. Grebe, transferred, or directed the cause was before the then district judge, Honorable Birge the transfer of, the balance of $3,791.65 remaining in the Holt, who subsequently retired, whereas, the judgment here account of W. F. Grebe to her account. All of said money in question was rendered by Honorable Cullen W. Briggs, his was community property, which fact the bank then knew. The successor in office. bank also then knew that W. F. Grebe left a minor daughter.

The controlling question for decision here is that of whether “(4) That on June 30, 1924, Mrs. Grebe made a loan of the trial court erred in refusing to retry the case upon $6,000 to her brother-in-law, H. W. Grebe, and transferred the return of the mandate of the Supreme Court, reversing that amount from her account to him; after which $377.68 and remanding the cause, and in rendering judgment upon remained in her account.

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First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)

been placed to the credit of the mother in such bank with full “(5) That the officers of the bank knew that the loan was made knowledge on the part of the officials of the bank of the nature by Mrs. Grebe to H. W. Grebe, and knew that it was used by of the account and the minor's interest therein. H. W. Grebe to buy land, and that the vice president of the bank took the acknowledgment to the deed to H. W. Grebe. “Therefore the judgments of the Court of Civil Appeals and Neither the bank nor any of its officers participated in the loan of the trial court are reversed, and this cause is remanded transaction or in the land purchase, except as above stated.” to the trial court for further proceedings consistent with this [1] [2] It appears that the Supreme Court made an opinion.” (Emphasis ours.) additional finding of fact which was not included in the findings made by the trial judge or this Court, and which The mandate sent down from the Supreme Court to the trial the trial court had expressly refused to find, to-wit: that the court embraced the same order. bank knew that all the community debts of the Grebes had The record shows that in response to the judgment of the been fully paid at the time it paid over the community funds Supreme Court appellee filed her motion in that court praying to Mrs. Grebe. As we interpret the opinion of the Supreme that judgment be there rendered for appellee, but, in the Court their decision of the case was based at least in part alternative, if that relief be denied, then that the Supreme upon this additional finding, and it is inferable that but for this Court direct the trial court to render judgment for appellee.

additional finding that decision might have been different, The Supreme Court, however, denied both prayers, and let the since the fact so found was incorporated into each statement order stand reversing the judgments of this and the trial court, of the hypothesis upon which the decision rested. Appellant and remanding the cause “for further proceedings consistent complains bitterly against the action of the Supreme Court in with this opinion.”

making this additional finding, upon the familiar theory that trial courts and Courts of Civil Appeals alone have power to Appellant urges with much force and persuasiveness that by determine facts, and that the Supreme Court is without such these rulings the Supreme Court declined to return the case to power. It is elemental, of course, that it is not a prerogative the trial court for the sole purpose of having that court render of the Supreme Court to make findings of fact upon disputed judgment on the record as thus made, but remanded the cause issues appearing in the record before them. But it is clearly for a new trial upon the whole case in accordance with the within their province, and it is their duty, to take notice of principles enunciated in the opinion of the Supreme Court. undisputed facts of record, and if material give them effect in The question thus posed is by no means without its serious their decision. We must assume, then, at least in the absence difficulties. of the statement of facts in the former appeal, that the record [3] The decision here seems to turn on the interpretation to before the Supreme Court in the former appeal conclusively be given to the qualification appended by the Supreme Court disclosed the fact found by that Court in the majority opinion, to their order reversing the judgments rendered below and but which the trial court not only failed but expressly refused remanding the cause “to the trial court for further proceedings to find, that the bank did know, at the time it paid over the consistent with this opinion.” The inquiry is narrowed to community funds to Mrs. Grebe, that all the community debts the question of the effect to be given the clause “for further of the Grebes had been paid. We make these observations in proceedings consistent with this opinion.” We say that every deference to appellant's earnest complaint of the additional, order of an appellate court reversing and remanding a cause to and apparently material, finding made by the Supreme Court. the trial court carries with it the necessary instruction, whether expressed or not, that all further proceedings in the case in the trial court must be “consistent with the opinion” of the After announcing the rules of law deemed by them as reversing court; that qualification is understood, is implied by applicable to the case made, and upon which they based their necessity, so that, at least usually, it adds nothing to the result ultimate decision of the case, the Supreme *168 Court, in to write it into the opinion or include it in the mandate.

the majority opinion by Mr. Justice Sharp, concluded:

“* * * It therefore follows, in view of the undisputed facts in Appellee's contention is that the qualification that the cause be this case, that after all the community debts had been paid, remanded to the trial court for further proceedings consistent one-half of the community funds belonged to the plaintiff, and with the opinion of the Supreme Court amounted to an that plaintiff is entitled to recover from the bank one-half of instruction to the trial court to proceed and render judgment all community funds of the deceased and his wife that had for appellee without a new trial or any other proceedings in

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First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)

that court. In support of this contention appellee relies chiefly with a new trial and render judgment upon the new record upon the decision of the Supreme Court in Wells v. Littlefield, in accordance with the principles and holdings announced 62 Tex. 28, 29, but in addition cites numerous other cases as in the opinion of the Supreme Court. Roberts v. Armstrong, well. None of the cases cited are deemed in point here, since in Tex.Com.App., 231 S.W. 371, in which the “holdings” of each of them the cause was remanded with instructions to the the Commission of Appeals were expressly approved by the trial court to do a specified thing, or enter a specific judgment, Supreme Court. The decision in that case grew out of the or limit its proceedings to a particular inquiry, whereas, in opinion of this Court in the first appeal in the same case this case the order and mandate of the Supreme Court was, (Armstrong v. Gifford, 196 S.W. 723) and opinion of the only, that the judgment of the trial court be “reversed, and this Galveston Court in the second appeal. 212 S.W. 227. In its cause is remanded to the trial court for further proceedings mandate in that case this Court reversed the judgment and consistent with this opinion.” “remanded the cause for further proceedings in accordance with” the reversing opinion. Following this remand the trial As stated, appellee relies chiefly upon the case of Wells v. court in that case, as was done in this case, refused to hear Littlefield, 62 Tex. 28, in which the Supreme Court issued a any evidence or consider or submit any issue except that writ of mandamus requiring the trial judge to render judgment upon the amount of rents involved in the case. The losing for Wells in pursuance of specific directions given by the party again appealed, and the Galveston Court affirmed the Supreme Court in their opinion handed down and mandate judgment. Writ of error was granted and the Supreme Court, issued in Wells v. Littlefield, 59 Tex. 556, as follows: according to its reported opinion, ordered that judgments of the trial court and Court of Civil Appeals be reversed “* * * The judgment below will be reversed and the cause and remanded “for further proceedings in accordance with remanded, with directions to the court below to enter up such this opinion.” 231 S.W. 371, 375. On a subsequent appeal, judgment in favor of the appellant, Marshall Wells, as under however, it was stated that the Supreme Court had reversed the law as announced by this opinion he was entitled to obtain the judgment “and remanded the cause to be tried upon” a upon the former trial of the cause, from the result of which this sole issue therein indicated, Tex.Civ.App., 269 S.W. 452, appeal was taken; and to allow him such recovery as he had a 453. The specific instruction must have been embraced in right to in the state of the record below, had the decision there the mandate of the Supreme Court, for it is not disclosed in been in his favor upon the trial of the right to the property in the opinion. But the point is immaterial here. The point in controversy.”

issue here is that the Supreme Court held (231 S.W. 371, Upon a retrial of that case in the District Court, Littlefield 375) that upon an opinion and mandate remanding a cause amended his pleadings setting up matters diclosed in newly for further proceedings “in accordance [consistent] with this discovered testimony, and the trial court heard evidence in a opinion,” when not modified by more specific instructions, new trial and again rendered judgment thereon for Littlefield has the effect of remanding the cause for a new trial on all *169 against Wells. As the Supreme Court in reversing the issues of fact. It was so held by the Supreme Court, as we judgment and remanding the cause had plainly directed the construe their opinion, in the cited case. 231 S.W. 371. trial court to proceed to render judgment for Wells against Littlefield, writ of mandamus was issued directing the trial Now, in this case, on return of the mandate of the Supreme judge to render judgment as before directed. 62 Tex. 28.

Court to the trial court, appellant demanded a jury and paid [4] No such case as that is presented here, for here the the jury fee, and filed an amended answer, including a plea Supreme Court, in ordering a remand, not only did not render to abate the suit until the recently appointed legal guardian of judgment or direct the trial court to render judgment for appellee's estate was made a party in lieu of her stepfather, appellee, but by implication held that it was not a case for Hauptreif, who had brought the suit for appellee as her next rendition or authorizing or directing the trial court to render friend; followed by general demurrer and general denial and that or any other particular judgment. This was evidenced special answer, to the effect, as stated in appellant's brief, by the refusal of the Supreme Court to grant judgment for of “setting up numerous defenses not pleaded at the time of appellee. The Supreme Court simply reversed the judgment the trial from which the original appeal was taken, including of the trial court in favor of appellant, and remanded the an allegation that taxes in the sum of $21.60, owed by the cause to the trial court for further proceedings consistent community estate for 1924 State and County taxes, were with the opinion of the Supreme Court. The order to the paid October 30th, 1924, which was four months after the trial court was in effect, simply, that the trial judge proceed date of the transactions with the bank involved in this suit

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First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)

guardian had appeared, and that upon trial a full accounting and alleging that therefore indebtedness of the community be required between the minor plaintiff and her said mother estate did exist when the bank paid the money to plaintiff's and that the debts and charges against the community estate mother, and that other indebtedness existed. By said amended which were paid by the plaintiff's mother, together with a answer, appellant further set up that the plaintiff's parents reasonable amount as allowances for a year's support and in owned no homestead at the time of her father's death and that lieu of homestead and other exempt property, be ascertained her father was a farmer, and that the community estate did and allowed as credits and deductions and that defendant be not have other exempt property allowed by our exemption subrogated to the rights of the minor plaintiff's mother, and laws, and that the plaintiff's mother had no separate property that there be a full and fair adjustment of the equities between for her maintenance, and that plaintiff's mother was therefore the parties.”

entitled to allowances for a year's support and in lieu of homestead and in lieu of other exemptions; that the money On the other hand, appellee filed no other pleading than a loaned by plaintiff's mother was used to purchase a farm by formal motion for judgment “in favor of Plaintiffs on the the borrower on which a lien was retained and which farm was undisputed facts as found by the Supreme Court of Texas in conveyed to plaintiff's mother as trustee for the minor plaintiff its opinion of March 12, 1941, reversing and remanding this in this case, and as such trustee owned and held by plaintiff's cause for further proceedings consistent with said opinion, * said mother for the plaintiff from 1928 until after the filing * *.” of this suit in 1932, during which time rents and revenues *170 were collected by plaintiff's said mother as trustee; The trial court overruled appellant's general demurrer to that plaintiff's mother and the next friend herein, the plaintiff's that motion, refused appellant's demand for jury, refused to stepfather, had conspired to deprive defendant of its legal allow appellant to introduce any evidence, heard no evidence right and that there had never been any accounting between from either party on the merits or on appellee's motion for the minor plaintiff and her mother and that the minor plaintiff judgment, and, granting that motion, rendered judgment for was entitled to recover no more from the bank than she appellee for $2,517.01, with interest, thereupon computed, could recover from her mother in a legal accounting and that from the date of the filing of the suit. defendant, appellant herein, was entitled to be subrogated to [5] On the authority of Roberts v. Armstrong, the rights of plaintiff's mother and to set up all of the defenses Tex.Com.App., 231 S.W. 371, supra, we hold that the trial and equities which plaintiff's mother could set up against the court erred in refusing appellant's demand for retrial on the plaintiff in an accounting, and that the amount expended by merits. the plaintiff's mother for payment of debts and the amounts to which she would have been entitled as allowances for a year's support and in lieu of homestead and other exemptions should The judgment is reversed and the cause remanded for another be treated as applied for, and were applied for by defendant trial in consonance with the opinion of the Supreme Court in bank, and should be adjudicated. Appellant then prayed that the case. the plaintiff's mother, joined pro forma by her husband, Louis All Citations

Hauptreif, and J. D. Howard, the guardian of the estate of the minor plaintiff, be cited, and that the suit be abated until the 162 S.W.2d 165

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Fitzsimmons v. Anthony, 716 S.W.2d 719 (1986)

5 Cases that cite this headnote 716 S.W.2d 719

Court of Appeals of Texas, Corpus Christi. [3] Contracts Time for Performance Where No Time Is Burton M. FITZSIMMONS, et ux., Appellants, Specified v. Generally, where no time for performance of Alvin E. ANTHONY, et al., Appellees. contract is expressly stated in contract, law will imply reasonable time for performance.

No. 13–86–089–CV. | Aug. 29, 1986. | Rehearing Denied Sept. 30, 1986. 5 Cases that cite this headnote

Purchasers brought suit for specific performance against vendors of property. The 81st District Court, Wilson County, [4] Contracts Robert Lee Eschenburg, II, J., granted specific performance Excuses for Nonperformance or Defects to purchasers. Vendors appealed. The Court of Appeals, Where third party's approval is required as Nye, C.J., held that purchasers were entitled to specific condition to performance of contract, it is performance where vendors attempted to cancel the sale after reasonable to delay performance until approval purchasers had already demonstrated willingness to perform. is received.

1 Cases that cite this headnote Affirmed.

West Headnotes (4) Attorneys and Law Firms

*719 Per Hardy, San Antonio, for appellants.

[1] Specific Performance Appeal Bruce W. Bodner, San Antonio, for appellees.

Appellate court will uphold trial court's findings of fact in specific performance action unless they are manifestly erroneous and without evidence to OPINION support them or are so against great weight and preponderance of evidence as to be manifestly NYE, Chief Justice. wrong.

Appellants, Burton M. and Fannie Lee Fitzsimmons, Cases that cite this headnote challenge the judgments of the trial court, which ordered specific performance *720 of their contracts to convey land to the appellees. We affirm.

[2] Vendor and Purchaser Time of Performance and Payment The appellees' suits for specific performance were Purchasers were entitled to reasonable time to consolidated for trial. Appellees, Alvin E. Anthony, Errol Ray perform under contract for sale of property, Warren, and Milven D. Warren, Jr., had each entered into where contract did not specify date for a contract of sale with the appellants. The three contracts performance or state that time was of the essence; were executed on May 24, 1983. Attached to each contract fact that contract precluded termination for 120 was a metes and bounds description of the three contiguous days except on written mutual consent did not tracts which the appellees were purchasing. Each of the mean that vendor could unilaterally cancel after contracts was a standard Texas Veterans Land Program 120 days, nor did such provision set 120 days as “Application and Contract of Sale.” Each contained the reasonable time for performance. following provision:

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Fitzsimmons v. Anthony, 716 S.W.2d 719 (1986)

Chevrolet Oldsmobile, Inc., 678 S.W.2d 707, 713 (Tex.App.

14. In no event shall this contract be —Corpus Christi 1984, writ ref'd n.r.e.).

terminated by the veteran or seller before the expiration of 120 days [2] Here, the trial court found that the contract neither from the date hereof except by written specified a date for performance nor stated that time was consent of both parties and written of the essence. It concluded that, in the absence of “time notice thereof to the Veterans Land of the essence” provisions and stipulated performance dates, Board of the State of Texas. The parties are entitled to a reasonable time to perform their part Veterans' Land Board of the State of of a contract. The court further concluded that the parties Texas reserves the right to cancel after had demonstrated their willingness to perform before the acceptance of the assignment of the appellants' attempt to cancel the sales on September 26, 1983.

contract if the seller or veteran fails to The conclusion of law filed by the trial court was correct.

put forth reasonable efforts to comply with the terms hereof.

[3] Generally, where no time for performance is stated, the law will imply a reasonable time. Moore v. Dilworth, 142 The parties agreed that the one hundred twentieth day was Tex. 538, 179 S.W.2d 940, 942 (1944); Joines v. Burke, 540 September 21, 1983. Ms. Louceyette Voges, owner of the S.W.2d 798, 801 (Tex.Civ.App.—Corpus Christi 1976, no Wilson County Abstract Company at the time in question, writ). Appellants contend that the 120–day period referred to testified that, after examining the title to the land and in paragraph fourteen of the contracts, set out above, either 1)

receiving approvals of loans to the appellees, she sent the caused the contracts to expire after 120 days; or 2) gave either appellees' three commitments to the Veterans Land Board party the right to unilaterally cancel after 120 days; or 3) set sometime in the middle of August 1983. The Veterans Land 120 days as a reasonable time for performance. We disagree.

Board sent letters notifying the appellees that it had approved The language of paragraph fourteen merely states the proper the transactions on September 8, 13, and 14, 1983. It was method of cancellation of the contract within the *721 120– waiting for the comptroller's office to issue state warrants day period. It is silent about whether a party may cancel after (checks) for the amounts approved. By letters of September that time.

20, 21, and 23, 1983, the Board notified the appellees that the purchases were ready to be closed, and that they should [4] The delay in closing in this case was occasioned by contact the title company to set a date for closing.

waiting for the Board's approval, and no evidence was introduced that appellees were in any way responsible for the Appellant Burton Fitzsimmons admitted that he received delay. In fact, all of the evidence was to the contrary. All copies of these letters, knew of their contents, and knew three of the appellees were in touch with the title company that the deal was proceeding to a point that the closing date on or before September 26, inquiring about setting a closing was near. Nevertheless, on either Friday, September 23, or date. No closing date was set because the title company had Monday, September 26, he wrote the Veterans Land Board already been notified that the appellants would not perform.

and informed them that he and his wife wished to cancel the Where a third party's approval is required as a condition of sale.

performance, it is reasonable to delay performance until the approval is received. See Hubler v. Oshman, 700 S.W.2d [1] In ordering specific performance, the trial court filed 694, 698 (Tex.App.—Corpus Christi 1985, no writ); Carter findings of fact and conclusions of law. An appellate court v. Gerald, 577 S.W.2d 797, 799–800 (Tex.Civ.App.—Austin will uphold a trial court's findings of fact unless they are 1979, writ ref'd n.r.e.).

manifestly erroneous and without evidence to support them or are so against the great weight and preponderance of the The judgment of the trial court is affirmed.

evidence as to be manifestly wrong. Trevino v. Castellow Chevrolet-Oldsmobile, Inc., 680 S.W.2d 71, 75 (Tex.App. —Corpus Christi 1984, no writ); Hinojosa v. Castellow All Citations

716 S.W.2d 719

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

[2] Contracts

546 S.W.2d 844 Discharge of contract by breach Court of Civil Appeals of Texas, Courts do not favor forfeitures, and unless San Antonio.

compelled to do so by language that will admit Mauricio FRANK, Appellant, no other construction, forfeiture will not be v. enforced.

Paul KUHNREICH and Belinda, Inc., Appellees. Cases that cite this headnote

No. 15641. | Jan. 5, 1977. | Rehearing Denied Feb. 16, 1977. [3] Contracts Construction as a whole

Lessee and sublessee brought action against lessor for specific A written contract must be considered and performance of lease agreement and for damages, and lessor construed together and various provisions or filed cross action seeking forfeiture and termination of lease.

parts of lease are to be construed as a The 111th District Court, Webb County, E. D. Salinas, J., unified whole unless they are so repugnant and entered summary judgment for plaintiffs, and lessor appealed.

inconsistent as to nullify each other.

The Court of Civil Appeals, Klingeman, J., held that evidence of profits made by lessee in operation of entirely different type Cases that cite this headnote of business from that carried on in leased premises, at entirely different locations, was insufficient to establish amount of [4] Landlord and Tenant damages, if any, sustained by lessee at leased premises; and Intention of parties

that lessor was not liable to lessee for damages in amount of $550 per month, the difference in amount paid by sublessee Landlord and Tenant to lessee and amount paid by lessee to lessor. Reasonable construction A lease, like other written agreement, should be Reversed and remanded. given reasonable construction that will carry out intention of parties as expressed by language of Cadena, J., did not agree that it was error to award $550.00 contract. per month.

2 Cases that cite this headnote

West Headnotes (9) [5] Landlord and Tenant Construction and Operation Landlord and Tenant

[1] Judgment Construction against drafter Form and requisites of judgment A lease is governed by general rule of Letter from trial judge addressed to attorneys construction of written instruments; any doubts of record was not proper method for entry of as to meaning of language of lease are to summary judgment; however, final judgment, be resolved most strongly against lessor who which did not mention parties' motions for prepared it. summary judgment, which did not dispose of such summary judgments by direct language, but 3 Cases that cite this headnote which awarded damages to plaintiff, impliedly made all findings necessary to support the [6] Landlord and Tenant judgment, including liability issues.

Insurance

5 Cases that cite this headnote Specific Performance Contracts Relating to Real Property

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

Where lease agreement required lessee to carry difference in amount paid by sublessee to lessee fire and liability insurance on leased premises, and amount paid by lessee to lessor. and further provided for written notice of default to be given lessee, with specified time to cure Cases that cite this headnote such default and to avoid forfeiture of lease, and leased premises were not covered by liability insurance for certain periods of time, but within 15 days after notification of suchinsurance Attorneys and Law Firms defaults the defaults were remedied, lessor was *845 J. G. Hornberger, J. G. Hornberger, Jr., Laredo, for not entitled to forfeiture and termination of lease, appellant.

and lessee was entitled to specific performance and possession under lease. Roy J. True, True & Zable, Dallas, for appellees. 2 Cases that cite this headnote Opinion

KLINGEMAN, Justice.

[7] Landlord and Tenant Damages This is a suit by Paul Kuhnreich and Belinda, Inc. against In action brought by lessee against lessor to Mauricio Frank for specific performance of a lease agreement recover damages for lost profits allegedly caused and for damages. Frank answered by general denial and by lessor's failure to turn over leased premises in a cross-action seeking a forfeiture and termination of the tenantable condition within reasonable time after lease because of the failure of the lessee to comply with the fire at leased premises, evidence of profits made terms of the lease. Both parties filed motions for summary by lessee in operation of entirely different type of judgment on the question of liability, and on December 20, business from that carried on in leased premises, 1973, the court found that a forfeiture and termination of at entirely different locations, was insufficient to the lease was not warranted; and based on this finding, the establish amount of damages, if any, sustained court granted plaintiffs' motion for summary judgment and by lessee at leased premises. denied defendant's motion. Trial on the damage issues was to a jury, and in response to the jury's answers on the special 1 Cases that cite this headnote issues submitted, judgment was rendered on January 22, 1976, awarding damages to the plaintiffs.

[8] Landlord and Tenant Damages The lease agreement, between Paul Kuhnreich as lessee and Mauricio Frank as lessor, was entered into on February 15, Lessee has duty to mitigate damages, if possible.

1969, covering certain property in Laredo, Webb County, 3 Cases that cite this headnote Texas, herein referred to as the Iturbide Street property. This lease was for a period of five years, with an option to extend for an additional three years.

[9] Landlord and Tenant Damages The pertinent portions of the lease here involved may be Where sublease between lessee and sublessee summarized as follows: was signed after fire at leased premises, at time Paragraph 7. It is specifically understood and agreed that when lessee was sole shareholder and owner lessor will carry Fire and Extended Coverage Insurance on of sublessee, and sublease called for rental the building located on said leased premises. The lessee, payments from sublessee in an amount $550 however, shall carry liability insurance on the leased premises per month greater than paid by lessee under to protect both the lessee and the lessor with limits of not less lease, lessor, who allegedly failed to turn over than $100,000/$200,000 and the premium for said liability leased premises in tenantable condition within insurance shall be paid by lessee . In addition, the lessee reasonable time after fire, was not liable to lessee shall carry plate glass insurance on the front windows and the for damages in amount of $550 per month, the premium for such insurance shall be paid by lessee.

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

a ladies and men's ready-to-wear store. A fire occurred Paragraph 13. It is understood and agreed that if rent or other on the premises on or about January 12, 1972, causing monies remain unpaid for a period of ten days after mailing substantial damages. A fire sale was thereafter conducted by of notice by the lessor stating that same is unpaid, then failure plaintiffs until about May 31, 1972, and possession was not to pay such rent by registered mail forthwith shall operate as relinquished by plaintiffs until on or about June 7, 1972. a forfeiture under this lease at the option of the lessor and in the event that any default shall remain unremedied for fifteen On July 1, 1972, Kuhnreich subleased to Belinda, Inc. (all the days after written notice by registered mail, then the lessor stock of Belinda, Inc. was owned by Kuhnreich). Thereafter, may at his option declare this lease forfeited and the terms LeBaron, Inc., successor to Belinda, Inc., took over such shall *846 thereupon end and he may proceed as hereinafter operations in the latter part of 1972 or early 1973. Kuhnreich provided . owns 50% Of the stock of LeBaron.

Paragraph 15. The lessee covenants and agrees that if at any Repair work on the premises started in September of time there should be any default in the payment of any rent 1972. There is some testimony that the lessee was getting or any other consideration herein contained or neglect to apprehensive during this period and complained to the lessor perform and observe any or either of the covenants contained about delay in the repair work, and there is also some in this instrument, which on his part is to be performed, or the testimony that the lessor attempted to negotiate for more performance of any of the terms and conditions of this lease, favorable rentals under the contract. Frank contends that the then upon such default, the entire rent for the balance of the premises wee substantially completed by December 1972, term shall, at the option of the lessor at once become due and but there is some dispute as to this. On January 4, 1973, payable, as if by the terms of this lease they were all payable Frank, through his attorney, wrote to plaintiffs making certain in advance, or at the option of the lessor the tenancy hereby inquiries about compliance with the provisions for carrying created may be terminated, and the said lessor, his heirs, liability insurance, 1 and on January 12, 1973, the attorney for representatives or assigns may cancel this lease forthwith at Frank wrote to plaintiff and advised him that because of his his option and may recover the possession of the demised failure to comply with the terms of the lease agreement, the premises and may dispossess all persons therefrom. lease was being terminated. On January 22, 1973, plaintiffs filed suit against defendant seeking specific performance and Paragraph 17. Should the premises herein be destroyed or damages, as hereinbefore stated.

rendered untenantable by fire or the elements, lessor agrees to cause to be rebuilt or repaired the improvements on said Frank asserts 43 points of error, some of which seek rendition premises in essentially the same condition as they are at the while the others seek a remand. inception of this lease. It is specifically understood and agreed that such replacement or repairs of such improvements shall A number of points of error complain that the trial court erred be made within a reasonable time from the time that said in granting plaintiffs' motions for summary judgment. premises become untenantable, and it is further agreed that during the time that such premises remain untenantable, the *847 There appears in this transcript a letter dated December rent provided for herein shall be abated. 20, 1973 from the trial judge addressed to the attorneys of record, which is filed in the record of such cause and Paragraph 23. Lessee is hereby given the right and option to which purports to be the order granting plaintiffs' motion extend this lease for an additional three (3) years from and for summary judgment and denying defendant's motion for after March 31, 1974, upon the same terms and conditions as summary judgment . are contained in this lease, EXCEPT that the rental shall be as follows: (here follows schedule of monthly rentals). Should The pertinent portions of such letter may be summarized as the lessee desire to exercise this option he shall give written follows: notice to the lessor of his intention to so exercise such option (a) Both parties filed motions for summary judgment, on or before October 31, 1973. Failure of lessee to give such plaintiffs' seeking specific performance and possession under notice, as herein provided, shall operate to nullify and destroy the lease contract, and defendant seeking forfeiture and the option herein granted.

termination of the lease.

Kuhnreich opened his business, known as Belinda's, in the (b) There is no genuine issue of material fact.

leased premises on April 14, 1969. It was operated as

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

(c) Defendant contends that the lease terminated because Under such rule, the judgment, dated January 22, 1976, of failure to comply with the lease provision pertaining to awarding damages to plaintiff, impliedly made all findings insurance coverage, and that paragraph 15 of the lease is necessary to support the judgment, including the liability controlling. issues. The points of error are properly before us by virtue of defendant's points of error pertaining to the motions for (d) Plaintiffs contend that paragraph 13 of the lease is summary judgment, hereinbefore set forth, ald also by points controlling, that they fully complied with the provisions of error of defendant in which he complains that the trial court thereof. erred as a matter of law in granting judgment for plaintiffs and in not granting judgment for defendant, and in failing to grant (e) The premises were not covered by liability insurance for defendant's motions for judgment non obstante veredicto.

certain periods of time, but it is undisputed that within 15 days after notification of such insurance default, such defaults were Frank makes no contention that there are any disputed issues remedied. of material fact as to the question of liability. His points of error as to liability assert: (a) it is undisputed that plaintiffs (f) The motion for summary judgment of defendant is were in violation of the insurance provisions contained in the denied, and the motion for summary judgment of plaintiffs is lease; (b) since plaintiffs clearly violated the provisions of the sustained.

lease, under the terms of the lease no notice was required, [1] The letter contained in the records is not a proper and that the lease was effectively terminated by the letter of method for entry of a judgment and we do not approve January 12, 1973; (c) the trial court erred in granting plaintiffs'

this kind of procedure. The letter contains statements and motion for summary judgment and in overruling defendant's other material not ordinarily contained in a judgment and motion for summary judgment; (d) the trial court erred as a a letter of this sort addressed to the attorneys for purposes matter of law in granting judgment for plaintiffs' and in not of appellate procedure is ordinarily a nullity. Benedict v.

granting judgment for defendant; (e) the trial court erred in not Benedict, 542 S.W.2d 692 (Tex.Civ.App.—Fort Worth 1976, granting defendant's *848 motion for judgment non obstante no writ); Tejas Trail Property Owners Association v. Holt, veredicto; (f) this case should be reversed and judgment here 516 S.W.2d 441 (Tex.Civ.App.—Fort Worth 1974, no writ).

rendered in favor of defendant that plaintiffs take nothing.

We have concluded that the trial court did not err in granting The final judgment, dated January 22, 1976, does not plaintiffs' motion for summary judgment and in refusing to mention the motions for summary judgment and such grant defendant's motion for summary judgment because of summary judgments are not disposed of by direct language the following reasons:

in such judgment. In North East Independent School District [2] (1) The courts do not favor forfeitures and unless v. Aldridge, 400 S.W.2d 893 (Tex.1966), the Court, in compelled to do so by language that will admit no other discussing the finality of judgments for appellate purpose, construction, forfeiture will not be enforced. G. C. Murphy stated:

Company v. Lack, 404 S.W.2d 853 (Tex.Civ.App.—Corpus When a judgment, not intrinsically Christi 1969, writ ref'd n.r.e.); Henshaw v. Texas Natural interlocutory in character, is rendered Resources Foundation, 147 Tex. 436, 216 S.W.2d 566 (Tex. and entered in a case regularly set for 1949); 36 Tex.Jur.2d Landlord & Tenants ss 253, 254 (1962). a conventional trial on the merits, no order for a separate trial of issues having [3] [4] (2) A written contract must be considered and been entered pursuant to Rule 174, Texas construed together and various provisions or parts of the lease Rules of Civil Procedure, it will be are to be construed as a unified whole unless they are so presumed for appeal purposes that the repugnant and inconsistent as to nullify each other. A lease, Court intended to, and did, dispose of like other written agreement, should be given a reasonable all parties legally before it and of all construction that will carry out the intention of the parties as issues made by the pleadings between expressed by the language of the contract. such parties.

[5] (3) A lease is governed by the general rule of construction of written instruments. Any doubts as to the

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

meaning of the language of the lease are to be resolved most strongly against the lessor who prepared it. 35 Tex.Jur.2d By a number of points of error, defendant asserts that the Jury s 20 (1962); Fisher v. Tempco Aircraft Corporation, jury's answers to Special Issues 1, 2, 4, and 5 are supported by 324 S.W.2d 571 (Tex.Civ.App.—Texarkana 1959, no writ); no evidence, insufficient evidence, and that the jury's answers Dedear v. Wilson, 220 S.W.2d 534 (Tex.Civ.App.—Austin thereto are against the great weight and preponderance of 1949, writ ref'd); Pickrell v. Buckler, 293 S.W. 667 the evidence. *849 We will first consider the special issues (Tex.Civ.App.—El Paso 1927, no writ). which pertain to lost profits in which defendant asserts that the evidence concerning lost profits is too uncertain or [6] We have examined and considered the entire lease, speculative to support any recovery for lost profits; that the including specifically, paragraphs 13 and 15 of the lease. jury answers to these issues are insufficiently supported by the Paragraph 13 of the lease clearly provides for written notice evidence; and are against the great weight and preponderance of default to be given lessee, with a specified time to cure such of the evidence. default and avoid forfeiture of the lease. We see no purpose The leased premises involved, sometimes referred to as the for such provision in the lease if the parties intended that the Iturbide Street Store, contains an area of 4,500 square feet.

lessor could terminate the lease without notice. The parties Such lease was prepared by Frank's lawyer. In April of 1969 did not intend to do a useless thing.

Kuhnreich established a business at such leased premises under the name of Belinda. Kuhnreich was the sole owner A reasonable construction of the two provisions, taken and the business carried on was a ladies and men's ready-totogether , is that after a particular default, the party in default wear store. This operation continued until the fire occurred was to be given written notice of such default with the right to on January 12, 1972, causing substantial damage to the leased cure such default within the time therein provided. The lease premises. A fire sale was thereafter conducted until about did not give the lessor the right to terminate the lease without May 31, 1972, and on June 7, 1972 the premises were notice, under the complete terms and provisions of the lease. delivered back to Frank.

We have concluded that the trial court did not err in refusing Kuhnreich testified that he intended to go back into business to grant defendant's motion for summary judgment and in in this location when the premises were repaired. Kuhnreich granting plaintiffs' motion. further testified that it was his intention to operate therein [7] We will next consider those points of error which, if a business which would include men's wear, electronics, sustained, will require a reversal and remand of this case. crystal, porcelain, gifts, and novelties. On the first day of July These points of error pertain to the jury answers on the 1972, Kuhnreich made a sublease of the premises to Belinda, damage issues. The jury found, in answer to special issues Inc., wherein Belinda, Inc. was to pay Kuhnreich $550.00 submitted, that (1) defendant could have turned over the a month more rental than Kuhnreich was paying Frank. leased premises in a tenantable condition on October 7, Kuhnreich was the sole owner of Belinda, Inc. Sometime 1972; (2) defendant failed in turn over the leased premises after the fire, Belinda, Inc. leased 1,200 square feet of space to plaintiffs in a tenantable condition; (3) plaintiff, LeBaron, known as El Lider at an entirely different location. This store as successor to Belinda, Inc., suffered loss of profits as was operated from March 1973 until October 31, 1974. The a result of defendant's failure to turn over the leased El Lider store sold televisions, stereos, calculators, crystal, premises to plaintiffs; (4) the sum of $3,500.00 per month porcelain, china, gifts, and novelties. Kuhnreich testified would reasonably compensate plaintiff LeBaron for its loss that the average monthly profit at the El Lider store was of profits. Based upon such jury findings, judgment was between $7,000.00 and $8,000.00 a month, but on cross entered that Kuhnreich recover judgment against defendant examination he was unable to give specific information in for $550.00 a month commencing October 7, 1972, and regard thereto and stated that his accountant, Arthur Rossi, continuing through March 31, 1974, an aggregate amount of knew the details thereof. However, he did testify that for $9,900.00; LeBaron recover judgment for $3,500.00 a month the first year of operation there was a loss of $14,985.87, commencing on October 7, 1972, aggregating $63,000.00. including a carryover loss of $29,413.97. The court refused to award damages for the three year option There is testimony that the El Lider location was a temporary period. Defendant alone excepted to the judgment and gave location, and Kuhnreich testified that he intended to open notice of appeal to this court.

another location at 1006 Grant, which was a larger store

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

containing between 3,000 and 3,500 square feet. Plaintiffs contract cannot escape liability because it is impossible to continued to operate in the El Lider location until October state or prove a perfect measure of damages. . . . Where, . . . 31, 1974, when they moved into the Grant location. This it is shown that the business was a going concern, and was business is primarily an electronics business with much of the making a profit, when the contract was breached, such preelectronics equipment being sold into Mexico. existing profit, together with other facts and circumstances, may be considered in arriving at a just estimate of the amount The only other witness who testified as to profits was Arthur of profit which would have been made if plaintiff had not Rossi, a C.P.A. who handles Belinda's and LeBaron's books. breached its contract. He stated that LeBaron's was a business that sells electronics and a variety of other goods. He testified that LeBaron's profits ranged from a high of $6,812.00 a month for a In 17 Tex.Jur.2d Damages s 149 (1960), it is stated: particular period (March 1974 to March 1975) to a low of To substantiate his claim of lost $5,337.68 a year for the fiscal year which ended February profits the plaintiff must bring forward 28, 1974, depending on whether or not officers' salaries convincing evidence; opinions and mere were included in computing such figures. It is seen that the estimates will not suffice. And lost supposed profits vary greatly depending on whether or not profits will not be considered sufficiently officers' salaries are included. Moreover, there is testimony proved in the absence of factual data that plaintiffs had a income tax loss for some of the years offered to show prospective income, involved. The figures are rather meaningless. The officers predicated on such factors as previous could, either by raising or decreasing their salaries, materially experience, past earnings of the same change the amount of profits. or a similar business, the competitive relationship of the business, and the He was then asked what the profits would have been if it prospects of continued public acceptance would have been operating at Iturbide Street and stated that he of the product or service offered.

did not have a positive opinion. He further testified that most of the sales made by plaintiffs were made into Mexico and that the amount of volume and the amount of profits would depend The testimony as to lost profits may be summarized as on whether the Mexican government permitted electronics follows: devices to be taken into Mexico without payment of duty.

(a) Plaintiff operated a ladies and men's ready-to-wear store at In Southwest Battery Corporation v. Owen, 131 Tex. 423, 115 the leased premises (1205 Iturbide). This covered the period S.W.2d 1097 (1938), the Court stated: from April 1969 to June 1972. The only evidence as to *850 In the early decisions a rigid rule affecting the right profits earned in such store was testimony that there was a of recovery for lost profits was announced. Modern business $29,413.97 carryover loss in the years 1973 and 1974. methods have caused a relaxation of that hard rule. . . .

(b) All the other testimony as to profits pertains to the The rule denying a recovery where the facts show that such operation of an entirely different type of business (electronics, profits claimed are too uncertain or speculative, or where the novelties, giftware, etc.) at entirely different locations. Even enterprise is new or unestablished, is still enforced, on the this testimony is conflicting with different figures as to ground that the profits which might have been made from taxable income and as to average monthly profits. The amount such business are not susceptible of being established by of such profits differ greatly depending on whether the profit proof to that degree of certainty which the law demands * * * includes the salaries of the officers of the corporation or whether it was exclusive of salaries.

It is impossible to announce with exact certainty any rule measuring the profits the loss for which recovery may be had. (c) Plaintiffs' accountant, when asked what plaintiffs' monthly The courts draw a distinction between uncertainty merely as profits would have been if it was operated as Iturbide Street, to the amount and uncertainty as to the fact of legal damages. stated that he had no positive opinion. There is no evidence Cases may be cited which hold that uncertainty as to the fact whatsoever of any profits are the established business at the of legal damages is fatal to recovery, but uncertainty as to leased premises, 1205 Iturbide Street. the amount will not defeat recovery. A party who breaks his

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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)

[8] [9] A lessee has a duty to mitigate the damages, if (d) Moreover, there is no testimony as to the desirability of the possible, and the sublease, which Kuhnreich made, in effect various locations involved. There is absolutely no evidence artifically increased the amount of damages. There is no in the record as to the location of the stores, customer showing that the sublease agreement Kuhnreich made with availability, the probability that the business will remain Belinda, Inc. had any relationship to market value, and there stable over a period of years, or the probability of increased is no showing that Kuhnreich suffered any real damages by business. There is no factual data which would show what virtue of this sublease. The court erred in awarding Kuhnreich profits, if any, would have been made at the leased premises.

damages in the amount of $550.00 per month.

The thrust of plaintiffs' contention is that since there is testimony that he made ‘X’ profits at a new and different Because of the errors hereinabove discussed, we have location in an entirely different type of business, then, concluded that the judgment must be reversed and remanded.

therefore, he is entitled to ‘X’ profits. This does not necessarily follow. By a cross-point, appellees urge that the trial court erred in not granting specific performance of the lease for the period Under the record before us, it is a matter of some conjecture covered in the option to extend the lease and that they are and speculation as to whether plaintiffs suffered any damages.

entitled to a calculation of their monthly damages so as to Their claim for damages is based on testimony that they were cover the three year additional period covered in such option.

making ‘X’ amount of profit as an electronics, novelties, and They ask for a modification or reformation of the judgment gifts business at two locations in Laredo, El *851 Lider and in this respect. Even if we were inclined to agree that the Grant Street, but there is no testimony as to what effect the profits, if any, would be applicable also to this period, which opening of another store selling these same type of items on we specifically do not herein pass on, there is no evidence in the leased premises (Iturbide Street) would have had on the the record as to anticipated profits for such period of time. In total amount of profits made; whether they would have been view of our general remand, we will not consider such crossthe same, less, or more.

point.

In our opinion, plaintiffs failed to establish by competent We have concluded that the judgment of January 22, 1976 evidence the amount of the damages, if any, that they must be reversed, and that the interest of justice would best sustained at the leased premises with that degree of certainty be served by a general remand.

which the law requires.

The judgment is reversed and remanded to the trial court for Defendant also asserts that the trial court erred in holding a new trial.

Frank liable to Kuhnreich for damages in the amount of $550.00 a month, which is the difference in the amount Belinda, Inc., as sublessee, was to pay him as rent and CADENA, Justice. the amount he was to pay Frank. The sublease between Kuhnreich and Belinda, Inc. was signed on July 1, 1973, after I do not agree it was error to award $550.00 per month. the fire and at the time Kuhnreich owned all the stock of All Citations

Belinda and was the sole owner thereof. Kuhnreich admitted that he was basically leasing to himself. 546 S.W.2d 844

Footnotes 1 Demand is hereby made for you to present to me or Mr. Frank immediately competent evidence that the insurance referred to in such paragraph has been in force since inception of the lease.

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

244 S.W.3d 855 West Headnotes (19)

Court of Appeals of Texas, Dallas.

[1] Pretrial Procedure

Vernon Lee GARNER, Appellant Affidavits and Evidence v. Trial court did not abuse its discretion in denying FIDELITY BANK, N. A., f/ borrower's motion for continuance of hearing k/a Parkway Bank, Appellee. on lender's motion for summary judgment, in lender's action against borrower seeking to No. 05–07–00360–CV. | Jan. 31, 2008. collect debt from borrower, as borrower's motion did not include an affidavit stating sufficient Synopsis cause, as required by rule. Vernon's Ann.Texas Background: Lender filed lawsuit against borrower, seeking Rules Civ.Proc., Rule 251.

to collect debt from borrower after borrower failed to pay promissory note on its maturity date or surrender collateral 1 Cases that cite this headnote secured via commercial security agreement. Lender filed motion for summary judgment. Borrower responded and [2] Appeal and Error

requested a continuance. The 296th District Court, Collin Continuance

County, Betty Caton, J., denied borrower a continuance and granted summary judgment to lender, and granted a The denial of a motion for continuance is foreclosure of security interest in the collateral. Borrower reviewed under an abuse of discretion standard. appealed.

9 Cases that cite this headnote

[3] Appeal and Error

Holdings: The Court of Appeals, Richter, J., held that:

Proceedings Preliminary to Trial

[1] trial court did not abuse its discretion in denying The denial of a motion for continuance will only borrower's motion for continuance of hearing on lender's be reversed on appeal if the trial court's action motion for summary judgment; was arbitrary, unreasonable, or without reference to any guiding rules and principles.

[2] statements set forth in borrower's responsive summary 7 Cases that cite this headnote judgment affidavit that were allegedly made before promissory note was signed constituted impermissible parol evidence; [4] Appeal and Error Dockets, Calendars, and Continuance [3] exception to parol evidence rule for evidence of a If a motion for continuance is not verified collateral agreement did not apply to permit statements set or supported by affidavit, appellate court will forth in borrower's responsive summary judgment affidavit presume the trial court did not abuse its that were allegedly made after note was signed; and discretion in denying the motion. Vernon's Ann.Texas Rules Civ.Proc., Rule 251.

[4] evidence of payment as an affirmative defense was inadmissible. 7 Cases that cite this headnote

[5] Pretrial Procedure

Affirmed.

Affidavits and Evidence

Rule requiring that a motion for continuance include an affidavit stating sufficient cause does

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

not require the party opposing a motion for continuance to lodge an objection with the [10] Evidence trial court under any circumstances. Vernon's Bills and Notes or Indorsement Thereof Ann.Texas Rules Civ.Proc., Rule 251. Judgment Negotiable Instruments

1 Cases that cite this headnote Exception to parol evidence rule for evidence of a collateral agreement did not apply to permit [6] Evidence statements set forth in borrower's affidavit in Bills and Notes response to lender's summary judgment motion Judgment that were allegedly made by lender to borrower Negotiable Instruments after promissory note was signed, in context of lender's action against borrower to recover Statements set forth in borrower's affidavit in unpaid debt from borrower, as statements response to lender's summary judgment motion contradicted the express terms of parties' written that were allegedly made by lender to borrower agreement.

before promissory note was signed constituted impermissible parol evidence, in context of 1 Cases that cite this headnote lender's action against borrower to recover unpaid debt from borrower, as parties had executed a valid integrated agreement. [11] Evidence Prior and Contemporaneous Collateral Cases that cite this headnote Agreements The parol evidence rule does not bar evidence of [7] Appeal and Error a collateral agreement.

Allowance of Remedy and Matters of Cases that cite this headnote Procedure in General Appellate court reviews a trial court's ruling sustaining objections to summary judgment [12] Evidence evidence for an abuse of discretion. Prior and Contemporaneous Collateral Agreements

6 Cases that cite this headnote A “collateral agreement,” evidence of which is not barred by parol evidence rule, is one the [8] Evidence parties might naturally make separately, i.e. one Contracts in General not ordinarily expected to be embodied in, or integrated with the written agreement and not so When the parties have concluded a valid clearly connected with the principal transaction integrated agreement, the parol evidence as to be part and parcel of it.

rule precludes enforcement of a prior or contemporaneous inconsistent agreement. 1 Cases that cite this headnote

1 Cases that cite this headnote [13] Evidence

Contracts in General

[9] Evidence Evidence Improperly Admitted Exception to parol evidence rule that exists with respect to evidence of a collateral agreement Evidence that violates the parol evidence rule does not permit parol evidence that varies or is incompetent and without probative force, and contradicts the express or implied terms of the cannot properly be given legal effect.

written agreement.

Cases that cite this headnote

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

1 Cases that cite this headnote 1 Cases that cite this headnote

[14] Contracts [18] Evidence Application to Contracts in General Matters of Defense and Rebuttal Evidence Party asserting an affirmative defense bears Completeness of Writing and Presumption the burden of proving its elements. Vernon's in Relation Thereto; Integration Ann.Texas Rules Civ.Proc., Rule 94. A written agreement will be enforced as written 6 Cases that cite this headnote and cannot be added to, varied, or contradicted by parol testimony; this is particularly true where the written contract contains a recital that it [19] Bills and Notes contains the entire agreement between the parties Evidence Admissible Under Plea or Answer or a similarly worded merger provision. in General Absence of a proper plea of payment renders 1 Cases that cite this headnote evidence as to payment inadmissible in action to recover unpaid balance of notes. Vernon's [15] Appeal and Error Ann.Texas Rules Civ.Proc., Rule 95.

Cases Triable in Appellate Court Cases that cite this headnote Appellate court reviews the granting of a summary judgment motion de novo.

2 Cases that cite this headnote Attorneys and Law Firms

[16] Bills and Notes *857 Cecil R. Miskin, Burleson, Susan Bleil, Sondrea King, Renewal, and Agreements to Renew Bleil & King, Fort Worth, for Appellant.

Fact that lender, in a letter to borrower, offered to renew promissory note that borrower failed Greg Gutman, Dallas, Edward L. Rice, Capelle & Burdette, to pay on its maturity date did not establish L.L.P., Dallas, for Appellee. existence of an oral agreement between parties Before Justices O'NEILL, RICHTER, and LANG.

outside the express terms of the loan agreement the parties had executed, for purposes of lender's action against borrower to recover unpaid debt from borrower. OPINION

Cases that cite this headnote Opinion by Justice RICHTER.

This appeal arises from a suit on a promissory note. Vernon [17] Bills and Notes Lee Garner challenges the entry of a traditional summary Evidence Admissible Under Plea or Answer judgment in favor of Fidelity Bank, N.A., f/k/a/ Parkway in General Bank. In six issues, Garner argues: (1) the trial court abused Borrower's failure to properly plead an account its discretion when it denied Garner's motion for continuance; or otherwise provide requisite notice for payment (2) the trial court erred when it granted summary judgment as affirmative defense to lender's action against because there was a material issue of fact as to whether him to recover unpaid balance of note rendered the note at issue constituted the complete agreement of the evidence as to payment inadmissible. Vernon's parties; (3) the court erred in granting summary judgment Ann.Texas Rules Civ.Proc., Rules 94, 95. because Garner raised a material issue of fact concerning payment; (4) the trial court abused its discretion when it sustained Fidelity's objections to Garner's testimony about

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

statements and acts that occurred after the note was signed; paragraph stating “[t]his case has not been on file for any (5) the trial court awarded Fidelity more relief than it appreciable length of time, certainly not sufficient to allow requested; and (6) the trial court erred by awarding attorney's for adequate discovery.” In his first issue, Garner argues the fees. Finding no reversible error, we affirm the trial court's trial court erred by denying the motion for continuance. We judgment. disagree.

[1] [2] [3] [4] [5] The denial of a motion for continuance is reviewed under an abuse of discretion I. BACKGROUND

standard. General Motors v. Gayle, 951 S.W.2d 469, Garner is in the used car business. Prior to the lawsuit, 476 (Tex.1997) (orig.proceeding). The denial will only be Garner had an ongoing *858 business relationship with reversed if the trial court's action was arbitrary, unreasonable, Fidelity and entered into various loan agreements to finance or without reference to any guiding rules and principles. See the purchase of his vehicle inventory. On December 15, BMC Software Belg. N.V. v. Marchand, 83 S.W.3d 789, 800 2005, Garner and Fidelity entered into the loan agreement (Tex.2002). Garner gave no reason why he needed discovery at issue in this case. To memorialize the agreement, the to oppose summary judgment on the note, nor did he specify parties executed a promissory note with a June 15, 2005 the discovery required. Although Garner now asserts the maturity date and a commercial security agreement granting discovery was essential to plead or prove a payment defense, Fidelity a security interest in three specified vehicles. The this argument was not presented to the trial court until after the parties also executed a “Notice of Final Agreement” which summary judgment was granted and Garner filed a motion for provided that the loan agreement, promissory note, and new trial. Garner admits the request for a continuance was not security agreement constituted the final agreement of the verified, but maintains Fidelity's failure to object to the lack parties. When Garner did not pay the note on the maturity of verification precludes it from raising the issue on appeal. date or surrender the collateral, Fidelity offered to extend A motion for continuance must include an affidavit stating the note with a new note in the same principal amount. sufficient cause. TEX.R. CIV. P. 251; Rabe v. Guaranty Garner refused. After demanding payment, Fidelity filed suit Nat'l Ins. Co., 787 S.W.2d 575, 578 (Tex.App.-Houston [1st against Garner. Garner generally denied the allegations in a Dist.] 1990, writ denied). If a motion for continuance is not document entitled “Plea in Abatement, Special Exceptions, verified or supported by affidavit, we will presume the trial Special Denials, Affirmative Defense and Original Answer court did not abuse its discretion in denying the motion. Subject Thereto” (the Answer). The Answer did not assert Villegas v. Carter, 711 S.W.2d 624, 626 (Tex.1986); *859 “payment” as an affirmative defense. On October 30, 2006 Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d Fidelity moved for summary judgment on Garner's liability 256, 270 (Tex.App.-Houston [1st Dist.] 2005, pet. denied). on the note. The motion was set for hearing on December 14, The rule does not require the party opposing a motion for 2006. Garner responded on December 7, 2006 and requested continuance to lodge an objection with the trial court under a continuance. The crux of Garner's response was that the any circumstances. See Daugherty v. Jacobs, 187 S.W.3d parties had agreed to terms other than what was stated in the 607, 620 (Tex.App.-Houston [14th Dist.] 2006, no pet.). note. At the same time he filed the response, Garner served Because Garner's motion did not include an affidavit stating his first request for production of documents on Fidelity. The sufficient cause, we conclude the trial court's ruling was trial court granted the summary judgment on December 26, neither arbitrary nor unreasonable. Garner's first issue is 2006 and awarded Fidelity the amount due under the note with overruled. interest, costs, and attorney's fees. The final judgment also granted a foreclosure of the security interest in the collateral.

Objections to Summary Judgment Evidence This appeal followed.

Garner submitted an affidavit in response to the motion for summary judgment. The affidavit described representations allegedly made by Fidelity to Garner and attached numerous II. DISCUSSION prior notes between the parties. Fidelity objected to paragraphs 3–16 and 22 of the affidavit and argued the merger Motion for Continuance clause in the loan documents prohibited the use of parol Garner's response to Fidelity's motion for summary judgment evidence to show any other agreements of the parties. The included a motion for continuance that consisted of a trial court sustained the objection. In his third issue, Garner

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

maintains the trial court erred because the representations S.W.2d 449, 451–52 (Tex.Civ.App.-Dallas 1980, writ ref'd described in the affidavit were made after the date of the note. n.r.e.). In addition, the notice of final agreement provides: In Garner's view, this demonstrates the statements were not barred by the parol evidence rule. *860 THE WRITTEN LOAN AGREEMENT REPRESENTS

[6] [7] [8] [9] We review a trial court's ruling sustaining THE FINAL AGREEMENT objections to summary judgment evidence for an abuse BETWEEN THE PARTIES AND of discretion. See Bradford Partners II, L.P. v. Fahning, MAY NOT BE CONTRADICTED 231 S.W.3d 513, 521 (Tex.App.-Dallas 2007, no pet.). The BY EVIDENCE OF PRIOR portion of the affidavit Garner argues should have been CONTEMPORANEOUS OR allowed stated in pertinent part: SUBSEQUENT ORAL AGREEMENTS OF THE

I took that to mean that when the PARTIES. THERE ARE note came due, that I would pay the NO UNWRITTEN ORAL interest, plus pay for the cars sold AGREEMENTS BETWEEN THE during that period, and, just as before, PARTIES. the note would be renewed. [The bank officer] told me this both before and [14] A written agreement will be enforced as written after I signed the note in question. and cannot be added to, varied, or contradicted by parol testimony. See Smith v. Smith, 794 S.W.2d 823, 827 (Emphasis added). Contrary to Garner's assertion, the (Tex.App.-Dallas 1990, writ withdrawn). This is particularly affidavit does not refer exclusively to representations alleged true where the written contract contains a recital that it to have been made after the note was signed. The affidavit contains the entire agreement between the parties or a also refers to a statement made prior to the signing of similarly-worded merger provision. See Weinacht v. Phillips the note. When, as here, the parties have concluded a Coal Co., 673 S.W.2d 677, 679 (Tex.App.-Dallas 1984, valid integrated agreement, the parol evidence rule precludes no writ). Because the evidence Garner sought to admit enforcement of a prior or contemporaneous inconsistent contradicted the express terms of the written agreement, the agreement. See Ledig v. Duke Energy Corp., 193 S.W.3d 167, trial court did not err in excluding it. Garner's third issue is 178 (Tex.App.-Houston [1st Dist.] 2006, no pet.). Evidence overruled.

that violates the rule is incompetent and without probative force, and cannot properly be given legal effect. See Johnson v. Driver, 198 S.W.3d 359, 364 (Tex.App.-Tyler 2006, no The Summary Judgment pet.). The statements made before the note was signed were [15] In his fourth and fifth issues, Garner complains about inadmissible parol evidence. the entry of summary judgment. We review the granting of a summary judgment motion de novo. AIG Life Ins. Co. v.

[10] [11] [12] [13] With regard to statements made afterFederated Mut. Ins. Co., 200 S.W.3d 280, 284 (Tex.App.- the note was signed, we recognize that the parol evidence rule Dallas 2006, pet. denied). When reviewing a traditional does not bar evidence of a collateral agreement. See Transit summary judgment, we determine whether the movant met Enter. v. Addicks Tire & Auto Supply, Inc., 725 S.W.2d its burden of establishing that no material fact issue exists 459, 461 (Tex.App.-Houston [1st Dist.] 1987, no writ). A and that it is entitled to judgment as a matter of law. TEX.R. collateral agreement is one the parties might naturally make CIV. PROC. 166a; AIG Life, 200 S.W.3d at 284. We take separately, i.e. one not ordinarily expected to be embodied the non-movant's evidence as true, indulge every reasonable in, or integrated with the written agreement and not so inference in favor of the non-movant, and resolve all doubts in clearly connected with the principal transaction as to be part the non-movant's favor. TEX.R. CIV PROC. 166a; AIG Life, and parcel of it. Boy Scouts of Am. v. Responsive Terminal 200 S.W.3d at 284. Sys., Inc., 790 S.W.2d 738, 745 (Tex.App.-Dallas 1990, writ withdrawn). This exception, however, does not permit parol Garner first argues the summary judgment evidence raised a evidence that varies or contradicts the express or implied question of material fact about whether the note constituted terms of the written agreement. See Loe v. Murphy, 611 the complete agreement of the parties. In support of his argument, Garner points to the portions of his affidavit

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Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)

Garner admits he did not file an account, but maintains it was in which he describes how Fidelity allegedly agreed to impossible to do so because he did not have the discovery he an arrangement other than what is described in the loan required. As we noted earlier, Garner did not inform the trial documents and the prior notes he provided to demonstrate the court that he needed discovery to plead or prove payment until parties previously executed notes with no maturity dates. We after the summary judgment had been determined. Although have already concluded the trial court did not err by sustaining there was more than adequate time between the filing of the Fidelity's objections to this evidence. Accordingly, Garner motion for summary judgment and the date on which it was failed to produce competent summary judgment evidence to set for hearing, Garner did not amend his answer to assert raise a disputed issue of material fact as to the agreement of a payment defense. Because Garner failed to properly plead the parties.

an account or otherwise provide the requisite notice for an affirmative defense of payment, the trial court did not err [16] Garner's summary judgment evidence also included when it sustained Fidelity's objections to Garner's affidavit.

the letter from Fidelity offering to renew the note. Garner Absence of a proper plea of payment renders evidence as to claims this uncontroverted evidence established the debt was payment inadmissible. See Rea v. Sunbelt Sav., 822 S.W.2d being renewed and evidenced an ongoing floor planning 370, 372 (Tex.App.-Dallas 1991, no writ). Garner's fifth issue arrangement that did not require Garner to pay for vehicles is overruled.

that had not been sold. The fact that Fidelity offered to renew the debt, however, does not establish the existence of an oral agreement outside the express terms of the contract. Garner's The Relief Awarded

fourth issue is overruled.

In his second issue, Garner argues the trial court awarded Fidelity more relief than the motion for summary judgment [17] Garner also contends he raised a material fact question requested. Specifically, Garner claims there is no support for on the issue of payment. Garner's affidavit stated he made the order of sale on the collateral or for “assistance to take the $300 payments each month, but did not specify that the money or any balance thereof remaining unpaid out of any payments were on the note at issue. Garner did not quantify other property of the defendant.” The motion for summary the total amount of payments allegedly made or provide any judgment requested foreclosure. Rule 309 establishes what supporting documentation. Fidelity objected that there were a judgment for foreclosure is to be. See TEX.R. CIV. P.

no pleadings to support a payment defense and the trial court 309. The trial court's order tracks the language of Rule 309.

sustained the objection.

Garner's second issue is overruled.

*861 [18] [19] Payment is an affirmative defense that In his sixth issue, Garner argues the attorney's fees award was must be specifically pleaded. See TEX.R. CIV. P. 94; Tarrant improper because summary judgment should not have been County Hosp. Dist. v. GE Automotive Serv., Inc., 156 S.W.3d granted. Because we have concluded the trial court did not 885, 896 n. 13 (Tex.App.-Fort Worth 2005, no pet.). The party err in granting the summary judgment, we need not reach this asserting an affirmative defense bears the burden of proving remaining issue. Garner's sixth issue is overruled.

its elements. See Compass Bank v. MFP Financial Serv., Inc., 152 S.W.3d 844, 850 (Tex.App.-Dallas 2005, pet. denied).

Having resolved all of Garner's issues against him, we affirm Rule 95 requires the party claiming the defense of payment the judgment of the trial court.

to “file with his plea an account stating distinctly the nature of such payment, ... failing to do so, he shall not be allowed to prove the same, unless it be so plainly and particularly All Citations described in the plea as to give the plaintiff full notice of the character thereof.” TEX.R. CIV. P. 95; Mays v. Bank One, 244 S.W.3d 855 N.A., 150 S.W.3d 897, 899 (Tex.App.-Dallas 2004, no pet.).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)

Testimony of employees of owner of oil and gas lease would be treated as that of interested 809 S.W.2d 652

witnesses for purposes of summary judgment Court of Appeals of Texas, motion, even though owner was not party Amarillo.

to suit brought by company to which owner Joe W. HAYES, Ty M. Sparks, Cecil had executed “farm out” agreement obligating Meadows, and Susan Krehbiel, Appellants, company to drill test well upon pooled unit v. seeking declaration that release executed by owner was result of mistake; interests of E.T.S. ENTERPRISES, INC., Appellee.

owner and of company were similar. Vernon's No. 07–90–0073–CV. | May 9, 1991. Ann.Texas Rules Civ.Proc., Rule 166a. | Rehearing Overruled June 5, 1991.

1 Cases that cite this headnote Party to which owner of oil and gas lease had executed “farm out” agreement obligating party to drill test well upon [3] Judgment pooled unit brought declaratory judgment action seeking Weight and sufficiency declaration that owner's release of oil and gas lease was In case in which summary judgment is sought, ineffective as result of mistake. The 31st Judicial District conditions authorizing consideration of, and Court of Hemphill County, Grainger W. McIlhany, J., entered decision upon, testimony of interested witness summary judgment in favor of party. Mineral interest owners require that such evidence be uncontradicted, appealed. The Court of Appeals, Boyd, J., held that: (1)

clear, direct and positive, free of circumstances summary judgment evidence was sufficient to establish that tending to discredit or impeach, readily execution of release was result of mistake, and (2) owners of controverted, and such testimony is especially mineral interests did not detrimentally change their position entitled to reliance where party opposing in innocent reliance upon mistaken release executed by owner summary judgment had means and opportunity of oil and gas lease.

of disproving testimony but did not do so.

Affirmed. 8 Cases that cite this headnote

Poff, J., dissented and issued an opinion.

[4] Judgment

Weight and sufficiency

Testimony of interested party as to what that West Headnotes (7) witness knew or intended to do or as to witness'

state of mind does no more than raise issue of [1] Appeal and Error fact and does not support summary judgment.

Reasons for Decision

3 Cases that cite this headnote Where trial court did not specify which of plaintiff's theories was relied upon for grant of [5] Judgment

summary judgment, summary judgment would Landlord and tenant

be affirmed on appeal if any of theories advanced were meritorious. Vernon's Ann.Texas Rules Testimony of employees of owner of oil and gas Civ.Proc., Rule 166a. lease was sufficient summary judgment evidence to support finding that owner mistakenly and 2 Cases that cite this headnote inadvertently prepared, executed and sent for filing release of oil and gas leases; employee [2] Judgment of owner testified that he would not have Landlord and tenant signed release had he known of farm out agreement and that this was only such mistake

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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)

during employee's employ with owner. Vernon's Enterprises, Inc. We disagree and affirm the judgment of the Ann.Texas Rules Civ.Proc., Rule 166a. trial court.

Cases that cite this headnote Appellants own an undivided mineral interest in the west one-

half (W/2) of Section 4, Block Z–1, ACH & B Survey in [6] Contracts Hemphill County, Texas (the Property). On April 2, 1982, Mistake Cecil Meadows and wife Emma Jean Meadows, executed an oil and gas lease to Tom L. Scott, Inc., covering the To be entitled to equitable relief on ground of Property. On May 14, 1982, this lease was conveyed to the unilateral mistake in contract action, party must Pogo Producing Company (Pogo).

show that mistake was of so great consequence that to enforce contract as made would be On November 30, 1983, the Meadows conveyed a 1.5/320 unconscionable, that mistake related to material mineral interest to appellant Joe W. Hayes, and a like feature of contract, that mistake was made interest to appellant Ty M. Sparks. On September 11, 1986, regardless of exercise of ordinary care, and that Hayes conveyed a .75/320 mineral interest to appellant Susan parties could be placed in status quo in equity Krehbiel (nee Martha Susan Hayes).

sense that rescission would not result in prejudice to other party except for loss of bargain.

On February 20, 1985, Pogo executed a “farm out” agreement 3 Cases that cite this headnote to appellee by the terms of which appellee was obligated to drill a test well upon a pooled unit which included all of Section 4. Appellee commenced drilling operations upon the [7] Release tract on or about April 5, 1985, and completed a producing Mistake

well on December 27, 1985.

Owners of mineral interests did not detrimentally change their position in innocent reliance upon On May 14, 1985, during the course of appellee's drilling mistaken release executed by owner of oil and operations, Pogo executed a release of the oil and gas gas leases, and thus owner of oil and gas leases lease. Subsequently, on June 24, 1985, by an instrument was entitled to revoke the release. denominated as a “Revocation and Rescission of Release of Oil and Gas Leases,” which recited it had not been its intent 1 Cases that cite this headnote to release its oil and gas lease, Pogo sought to revoke and rescind the release. By an instrument dated March 19, 1986, but which recited its effective date as of October 2, 1985, and which recited it was made without express or implied Attorneys and Law Firms warranty of title, Pogo assigned the lease to appellee. In the transfer, Pogo retained an overriding royalty interest equal *653 Robert L. Templeton & Associates, Amarillo, Joe W.

to the difference between all existing leasehold burdens of Hayes, Ty M. Sparks, Canadian, for appellants.

record and 25% of 8/8 production.

Nickum and Naylor, Ronald D. Nickum, Amarillo, for appellee. In the action giving rise to this appeal, appellee sought a declaratory judgment that Pogo's release was ineffective *654 Before REYNOLDS, C.J., and BOYD and POFF, JJ. because it was the result of a mistake. They further alleged even if Pogo's release was effective, appellee had obtained a Opinion limitation title to an oil and gas leasehold estate pursuant to BOYD, Justice. Texas Civil Practice & Remedies Code Annotated § 16.024 (Vernon 1986) (three year statute). Appellee's successful In one point, appellants Joe W. Hayes, Ty M. Sparks, Cecil motion for summary judgment was also based upon these Meadows and Susan Krehbiel say the trial court erred in grounds. granting a summary judgment in favor of appellee E.T.S.

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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)

Appellants contend the summary judgment should not have been granted on either ground. Initially, they contend that As summary judgment evidence and pertinent to its mistake any mistake in the execution of the release was a unilateral ground, appellee attached excerpts from the deposition of one on Pogo's part and cannot support either cancellation Kenneth Good, an employee of Pogo, taken in the instant or rescission. Alternatively, they say, if such a unilateral case. In that deposition, Good testified that, although he mistake is to be the basis of the relief sought, it must meet the intended to sign the release at the time he did so, he requirements of a “remedial mistake.” Those requirements do would not have signed it had he known of the farmnot exist, they continue, because (a) there exists a genuine out agreement to appellee and that well drilling operations issue of material fact whether the execution and filing of were proceeding upon the tract in question. He recited the the release was in fact a mistake, (b) appellee offered no preliminary procedures that were standard in his company summary judgment proof that to enforce the release would and said that, by the time a release was submitted to him, his be unconscionable, and (c) there exists a genuine issue of signature was a mere formality as the release had been cleared material fact whether Pogo exercised ordinary care in the by those below him responsible for its accuracy. execution and filing of the release.

He also stated this was the only time such a mistake had been With regard to the limitation contention, appellants contend made by Pogo in the twelve years of his employment, and that appellee did not prove the unbroken chain of title from it was made because the information about the farm-out and the sovereign to appellee which is a requisite of the three the well drilling was not included. Had he known about this year limitation statute. They also contend that the effect of missing information, he would not have signed and “would the release was to make appellee and appellants co-tenants, also determine how the error occurred and have the situation and a fact question exists as to whether appellee repudiated corrected.” He averred that there was absolutely nothing to appellants' title. be gained by Pogo by executing the release where a farm-

out existed and drilling had commenced. He characterized the [1] The rules governing the decision of appeals from signing of the release as a “mistake. A clerical error. A fluke.” summary judgments are well established. Under Rule 166a of the Texas Rules of Civil Procedure, 1 the summary *655 The summary judgment motion was also supported by judgment movant must establish there is no genuine issue the affidavit of John W. Chisholm, appellee's senior vice of fact and the movant is entitled to judgment as a matter president in charge of administration of oil and gas leases, of law. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986); production, marketing and well operations. He averred that City of Houston v. Clear Creek Basin Authority, 589 S.W.2d the well on the premises was spudded on April 5, 1985, and 671, 678 (Tex.1979). We are required to view summary was completed on December 27, 1985, with an absolute open judgment evidence in the light most favorable to the non- flow potential of 17,500,000 cubic feet of gas per day. movant and resolve any doubt of the existence of a genuine issue of material fact against the movant. Nixon v. Mr. In opposition to appellee's motion, and relevant to the mistake Property Management, 690 S.W.2d 546, 548–49 (Tex.1985); contention, appellants advanced deposition testimony of Gina Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984). Gresham taken in the Randall County case. Ms. Gresham was Since the trial court did not specify which of appellee's also an employee of Pogo. In that testimony, she recounted theories was relied upon for summary judgment, it will in some detail the procedures followed by Pogo in the be affirmed on appeal if any of the theories advanced are preparation of releases of oil and gas leases and the company's meritorious. Rogers v. Ricane Enterprises, Inc., 772 S.W.2d endeavors to ensure their accuracy. She said the farm-out 76, 79 (Tex.1989); Carr v. Brasher, 776 S.W.2d 567, 569 agreement was not in Pogo's file on the premises at the time it (Tex.1989). was checked by Cathy Zella, the employee designated to do so, nor was it there at the time the release was executed.

Another case styled Pogo Producing Company v. Cecil Meadows et al., No. 32,319–A in the 47th District Court of Under Pogo's standard operating procedure at the time, had Randall County, involved the same facts and legal issues in the information about the agreement been in the file, no controversy in this case. Although appellee was not a party to release would have been prepared. She said the release that suit, the trial court allowed depositions taken in that case “was an error, ‘big time.’ You don't prepare a release on to be used in this one. a producing lease.” After the execution of the release was

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discovered, she discussed the mistake with everyone in her question whether the execution and filing of the release was department, “and built up better procedures.” She also said, a mistake. “We just don't prepare releases like we used to.” In addition, she told Bruce May, another employee of Pogo, that he was [2] Parenthetically, appellants contend specifically that partly responsible for the error, because “the obligation dates Good's testimony and inferentially, the testimony of the on these instruments (the farm-out agreements) were such that other employees of Pogo should be considered as that of he should have taken immediate action to *656 note the files an interested witness and judged by that standard. Although with this information. And I'm sure I made him aware of that.” Pogo is not a party to this suit, it is a party to another suit which will, apparently, determine the effect of the release Appellants also presented excerpts from deposition testimony insofar as its interests are concerned. However, because of of Bruce May taken in the other suit. In that testimony, the similarity of Pogo's interests to those of appellee, we will May said that Ms. Gresham had told him he was partially consider the testimony of its employees in this case as that of responsible for the execution of the release and that Cathy interested witnesses. See Martin v. Cloth World of Texas, Inc., Zella was also responsible because she prepared the release. 692 S.W.2d 134, 135–36 (Tex.App.—Dallas 1985, writ ref'd He said that “HBP” was the code placed in files held by n.r.e.); Hunsucker v. Omega Industries, 659 S.W.2d 692, 697 production but it had not been placed in the file in question. (Tex.App.—Dallas 1983, no writ). That code should have been inserted in files where a lease had been farmed out and a well spudded. However, May In pertinent part, Rule 166a(c) provides that a summary did not feel responsible because he felt Pogo should not rely judgment may be based upon the testimony of an exclusively upon code symbols in the files but should consult interested witness, “if the evidence is clear, positive and with the district land office to determine lease activity. direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted.”

In their response, appellants also referred to portions of deposition testimony of Good taken in the suit to which Pogo Prior to an amendment effective January 1, 1978, the rule was a party. In those portions, Good said he was the only governing summary judgments did not expressly authorize person who signed releases for Pogo. When a release was put consideration of the testimonial evidence of an interested on his desk, he did not make an independent investigation witness. However, the Supreme Court's construction of to determine if it should be executed since he had given that the rule had authorized use of the interested witness' responsibility to the manager of land administration. When evidence, under certain conditions. Gibbs v. General Motors he received releases to be executed, they were accompanied Corporation, 450 S.W.2d 827 (Tex.1970); Great American by a memorandum that “basically explains to me that the R. Ins. Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d 41, 47 lease has expired and that it's an order to execute the release.” (Tex.1965). Whenever Good received such a memorandum, he assumed that whatever steps that needed to have been taken to verify [3] In the Great American case, the Court set out the the correctness of the release had been taken. At the time in conditions authorizing consideration of, and decision upon, question, that verification would have been the responsibility the testimony of an interested witness. Those conditions of Sherri Mills, Cathy Zella, or Bruce May. He also stated that require that such evidence be uncontradicted, clear, direct and when he signed the release, he intended to do so. positive, free of circumstances tending to discredit *657 or impeach, and readily controverted. Great American R. Ins.

In asserting the evidence is insufficient to support summary Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d at 47. The judgment, appellants place particular reliance upon Good's Court also commented that such testimony was especially testimony. They argue that the testimony indicates that entitled to reliance where the opposite party had the means Good's execution of the release was an intentional act, not and opportunity of disproving the testimony but did not do a mistake for which relief might lie. In support of that so. Id. position, they especially point out, and rely upon, testimony that no one tricked Good into signing the release and when [4] Parenthetically, it was also established as a general rule he signed it, he intended to surrender Pogo's interest in the that the testimony of an interested party as to what that witness lease. In the alternative, they posit that, even viewed in a light knew or intended to do or as to the witness' state of mind does most favorable to appellee, Good's testimony creates a fact no more than raise an issue of fact and would not support

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summary judgment. The rationale for that qualification is [5] That question is one involving matters susceptible of obvious, i.e., the mental workings of an individual's mind objective proof or disproof, such, among others, as whether a are matters about which adversaries have no knowledge or release was properly due under the lease, whether the typing ready means of confirming or controverting. See Lewisville and forwarding of the release for signature, if a release was State Bank v. Blanton, 525 S.W.2d 696 (Tex.1975); James T. not properly due, was the result of a breakdown in standard Taylor, Etc. v. Arlington Ind. School Dist., 160 Tex. 617, 335 operating procedures, and if so, what was the defect in those S.W.2d 371, 376 (1960); Northrup v. O'Brien, 474 S.W.2d procedures that caused the forwarding of the release for 614, 618 (Tex.Civ.App.—Dallas 1971, no writ). execution.

Those conditions and qualifications are the tests which Texas It is true that the only testimony bearing upon these matters courts have traditionally applied to an interested witness' comes from employees of Pogo. However, that testimony testimony in determining whether a fact is established or is clear, direct, and positive. It is uncontroverted and there negated as a matter of law, whether in summary judgment are no circumstances in evidence tending to discredit or proceedings or in jury or non-jury trials. Great American R. impeach their testimony. In sum, these proofs, in the words Ins. Co. v. San Antonio Pl. Sup. Co., supra; Valley Stockyards of the Court in the seminal case of Channel 4, KGBT v. Co. v. Kinsel, 369 S.W.2d 19, 20 (Tex.1963); James T. Briggs, 759 S.W.2d 939, 942 (Tex.1988) when it upheld the Taylor, Etc., v. Arlington Ind. School Dist., 335 S.W.2d at sufficiency of similar summary proof, “go far beyond state of 376; Owen Development Company v. Calvert, 157 Tex. 212, mind to establish an objective explanation for the mistake.” 302 S.W.2d 640, 642 (1957); McGuire v. City of Dallas, 141 See also Republic Nat. Leasing Corp. v. Schindler, 717 Tex. 170, 170 S.W.2d 722, 728 (1943); Simonds v. Stanolind S.W.2d 606, 607 (Tex.1986); *658 Americana Motel, Inc. Oil & Gas Co., 134 Tex. 332, 136 S.W.2d 207, 208 (1940). v. Johnson, 610 S.W.2d 143 (Tex.1980); Great American R.

Ins. Co. v. San Antonio Pl. Sup. Co., supra; American Quality The present rule formally recognizes the admissibility of the Roofing, Inc. v. Ipock, 730 S.W.2d 470, 472 (Tex.App.— testimony of an interested witness and carries forward the Fort Worth 1987, no writ); Amara v. Lain, 725 S.W.2d 734, same qualifications and conditions previously explicated by 736 (Tex.App.—Fort Worth 1986, no writ); Metro Siding court decisions. See Lofton v. Texas Brine Corp., 777 S.W.2d Distributors v. Master Shield, Inc., 717 S.W.2d 455, 457 384, 386 (Tex.1989); Beaumont Enterprise & Journal v. (Tex.App.—Fort Worth 1986, writ ref'd n.r.e.); Duncan v. Smith, 687 S.W.2d 729, 730 (Tex.1985); Allied Chemical Horning, 587 S.W.2d 471, 474 (Tex.Civ.App.—Dallas 1979, Corp. v. DeHaven, 752 S.W.2d 155, 157–58 (Tex.App.— no writ); Longoria v. Texaco, Inc., 649 S.W.2d 332, 335–36 Houston [14th Dist.] 1988, writ denied). (Tex.App.—Corpus Christi 1983, no writ).

The decision of the sufficiency of the testimony of interested In support of their proposition that the evidence was witnesses to support a summary judgment, of necessity, must insufficient to establish mistake as a matter of law, appellants be decided on a case-by-case basis bearing in mind the place considerable reliance upon Ladd Petroleum Corp. v. requirement of the rule and the teachings of the above cases. Eagle Oil & Gas Co., 695 S.W.2d 99 (Tex.App.—Fort Worth In this case, appellants assert and appellee does not challenge, 1985, writ ref'd n.r.e.). In that case, as relevant here, the court that Good understood he was executing a release at the time was considering a contention that the testimony of Ladd's he signed it. Thus, the question of his intent or mental process witnesses, in a jury trial, was sufficient to establish as a matter in actually executing the instrument is not in issue here. of law that the release of the oil and gas lease involved there was filed by mistake. In that respect, admittedly in dictum, What is in issue, in the words of appellee's motion, is whether: the court said the jury in the case was entitled to weigh the testimony of the witness and made the blanket statement that E. Subsequent to the execution of the farmout agreement “[t]he testimony of an interested witness does no more than from Pogo to E.T.S., and while ETS was in the process raise a fact issue.” Id. at 107. of drilling a test well on Section 4, an employee of Pogo mistakenly and inadvertently prepared, executed and sent That general statement, as applied in a summary judgment for filing a document entitled “Release of Oil and Gas proceeding is not only in derogation of the express provision Leases”.... of Rule 166a(c) set out above, but is also in derogation of the well established law prior to the inclusion of the provision in

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Rule 166a. As such, the case cannot be considered as authority release and to show that the mistake would have been made on that point. Parenthetically, the Ladd case is the only Texas regardless of the exercise of ordinary care. case cited by either party which, even peripherally, deals with a release of an oil and gas lease because of a unilateral mistake *659 We do not think the elements set out in the Roland and that case is not sufficiently analogous to be helpful in our case, particularly the one requiring a showing that the mistake decision. would have occurred regardless of the exercise of ordinary care, are applicable here. Indeed, in James T. Taylor, Etc. v.

The summary judgment evidence was sufficient to establish Arlington Ind. School Dist., supra, the Court had occasion that Good's admitted execution of the release was the result to discuss at some length the effect of negligence on the of a mistake. Having made that determination, we must next part of one claiming equitable relief for his own mistake. consider the viability of appellants' invocation of what they After surveying relevant contract cases, the Court concluded, denominate as the rule of “remedial mistake.” Concomitantly “We think the authorities, both from this state and from with that invocation, appellants argue even if the release was other jurisdictions, clearly indicate that in cases of this kind executed by unilateral mistake, appellee is not entitled to (contract cases) ordinary negligence will not necessarily bar relief because it has not satisfied the requirements of that rule. the granting of equitable relief.” James T. Taylor, Etc. v.

Arlington Ind. School Dist., 335 S.W.2d at 375.

In support of their position that appellee is not entitled to relief, appellants place primary reliance upon the case of In additional explication the Court stated that it is only when Roland v. McCullough, 561 S.W.2d 207 (Tex.Civ.App.— negligence amounts to such carelessness or lack of good San Antonio 1977, writ ref'd n.r.e.). In that case, Roland faith as to amount to a violation of a positive duty will had purchased a 200–acre tract from McCullough. The equitable relief be denied the supplicating party. Id. En route appeal arose from a summary judgment granting McCullough to that conclusion, the Court quoted with approval a statement recovery on two promissory notes as well as foreclosure of a from Edwards v. Trinity & B.V. Ry. Co., 54 Tex.Civ.App. deed of trust on the 200–acre tract. 334, 118 S.W. 572 (1909, writ ref'd), that “[e]ven a clearly established negligence may not of itself be a sufficient ground The land purchased by Roland apparently had no access to for refusing relief, if it appears that the other party has not an interstate highway (IH 10) close by. Roland contended been prejudiced thereby.” Id. The Court also commented that that although McCullough did not tell him there was access the elements to show entitlement to relief were generally fact to IH 10, he did not tell him there was no such access. questions unless they “can be resolved by the court under the He also contended that McCullough furnished him with a undisputed evidence.” Id. 335 S.W.2d at 376. Although the map of the land from which it could be reasonably inferred Taylor decision resulted from a suit involving a construction access existed; and, at the time Roland originally inspected contract, its teachings are also applicable to a case such as the property, while IH 10 was under construction, he entered this one. the property from IH 10.

A study of Roland, in which all of the elements set out in [6] Relevant to this case, the court held that Roland was not that case have been strictly applied, as well as other similar entitled to equitable relief on the ground of unilateral mistake. cases, reveals that these are instances arising out of contracts To be entitled to such relief, said the court, a party must show: based upon an offer and acceptance, a negotiation, mutuality (1) the mistake is of so great consequence that to enforce the of consideration, and performance. Once a bargain has been contract as made would be unconscionable; (2) the mistake reached in those instances, it would clearly be inequitable relates to a material feature of the contract; (3) the mistake to allow one party relief on the basis of a unilateral mistake must have been made regardless of the exercise of ordinary without the necessity of pleading and proving each of the care; and (4) the parties can be placed in status quo in the enumerated elements. This cause, of course, does not arise equity sense, i.e., rescission must not result in prejudice to the from a suit in which a party is suing another party seeking other party except for the loss of his bargain. Id. at 213. relief from such a negotiated contract.

In assuming the applicability of this doctrine to the instant In this instance, we think the proper rule to apply is that case, appellants argue the summary judgment evidence is stated in Armbruster v. Thetis Energy Corp., 675 P.2d 476 insufficient to show the unconscionability of enforcing the (Okl.App.1983). In that case, a lessee sought cancellation of a

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release of an oil and gas lease executed by the lessee under the mistaken belief that the lease had expired. In such a situation, POFF, Justice, dissenting.

the court held the lessee was entitled to cancellation of the I respectfully dissent from the affirmance of the granting of release unless (1) the cancellation would offend the rights of the summary judgment. I cannot agree with the majority's an innocent purchaser for value or (2) another party in good determination that the evidence offered by the employees of faith and in innocent reliance, i.e., reliance without notice or Pogo was readily controvertible. I do agree that the Pogo knowledge of facts which would suggest the probability of employees are interested witnesses, for Pogo, as the owner an invalid release, had made a position alteration that could of an overriding royalty in the Meadows lease, has a direct not be reversed without significant prejudice. Id. at 478. See interest in the outcome of this suit. If the contested release is also Mobil Oil Corp. v. Flag–Redfern Oil Co., 522 P.2d 651 held to be a valid release, Pogo will lose its overriding royalty (Okl.App.1973).

interest.

[7] In our case, appellants admit they did not learn of the I also agree with the majority that the question to be resolved existence of the release until sometime during the summer of is not the knowledge or intent of Mr. Good, the signator of 1985, which would be after Pogo filed the “Revocation and the release, but rather the question to be resolved is “did an Rescission of Oil and Gas Leases.” In deposition testimony, employer of Pogo mistakenly and inadvertently prepare the appellant Hayes said he could not recall if he relied on the release for Good's signature.” I disagree that the question is release; however, he did not try to lease, sell, or develop susceptible of objective proof or disproof.

his interest. When asked if he had suffered any detriment by the release, he answered, “I would have to think about that.”

In explaining the basis for preparing the release, Pogo's Appellant Meadows said he did not rely on the release, or employees stated in their depositions that the Meadows lease lease or develop his interest. Appellant Sparks said he did not file did not contain the Pogo assignment to E.T.S. Enterprises, “tout” his mineral interest to third parties to lease, was not nor did the file contain any information concerning the contacted by third parties to lease, and did not attempt to drill commencement of drilling on the Meadows lease. The sum on the acreage himself. Appellant Susan Krehbiel's interest of Pogo's evidence was that the Meadows lease file indicated was not conveyed to her by appellant Hayes until September a dormant lease, which was subject to being released. Pogo's 11, 1986. The summary judgment evidence is sufficient to employees also deposed that the failure to file an assignment, show that appellants made no detrimental position change in and the failure to note in a lease file drilling activity or innocent reliance upon the Pogo release.

production was a departure from Pogo's standard operating procedure.

In Mobil Oil Corp. v. Flag–Redfern Oil Co., 522 P.2d at 656, the court ruminated, *660 “In the instant case, a mistake The majority opines that, whether the release was properly of fact has occurred, which was simple human error. The due, whether the preparation of the release was the result principle of equity can allow this to be rectified, as the of a breakdown in standard operating procedures and what defendant Flag–Redfern Oil Co. was not damaged by such defect in those procedures caused the release to be signed, are mistake and would receive a great advantage if the results matters susceptible of objective proof or disproof. I do not were otherwise.” That summation is applicable to this case, agree, for I fail to see how Hayes et al. could have objectively particularly since the negligence, if any, in preparing and disproved what knowledge Pogo's employees possessed at executing the release was that of a third party and not that of the time of the preparation of the release, nor do I envision appellee.

any manner in which Hayes could recreate the status of the Meadows lease file as it existed at the time in question.

Since we have held that appellee is entitled to its judgment The basis for the preparation of the release and the facts on the basis discussed above, and since one of its theories upon which these actions were taken lies solely within the supports the judgment, the necessity of discussing appellee's knowledge of the actors, the interested witnesses. The truth or limitation theory is obviated. Appellants' point of error is falsity of E.T.S. Inc.'s evidence stands solely on the credibility overruled and the trial court judgment is affirmed.

of the interested witnesses. An affidavit by an interested witness to a matter which the adversaries have no knowledge or real means of confirmation does no more than raise an issue POFF, J., dissents.

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been completely erased) was such that it could have been of fact. Lewisville State Bank v. Blanton, 525 S.W.2d 696, disputed by third parties testifying on Briggs' behalf.

(Tex.1975).

I do not find the actions of Pogo's employees in allegedly Not being present at Pogo's office at the time of the failing to file or note the E.T.S. assignment, to be a technical preparation of the release and not having access to what mistake subject to investigation, or possible disproof by facts and knowledge was possessed by Pogo's employees extraneous sources. I find the mistake and the explanation to when they prepared the release, Hayes had no basis upon be more similar to the mistake made in James T. Taylor, Etc.

which to dispute their story. The only eyewitnesses are Pogo v. Arlington Ind. School Dist., 160 Tex. 617, 335 S.W.2d 371 employees. All physical or documentary evidence was under (1960); wherein a contractor attempted to explain that his bid the exclusive control of Pogo. In this case, I can envision was incorrect, due to his failure to properly carry a digit while no outside or independent source Hayes could have mustered adding his cost and preparing his bid. Taylor's employee's to controvert Pogo's explanation for the preparation of the affidavit setting out the mistake was held not to be sufficient release. The facts presented by Pogo's employees were not summary judgment proof. The court opined the affidavit was subject to outside objective verification nor was there a evidence from an interested party which could not be readily basis upon which to offer opinion or expert testimony. I controverted if untrue. In such cases, the credibility of the envision Hayes' only option to have been the filing of a witness is presented and a summary judgment is improper.

counter affidavit disputing E.T.S. *661 Inc.'s evidence.

Evidence resting solely on the credibility of the interested Such a counter affidavit would have at best been based on witness is more effectively tested in court at trial than by assumptions and conjecture and at worst it would have been sterile affidavits at a summary judgment hearing. The trier perjurious.

of fact is uniquely qualified to observe the demeanor of the witnesses as well as his responses, and to test the credibility The majority finds E.T.S.'s summary judgment evidence of the witnesses.

similar to that summary judgment proof offered in Channel 4, KGBT v. Briggs, 759 S.W.2d 939 (Tex.1988), and concludes I therefore cannot agree that the evidence offered by the that the evidence goes far beyond state of mind to establish interested witnesses was sufficient evidence upon which to an objective explanation for the mistake. In Briggs, which grant the summary judgment. I therefore cannot join in the was a libel suit, the Supreme Court found the technical majority opinion.

procedures for the production of the telecast (such procedures being claimed by Channel 4 to be the basis for the technical mistake) to be subject to investigation. The technical process All Citations

(by which Channel 4 alleged the news special was dubbed over a political file tape from which Briggs' image had not 809 S.W.2d 652

Footnotes 1 Unless otherwise specified, future reference to rule numbers are to those rules contained in the Texas Rules of Civil Procedure.

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Henry S. Miller Co. v. Stephens, 587 S.W.2d 491 (1979)

Where contract for sale of real estate did not contain any provision obligating the purchaser 587 S.W.2d 491

to satisfy the vendor's creditors or otherwise Court of Civil Appeals of Texas, Dallas.

prevent the vendor's loss of title, vendor was not HENRY S. MILLER CO., Appellant, relieved of requirement that he hold title at time v. of trial of his specific performance action.

Walter H. STEPHENS, Appellee.

2 Cases that cite this headnote No. 19951. | Aug. 14, 1979. | Rehearing Denied Sept. 19, 1979.

Vendor brought suit for specific performance of a real estate Attorneys and Law Firms contract of sale. The 101st District Court, Dallas County, E. H. Griffin, J., granted specific performance and purchaser *491 Harold Hoffman, Donald C. McCleary, Wynne & appealed. The Court of Civil Appeals, Akin, J., held that Jaffe, Dallas, for appellant. as contract did not contain any provision obligating the Bill C. Hunter, Hunter, Stewart, Salzberger & Vineyard, purchaser to satisfy vendor's creditors or otherwise prevent Dallas, for appellee.

the vendor's loss of title, vendor was not relieved of the requirement that he hold title at the time of the trial of his Before AKIN, ROBERTSON and HUMPHREYS, JJ. specific performance action; thus, the trial court's judgment for specific performance was erroneous. Opinion

AKIN, Justice.

Reversed and remanded.

This is an appeal by Henry S. Miller Company, the vendee, from a judgment granting specific performance of a real estate West Headnotes (3) contract of sale in favor of the vendor, appellee Walter H.

Stephens. Appellant Henry S. Miller Company contends that the trial court erred in granting specific performance because [1] Specific Performance the vendor did not hold title to the land at the time of trial. We Nature and Grounds of Duty of Plaintiff agree with appellant and reverse the trial court's judgment.

When a party seeks specific performance, he is required at all times to remain ready, willing and The contract in question was for the sale of approximately able to perform his contractual responsibilities 490 acres of land in Travis County, Texas, between Stephens according to terms of contract. as vendor and Henry S. Miller Company as vendee. *492 The contract was executed on September 13, 1973, and the 3 Cases that cite this headnote sale was to close on or before July 1, 1974. Henry S. Miller Company refused to close, however, and appellee Stephens [2] Specific Performance brought suit for specific performance. Appellee held the land Sufficiency of Title of Vendor for approximately two years after the closing date. Six weeks prior to trial, however, appellee lost title to the land through Specific performance will not usually be ordered a foreclosure sale and title was transferred to Travis Lake for vendor unless he has legal title to property at Properties, Ltd. Travis Lake Properties was not a party to time of trial.

this lawsuit. Despite appellee's lack of title and the absence 1 Cases that cite this headnote of Travis Lake Properties as a party to the suit, the trial court granted specific performance of the land sale contract and ordered appellant Henry S. Miller Company to pay the [3] Specific Performance contract purchase price of $1,446,531.00.

Sufficiency of Title of Vendor

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Henry S. Miller Co. v. Stephens, 587 S.W.2d 491 (1979)

different proposition that the vendor will be excused if the [1] [2] When a party seeks specific performance, he is loss of title occurred as a result of a contingency or obligation required at all times to remain ready, willing and able to assumed directly by the vendee. In Fant v. Howell, supra, perform his contractual responsibilities according to the terms both parties knew at the time of contract that third parties of the contract. Kluck v. Leuschner, 70 S.W.2d 768, 769 were holding adverse possession to the land. After the vendee (Tex.Civ.App. Waco 1934, writ ref'd) (Per Alexander, J.).

took possession of the land, the third parties' title by adverse Both parties agree that specific performance will not usually possession ripened. The court held that the vendor was not be ordered for the vendor unless he has legal title to the precluded from bringing an action for specific performance, property at the time of trial. E. g., Buhler v. McIntire, despite the loss of title to the land, because the vendee was 365 S.W.2d 237, 239 (Tex.Civ.App. Austin 1963, writ ref'd responsible for the loss of title through adverse possession.

n.r.e.); Clifton v. Charles, 53 Tex.Civ.App. 448, 116 S.W.

In Manley v. Holt, supra, the vendee expressly assumed the 120, 122 (1909, writ ref'd). Appellee maintains, however, obligation to pay the vendor's creditors. Foreclosure resulted that an exception to these rules applies if the vendor loses when the vendee failed to make these payments. The Holt title after the closing date but prior to trial and the vendor's court also held that the vendor was not precluded from loss was due to a contingency, known to both parties at the bringing an action for specific performance because the loss time of contract, which the vendee caused or could have of title was caused by the vendee's failure to carry out his prevented. In this respect, appellee argues that Henry S.

obligations.

Miller Company failed to close the sale and refused to make a cash payment to appellees which was due at the closing.

[3] The contract before us in this case does not contain Appellee claims that this payment was designed to provide any provision obligating the vendee to satisfy the vendor's the funds required to prevent foreclosure and that Miller also creditors or otherwise prevent the vendor's loss of title.

failed to take any other steps to prevent the foreclosure. Thus, Consequently, vendor was not relieved of the requirement appellee argues that these failures on appellant's part directly that he hold title at the time of the trial of his specific caused the foreclosure, and therefore appellee falls within the performance action. Since appellee did not hold title, the exception to the requirement that a vendor seeking specific trial court's judgment for specific performance was error.

performance must hold title at the time of trial. In support of Accordingly, the judgment of the trial court is reversed. In its position, appellee relies on Fant v. Howell, 410 S.W.2d the interest of justice, we remand rather than render, so that 294 (Tex.Civ.App. Austin 1966, writ dismd.), and Manley plaintiff may plead and prove whatever damages *493 that v. Holt, 161 S.W.2d 857 (Tex.Civ.App. Amarillo 1942, writ he may have. Morrow v. Shotwell, 477 S.W.2d 538, 542 ref'd w.o.m.).

(Tex.1972).

These cases do not support the proposition that a vendor seeking specific performance will be excused from holding All Citations

title at the time of trial if the vendee Could have prevented the vendor's loss of title. They stand for the significantly 587 S.W.2d 491

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Hudson v. Wakefield, 711 S.W.2d 628 (1986)

substantially the same as those involved in the first appeal.

711 S.W.2d 628

Supreme Court of Texas. 125 Cases that cite this headnote Robert HUDSON, et al., Petitioners, v. [3] Appeal and Error Marion WAKEFIELD, et al., Respondents. Scope and Extent of Review Appeal and Error

No. C–4463. | June 25, 1986. Directions in Remittitur | Rehearing Denied July 16, 1986.

When Supreme Court remands case and limits Purchaser sought specific performance of contract for sale subsequent trial to particular issue, trial court of property. Following judgment in favor of vendors, the is restricted to determination of that particular Court of Appeals, 635 S.W.2d 216, affirmed. The Supreme issue, and, in subsequent appeal, instructions Court, 645 S.W.2d 427, reversed and remanded. The District given to trial court in former appeal will be Court, Freestone County, Bournais, J., entered judgment in adhered to and enforced. favor of vendors after allowing trial amendment. The Waco 53 Cases that cite this headnote Court of Appeals, Tenth Supreme Judicial District, affirmed. The Supreme Court, Gonzalez, J., held that Supreme Court's reversal of initial summary judgment had not precluded [4] Appeal and Error amendment to assert additional defense. Extent of Review Dependent on Nature of Decision Appealed from

Affirmed. Appeal and Error Nature or Subject-Matter in General On review of summary judgment, appellate West Headnotes (5) courts are limited in consideration of issues and facts; movant is not required to assert every theory upon which he may recover or defend, [1] Appeal and Error but nonmovants are required, in written answer Former Decision as Law of the Case in or response to motion, to expressly present to General trial court all issues that would defeat movants' Appeal and Error rights to summary judgment, and, failing to do As Law of the Case so, nonmovants cannot later assign the issues as “Law of the case” doctrine is principle under error on appeal. which questions of law decided on appeal to 12 Cases that cite this headnote court of last resort will govern case throughout its subsequent stages.

[5] Appeal and Error

184 Cases that cite this headnote Amendments as to Pleadings and Parties Reversal of summary judgment granted in favor [2] Appeal and Error of vendors on the basis of breach of contract Former Decision as Law of the Case in by purchasers did not preclude vendors from General making trial amendment on remand in order to Doctrine of law of the case only applies to assert defense of fraud in the inducement. questions of law, to questions of fact, and does 28 Cases that cite this headnote not necessarily apply when either issues or facts presented at successive appeals are not

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Hudson v. Wakefield, 711 S.W.2d 628 (1986)

The trial court then rendered judgment non obstante veredicto Attorneys and Law Firms for the sellers. In an unpublished opinion, the court of appeals affirmed the judgment of the trial court. We affirm the *629 John W. Berkel, Houston, for petitioners.

judgment of the court of appeals.

Keils and Fulcher, W.A. Keils, Jr., Teague, for respondents.

The question is whether, under the “law of the case” doctrine, our remand of the cause to the trial court to determine whether “the return of the earnest money check because of OPINION

insufficient funds was such a material breach of the contract GONZALEZ, Justice. as to warrant sellers' repudiation of the same” precludes sellers' trial amendment and submission of issues on a theory This case involves the refusal of a bank to honor a check given of fraudulent inducement which would defeat the existence of as earnest money under a contract for the sale of land. The a valid contract. Purchasers argue that when we remanded the issue presented is whether, under the doctrine of the “law of case, the existence *630 of a valid contract became the “law the case,” our “limited remand” of this cause precluded the of the case;” therefore, the only issue which could be decided assertion of additional related legal theories or defenses. on remand was whether the contract breach was material.

Robert Hudson and Andy Wright (Purchasers) sued to enforce specific performance of a contract for the sale of real property owned by Marion and Jean Wakefield (Sellers). Law of the Case In the original proceeding, the trial court granted sellers'

[1] The “law of the case” doctrine is defined as that motion for summary judgment on the grounds that the principle under which questions of law decided on appeal instrument on which specific performance was sought never to a court of last resort will govern the case throughout attained the status of a contract because the check for earnest its subsequent stages. Trevino v. Turcotte, 564 S.W.2d 682, money was returned due to insufficient funds. The court of 685 (Tex.1978); Governing Bd. v. Pannill, 659 S.W.2d 670, appeals affirmed, holding that a condition precedent under the 680 (Tex.App.—Beaumont 1983, writ ref'd n.r.e.); Kropp v.

contract was that purchasers fulfill the requirements of the Prather, 526 S.W.2d 283 (Tex.Civ.App.—Tyler 1975, writ earnest-money provision. 635 S.W.2d 216. We reversed the ref'd n.r.e.). By narrowing the issues in successive stages judgments of the lower courts and remanded, holding that, of the litigation, the law of the case doctrine is intended to as a matter of law, the earnest-money provision was only a achieve uniformity of decision as well as judicial economy covenant. We then remanded the cause to the trial court to and efficiency. Dessommes v. Dessommes, 543 S.W.2d 165, determine whether “the return of the earnest money check 169 (Tex.Civ.App.—Texarkana 1976, writ ref'd n.r.e.). The because of insufficient funds was such a material breach of doctrine is based on public policy and is aimed at putting the contract as to warrant sellers' repudiation of same.” 645 an end to litigation. See Barrows v. Ezer, 624 S.W.2d 613, S.W.2d 427, 431 (Tex.1983).

617 (Tex.App.—Houston [14th Dist.] 1981, no writ); Elliott v. Moffett, 165 S.W.2d 911 (Tex.Civ.App.—Texarkana 1942, On remand, the case was fully litigated to a jury. Prior to writ ref'd w.o.m.).

submission of the charge, the trial court allowed sellers to file a trial amendment which asserted fraud in the inducement.

[2] The doctrine of the law of the case only applies to Purchasers objected to the trial amendment and to the court's questions of law and does not apply to questions of fact.

submission of issues thereon. The record, however, fails to Barrows, 624 S.W.2d at 617; Kropp, 526 S.W.2d at 285.

contain a statement of facts so that we cannot determine if Missouri K. & T. Ry. Co. v. Redus, 55 Tex.Civ.App. 205, purchasers objected to evidence of fraudulent inducement or 118 S.W. 208 (Dallas 1909, writ ref'd). Further, the doctrine if it was tried by consent. That court also allowed purchasers does not necessarily apply when either the issues or the to file a trial amendment alleging a new theory dealing with facts presented at successive appeals are not substantially ratification. The trial court then submitted several issues to the the same as those involved on the first trial. Barrows, 624 jury. Upon motion, the trial court disregarded two of the jury's S.W.2d at 617; Kropp, 526 S.W.2d at 285; Ralph Williams findings: one, that sellers had ratified the contract; and two, Gulfgate Chrysler Plymouth, Inc. v. State, 466 S.W.2d 639 that there had been no breach of contract by the purchasers.

(Tex.Civ.App.—Houston [14th Dist.] 1971, writ ref'd n.r.e.).

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Hudson v. Wakefield, 711 S.W.2d 628 (1986)

Thus, when in the second trial or proceeding, one or both of Tex. 618, 358 S.W.2d 557, 562 (1962). Thus, the context of a the parties amend their pleadings, it may be that the issues summary judgment proceeding is distinguishable from a full or facts have sufficiently changed so that the law of the trial on the merits. case no longer applies. See Rose v. Baker, 143 Tex. 202, 183 S.W.2d 438 (1944); Seydler v. Keuper, 133 S.W.2d 189 The distinction between a summary judgment and a trial on (Tex.Civ.App.—Austin 1939, writ ref'd); Kropp, 526 S.W.2d the merits in regard to the law of the case doctrine was made at 286. in Pannill, where the court noted:

Also, it is apparent that the record presented on this third appeal, being Limited Remand an appeal after a full and lengthy trial on the merits with the jury acting as [3] When this court remands a case and limits a subsequent a finder of facts, differs in a very trial to a particular issue, the trial court is restricted to a material sense from the prior limited determination of that particular issue. Wall v. East Texas appeal. There is no error in the action Teachers Credit Union, 549 S.W.2d 232 (Tex.Civ.App.—

of the trial court in declining to follow Texarkana 1977, writ ref'd); McConnell v. Wall, 67 Tex. 352, the “law of the case” as pronounced 5 S.W. 681 (1887). Thus, in a subsequent appeal, instructions by another Court of Civil Appeals on a given to a trial court in the former appeal will be adhered vastly different record.

to and enforced. Wall v. Wall, 143 Tex. 418, 186 S.W.2d 57 (1945, opinion adopted); Dessommes, 543 S.W.2d at 169. In 659 S.W.2d at 681. In the case at hand, the trial amendments interpreting the mandate of an appellate court, however, the by purchasers and sellers changed both the scope and nature courts should look not only to the mandate itself, but also to of the lawsuit. the opinion of the court. Wells v. Littlefield, 62 Tex. 28 (1884); Seale v. Click, 556 S.W.2d 95, 96 (Tex.Civ.App.—Eastland Purchasers argue that our remand language established the 1977, writ ref'd n.r.e.). In this regard, we have observed that law of the case as to the existence of a valid contract. “the cases are rare and very exceptional in which this court Therefore, they contend the trial court erred in allowing is warranted in limiting the issues of fact, in reversing and seller's trial amendment and issues asserting fraud in the remanding a case where the trial has been by jury; and to inducement. We disagree. authorize such interpretation, it must clearly appear from the decision that it was so intended.” Cole v. Estell, 6 S.W. 175, [5] In this case, sellers moved for summary judgment, 177 (Tex.1887). See Price v. Gulf Atlantic Life Ins., 621 asserting breach of contract by purchasers as a defense. S.W.2d 185, 187 (Tex.Civ.App.—Texarkana 1981, writ ref'd In summary judgment proceedings, the movant must n.r.e.). conclusively establish the essential elements of his asserted theories of recovery or defense. City of Houston v. Clear [4] A critical factor in our determination of this case is that in Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979). the first appeal we reviewed a summary judgment. On review Breach of contract may have been the only theory which of summary judgments, the appellate courts are limited in sellers believed they could conclusively establish. In regard their considerations of issues and facts. In such a proceeding, to this theory, we held, on a single question of law (condition the movant is not required to assert every theory upon which or covenant), that one of the terms of the contract was a he may recover or defend. 1 Thus, when a case comes *631 covenant; therefore, a fact question existed and summary up for a trial on the merits, the parties may be different, judgment was improper. Our holding in the first appeal, the pleadings may be different, and other causes of action however, did not preclude sellers from asserting other may have been consolidated. See Governing Bd. v. Pannill, defensive theories, including those attacking the validity of 659 S.W.2d 670, 680–81 (Tex.App.—Beaumont 1983, writ the contract, at a subsequent trial on the merits. Therefore, ref'd n.r.e.). Other distinctions may be drawn; for instance, in in light of the proceeding in which the question first arose, reviewing the evidence to determine whether there are any the trial court properly allowed sellers to assert the defense of fact issues in dispute, the appellate court must review the fraud in the inducement. evidence in the light most favorable to the party opposing the motion for summary judgment. Gaines v. Hamman, 163

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Hudson v. Wakefield, 711 S.W.2d 628 (1986)

The judgment of the court of appeals is affirmed.

The court of appeals correctly determined purchaser's remaining points of error dealing with conflicting jury findings and the propriety of submitting certain issues on All Citations

fraud.

711 S.W.2d 628

Footnotes 1 It is important to note, that non-movants are required, in a written answer or response to motion, to expressly present to the trial court all issues that would defeat the movants right to a summary judgment, and failing to do so, they cannot later assign them as error on appeal. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 679 (Tex.1979).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)

additional terms as inducement for optionee to exercise option did not terminate option.

428 S.W.2d 92

Supreme Court of Texas. 5 Cases that cite this headnote HUMBLE OIL & REFINING COMPANY et al., Petitioners, [3] Specific Performance v. Options WESTSIDE INVESTMENT Where optionee, prior to expiration of option, CORPORATION, Respondent. communicated its unconditional exercise of option to optionor, it was entitled to specific No. B—572. | May, 1, 1968. performance of option and contract for sale even | Rehearing Denied May 1, 1968. though it had previously advised optionor of additional terms which it claimed optionor had Action for specific performance of real estate contract. The agreed to as inducements to optionee exercising 37th District Court, Bexar County, Eugene C. Williams, options. J., granted defendant's motion for summary judgment and plaintiff appealed. The San Antonio Court of Civil Appeals 1 Cases that cite this headnote of the Fourth Supreme Judicial District, 419 S.W.2d 448, affirmed and error was brought. The Supreme Court, [4] Judgment

Smith, J., held that where optionee, prior to expiration of Brokers or agents, cases involving option, communicated its unconditional exercise of option to optionor, it was entitled to specific performance, even though Where option contract provided that landowner it had previously advised optionor of additional inducements was to pay all brokerage fees and designated to its exercise of the option. certain realty company which was not party to litigation as broker, claim of employee of realty Specific performance action severed and judgments of trial company that he was procuring cause of sale and court and Court of Civil Appeals reversed and judgment entitled to 60% of commission created issues of rendered; judgments of trial court and Court of Civil fact precluding grant of summary judgment. Appeals in agent's action for commission reversed and cause 1 Cases that cite this headnote remanded.

West Headnotes (4) Attorneys and Law Firms

*92 Frank L. Heard, Jr., Houston, Lagerquist, Shaw & [1] Vendor and Purchaser Davis, San Antonio, for petitioners.

Revocation, rescission, or other termination Mere fact that parties may choose to negotiate Pat Legan Johnson & Christopher, San Antonio, for before accepting an option does not mean that respondent. option contract is repudiated.

Opinion

6 Cases that cite this headnote SMITH, Justice.

[2] Vendor and Purchaser Petitioner, Humble Oil & Refining Company, 1 filed this Revocation, rescission, or other termination suit on February 10, 1965, against Westside Investment Letter which was written by optionee who Corporation 2 seeking a judgment commanding specific had paid valuable consideration for option and performance based on a written option and contract for the which recited that optionor had agreed to some sale of real estate. Petitioner, Marvin H. Mann, 3 a realtor, as

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Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)

a third-party plaintiff, filed a plea in intervention, seeking a Bexar County, Texas, granted in Option and Purchase judgment for $1260.00 against Westside as brokerage charges Contract dated April 5, 1963. As additional inducement for in connection with the transaction. Westside, Humble and Humble to exercise its option to purchase, you have agreed Mann each filed a motion for *93 summary judgment. The that all utilities (gas, water, sewer and electricity) will be court granted Westside's motion and overruled the motions of extended to the property prior to the closing of the transaction. Humble and Mann. The court of civil appeals affirmed. 419 The contract of sale is hereby amended to provide that Seller S.W.2d 448. We reverse the judgments of the courts below. shall extend all utility lines to the property before the date of We hold that Humble is entitled to specific performance of closing. the option contract and render judgment for Humble. We hold that a material issue of fact exists as to whether Mann is ‘Please sign and return one copy of this letter in the space entitled to a brokerage commission and remand that portion indicated below to signify your agreement to the amendment of the case to the district court for trial. to the purchase contract.’

The facts, most of which are either stipulated or established by affidavits, are these: The May 14th communication provided, in part, as follows:

‘Humble * * * hereby notifies you of its intention to exercise On April 5, 1963, Westside as seller and Humble as buyer the option granted in option and purchase contract dated agreed and entered into a written contract whereby Westside April 5, 1963, covering Lots 19, 20, 21, 22 and 23, Block gave and granted to Humble an exclusive and irrevocable 2, Lackland Heights Subdivision in or near the City of San option to purchase for a consideration of $35,000.00 a tract of Antonio, Bexar County, Texas. The exercise of said option is land situated outside of the city limits of San Antonio, Bexar not qualified and you may disregard the proposed amendment County, Texas, being all of lots 19, 20, 21, 22 and 23 of Block to the contract suggested in letter of May 2, 1963. * * 2, Lackland Heights Subdivision. *’ (Emphasis added.)

The option contract was supported by a consideration. The contract provided that Humble might exercise the option by We conclude from this record that the parties are in agreement giving notice at any time prior to 9:00 p.m. on the 4th day that Humble's letter of May 14, 1963, and the payment of of June, 1963, and by paying to Westside at the time of such earnest money within 10 days thereof was in law a timely notice or within ten (10) days following such notice the sum exercise of the option to purchase Unless Humble's letter of of $1750.00 as earnest money. This sum of money, together May 2, 1963, terminated and rendered unenforceable *94 with the sum of Fifty Dollars ($50.00) as consideration paid at the option contract. The narrow question to be determined the time of the execution of the option contract, made a total is whether or not the letter of May 2, 1963, constitutes a of $1800.00 paid by Humble, leaving a balance of $33,200.00 rejection of the option contract. If it does, the trial court yet to be paid as purchase money in accordance with the properly granted Westside's motion for summary judgment option contract. and the court of civil appeals correctly affirmed such judgment.

On May 14, 1963, within the time period provided for in the option contract, Humble paid the above mentioned sum Westside contends that Humble's letter of May 2nd was a of $1750.00 to the designated escrow agent, Commercial conditional acceptance which amounted in law to a rejection Abstract & Title Company. of the option contract. Westside argues that the letter of May 2nd ‘clearly evidences Humble's intent to accept the offer Westside admits in its pleadings that it entered into the Only if Westside would agree to an amendment to the terms option contract with Humble, but contends that the option of its original offer.’ (Emphasis added.) It further argues that agreement was ‘rejected, repudiated, and terminated by Humble's letter of May 14, 1963, reflects that Humble itself Humble.’ Westside contends that summary judgment proof of understood that its letter of May 2, 1963, contained a qualified rejection of the option contract is contained in letters written acceptance, and did not form a contract. The basis for this by Humble to Westside on May 2, 1963, and May 14, 1963.

conclusion is the sentence in the May 14 letter which reads:

The pertinent portion of the May 2nd letter reads:

‘The exercise of said option is not qualified and you may ‘Humble Oil & Refining Company hereby exercises its option disregard the proposed amendment to the contract suggested to purchase Lots 19, 20, 21, 22 and 23, Block 2, Lackland Heights Subdivision, in or near the City of San Antonio,

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Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)

in letter dated May 2, 1963, from the undersigned. * * *’ We nor conduct establish an intention to rescind or abandon the cannot agree with Westside's contentions. rights under the option. * * * At most it was a non-acceptance [1] The mere fact that the parties may choose to negotiate of an offer to enter into a new contract on the same terms before accepting an option does not mean that the option except for a reduction in price. * * * Nowhere *95 does it contract is repudiated. As stated in James on Option Contracts appear that the lessee waived his rights under the option to s 838: purchase.’ Supra at 909. ‘It is laid down in the law of offers that a qualified or conditional acceptance is a rejection of the offer. It is clearly [2] [3] We hold that Humble's letter of May 2, 1963, did established by the decisions that a qualified or conditional not terminate the option contract. Humble, for a valuable acceptance of an offer does not raise a contract because the consideration, purchased the right to keep the option contract minds of the parties do not meet in agreement upon the same open for the time specified, and the right to create a contract terms. It is said that such an acceptance is a counter-proposal of purchase. Although Humble did have the right to Accept for a new contract, to give legal life to which requires the or Reject the option in the sense that it was free to take assent or acceptance of the other party. It is in this sense that a the action required to close the transaction, Humble was not qualified or conditional acceptance is a rejection of the offer foreclosed from negotiating relative to the contract of sale first made because the original negotiations are dropped and as distinguished from the option. The option, considered as negotiations for a new and different contract begun. an independent completed agreement, gave the optionee the right to purchase the property within the time specified. The ‘An option is a contract, the negotiations for the making of option contract bound Humble to do nothing but granted it the which are concluded by the execution and delivery of the right to accept or reject the option in accordance with its terms option. The minds of the parties have met in agreement, within the time and in the manner specified in the option. the distinctive feature of which is that the optionor, for a Westside was bound to keep the option open and could not act consideration, binds himself to keep the option open for in derogation of the terms of the option. By the letter of May election by the optionee, for and during the time stipulated, 2, 1963, Humble did not surrender or reject the option. The or implied by law. option to purchase was still a binding obligation between the parties when Humble exercised it on May 14, 1963. See Best ‘Under an option, the act necessary to raise a binding promise Building Co. v. Sikes, 394 S.W.2d 57 (Tex.Civ.App.—1965, to sell, is not, therefore, an acceptance of the offer, but rather writ ref'd n.r.e.); Harper v. Runner, 85 Neb. 343, 123 N.W. the performance of the condition of the option contract. If 313 (1909); McCormick v. Stephany, 61 N.J.Eq. 208, 48 A. this is true, then the rule peculiar to offers to the effect that a 25 (1900); Cerbo v. Carabello, 376 Pa. 571, 103 A.2d 908 conditional acceptance is, in itself, in every case, a rejection (1954); James on Option Contracts s 838; 8A Thompson on of the offer, is not applicable to an option contract, supported Real Property s 4446; 1 Corbin on Contracts s 91; 1A Corbin by a consideration and fixing a time limit for election.’ on Contracts s 264.

Our holding falls within the rule stated in 1 Corbin on The case of Cerbo v. Carabello, 376 Pa. 571, 103 A.2d 908 Contracts s 91. According to Corbin: (1954), is to the same effect. It involved an option contract ‘If the original offer is an irrevocable supported by a consideration wherein a lessor granted a lessee offer, creating in the offeree a ‘binding an option to purchase real estate for $11,500.00 during a option,’ the rule that a counter offer stated term. Before the expiration of the term, the lessee terminates the power of acceptance does sought unsuccessfully to obtain a reduction of the proposed not apply. Even if it is reasonable sale price to $11,000.00; however, prior to the expiration to hold that it terminates a revocable date, the lessee exercised the option. The Court, in overruling power, it should not be held to terminate lessor's contention that the negotiations instituted by lessee rights and powers created by a contract. resulted in a termination of the option, said: A ‘binding option’ is such a contract ‘It is true that parties to a written contract may abandon, (usually unilateral); and an offer in modify or change it by words or conduct, Elliott v. Linquist, writing, that allows a time for acceptance 356 Pa. 385, 388, 52 A.2d 180, 169 A.L.R. 1369. But the (either definite or reasonable) and that is difficulty with defendants' position is that neither the words

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Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)

Westside does not deny these facts, the summary judgment irrevocable by virtue of a statute, is itself proofs on Mann's claim for commissions do not establish that a unilateral contract. A counter offer by he is entitled to a summary judgment. Westside has agreed such an offeree, or other negotiation not to pay only 6% Commission of the gross sales price. Since resulting in a contract, does not terminate Clarence Jones Realty is not a party to this suit, we cannot the power of acceptance.'

hold in this Court that an issue of fact does not exist relative to Mann's entitlement to 60% Of the real estate commission.

Westside relies upon such cases as Beaumont v. Prieto, 249 U.S. 554, 39 S.Ct. 383, 63 L.Ed. 770 (1919); State The parties have stipulated that Ray Ellison and Boyce v. Clevenger, 384 S.W.2d 207 (Tex.Civ.App.—1964, writ Gaskin are the successors in interest to all rights of Westside ref'd n.r.e.); Liquids Dispatch Line v. Texas Power & Light Investment Corporation and are subject to the duties and Co., 6 S.W.2d 169 (Tex.Civ.App.—1928, writ ref'd); and obligations of Westside under the contract here involved.

Seeburg v. El Royale Corporation, 54 Cal.App.2d 1, 128 P.2d Therefore, for all of the reasons herein stated, we enter the 362 (1942). These cases are distinguishable in that they are following judgment:

factually different. They either show a mere offer, no stated term for the option to remain open, or no consideration for (1) The cause of action between Humble and Westside is the option. severed from the cause of action between Mann and Westside. [4] On the basis of the undisputed facts herein discussed, The judgments of the trial court and the court of civil appeals we hold that Humble's motion for summary judgment praying as to Westside and Humble are reversed and judgment is here for specific performance of the contract should have been rendered that Westside and its successors specifically perform granted. We turn now to a consideration of Mann's motion the contract of sale and that Westside and its successors for summary judgment. The option contract contains a properly execute and deliver to Humble a general warranty provision whereby Westside agreed to pay all brokerage fees deed conveying the land involved to Humble and, further that in connection with the transaction and to indemnify and save Westside and its successors deliver to Humble an owner's Humble harmless against any and all claims for such charges. policy of insurance for the sum of $35,000.00 as provided Clarence Jones Realty was designated as the broker and not in the contract, such delivery to be made contemporaneously Mann. Westside agreed to pay Clarence Jones Realty a 6% with the payment of $33,200.00, the balance of the purchase Commission of the gross sales price when and if the sale money provided for in the contract of sale. should be finally completed. Clarence Jones Realty is not a party to this suit. Mann alleged in his petition and in his (2) We reverse the judgments of the trial court and the court of affidavit in support of his motion for summary judgment civil appeals in favor of Westside against Mann and remand that he was the procuring cause of the execution of the the cause of action between Mann and Westside to the district contract; he was a licensed real estate salesman; he was court for a new trial. associated with Clarence Jones Realty and participated in (3) All costs are adjudged against Westside Investment the negotiations leading to the execution of the option *96 Corporation and its successors.

contract between Westside and Humble; he was no longer associated with Clarence Jones Realty, however, he had, at All Citations

all time an agreement with Jones that he was to receive and was entitled to ‘60% Of the real estate agent's commission 428 S.W.2d 92 provided for in the contract of April 5, 1963.’ Although

Footnotes 1 Humble Oil & Refining Company, Petitioner, herein referred to as Humble. 2 Westside Investment Corporation, Respondent, herein referred to as Westside. 3 Marvin H. Mann, Petitioner, herein referred to as Mann.

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In re Hecht, 213 S.W.3d 547 (2006)

Supreme Court performs a de novo review of decision by State Commission on Judicial 213 S.W.3d 547

Conduct.

Special Court of Review

Appointed by the Supreme Court. 1 Cases that cite this headnote In re Honorable Nathan HECHT, Texas Supreme Court Justice. [2] Judges Evidence

No. A–2006–1. | Oct. 20, 2006. State Commission on Judicial Conduct has the burden of proof by a preponderance of the Synopsis evidence, as is applicable to the trial of civil Background: The State Commission on Judicial Conduct actions generally. V.T.C.A., Government Code issued public admonition of Supreme Court justice for § 33.034(f).

statements in support of United States Supreme Court nominee. 2 Cases that cite this headnote

[3] Judges

Holdings: A Special Court of Review appointed by the Evidence Supreme Court, Fitzgerald and Mazzant, JJ., held as a matter State Commission on Judicial Conduct must of first impression that:

prove each element of a charge by a preponderance of the evidence.

[1] Commission failed to prove that justice authorized the public use of his name endorsing nominee when justice spoke 1 Cases that cite this headnote to media about nominee;

[2] to violate prohibition against authorizing the public use [4] Judges of name endorsing another candidate for any public office, Standards, canons, or codes of conduct, in the judge must give permission for others to publicly use the general judge's name in endorsements of the candidate; State Commission on Judicial Conduct failed to prove that Supreme Court justice authorized the [3] justice's statements about nominee did not amount to public use of his name endorsing United States endorsing her; Supreme Court nominee when justice spoke to media about nominee; justice had no control [4] canon that prohibited a judge from lending the prestige of or authority over what the media broadcast or judicial office to advance the private interests of others did printed, and Commission presented no evidence not apply. that justice authorized the media to use his name publicly endorsing nominee. V.T.C.A., Government Code Title 2, Subtitle G App. B, Dismissed. Code of Jud.Conduct, Canon 5(2).

Ann Crawford McClure, J., concurred in judgment and filed Cases that cite this headnote opinion.

[5] Judges

Standards, canons, or codes of conduct, in West Headnotes (25) general Canon that prohibits a judge from authorizing the public use of his or her name endorsing another [1] Judges candidate for any public office does not prohibit Reference and review

a judge from endorsing another candidate;

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In re Hecht, 213 S.W.3d 547 (2006)

modification of the canon by deleting “endorse” legislative history, the objective sought, and the and inserting “authorize” and the concomitant consequences that would flow from alternate shift in meaning signaled that the Texas Supreme constructions. Court intended to confine the restriction to a prohibition of a judge's authorization of the Cases that cite this headnote public use of his or her name endorsing a candidate. V.T.C.A., Government Code Title 2, [10] Statutes Subtitle G App. B, Code of Jud.Conduct, Canon Grammar, spelling, and punctuation 5(2).

Statutes

Cases that cite this headnote Context When interpreting a statute, courts read words and phrases in context and construe them [6] Judges according to the rules of grammar and Standards, canons, or codes of conduct, in common usage. V.T.C.A., Government Code § general 311.011(a).

In discharging judicial responsibilities, a judge must be governed by the rule of law, conduct a Cases that cite this headnote fair and impartial hearing, and dispense justice as well as equity under the law, according to the [11] Statutes

particular facts and circumstances presented in Plain Language; Plain, Ordinary, or each individual case.

Common Meaning

Cases that cite this headnote Statutory words are given their ordinary meaning.

[7] Statutes Cases that cite this headnote Questions of law or fact

Statutory construction is a question of law for the [12] Statutes

court.

Dictionaries

Cases that cite this headnote Legal or other well-accepted dictionaries are a method of determining the ordinary meaning of certain words in a statute.

[8] Statutes Intent Cases that cite this headnote The primary rule in statutory interpretation is that a court must give effect to legislative intent.

[13] Statutes

1 Cases that cite this headnote Superfluousness In construing a statute, courts give effect to all its words and, if possible, do not treat any statutory [9] Statutes language as mere surplusage.

Construction based on multiple factors Statutes Cases that cite this headnote Legislative History

Statutes [14] Judges Construction in View of Effects, Standards, canons, or codes of conduct, in Consequences, or Results general When determining legislative intent, courts look To violate canon that prohibits a judge from to the language of the statute, as well as its authorizing the public use of his or her name

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In re Hecht, 213 S.W.3d 547 (2006)

endorsing another candidate for any public When the liberty interest is the right to core office, the judge must give permission for others political speech, construction of a statute must be to publicly use the judge's name in endorsements quite strict. of the candidate. V.T.C.A., Government Code Title 2, Subtitle G App. B, Code of Jud.Conduct, 2 Cases that cite this headnote Canon 5(2).

[19] Judges

Cases that cite this headnote Standards, canons, or codes of conduct, in general

[15] Statutes Canon that prohibits a judge from authorizing Language the public use of his or her name endorsing Statutes another candidate for any public office must Construction in View of Effects, be strictly construed in favor of judge since Consequences, or Results it implicates liberty interest of free expression. The language and legal effect of a statute may V.T.C.A., Government Code Title 2, Subtitle G require a court to construe it strictly. App. B, Code of Jud.Conduct, Canon 5(2).

Cases that cite this headnote Cases that cite this headnote

[16] Statutes [20] Judges Liberal or strict construction Standards, canons, or codes of conduct, in general

To construe a statute strictly means applying a limited, narrow, or inflexible reading and Endorsing in canon that prohibits a judge from application of the statute. authorizing the public use of his or her name endorsing another candidate for any public office Cases that cite this headnote meant more than support, that is, more than spoken praise as applied to Supreme Court justice's statements in support of United States [17] Constitutional Law Supreme Court nominee. V.T.C.A., Government Certainty and definiteness; vagueness Code Title 2, Subtitle G App. B, Code of Constitutional Law Jud.Conduct, Canon 5(2).

Penalties, fines, and sanctions in general Statutes Cases that cite this headnote Liberal or strict construction; rule of lenity A strict construction of a statute must be applied [21] Judges to two classes of statutes: (1) those that authorize Standards, canons, or codes of conduct, in a penalty and (2) those that infringe upon private general property or liberty interests; thus, a statute that Supreme Court justice's statements that United falls within one of these categories must be States Supreme Court nominee “would make a couched in such explicit terms that the party good justice” and had a “sterling character,” and upon whom the statute is to operate may, with that her nomination was “good” and “solid” did reasonable certainty, ascertain what the statute not amount to endorsing within the meaning of requires to be done and when it must be done. canon that prohibits a judge from authorizing the public use of his or her name endorsing another 1 Cases that cite this headnote candidate for any public office; the statements reflected descriptions of nominee's background, [18] Constitutional Law justice's perception of nominee's personal views Speech, press, assembly, and petition on various subjects, and his favorable opinions

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In re Hecht, 213 S.W.3d 547 (2006)

about nomination to the bench, they were no more than support or praise, and they did not [24] Judges constitute a request or appeal for others to Standards, canons, or codes of conduct, in support nomination and were consistent with general right to respond to misrepresentations. V.T.C.A., A “private interest” within the meaning of canon Government Code Title 2, Subtitle G App. B, that prohibits a judge from lending the prestige Code of Jud.Conduct, Canon 5(2). of judicial office to advance the private interests of the judge or others is a personal or individual Cases that cite this headnote advantage or benefit gained by use of judicial office. V.T.C.A., Government Code Title 2, [22] Judges Subtitle G App. B, Code of Jud.Conduct, Canon Standards, canons, or codes of conduct, in 2(B).

general Cases that cite this headnote Canon that prohibits a judge from authorizing the public use of his or her name endorsing another candidate for any public office should permit a [25] Judges judge to respond to any untruthful or inaccurate Standards, canons, or codes of conduct, in statements, thereby affording a judge able and general willing to do so an effective and timely avenue Supreme Court justice's public statements in of recourse to correct misrepresentations in a support of United States Supreme Court nominee public forum; a construction of this provision were permitted by canons as legitimate responses that bars a judge from publicly responding to to misrepresentations, expressions of views misrepresentations absent express permission to on political matters, statements that promoted do so leaves a judge vulnerable to potentially public confidence in the competence of the inaccurate and untruthful attacks without any judiciary, and statements which involved the effective remedy and deprives the public of law, the legal system, and the administration correct and accurate background information of justice. V.T.C.A., Government Code Title 2, on judicial candidates and nominees. V.T.C.A., Subtitle G App. B, Code of Jud.Conduct, Canons Government Code Title 2, Subtitle G App. B, 2, 4, 5(1)(ii), (2),. Code of Jud.Conduct, Canon 5(2).

Cases that cite this headnote Cases that cite this headnote

[23] Judges Standards, canons, or codes of conduct, in Attorneys and Law Firms general *550 Jackson Walker, L.L.P., Charles L. BabCock, Canon that prohibited a judge from lending the Houston, for Petitioner. prestige of judicial office to advance the private interests of others did not apply to Supreme Seana Willing, Executive Director, State Com'n on Judicial Court justice's support for United States Supreme Conduct of Austin, TX, Mark Greenwald, San Antonio, for Court nominee; life tenure and the power and The Commission. prestige of the office were public interests, rather than private interests. V.T.C.A., Government Before Justices FITZGERALD, 1 McCLURE, 2 and Code Title 2, Subtitle G App. B, Code of 3 MAZZANT .

Jud.Conduct, Canon 2(B).

Cases that cite this headnote OPINION

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In re Hecht, 213 S.W.3d 547 (2006)

endorsing and supporting, terms it used interchangeably, Opinion by Justices FITZGERALD and MAZZANT. and proceeded to devote substantially all of its efforts to determining the penalty to be imposed. This Court performs I. a de novo review. We consider the evidence presented before us (which differs markedly in some respects from evidence This case focuses on whether the Texas Code of Judicial presented to the commission), we review Canons 5(2) and Conduct, the judicial “rules of the road,” so to speak, prohibit 2B, with our starting point being the determination of the a Texas state judge from speaking out favorably in behalf of meaning of pivotal terms, such as “authorized,” “endorsing,” a close friend nominated to the United States Supreme Court. and “private interests” (rather than assuming certain of these This case hinges on the meaning of words in this Code and terms can be used interchangeably), 4 and we decide whether what words were spoken by the judge. This case involves a the judge's public statements violated Canons 5(2) and 2B. composite of two different political systems for the selection of judges. In Texas, we have an elective process, whereas in the federal system, we have a nomination-confirmation process. II.

The Preamble to the Texas Code of Judicial Conduct We recognize at the outset a considerable hurdle must be provides:

overcome: the Texas Code is decidedly deficient in a pivotal area important in this case, that is, providing definitive Our legal system is based on the principle that an meanings to words in the political arena, words such as independent, fair and competent judiciary will interpret and “authorized,” “endorsing,” and “private interests.” We are all apply the laws that govern us. The role of the judiciary is familiar with certain axioms in particular disciplines, some central to American concepts of justice and the rule of law. of which capsulize the core of the undertaking. For example, Intrinsic to all sections of this Code of Judicial Conduct in real estate, the appropriate axiom is “location, location, are the precepts that judges, individually and collectively, location.” In music, “practice.” In law, “definitions.” The must respect and honor the judicial office as a public relevant provisions of the Texas Code, Canons 5(2) and 2B, trust and strive to enhance and maintain confidence in our quite candidly, lack definitive meaning. legal system. The judge is an arbiter of facts and law for the resolution of disputes and a highly visible symbol of The political processes offer a unique twist. The state judge government under the rule of law.... is up for re-election *551 and is in a political campaign. The state judge speaks of his friend, the nominee, whose The Code [of Judicial Conduct] is intended ... to state basic nomination is pending before the Senate Judicial Committee standards which should govern the conduct of all judges of the United States Congress. In this federal process, the and to provide guidance to assist judges in establishing public expects a thorough examination of the background, and maintaining high standards of judicial and personal qualifications, and experience of the nominee in public, conduct. and most assuredly, at the Senate committee hearings. The Senate committee fully intended to call the state judge as TEX.CODE JUD. CONDUCT, Preamble, reprinted in TEX. a witness during the confirmation hearings, and the state GOV'T CODE ANN., tit. 2, subtit. G app. B (Vernon 2005). judge fully intended to testify to the same statements before The Preamble reminds us of the high ideals and noble the committee which are at issue here. No one claims such principles this Court is called upon to apply. This case statements would have violated the Texas Code of Judicial presents substantial issues of first impression. First, we must Conduct. Had the confirmation proceeded as scheduled and determine whether public statements of a judge supporting the state judge testified, it is highly doubtful we would be a nominee to the United States Supreme Court violate the considering any of these matters, anonymous complaint or Texas Code of Judicial Conduct, specifically Canons 2B not. and 5(2). If so, we must determine whether the Texas Code abridges the Petitioner's freedom of speech guaranteed by the [1] We also recognize the commission's approach and this First Amendment to the United States Constitution. However, Court's approach are substantially different. The commission, because we conclude Petitioner did not violate the Canons, according to the evidence, assumed the Code prohibited *552 we do not address the constitutional question. 5

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In re Hecht, 213 S.W.3d 547 (2006)

IV.

III.

The parties entered into a written “Parties' Stipulations The events leading to the public admonition revolve around of Fact” (hereafter “Stipulation”). At the hearing before President George W. Bush's nomination of Harriet Miers this Special Court of Review, the commission called one to the United States Supreme Court in October 2005 and witness, Petitioner; the remainder of its presentation centered statements of the Honorable Nathan Hecht, Texas Supreme around documentary evidence, including news stories, public Court Justice, (hereafter “Petitioner”) to the news media admonishments relative to other judges bearing generally concerning her nomination. on the two Canons at issue, several volumes of committee hearings involving the current Task Force on the Code of On October 14, the commission voted to initiate an Judicial Conduct and its recommendations, several videos, investigation of Petitioner based on the October 12 complaint and the Stipulation. The commission presented no expert and, on its own motion, an article published on October 6 testimony related to whether Petitioner violated the Code or in The New York Times. On October 17, 2005, the State whether the Code was constitutional under Republican Party Commission on Judicial Conduct received a confidential v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 complaint about Petitioner based on the October 10 (2002). article in the Texas Lawyer newspaper. The commission informed Petitioner of the investigation and requested that Petitioner's testimony will be detailed below. In addition, he answer a questionnaire about the news articles and his Petitioner presented, without objection by the commission, actions preceding and during Miers' nomination. Petitioner the expert testimony of former Chief Justice Tom Phillips cooperated with the commission and provided detailed through his affidavit; the testimony of Judge Jim Parsons and responses to the questions. Petitioner voluntarily appeared Judge Monica Gonzalez; the expert testimony of Professor at a hearing before eight 6 members of the commission. Geoffrey Hazard and Blake Tartt by stipulation; Senator Arlen Specter's oral deposition; official transcripts from The commission voted 7 and issued its Public Admonition, numerous Senate confirmation hearings *554 of past United containing its findings of fact and conclusions of law. 8 The States Supreme Court Justices; and copies of the Codes of commission determined Petitioner violated *553 Canons Judicial Conduct from many states. 2B and 5(2) of the Texas Code of Judicial Conduct. See TEX.CODE JUD. CONDUCT, Canon 2B (“A judge shall The evidence shows Petitioner and Miers became close not lend the prestige of judicial office to advance the private friends beginning in 1976 when they practiced in the same law interests of the judge or others....”), & Canon 5(2) (“A judge firm, Locke Purnell. Petitioner left the firm in 1981 to become shall not authorize the public use of his or her name endorsing a district court judge. He subsequently served on the appellate another candidate for any public office....”). 9 bench, first on the Fifth District Court of Appeals at Dallas, and then the Texas Supreme Court, his current position. It Petitioner requested de novo review of the public admonition is undisputed that Petitioner's record is unblemished. 10 The rendered by the commission. Texas Supreme Court Chief Stipulation recites that Petitioner “has never been sanctioned Justice Wallace Jefferson appointed, by random selection, by the State Commission on Judicial Conduct.” this panel to the Special Court of Review to review the commission's decision. See TEX. GOV'T CODE ANN. § Miers became head partner of Locke Purnell, and eventually 33.034(c) (Vernon 2004). This Court subsequently conducted became White House Counsel to President Bush. She also an evidentiary hearing. See id. § 33.034(e) (review “is by trial served as president of the State Bar of Texas and as a de novo as that term is used in the appeal of cases from justice member of the Dallas City Council. Petitioner and Miers to county court”). Following the presentation of evidence and have remained close friends through the succeeding thirtyarguments , the commission sought a public admonition, and five years, including regularly attending the same church and Petitioner requested dismissal of the sanction imposed on going to dinners and social occasions together. him.

Besides being a long-time, close friend of Miers, Petitioner was also a friend of White House Deputy Chief of

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In re Hecht, 213 S.W.3d 547 (2006)

Staff, Karl Rove. On October 1, 2005, two days before 2005. 14 These were the only news articles presented at the Miers' nomination, Rove and Petitioner had a telephone commission's *557 hearing. Evidence of additional articles conversation, and Rove told him Miers might be nominated and interviews were presented before this Court. Rather to fill *555 retiring Justice Sandra Day O'Connor's place on than selecting “representative statements” from these sources, the Supreme Court. Rove asked Petitioner if he would agree which are often redundant, and quoting them verbatim, to speak with Dr. James Dobson (the founder of Focus on the we choose a more succinct method, excerpting from the Family, a conservative religious organization that emphasizes commission's brief the primary statements it asserts violate family values) about Miers' faith. Petitioner agreed to speak Canons 2B and 5(2): to Dr. Dobson, and he told Rove he was willing to speak to the media about Miers as he considered himself one of the most knowledgeable people, if not the most knowledgeable For the most part, Petitioner provided reporters and person, about Miers' personal and professional beliefs and interviewers with factual information about Miers' accomplishments. background and experience, including information about her views on religion and abortion and his own personal Out of an abundance of caution, Petitioner consulted first relationship with her. However, beyond the factual with former Texas Supreme Court Chief Justice Tom information, Petitioner repeatedly expressed his opinion Phillips, considered a legal scholar and knowledgeable and that the Miers' appointment was “great,” “solid,” “strong,” experienced with respect to the Code of Judicial Conduct. and that after the American people had been given a Petitioner also consulted with former Texas Supreme Court chance to review her record, they were “going to herald Justice Priscilla Owen, 11 a friend with similar experience this nomination as a good one.” When asked about involving the Code of Judicial Conduct. Both assured the opposition to Miers' nomination during an interview Petitioner that the statements in question did not violate the reported by the Washington Post, Petitioner replied that he Code. believed that Miers' detractors were “going to be happy as clams” after they learned more about her. When asked by Between Miers' nomination on October 3 and the another interviewer about the need to prove the President's announcement of her withdrawal on October 27, Petitioner “case” in favor of the Miers' nomination, Petitioner agreed responded to more than 120 requests for media interviews. that a “case has to be made,” but went on to claim that a Petitioner appeared on television news programs, and he “case has been made in Texas for the last 30–plus years. was quoted or referenced in many newspaper and internet We think of her as a hero down here already.” Petitioner news articles. Petitioner's comments included discussions went on to predict that during the confirmation process, of his personal relationship with Miers, her professional Senators would be “convinced that this is the right person background and accomplishments, her conservative political for the job.” Tellingly, in one interview with an ABC news philosophy, her attendance and participation at an evangelical reporter, Petitioner expressly opined that Miers would be Christian church, and her pro-life and anti-abortion views. He a “great justice.” expressed his opinion in a variety of ways that she would be On a more personal note, Petitioner acknowledged a “great” Justice of the Supreme Court. Some news articles publicly that he had a close personal relationship also reported that Petitioner said President Bush had known with Miers, and frequently spoke of his “admiration”

Miers for many years and that conservatives had no need to for Miers, describing her in various interviews as be concerned that she was an unknown entity. Petitioner was being “remarkable,” “charming,” “gracious,” “solid,”

continuously identified as a close personal friend of Miers and “strong,” “sterling,” and “stellar.”

as a Justice of the Texas Supreme Court.

Former Chief Justice Phillips, whose extensive curriculum vitae was admitted, furnished an affidavit in support of Much of the commission's evidence consisted of media reports between October 3 and 27. The Texas Lawyer Petitioner's position. 15 published an article on October 10, 2005 about Petitioner's and other present and former Texas Supreme Court *559 Judge Jim Parsons testified he was a district judge in Palestine and a long time Democrat. He did not believe Canon Justices' participation in supporting the Miers nomination. 12 5(2)'s restrictions on endorsements applied outside partisan Although *556 Petitioner was never interviewed, 13 The electoral politics, and he viewed the public statements about New York Times published an article on October 6,

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In re Hecht, 213 S.W.3d 547 (2006)

Miers' nomination as “an administration of justice issue,” have made favorable comments in particularly at the level involving a nominee to the United support of the nominees.... States Supreme Court, not a matter of partisan politics. 16

Senator Arlen Specter, the Chairman of the Senate Judiciary V.

Committee of the United States Congress, testified by deposition that the committee would have considered Miers' [2] [3] The Texas Constitution and Government Code nomination to the United States Supreme Court had it not do not set forth expressly the commission's burden of been withdrawn. If the Miers nomination had gone forward, proof. The parties assert and we agree that the commission his chief counsel would have recommended asking Petitioner has the burden of proof and that the standard is by a to testify before the committee and the Senator would have preponderance of the evidence, as is applicable “to the trial honored this recommendation. Senator Specter testified that of civil actions generally.” TEX. GOV'T CODE ANN. § frequently, judges appear and testify voluntarily in hearings 33.034(f) (Vernon 2004); In re Davis, 82 S.W.3d 140, 142 involving nominees to the United States Supreme Court. The (Tex.Spec.Ct.Rev.2002); In re Bell, 894 S.W.2d 119, 123 Senator saw no difference between speaking at the committee (Tex.Spec.Ct.Rev.1995); In re Jimenez, 841 S.W.2d 572, 579 hearing and speaking informally to the press. He also stated (Tex.Spec.Ct.Rev.1992). Thus, the commission must prove that had Miers' nomination gone forward, his interest in each element of a charge by a preponderance of the evidence. Petitioner's testimony would have been based on Petitioner's personal and deep knowledge of Miers' background, not his position as a Texas Supreme Court Justice.

VI.

The parties stipulated that Geoffrey C. Hazard, Jr., Professor [4] The commission's first charge alleges that Petitioner of Law at the University of Pennsylvania Law School, would violated Canon 5(2) when he “authorized the public use of testify Petitioner's speech his name and title to endorse his close friend, Harriet Miers, a candidate for public office.” The question presented is *560 did not violate Canon 2B or 5(2) of the Texas whether the commission proved by a preponderance of the Code of Judicial Conduct, and that [Petitioner] had a evidence that Petitioner authorized the public use of his name First Amendment right to engage in the speech which is endorsing another candidate, Miers, for public office. We subject of the censure by the State Commission on Judicial hold the commission did not.

Conduct.

He would further say that judges talk to the media and Until 1974, there was no Code of Judicial Conduct in Texas. public about nominees to the federal bench, and he is not In 1974, the Texas Supreme Court enacted the initial Code aware of any judge who has been sanctioned by a state or of Judicial Conduct, which contained an “endorsement” federal committee or by a court for making comments to prohibition: the press or public about a nominee to the federal bench.

A judge or candidate for election to judicial office should not: ... (b)

The commission further stipulated that Blake Tartt would make political speeches for a political testify:

organization or candidate or publicly [H]e is a former member of the endorse a candidate for public office. Commission on Judicial Conduct, and TEX.CODE JUD. CONDUCT, Canon 7A(1)(b), 37 TEX.

a former president of the State Bar of B.J. 853 (1974).

Texas, and he has served on numerous ABA committees, which have vetted In 1976, the Texas Supreme Court removed the endorsement nominees for the federal bench, and in performing those tasks has frequently prohibition from the Code. 17 In 1980, the Committee on sought the comments of judges about Judicial Ethics 18 issued an opinion in answer to the question: the nominees. Many of these judges “May a judge endorse a specific candidate or candidates?”

*561 The opinion stated the Code did not “specifically

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prohibit a judge from supporting a candidate or candidates.” In essence, Petitioner explained that the purpose of inserting After reviewing the provisions of Canon 2, the opinion the “authorization” language into Canon 5(2) was to provide concluded: “cover” for judges to refuse to authorize endorsements of partisan elected candidates. 21

The Committee is of the opinion that endorsing a candidate A Task Force has proposed certain amendments to the or candidates is within the discretion of a judge provided Code of Judicial Conduct. One proposed amendment to the the nature and type of endorsement does not contravene language at issue in Canon 5(2) provides:

Canon 1, Canon 2A and Canon 2B of the Code of Judicial Conduct. In order for a judge or judicial Comm. on Jud. Ethics, State Bar of Tex., Op. 53A (1980). candidate to both appear to be and, In 1990, the Texas Supreme Court amended Canon 7(3) as in fact, be independent of political follows: influence, a judge or judicial candidate shall not endorse another candidate A judge or judicial candidate shall for any public office and shall not not authorize the public use of his or authorize his or her name to be used her name endorsing another candidate in a manner where it *563 reasonably for any public office, except that a appears that the judge has endorsed candidate may indicate support for a another candidate for public office, political party.

except that either may indicate support TEX.CODE JUD. CONDUCT, Canon 7(3), 53 TEX. B.J. for a political party. A judge or judicial candidate may attend political events 240–41 (1990) (emphasis added). 19 Today, this provision and express his or her views on (hereafter, “authorization” provision) is found in Canon 5(2)

political matters in accord with this and provides in pertinent part: “A judge or judicial candidate Canon, Canon 2 and Canon 3B(10).

shall not authorize the public use of his or her name endorsing another candidate for any public office, except that either Final Report and Recommendations of the Supreme Court's may indicate support for a political party.” TEX.CODE JUD. Task Force on the Code of Judicial Conduct, p. 21 CONDUCT, Canon 5(2). Petitioner, who was on the Texas (Jan.2005) (emphasis added). However, the Task Force's Supreme Court in 1990, testified that the “authorization” recommendation does not contain definitions of “endorse” provision was generated at the request of the judges. In and “authorize.” 22

response to questions by the commission, Petitioner provided significant insights about the circumstances leading to the We recognize it is integral to the commission's position creation of the “authorization” provision: 20 that the “authorization” provision of Canon 5(2) be read and interpreted to prohibit a judge from “endorsing” or “supporting” another candidate. The commission's first *562 The problem, the reason that 5(2) was proposed charge contains no factual allegations Petitioner “authorized”

in the first place, the judges were concerned that county the public use of his name endorsing Miers' nomination officials were muscling them into endorsements that they to the United States Supreme Court. The commission's didn't want to make. And they said, look, you've got to evidence focused exclusively on establishing Petitioner had endorse me for, let's say a district judge, you have to supported Miers' nomination. The commission urged this endorse me for County Commissioner. The district judge Court to hold that as Petitioner was a sitting Justice on the didn't want to do it, but he didn't have any way of saying Texas Supreme Court and made public statements to the no. If he said no, then he was afraid of what was going news media supporting Miers' nomination, Petitioner was to happen to him in the budgeting process. So he wanted guilty of endorsing another candidate, in violation of the cover for that. So that's why the judges came to us back in “authorization” provision of Canon 5(2).

′88 and said, we're tired of getting hammered on here, and we want an excuse that we can hold up and say, we don't The commission primarily relies upon its own Public have to do this any more.

Statement PS–2000–2. 23 This Public Statement firmly

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espoused a broad view of the term “authorize.” See PUBLIC impartial hearing, and dispense justice as well as equity under STATEMENT, No. PS–2000–2 (Comm'n Jud. Conduct Mar. the law, according to the particular facts and circumstances 24, 2000). The commission essentially declared “personally presented in each individual case. 25 publishing an endorsement of another candidate for public office” was synonymous with “giving permission to or We therefore undertake to construe and apply the language in ‘authorizing’ the candidate or a third party to use the judge's dispute in Canon 5(2) consistent with “rules of reason” to the name in such a public endorsement.” Id. The commission facts presented. Our analysis should focus upon key language took the position that no distinction was to be made “between and its relationship to the entire Code. acting on one's own behalf and empowering another to act on one's behalf as [Canon 5(2) ] necessarily encompasses [7] [8] [9] [10] [11] [12] [13] Statutory the broadest definition of the term ‘authorize.’ ” Id. The construction is a question of law for the court. Johnson commission cited no legal precedent. v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989).

The primary rule in statutory interpretation is that a court [5] Thus, according to this Public Statement, the must give effect to legislative intent. Crown Life Ins. commission concluded that the “authorization” provision of Co. v. Casteel, 22 S.W.3d 378, 383 (Tex.2000). When Canon 5(2) prohibited a judge from “endorsing” another determining legislative intent, we look to the language of candidate. Before this Court, the commission took the the *565 statute, as well as its legislative history, the additional step *564 of defining “endorse” as “support.” 24 objective sought, and the consequences that would flow Its pleadings and evidence demonstrate the commission from alternate constructions. Id. When interpreting a statute, uses these terms interchangeably and treats them as being we read words and phrases in context and construe them synonymous. In effect, the commission has reinserted the according to the rules of grammar and common usage. TEX. heretofore rejected “endorsement” prohibition into Canon GOV'T CODE ANN. § 311.011(a) (Vernon 2005). Words 5(2), thereby recasting the meaning of the “authorization” are given their ordinary meaning. Fitzgerald v. Advanced provision. In so doing, the commission has entirely ignored, Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex.1999). if not dismissed, the importance of the pivotal term Legal or other well-accepted dictionaries are a method of “authorized” in its pleadings, its evidence, and its arguments. determining the ordinary meaning of certain words. See Pratt–Shaw v. Pilgrim's Pride Corp., 122 S.W.3d 825, 833 The issue before us is the construction of the “authorization” (Tex.App.-Dallas 2003, pet. denied). In construing a statute, provision of Canon 5(2), including examining the meaning of we give effect to all its words and, if possible, do not “authorize.” In our analysis of this issue, this Court recognizes treat any statutory language as mere surplusage. Cont'l Cas. the wisdom and value of the cautionary mandate incorporated Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, within Canon 8A: 402 (Tex.2000). This Court must give effect to the word “authorize” to prevent it from being surplusage. See Meritor The Sections are rules of reason, Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 89 (Tex.2001). which should be applied consistent We may not disregard, discount, or dismiss this language and with constitutional requirements, its impact. statutes, other court rules and decisional law and in the context of all If the supreme court had intended by its 1990 amendments relevant circumstances. to reinstate the 1974 “endorsement” prohibition, it would have done so, but it did not. Instead, it used substantially TEX.CODE OF JUD. CONDUCT, Canon 8A (emphasis different language by adding the “authorization” provision.

added). This provision also encourages “reasonable and We conclude the Texas Supreme Court intended for the reasoned application of the text.” Id. Accordingly, we 1990 amendment inserting the “authorization” provision endeavor to construe Canon 5(2) as written, in accordance into the Canon governing political activity to effect a with the rules of reason.

substantial change, not simply a technical refinement, from the “endorsement” prohibition. See Gold v. City of [6] We also recognize our judicial system is based upon Coll. Station, 40 S.W.3d 637, 649 (Tex.App.-Houston [1st the cornerstones of integrity, impartiality, fairness, and Dist.] 2001, pet. granted, judgm't vacated w.r.m. by agr.)

independence. In discharging judicial responsibilities, the (“Moreover, the fact that the legislature enacts an amendment judge must be governed by the Rule of Law, conduct a fair and

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indicates that it thereby intended to change the original were at issue. One prohibited “permitting his or her name act by creating a new right or withdrawing an old one.”). to be used in connection with any activity of a political Such a significant modification in terminology (deleting organization”; the other prohibited “publicly endorsing or “endorse” and inserting “authorize”) and the concomitant publicly opposing (other than by running against) another shift in meaning certainly signals that the Texas Supreme candidate for public office.” Id. at 1289 n. 2. The New York Court intended to confine the restriction to a prohibition of Code clearly distinguished between a judge permitting the a judge's authorization of the public use of his or her name use of his name and a judge endorsing another candidate. endorsing a candidate. The plain language of the New York Code provisions shows that one relates only to the use of the judge's name and the [14] In determining what constitutes a judge's authorizing other to “endorsing.” The former provision, however, does the public use of his or her name endorsing a candidate for not encompass the latter. The New York Code's prohibition any public office, we examine a recent incident involving relating to the use of a judge's name is similar to the Texas such conduct. A judge's act of giving a candidate express Code's “authorization” provision. permission to include the judge's name on a publicly distributed list of persons endorsing the candidate would *567 In 1989, the Committee on Judicial Ethics violate Canon 5(2). See Public Admonition of Justice of the recommended to the Texas Supreme Court that the Code Peace Torres, No. 00–0689–JP (Comm'n Jud. Conduct Aug. be amended to specifically prohibit a judge or a candidate 16, 2000). Any other fact scenario must be analogous to for election to judicial office from publicly endorsing a this situation to constitute a violation of Canon 5(2). That candidate for public office. As previously noted, in 1990, the is, the facts must show the judge gave permission for others Texas Supreme Court amended the Texas Code to add the to publicly use the judge's name in endorsements of the “authorization” provision but did not add a prohibition on candidate. “endorsing” per se.

Several other states' Code provisions treat the use of a judge's The recommendation of the recent Task Force proposes name separately from endorsing or making public statements. amending Canon 5(2) by prohibiting “authorizing” and In the Oregon Code of Judicial Conduct, JR 4–101(1) and (3) “endorsing” as separate acts. The recommendation does not of Oregon's Code provide, in part, that: equate “authorize” and “endorse.” It does not propose to subsume the meaning of “authorize” into the meaning of [a] judge shall not knowingly (1) make “endorse.” It does not eliminate the former in favor of the a public statement in support of the latter. Instead, it clearly identifies each as a separate act, and election or defeat of any candidate for it prohibits each act. Thus, the recommendation of the recent a nonjudicial public office ..., or (3) Task Force reinforces our interpretation of Canon 5(2). lend the judge's name in support of an action, by any person or group, The Texas Supreme Court defines “authorized” as follows: to elect or defeat any candidate for a “The primary meaning of ‘authorize’ is to empower, or give nonjudicial public office.... 26 a right to act.” Caller Times Publ'g Co. v. Chandler, 134 Tex.

1, 7, 130 S.W.2d 853, 856 (1939); see Cox, Inc. v. Humble OR.CODE JUD. CONDUCT JR 4–101(1), (3). Oregon's Oil & Ref. Co., 16 S.W.2d 285, 286 (Tex. Comm'n App.1929, Code provisions, which apply to *566 candidates for judgm't adopted) (same). Other courts have defined the nonjudicial offices, distinguish between public statements empowerment of authorization as referring to future conduct. supporting or opposing a candidate and lending the judge's For example, in Gray v. Gill, 125 Misc. 70, 210 N.Y.S. name supporting such candidates. The “authorization” 658, 660 (N.Y.Sup.Ct.1925), “authorize” was defined as “to provision of the Texas Code and the “lending” provision of permit a thing to be done in the future.” The court contrasted the Oregon Code address the same conduct, albeit in different the term with “approve,” which it defined as “to ratify or words. confirm a thing already done, or to sanction a thing that may be done in the future....” Id. (emphasis added). Thus, as the In In re Raab, 100 N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d Gray court observed, “After the act, one may not authorize it, although he may approve it.” Id. “Authorize,” therefore, 1287 (2003), 27 several sections of the New York Code has an accepted legal meaning. The term “authorize” is of Judicial Conduct related to prohibited political activity

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also defined to mean “to give legal authority; to empower” in Canon 5. The Code of Judicial Conduct in its past and and “to formally approve, to sanction.” BLACK'S LAW present forms, the Task Force Recommendations, 31 and the DICTIONARY 143 (8th ed.2004). These legal definitions relevant statutes fail to define “endorse.” The commission's of “authorize” essentially require that the authorization be judicial disciplinary proceedings, the advisory opinions of the express and refer to conduct or actions to be taken in the Committee on Judicial Ethics, and the few available decisions future. The language of giving legal authority, empowering, of the Texas courts also fail to define “endorse” under Canon formally approving, requiring, and sanctioning all necessitate 5(2). Absent any definition of the term “endorsing,” we are affirmative actions on the part of the authorizor. Thus, it is presented with the task of statutory interpretation. not sufficient under Canon 5(2) for a judge simply to speak; the judge must affirmatively “authorize the use of his name,”

The commission's brief 32 essentially contends Petitioner's that is, expressly permitting the use of his name in the future.

public statements provided more than “factual information The commission's interpretation has deviated from the plain about Miers' background and experience.” Specifically, meaning of the “authorization” provision in Canon 5(2). The the commission stated: “[Petitioner's] praise of Miers'

commission's interpretation does not merely take a broad ‘sterling’ character and his opinion that she would make view of “authorize,” it eliminates this element entirely.

‘a great justice,’ and his repeated public statements that her nomination was ‘good’ and ‘solid,’ certainly sound like When the commission called Petitioner as its only witness, approval and support of the President's nomination.” In a the commission never asked Petitioner if he “authorize[d]

footnote, the commission refers us Merriam–Webster OnLine the public use of his ... name endorsing” Miers' nomination.

Dictionary's definition of “endorse”: “[T]o approve openly, In addition, the commission failed to question Petitioner especially: to express support or approval of publicly and about this matter at the hearing before the commission.

definitely [as in] endors[ing] a mayoral candidate.” The The commission's questions to Petitioner recognized he commission's ultimate argument is that “endorsement” is had no control or authority over what the media broadcast equivalent to “support,” and it is undisputed that Petitioner or printed. 28 In the media interviews, Petitioner could supported Miers. anticipate the use of his *568 name as the person being interviewed, if the media chose to identify him. However, Petitioner served the commission with an interrogatory having reviewed Petitioner's statements, we do not find any asking the commission to explain what constitutes an evidence that he authorized the media to use his name publicly “endorsement.” In its response, the commission stated the endorsing Miers. 29 Any argument that Petitioner impliedly term was not defined in the Code and should be given authorized the public use of his name endorsing Miers its “ordinary and reasonable meaning” as contained in would be futile and unavailing. 30 We therefore conclude the American Heritage Dictionary of the *569 English the commission failed to prove by a preponderance of the Language, Fourth Edition, 2000, “which defines ‘endorse’ ” evidence that Petitioner authorized the public use of his name as: “to give approval of or support to, especially by public endorsing Miers. statement; sanction: endorse a political candidate.”

With respect to the commission's position equating “support” and “endorse” and its assertion that Canon 5(2) embraces a VII. blanket prohibition of endorsing, we consider two advisory opinion from the Committee on Judicial Ethics. The While we have rejected the commission's argument that committee's opinion No. 2 contain the following question and Canon 5(2) prohibits “endorsing,” we conclude that, even answer:

under its construction, the commission failed to prove by a preponderance of evidence that Petitioner's public statements QUESTION: May a Texas judge privately introduce endorsed Miers. candidates for judicial office to his friends and recommend that such friends vote for such candidates?

Again, the first task is to define the key term. We, therefore, focus on a definition of “endorsing.” The Code ANSWER: It is the opinion of the Committee on Judicial provides no definition. The commission concedes there is Ethics that a Texas judge would not violate the Code of no definition or consensus as to the meaning of “endorse” Judicial Conduct by privately introducing candidates for

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judicial office to his friends and recommending that such friends vote for such candidates. Ohio's Canon 7(B)(2)(b) prohibits a judge or judicial candidate from publicly endorsing or opposing a candidate Comm. on Jud. Ethics, State Bar of Tex., Op. 2 (1975). In its for another public office. OHIO CODE JUD. CONDUCT, opinion No. 13, the committee stated, Canon 7(B)(2)(b). The Ohio Board of Commissioners referred to a dictionary for broad direction in defining QUESTION: May a district judge introduce a candidate the term “endorsing.” The Ohio Board ultimately defined for the state Legislature to his personal friends and “endorsement” as: “to give approval of or support to.” Ohio recommend that such friends vote for such candidate?

Bd. of Comm'rs on Grievances & Discipline, Op. 89–15 (Apr.

ANSWER: The Committee on Judicial Ethics is of the 10, 1992) (citing WEBSTER'S II NEW RIVERSIDE UNIV. opinion that the question should be answered in the DICTIONARY (1984)). affirmative. In Opinion Number 2 this Committee held that a Texas judge would not violate the Code of Judicial The definitions provided by two leading dictionaries, Conduct by privately introducing candidates for judicial however, require more than mere support. Webster's office to his friends and recommending that such friends International Dictionary defines “endorse” as “to express vote for such candidates. The Committee now reaffirms definite approval or acceptance of,” “support or aid that opinion and extends its scope so that henceforth it will explicitly by or as if by a signed statement,” “vouch be applicable to all candidates for public office. for,” and “underwrite.” WEBSTER'S THIRD NEW INT'L DICTIONARY 749 (1981). The Oxford English Dictionary Comm. on Jud. Ethics, State Bar of Tex., Op. 13 (1976). defines “endorse” as “[t]o write on the back of something,”

“[t]o confirm, sanction, countenance, or vouch for These ethics opinions are noteworthy for several reasons. (statements, opinions, acts, etc.; occasionally persons) as by These opinions do not conclude that “endorsing,” as a matter an endorsement,” and “[t]o declare one's approval of.” 5 of principle, is evil, corrupt, ill-advised, undignified, or THE OXFORD ENGLISH DICTIONARY 233 (2d ed.1989). inherently injudicious. Both opinions hold “endorsing” is Even the commission's proffered definition of “endorse” acceptable conduct within certain boundaries. These holdings from the Merriam–Webster's Online Dictionary indicates are consistent with, if not as expansive as, the new draft rules the term involves more than mere support: “to express of the American Bar Association's joint commission 33 and support or approval of publicly and definitely <endorse a significant number of state Codes throughout the country a mayoral candidate>.” MERRIAM–WEBSTER ONLINE that expressly permit judges to endorse other candidates in DICTIONARY, http://www.m-w.com/dictionary/endorse. certain circumstances 34 or *570 which have no express North Carolina's definition of “endorse”—requiring more prohibitions. 35 than mere support—is consistent with these definitions. North Carolina's Code of Judicial Conduct, the only Code that In addition, these ethics opinions contradict the assertion that we determined actually defined “endorsing,” provides that a the “authorization” provision of Canon 5(2) constitutes a judge who is a candidate may endorse a candidate for judicial blanket prohibition, banning a judge from endorsing another office. N.C.CODE JUD. CONDUCT, Canon 7B(2). The candidate. These opinions only limit “endorsing” in scope. North Carolina Code of Judicial Conduct defines “endorse” In effect, these opinions approve the practice of “endorsing” as follows: by allowing a judge to introduce a candidate to personal friends *571 and recommend to friends that they vote for knowingly and expressly request, appeal or announce 36 publicly, orally or in writing, whether in person or through the candidate.

the press, radio, television, telephone, Internet, billboard or The text of Canon 5(2), the lack of any definition of distribution and circulation of printed materials, that other the term “endorse,” and the problematic ethical opinions persons should support a specific individual in his efforts provide marginal guidance. A survey of the respective Codes to be elected to public office. of a majority of states shows that they prohibit either N.C.CODE JUD. CONDUCT, Canon 7A(3) (emphasis “endorsing” 37 or “endorsing and opposing,” 38 but for the added). 39 North Carolina has recognized *572 “endorsing”

most part these state Codes fail to define “endorse.”

as a term of art within the political process.

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the Canon must be strictly construed in favor of Petitioner.

Although Eu v. San Francisco County Democratic Central See Mo., K. & T. Ry. Co., 100 Tex. at 424, 100 S.W. at 767. Committee, 489 U.S. 214, 109 S.Ct. 1013, 103 L.Ed.2d 271 (1989), is frequently relied upon in First Amendment cases The commission and the Ohio Board define “endorsing” as for a number of significant principles, it is important in meaning “support”; other prominent dictionary definitions this case because of the basis for its decision, a statutory and the North Carolina Code of Judicial Conduct define provision of an election code. The former provision of the “endorsing” as meaning more than just support. This latter California Elections Code at issue in Eu v. San Francisco definition constitutes a “limited, narrow, and inflexible County Democratic Central Committee, 489 U.S. 214, 109 reading and application” of the term “endorsing” in Canon S.Ct. 1013, 103 L.Ed.2d 271 (1989), stated in part that the 5(2) of the Code. The former interpretation encompasses official governing bodies of the political parties “shall not Petitioner's statements; the latter does not. We do not endorse, support, or oppose, any candidate for nomination by propose to construct our own definition of “endorsing.” We that party for partisan office in the direct primary election.” do, however, recognize the necessity of first establishing Id. at 217, 109 S.Ct. 1013 (emphasis added). This election *573 the meaning of “endorsing” before we can proceed code clearly distinguished between “endorse” and “support” to determine whether Petitioner's statements constitute because the use of both terms would be redundant. “endorsing.” This step is fundamental, particularly when the only definition specifically mandated by a state Code, that of [15] [16] [17] [18] The language and legal effect ofNorth Carolina, which in turn is based upon the American a statute may require a court to construe it “strictly.” To Bar Association's Model Code of Judicial Conduct, would not construe a statute strictly means applying a limited, narrow, prohibit Petitioner's statements. or inflexible reading and application of the statute. Cain v. State, 882 S.W.2d 515, 519 (Tex.App.-Austin 1994, no writ). [20] Accordingly, we interpret “endorsing” under the A strict construction of a statute must be applied to two circumstances of this case to mean more than support, that is, classes of statutes: those that authorize a penalty and those more than spoken praise. that infringe upon private property or liberty interests. Id. A statute that falls within one of these categories must be Petitioner testified his public statements, while obviously couched in such explicit terms that the party upon whom the supportive, principally dealt with factual background and did statute is to operate may, with reasonable certainty, ascertain not urge the public to “get behind” the nominee, particularly what the statute requires to be done and when it must be done. because the situation involved a nomination to the federal Mo., K. & T. Ry. Co. v. State, 100 Tex. 420, 424, 100 S.W. bench, not a candidate running in a contested election. 766, 767 (1907). If such explicit terms are not present, there is no opportunity for a person charged with the duty to protect The federal judicial-selection process focuses only on the himself by the performance of it according to the law. Id. individual nominated for the judicial position. The inquiry When the liberty interest is the right to core political speech, carefully examines the nominee's character, credentials, that construction must be quite strict. qualifications, and experience. The process encourages and invites public comment from prominent members of the [19] The commission alleged that Petitioner violated Canon community, including the judiciary. Public statements made 5(2) when he made certain statements in support of Harriet about the nominee are not intended to give an individual an Miers, a United States Supreme Court nominee at the advantage over another because there is only one nominee. time. Debate on the qualifications of candidates for public Senator Specter testified that the Senate Judiciary Committee office is at the core of our electoral process and of First would have requested Petitioner to appear and testify at Amendment freedoms. Eu, 489 U.S. at 223, 109 S.Ct. 1013. hearings on Miers' nomination. Petitioner testified he would The Supreme Court has recognized repeatedly that debate on have repeated the same public statements at issue here at such the qualifications of candidates is integral to the operation a hearing. 40 of the system of government established by the Constitution. Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 46 L.Ed.2d 659 Petitioner touched on this aspect again when he testified (1976) (per curiam). Because the authorization provision of that “of course you're endorsing in the sense that you're Canon 5(2) implicates the liberty interest of free expression, supportive, but that's not what the canon means.” He stated his intent was to get the truth out because much of the information

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being published about Miers was negative and untrue. He the authorization provision minimizes Canon 5(2)'s provision declined the commission's invitation to describe his support empowering a judge to speak on political matters. as “go, Harriet, go, she is my pick,” instead emphasizing he predominantly conveyed information *574 about her Canon 5(1)(ii) prohibits misrepresentations. Petitioner took personal and professional background, the type of cases the position that he “was uniquely situated to get the truth she handled (general business litigation from contracting out about Harriet [Miers].” He described the times as truly disputes to antitrust and securities), and the positions she took “chaotic” and that “the publicity coming out about Harriet when a Dallas City Council member or State Bar of Texas Miers [was] negative,” “false,” and “untrue.” He perceived President. He stressed that he intended to accurately relate her that “more information” needed to be developed about her qualifications. background. His public statements were “truthful” on matters “of enormous concern to the American public.” Petitioner Petitioner further testified he was present during the was also “worried” that if he did not speak up, it could discussions that took place when the Canons were amended be perceived that he knew something that would hurt her in 1990: “[T]here was not the slightest thought that it would nomination, which was false. ever apply to comments made in respect to a nomination to the United States Supreme Court. That was not a concern, it [22] Canon 5(2) should permit a judge to respond to any never crossed anybody's mind, and it hasn't since until this untruthful or inaccurate statements, thereby affording a judge case.” The amendment concerned providing “cover” for the able and willing to do so an effective and timely avenue judges under totally different circumstances. of recourse to correct misrepresentations in a public forum.

Otherwise, this provision provides minimal utility at such a [21] The commission highlights statements by Petitioner critical juncture. A construction of this provision that bars a that Harriet Miers “would make a good justice,” has a judge from publicly responding to misrepresentations absent “sterling character,” and her nomination was “good” and express permission to do so leaves a judge vulnerable to “solid.” These and other statements reflect that Petitioner potentially inaccurate and untruthful attacks without any provided descriptions of Miers' background, his perception effective remedy and deprives the public of correct and of her personal views on various subjects, and his favorable accurate background information on judicial candidates and opinions about Miers' nomination to the bench. They do not nominees. A reasonable construction of this provision affords constitute “endorsing” in that they are no more than support an immediate and practical method to counter public attacks or praise, and they do not constitute a request or appeal for and criticisms and protects the public's right to truthful and others to support her nomination. important information, particularly as to a nominee to the United States Supreme Court. In addition, the purposes of the Our conclusion is reinforced by examining Petitioner's public Code are promoted and enhanced, not hindered and frustrated. statements in the context of several relevant provisions This provision should not censor or silence a judge. of the Canons. 41 The Preamble and Canon 2 stress the need for a competent judiciary and maintaining public The American Bar Association Model Code of confidence. Petitioner made a number of remarks which Judicial Conduct and other state Codes make ample asserted Miers' character, experience, and career reflected the provision enabling a judicial candidate to respond to type of competence necessary on the bench. His remarks were misrepresentations. The ABA Model Code of Judicial designed to instill public confidence in the Miers nomination. Conduct includes a comment addressing “false information”

stating, “Where false information concerning a judicial Canons 3B(10), 4B(1), and 5(2) encourage participation by candidate is made public, a judge or another judicial judges in the legal system, the administration of justice, and candidate having knowledge of the facts is not prohibited by the political process. Petitioner's public *575 statements Section 5A(1) from making the facts public.” ABA MODEL concerning Miers' nomination detailed her personal life, her CODE JUD. CONDUCT, Canon 5A(1), Commentary positions on various sensitive issues, her professional career, (2004). This comment or a variation of this comment her character, and her work ethic. It is undisputed that Canon has been included in the Codes of Judicial Conduct of 5(2) permits a judge to speak out “on political matters.” several states including Alaska, Florida, Idaho, Indiana, Petitioner's statements were within the boundaries of these Kansas, Kentucky, Mississippi, Nebraska, Nevada, North Canons. The commission's interpretation and application of Dakota, South Carolina, South Dakota, and Tennessee. We

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conclude Petitioner's public statements are consistent with males for DWI. The judge's communications followed a a judge's right, if not his responsibility, to respond to telephone conversation in which the policeman criticized the misrepresentations. judge's dismissal of a suit against an Hispanic male for DWI as a “[expletive deleted] ... decision.” Id. at 573–74. The We conclude the commission's efforts to postulate judicial Special Court of Review determined that the judge's actions, misconduct by showing a state appellate judge made public including one of the letters and later “media interviews” statements about a pending nominee to the United States stemming from the letters and the judge's testimony in a Supreme Court, in the commission's words, “endorsing,” lawsuit as to the truthfulness of the policeman, were to under the particular facts and circumstances of this case, advance the public interest. Id. at 579. The court reasoned severely strain a reasonable construction of the Texas Code that all these communications dealt with the policeman's and are without merit. “alleged crimes,” not with his “private insulting remarks,”

and were, therefore, motivated by public interest. Id. at 580.

We conclude the commission has failed to prove by a The court considered a “matter of public interest” to be “one preponderance of the evidence that Petitioner endorsed Miers. that affected his [i.e., the policeman's] performance of duty.” We conclude under the particular circumstances *576 Id. at 580. In considering a second letter in which the judge presented that Petitioner complied with the spirit and letter did not mention possible crimes and public misconduct but of the Texas Code of Judicial Conduct. Accordingly, we instead referred to the judge taking “particular offense” to the conclude Petitioner is not guilty of violating Canon 5(2). comment, the court concluded the letter was not written to retaliate. Id. at 581. Instead, the court concluded that, even if the judge had a “personal motive of retaliation,” it was not convinced by a preponderance of the evidence that his VIII.

personal motive “exceeded the public motive of disciplining [23] The commission's second charge alleges: “[Petitioner] a police officer reasonably suspected of major crimes and lent the prestige of his judicial office to advance the private minor bad manners.” Id. interests of his close friend, Harriet Miers in violation of Canon 2B of the Texas Code of Judicial Conduct.” We Thus, the focus of the Jimenez court was on the public interest conclude Canon 2B is inapplicable to the conduct at issue. of the policeman's performance of his duties as a police officer, not the judge's private interest in retaliating against an Canon 2 is entitled: “Avoiding Impropriety and the ill-mannered individual. *577 See id. at 580. The Jimenez Appearance if Impropriety in All of the Judge's Activities.” court also recognized a balancing between private and public TEX.CODE JUD. CONDUCT, Canon 2. Canon 2B of the motivation. See id. at 581. Finally, the Jimenez court stressed Code provides, in relevant part: “A judge shall not lend the the commission never alleged any of the judge's statements prestige of judicial office to advance the private interests of were false in any respect. the judge or others....” TEX.CODE JUD. CONDUCT, 2B. 42 [24] A legal dictionary defines “private” in part as The second charge was limited to the private interests of “[r]elating to or belonging to an individual, as opposed to the “others,” namely, Miers.

public or the government.... Confidential; secret.” BLACK'S We first address whether Canon 2B applies to the conduct at LAW DICTIONARY 1233 (8th ed.2004). 43 While not issue in this case. In so doing, our inquiry focuses again on a defining “private interests,” the Texas Attorney General has definition, this time, of the term “private interests.” The Code decided that the phrase “does not include candidacy.” Op. of Judicial Conduct does not contain a definition of “private Tex. Att'y Gen. No. LO–89–21 (1989). In addition, the interests.” Supreme Court of Washington, reviewing the same language, discussed the type of conduct to which Canon 2B is directed, In re Jimenez, 841 S.W.2d 572 (Tex.Spec.Ct.Rev.1992), emphasizing “the judge's use of his or her office to obtain provides some guidance. In that case, the commission, after a financial or other advantage, either for himself or herself finding the judge had a private interest in retaliating against personally or for a third party.” In re Sanders, 135 Wash.2d a policeman, privately admonished the judge for violating 175, 955 P.2d 369, 376 (1998). We conclude that a private Canon 2B for making statements accusing a policeman interest pursuant to Canon 2B is a personal or individual of perjuring himself and selectively prosecuting Hispanic advantage or benefit gained by use of judicial office.

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friendly or less friendly, or those kinds The commission asserts that a benefit of office, life tenure, of things. It's not—the idea that by as well as power and prestige, constitute “private interests” speaking in favor of someone who under Canon 2B. We disagree. Although the position of is trying to get confirmed, and has Supreme Court Justice comes with life tenure and as well already been nominated to the U.S. as a guaranteed salary, see U.S. CONST. art. III, § 1, those Supreme Court, that that somehow factors are not necessarily private interests. Rather, they advances a private interest, no one are the perquisites of the public office. Lifetime tenure and would have ever thought that. If you guaranteed salary safeguard the judiciary from interference made a list—this canon is old, so if from the other branches of government and promote judicial you made a list a long time ago and independence; thus, they are public, rather than private, said, check off the ten things this is interests. supposed to stop, and one of them was keeping people from promoting The argument that the benefits of public office are private nominees to the U.S. Supreme Court, interests presumes that candidates seek office for selfish nobody would check that off.... reasons rather than from a noble sense of duty. The suggestion that a public office is a private interest implies that all Canon 2B prohibits a judge from using the prestige of public officers, whether legislative, executive, or judicial, are judicial office to pursue “private interests” such as using the corrupt. This Court soundly rejects any such suggestion. position of judge to extort a financial benefit, to retaliate against another, or to obtain preferential treatment for the The evidence before us, including numerous transcriptions judge or another person. 46 Such conduct is *579 generally of congressional hearings, clearly demonstrates candidates perpetrated in secret or in a clandestine manner. The conduct seeking federal judicial positions are driven by the desire and at issue, however, is the public dissemination of information passion to engage in public service and promote the rule of about Miers in a political context. The record does not even law in a meaningful capacity. Furthermore, all of the expert intimate that Petitioner engaged in any surreptitious conduct.

witness testimony, most of which was stipulated to by the commission, opined that Petitioner's conduct did not advance We hold Canon 2B was not intended to apply and does not the private interests of Miers. Under the facts presented, we apply to the conduct at issue in the political environment are convinced this level of dedication and commitment is best described. 47 Under these circumstances, we can hardly described as one of public, not private, interest. 44 conclude that Petitioner's public statements would have constituted an advancement of Miers' “private interests.”

*578 Moreover, the view that seeking these perquisites as a Accordingly, we find Petitioner not guilty of the charge of private interest, that is, viewing candidacy for this office as a violating Canon 2B by lending the prestige of his judicial private interest, contradicts the Attorney General's decision in office to advance Miers' private interests.

LO–89–21 and would equate a judge's promotion of his or her own candidacy as a violation of Canon 2B. This interpretation would also prohibit a judge from appearing on his or her own behalf at a political event, conduct expressly permitted under IX.

45

Canon 5(2). In short, we agree that “private interests ... do Analysis of the public statements in relation to the Texas not include candidacy.” Op. Tex. Att'y Gen. No. LO–89–21. Code of Judicial Conduct has been seriously hampered by the complete lack of definitions of critical terms in Petitioner testified about the purpose of Canon 2B: the Code. Terms such as “authorized,” “endorsing,” and “private interests” are pivotal to the provisions in which they [T]he purpose for 2B is to keep judges appear, but the Code does not provide a specific meaning from calling the district attorney, for the terms. This void fosters ambiguity and confusion trying to get him to go easy on their in interpretation and application. There is no bright line kid, or the neighbor's kid, or trying to of demarcation between acceptable and prohibited conduct.

get the county commissioners to give We decline to come down on the side of condemnation a contract to somebody that's more

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In re Hecht, 213 S.W.3d 547 (2006)

in the face of what we perceive as undeniably obvious: the ambiguity, confusion, and apparent contradictions in McCLURE, J., concurring.

the content, interpretation, and application of the Canons. Perhaps an event such as the case before us will precipitate a fresh approach and renewed efforts to clearly delineate the ANN CRAWFORD McCLURE, Justice, concurring. meaning of such key terms and thereby clearly define what “Thirty-seven hundred judges want to know what to do.” conduct is acceptable and what is not. With these words, the Examiner for the Commission has asked us to clearly draw the lines and articulate the boundaries We have resolved the meaning of “authorized” by referring of the Texas Code of Judicial Conduct. At the outset, let me to the Webster's International and the Oxford English dispel any notion that this court of review is about politics. dictionaries. We conclude Canon 5(2), the “authorization” Politics may well have initiated the debate. It plays no role provision, does not prohibit “endorsing”; rather, the words in the resolution. The three members of this panel are not mean what they say: the “authorization” provision prohibits affiliated with the same political party. But as judges, we a judge from authorizing the public use of his name unanimously agree that we must preserve the independence, endorsing another candidate. We cannot conclude a violation integrity, and impartiality of the judiciary. I don't believe that of the “authorization” provision occurred without any Justice Hecht, a well-respected member of the state's highest evidence Petitioner “authorized” *580 the use of his name civil court, would contend otherwise. How we do that within “endorsing” “another candidate for any public office,” Harriet the confines of the canons and the constitution is the issue. Miers. If we as judges do not honor and respect the office and the public trust, we can hardly expect lawyers and litigants to do Although we have not resolved the meaning of “endorsing,” so. Nor can we expect the recurrent attacks on the judiciary we conclude there are alternative, reasonable definitions of to subside. “endorsing” and that, even if we accepted the commission's interpretation of Canon 5(2) as prohibiting “endorsing,” The majority perceives no violation of either Canon 5(2) or a strict construction of “endorsing” means a narrower Canon 2B. I disagree. But because I believe the canons in construction than just broad support, and, therefore, does not issue are unconstitutional, I concur in the judgment. encompass Petitioner's public statements. The commission failed to prove Petitioner's public statements “endorsed” Miers. Thus, we cannot conclude Petitioner violated Canon CHARGE I

5(2) by “endorsing.”

[25] We also conclude Petitioner's public statements are, THE “ENDORSE” CLAUSE under the particular facts presented, permitted by the Charge I alleges that Justice Hecht authorized the public use Canons because they qualify as legitimate responses to misrepresentations (Canon 5(1)(ii)), expressions of views of his name and title to support 1 or endorse his close friend, on political matters (Canon 5(2)), statements that promote Harriet Miers, a candidate for public office, which actions public confidence in the competence of the judiciary, and constituted willful and/or persistent violations of Article V, statements which involve the law, the legal system, and the Section 1–a(6) of the Texas Constitution and Canon 5(2) of administration of justice (Preamble, Canons 2 & 4). the Texas Code of Judicial Conduct. Canon 5(2) provides:

Finally, we conclude Canon 2B does not apply to the political A judge or judicial candidate shall not authorize the public conduct at issue, and, therefore, no violation can be found.

use of his or her *581 name endorsing another candidate for any public office, except that either may indicate Accordingly, we conclude the commission has failed to meet support for a political party. A judge or judicial candidate its burden of proving Petitioner violated the Canons, we may attend political events and express his or her views dismiss the commission's public admonition, and we find him on political matters in accord with this Canon and Canon not guilty of the charges.

3B(10). TEX.CODE JUD. CONDUCT, Canon 5(2), reprinted in TEX. GOV'T.CODE ANN., tit. 2, subtit G, app. B (Vernon

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2005). We must determine (1) whether Miers was “a context. He concedes that although a “judge commenting candidate;” (2) whether Justice Hecht “endorsed” her; and favorably on the proposed appointment may be said to be (3) whether he authorized the public use of his name and ‘endorsing’ the person in the dictionary sense of ‘giving office in doing so. The answer to all three of these inquiries support,’ the judge is not engaging in the electoral political is a resounding, “Yes.” process that Canon 5(2) is aimed at.” Petitioner's Brief at 18.

I must conclude that Justice Hecht “endorsed” for the same reasons I conclude that Miers was a “candidate.” And in his Was Miers a Candidate?

brief, even he candidly admits:

Justice Hecht argues that while Miers was a nominee for a The information [Justice Hecht]

lifetime appointment to the United States Supreme Court, she provided about Miers' experience was not a candidate for a public office within the meaning and qualifications certainly supported of Canon 5(2). He contends that the prohibition relates only and thus ‘endorsed’ her nomination to endorsement of a political candidate for an elected office among those who valued the kind and does not prohibit him from expressing his support of of background she had, although the a person seeking an appointed judicial position. The Code information was undoubtedly received of Judicial Conduct does not define the term “candidate”

negatively among those who did not.

and it does not have a specialized meaning; therefore, it should be given its ordinary meaning. TEX.GOV'T CODE Petitioner's Brief at 19. ANN. § 312.002 (Vernon 2005). Webster defines “candidate” as “one that aspires to or is nominated or qualified for Justice Hecht gave numerous media interviews in which he an office, membership, or award.” Webster's Ninth New was identified as a *582 justice on the Texas Supreme Court. Collegiate Dictionary 201 (9th ed.1987). The Examiner He provided factual information about Miers' experience references the Merriam–Webster Online Dictionary, which and background. In some of the interviews, he offered defines “candidate” as “[o]ne that aspires to or is nominated his personal opinion that Miers' nomination would be or qualified for an office, membership, or award.” See http:// “good for the country,” that she would make a “good www. merriamwebster.com/dictionary/candidate. Even the justice,” that she would be “a conservative judge” and current version of the Texas Election Code makes no “a strict constructionist.” He also described her as “prodistinction between persons who take affirmative action for life.” Reasonable minds could differ as to whether these the purpose of gaining nomination to public office and those comments constitute an endorsement. The majority concludes who take affirmative action for the purpose of election to that “endorsing” must mean more than “spoken praise.” It public office. TEX.ELEC.CODE ANN. § 251.001 (Vernon suggests that Justice Hecht's comments did not constitute a Supp.2006). More à propos to our discussion, however, is request or an appeal to others to support her nomination. I the definition contained in the American Bar Association respectfully disagree. Model Code of Judicial Conduct. “Candidate” is defined as “a person seeking selection for or retention in judicial office The Stipulation of Facts reveals that Former White House by election or appointment.” MODEL CODE OF JUDICIAL Deputy Chief of Staff Karl Rove spoke with Justice Hecht CONDUCT, Preamble and Canons 5A, 5B, 5C, and 5E. on Saturday, October 1, 2005, and asked whether he [Justice Finally, the record reveals that Justice Hecht himself has Hecht] would be willing to provide factual information to Dr. referred to nominees for various federal courts, including James Dobson 2 and “others who might ask” about Miers'

the United States Supreme Court, as “candidates,” just as he background in general and her religious views in particular.

considers a position on the United States Supreme Court to Justice Hecht agreed to do so. In a later conversation, Justice be “a public office.”

Hecht agreed to respond to media calls referred to him by the White House, and he agreed to make daily reports to White House staff concerning the types of questions he had been Did Justice Hecht's Comments asked. Constitute An “Endorsement”?

President Bush announced Miers' nomination on Monday Justice Hecht contends that just as “candidate” refers to the morning, October 3. That afternoon, someone from Rove's elective process, so does “endorsing” as used in the same office called Justice Hecht to advise him that he had been

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In re Hecht, 213 S.W.3d 547 (2006)

invited to participate in a conference call of the Arlington and even applying the interpretation that the majority has Group. Justice Hecht had not heard of the group but learned adopted, I conclude that Justice Hecht endorsed Miers. 5 that it was composed of conservative religious leaders. He agreed to participate, and called in at the appointed time. Dr. Dobson, who participated in the call, later told the press that Did Justice Hecht Authorize the he had been assured by Rove that Miers was an evangelical Public Use of His Name and Office? Christian but that he did not get reassurances about how she I also disagree with the majority as to whether Justice Hecht would vote on Supreme Court issues. Examiner's Exhibit 17.

authorized the public use of his name and office. As I have already mentioned, the White House sought his help Within the first two days following the announcement, in reassuring Dr. Dobson, the Arlington Group, and other Justice. received nearly 100 media calls and within a week, religious conservatives that Miers was pro-life and a strict by his own count, he had responded to some 120 requests for constructionist. The White House wanted to refer media calls interviews. Included in the record are videotapes, DVDs, and to him and asked him to report daily on the types of questions transcripts from various networks, including Supreme Court he was asked. He expressly agreed. These are facts to which Watch [C–SPAN], FOX News Sunday [FOX], Hardball Justice Hecht has stipulated. Examiner's Exhibit 2, The New with Chris Matthews [MSNBC], and The Situation Room York Times article, reported that “[t]he Republican National [CNN]. The New York Times hailed Justice Hecht as Miers'

Committee put him on at least one conference call with “Spokesman” in an October 6 article. 3 Examiner's Exhibit 2. evangelical pastors and conservative organizers. Progress for And he himself joked during an interview that he was a “PR America, a group that promotes President Bush's agenda, office for the White House.” Examiner's Exhibit 1. has also been working to make Justice Hecht available for interviews.” While Justice Hecht complained to another On October 10, Texas Lawyer reported that Justice Hecht reporter that the Times article was misleading, he sought no categorized his “mission” as filling in the gaps about Miers' retraction. background and countering “some conservatives' skepticism about her qualifications.” Examiner's Exhibit 1. 4 He told *584 The majority contends that a violation of Canon *583 reporters that conservatives should “rest easy” about 5(2) requires proof that the judge gave permission for Miers' nomination. Id. Examiner's Exhibit 3 is a story from others to publicly use the judge's name in endorsements The Dallas Morning News. It begins: of the candidate. The record shows precisely that. Justice Hecht appeared on several television programs to debate conservatives who opposed Miers' nomination, clearly Like an author on a radio talk-show blitz, Texas Supreme articulating the difference between legal issues and personal Court Justice Nathan Hecht worked the phones Tuesday viewpoints 6 . The following exchange occurred during an on a mission authorized at the highest levels of the White interview with Chris Wallace of FOX News Sunday:

House: lending his conservative stamp of approval to Harriet Miers, his long time friend, churchmate and fellow Dallas lawyer. Chris Wallace: Does she regard abortion as murder? Justice Hecht never sought a retraction of these or other media reports. He voluntarily participated in Justice Hecht: Well, I don't know that we've ever talked rallying public support for Miers' nomination and in in exactly those terms. But she is pro-life. I mean, you convincing conservative religious leaders that she was press around it all you can, but she is pro-life, and she an acceptable candidate. He spoke about her religious has been for 25 years. beliefs and convictions, her faith, and her pursuit of deeper meaning and greater purpose through evangelical Christian Q: If she does believe that, Justice, how could she teachings. In responding to a media report that he had possibly vote to uphold Roe v. Wade 7 , if she believes “embarked on a media blitz,” Justice Hecht quipped that that abortion is murder? he “embarked, the same way a fishing boat embarks into a tsunami.” Little wonder that he characterized his A: Because it's easy. Legal issues and personal issues are experience as “seismic.” Based upon the record before us, just two different things. Judges do it all the time. In fact, a judge is going to take an oath that says I'm going to judge

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In re Hecht, 213 S.W.3d 547 (2006)

rightly in cases, which means that you have to set aside your personal views in deciding the case. And if you don't “If you have somebody like Nathan Hecht, whose antido that, you're either a bad believer in your views, a bad choice, right-wing credentials are so solid, and he says you're going to like her, she's one of us, that sends a judge or both. 8 pretty clear signal to that wing of the Republican Party,” said Sarah Wheat, executive director of NARAL Pro– Gary Bauer 9 : Look, I'm confused here. I can't tell whether Choice Texas.

Judge Hecht is arguing that [Miers] is going to overturn Roe or she's not going to overturn Roe. If he wants to reassure Examiner's Exhibit 3. All of this evidence leads me his fellow pro-life conservatives, that's the last argument he to conclude that Justice Hecht expressly and quite should be making, the argument that he just made. affirmatively authorized the public use of his name and Examiner's Exhibit 10. Justice Hecht responded similarly to office to sell the Miers' nomination. Chris Matthews and Pat Buchanan 10 on MSNBC's Hardball with Chris Matthews:

CHARGE II

Chris Matthews: Karl Rove gave you the OK to begin THE “PROMOTE” CLAUSE giving interviews like this. And we very much appreciate, Justice, you coming on, because no one else can talk about Charge II alleges that Justice Hecht lent the prestige of his her from that Texas perspective, that longtime perspective. judicial office to advance the private interests of his close Are you surprised Karl Rove has basically unleashed friend, Harriet Miers, which actions constituted willful and/ people to come out and talk about her, that they're not more or persistent violations of Article V, Section 1–a(6) of the careful about making sure there's less talked about her than Texas Constitution and Canon 2B of the Texas Code of more? Judicial Conduct. Canon 2B states in pertinent part: “A judge shall not lend the prestige of judicial office to advance the Justice Hecht: You know, I really don't know the history private interests of the judge or others....” TEX.CODE JUD. on that. And I don't know what their usual policies CONDUCT, Canon 2B, reprinted in TEX. GOV'T CODE are....But I'm happy that people are, because I think there ANN., tit. 2, subtit G, app. B (Vernon 2005). is going to be a *585 pretty solid consensus of view from people talking about her.

Did Justice Hecht's Conduct Promote a Private Interest?

*****

Justice Hecht contends, and the Examiner concedes, that the Pat Buchanan: The president has asked us to elevate a nomination of Harriet Miers to the United States Supreme blank slate to the Supreme Court to sit opposite people Court and the ensuing debate over her qualifications were like Roberts and Scalia, when we have outstanding jurists matters of public concern. But the sanction imposed requires who have taken a stand, been cut and blooded for their a finding that Justice Hecht's very public conduct promoted beliefs. And so, I think this is why she has got to sell Miers' very private interests. The Examiner counters that herself to the country, to the conservative movement and there is a real and personal private interest at stake—that of Republican Party. And if she does not, Chris, I would urge political ambition—including a candidate's desire for lifetime conservatives to recommend a no-vote on this, if she does tenure, prestige, and power, which motivates a candidate to not persuade that committee that she is Supreme Court seek a life-time appointment to the federal bench in the first material. place. Examiner's Brief at 9. Examiner's Exhibit 13. The New York Times article reported that “[w]hen the White House named Harriet E. The Commentary to the ABA Model Code indicates that a Miers for a seat on the United States Supreme Court this judge may participate in only a limited fashion in the process week, Republicans turned to Justice Nathan L. Hecht of of judicial selection. “Judges may participate in the process of the Texas Supreme Court to make her case.” Examiner's judicial selection by cooperating with appointing authorities Exhibit 2. Following suit, The Dallas Morning News wrote: and screening committees seeking names for consideration, and by responding to official inquiries concerning a person

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In re Hecht, 213 S.W.3d 547 (2006)

being considered for a judgeship.” MODEL CODE OF to use, his position as a judge, and a Texas Supreme Court JUDICIAL CONDUCT, Canon 2B, cmt. Justice Hecht could justice in particular, to influence, sway, and convince public have answered inquiries from the White House regarding opinion and conservatives who questioned the President's his knowledge of Miers, and he could have testified at the decision to nominate Miers. Examiner's Brief at 14. Because Senate confirmation hearing, *586 since that proceeding the Examiner proved these facts by a preponderance of the obviously constitutes an official inquiry about the person evidence, I agree. being considered for a judgeship. 11 But his activities went beyond the limited participation contemplated by the canon and its commentary. I do not question Justice Hecht's loyalty WERE THE VIOLATIONS WILLFUL? to and friendship with Miers. He considered himself a “central repository of information” about her. That's precisely The Commission must prove by a preponderance of the point. He spoke because of his personal and private the evidence that Justice Hecht willfully committed the relationship with her. He spoke because the candidate was charged violations. In re Davis, 82 S.W.3d 140, 142 “Harriet,” not former State Bar of Texas President Miers, not (Tex.Spec.Ct.Rev.2002); see TEX GOV'T CODE ANN. § former Locke Liddell & Sapp managing partner Miers, not 33.001(b)(2)(Vernon 2004); see also In re Bell, 894 S.W.2d former Dallas City Councilwoman Miers. If the candidate had 119, 131 (Tex.Spec.Ct.Rev.1995). Willful conduct requires been a different former bar president or a different firm leader a showing of intentional or grossly indifferent misuse of or a different city representative whom he had known in years judicial office, involving more than an error of judgment or past, he may well have spoken privately to individuals vetting lack of diligence. Davis, 82 S.W.3d at 148; Bell, 894 S.W.2d the candidate or agreed to testify during Senate confirmation at 126. A judge need not have formed the specific intent to proceedings. But he would have been more circumscribed in violate the Code; as long as he intended to engage *587 his comments. He wouldn't have jumped on board the “media in the conduct for which he is disciplined, he is guilty of train” and he wouldn't have joked about running “PR for the a willful violation of the Code. See In re Barr, 13 S.W.3d White House.” These events happened because they involved 525, 539 (Tex.Rev.Trib.1998, pet.denied). There is no dispute “Harriet.” whatsoever that Justice 2 intended to engage in the conduct for which he is disciplined. Although he defines willful as, “you know it's wrong and you do it anyway,” he also testified that “if I had it to do over again, I'd do it again.” In my view, Did Justice Hecht Lend the Prestige the evidence supports a finding that Justice Hecht willfully of His Office to Promote that Interest?

violated the canons.

The evidence supports a finding that Justice Hecht lent the prestige of his judicial office to advance Miers' private interests in violation of Canon 2B. I must reject his argument ARE THE CANONS CONSTITUTIONAL? that he was contacted by the media not because of his position as a justice on the Texas Supreme Court but because of his I turn now to the broader constitutional concerns. Justice thirty-year relationship with Miers. That may well have been Hecht challenges the constitutionality of Canon 5(2) (the the motivation behind press inquiries. But every time the endorse clause), both facially and as applied to him. Similarly, media carried the story, the “source” was clearly identified, he challenges Canon 2B (the promote clause) as applied. Both captioned, and addressed as “Justice Hecht.” complaints allege the canons violate the First Amendment.

Citing Republican Party of Minnesota v. White, 536 U.S. 765, In a public statement issued in 2000, the Commission 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002) (White I ), he argues cautioned Texas judges that “it is virtually impossible for that these provisions do not withstand strict scrutiny analysis. a judge, at least in the eyes of the public, to separate The first issue is whether strict scrutiny analysis applies. himself or herself from the judicial office; therefore it is immaterial to the issue of misconduct that a judge does not use his judicial title or refer to his judicial position in a Does Strict Scrutiny Apply?

public endorsement of a candidate for public office.” Public Statement PS–2000–2. The Examiner argues in its brief that In White I, the Supreme Court applied the strict scrutiny contrary to his claims, Justice Hecht used, and allowed others analysis because the intermediate court of appeals had done

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In re Hecht, 213 S.W.3d 547 (2006)

so and the parties did not dispute the issue. White I, 536 U.S. Determining which tier applies requires a court to determine at 774, 122 S.Ct. 2528. Some legal scholars suggest that the whether a regulation is content-neutral or content-based. See political activity canons should not be subjected to a strict Barber, 111 S.W.3d at 93. This is often not a simple task. Id. A scrutiny analysis. See J.J. Gass, After White: Defending and content-neutral regulation generally must be both viewpoint Amending Canons of Judicial Ethics, Judicial Independence neutral and subject-matter neutral. Id., see Hill v. Colorado, Series, Brennan Center for Justice at NYU School of Law at 530 U.S. 703, 722–23, 120 S.Ct. 2480, 147 L.Ed.2d 597 p. 18 (2004). The First Amendment forbids the government (2000). As the Supreme Court has stated, “[r]egulation of to regulate speech in ways that favor some viewpoints or the subject matter of messages, though not as obnoxious as ideas at the expense of others. Members of City Council v. viewpoint-based regulation, is also an objectionable form of Taxpayers for Vincent, 466 U.S. 789, 804, 104 S.Ct. 2118, content-based regulation.” Barber, 111 S.W.3d at 93, quoting 80 L.Ed.2d 772 (1984); Texas Department of Transportation Hill, 530 U.S. at 723, 120 S.Ct. 2480. v. Barber, 111 S.W.3d 86, 92 (Tex.2003). But the Supreme Court also has recognized that the First Amendment does not To be viewpoint neutral, a regulation must not be based on guarantee the right to communicate one's views at all times the ideology of the message. Barber, 111 S.W.3d at 93. The and places or in any manner. Heffron v. International Society prohibitions contained in the canons are not based on ideology for Krishna Consciousness, Inc., 452 U.S. 640, 647, 101 S.Ct. since they restrict all speech by a judge or judicial candidate 2559, 69 L.Ed.2d 298 (1981); Barber, 111 S.W.3d at 92. endorsing another candidate. To be subject-matter neutral, a Both written and oral expression may be subject to reasonable regulation must not be based on the topic of the message. time, place, and manner restrictions. Clark v. Community for While viewpoint neutral, the canons are not subject-matter Creative Non–Violence, 468 U.S. 288, 293, 104 S.Ct. 3065, neutral as they are certainly based on topic. 82 L.Ed.2d 221 (1984); Barber, 111 S.W.3d at 92. When reviewing regulations on speech, we engage in a two-tier I thus conclude that the proper test to determine the analysis. Barber, 111 S.W.3d at 92. constitutionality of the canons is strict scrutiny. Under the strict scrutiny analysis, any restriction on the right of For the higher tier, “regulations that suppress, disadvantage, political speech requires a three-pronged analysis: (1) were or impose differential burdens upon speech because of its the statements core political speech? (2) is there a compelling content,” the court applies “the most exacting scrutiny.” state interest to prohibit that speech? and (3) is the canon Barber, 111 S.W.3d at 92, quoting Turner Broadcasting narrowly tailored to serve that interest? White I, 536 U.S. at System, Inc. v. FCC, 512 U.S. 622, 642, 114 S.Ct. 2445, 775, 122 S.Ct. 2528 Brown v. Hartlage, 456 U.S. 45, 54, 102 129 L.Ed.2d 497 (1994). Such content-based regulations are S.Ct. 1523, 71 L.Ed.2d 732 (1982). presumptively invalid, R.A.V. v. City of St. Paul, 505 U.S. 377, 382, 112 S.Ct. 2538, 120 L.Ed.2d 305 (1992), and they can withstand strict scrutiny only if precisely drawn to serve What Does White Really Say?

a compelling state interest. Consolidated Edison Company of N.Y., Inc. v. Public Service Commission, 447 U.S. 530, 540, In Republican Party of Minnesota v. White, 536 U.S. 765, 122 100 S.Ct. 2326, 65 L.Ed.2d 319 (1980); Barber, 111 S.W.3d S.Ct. 2528, 153 L.Ed.2d 694 (2002) (White I ), the United at 92–93. For the lower tier, “regulations that are unrelated States Supreme Court considered whether the Minnesota to the content of speech,” the court applies an “intermediate Code of Judicial Conduct violated a judicial candidate's First level of scrutiny.” Barber, 111 S.W.3d at 93, quoting Turner Amendment rights by prohibiting him from announcing his Broadcasting, 512 U.S. at 642, 114 S.Ct. 2445. Contentviews on disputed legal or political issues. 12 Many states, neutral regulations are valid provided they are narrowly including Texas, had canons which are generically referred to tailored to *588 serve a substantial governmental interest, as “announce” clauses:

and they do not unreasonably limit alternative channels for communicating the information. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 47, 106 S.Ct. 925, 89 L.Ed.2d 29 [I]t is clear that the announce clause prohibits a (1986); Clark, 468 U.S. at 293, 104 S.Ct. 3065; Taxpayers for judicial candidate from stating his views on any specific Vincent, 466 U.S. at 808, 104 S.Ct. 2118; Heffron, 452 U.S. nonfanciful legal question within the province of the court at 647–48, 101 S.Ct. 2559; Barber, 111 S.W.3d at 93. for which he is running, except in the context of discussing

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past decisions—and in the latter context as well, if he expresses the view that he is not bound by stare decisis. The majority concluded that the goal of “impartiality” could White I, 536 U.S. at 773, 122 S.Ct. 2528. be compelling depending upon the definition assigned. While it rejected a definition of “impartiality” as meaning a lack

The Facts of preconception regarding legal matters 13 , it accepted the definition of promoting the state's interest in electing judges Gregory Wersal first ran for the Minnesota Supreme who are not biased against or in favor of a particular party. Court in 1996. He identified himself as a member of the Because Minnesota had not demonstrated that the announce Republican Party, attended and spoke at party meetings, clause served that interest, the canon was not narrowly sought its endorsement, and personally solicited campaign tailored to achieve that goal. “[E]ven if the First Amendment contributions. He distributed literature criticizing *589 allows greater regulation of judicial election campaigns than several decisions of the court on issues such as crime, welfare, legislative election campaigns, the announce clause still and abortion. As a result of this literature, a complaint was fails strict scrutiny because it is woefully underinclusive, filed with the Minnesota Lawyers Professional Responsibility prohibiting announcements by judges (and would-be judges) Board. The Board ultimately dismissed the complaint, but only at certain times and in certain forms.” Id. at 783, 122 Wersal withdrew as a candidate because he feared that other S.Ct. 2528 (Emphasis in original). The court left unanswered complaints might jeopardize his law license. whether the definition could include the characteristic of open-mindedness 14 , but other courts have found that open-

Wersal ran again in 1998. This time, he asked the Board mindedness can be a *590 compelling state interest. See for an advisory opinion regarding the announce clause. The Kansas Judicial Watch v. Stout, 440 F.Supp.2d 1209, 1230 Board expressed significant doubts about the constitutionality (D.Kan.2006), citing North Dakota Family Alliance, Inc. of the canon, but it did not specifically answer his questions v. Bader, 361 F.Supp.2d 1021, 1040 (D.N.D.2005); Family because he had not submitted a list of the “announcements” Trust Foundation of Ky., Inc. v. Wolnitzek, 345 F.Supp.2d he wished to make. Wersal responded with a lawsuit against 672, 695 (E.D.Ky.2004); In re Watson, 100 N.Y.2d 290, 794 the Board and Suzanne White in her capacity as chair, seeking N.E.2d 1, 763 N.Y.S.2d 219 (N.Y.2003). a declaration that the announce clause violates the First Amendment. Other plaintiffs, including the Republican Party White I caught the judiciary off guard. Justice Hecht captured of Minnesota, alleged that the announce clause prevented the sentiment when he testified, “I would say that White their membership from learning Wersal's views on various case was a bombshell when it hit and that I certainly wasn't legal issues. The district court determined that the announce expecting it.” Few of us were. clause did not violate the First Amendment and the Eighth Circuit affirmed.

White II

White I The Supreme Court remanded to the Eighth Circuit for consideration of the constitutional viability of the The Supreme Court swiftly determined that a candidate's “partisan activities” clause and the “solicitation” clause. statements regarding his or her own views on political Republican Party of Minnesota v. White, 416 F.3d 738 or legal issues is protected speech. The court struggled (8th Cir.2005) (White II ). Pursuant to the Minnesota Code a bit with an analysis of Minnesota's compelling state of Judicial Conduct, a judge or judicial candidate may interest. Minnesota purportedly enacted the announce clause not identify himself or herself as a member of a political to promote the impartiality of the judiciary and the appearance organization; attend political gatherings; or seek, accept, of impartiality. The Eighth Circuit agreed that these were or use endorsements from a political organization. The sufficiently compelling. The same justifications were argued solicitation clause prohibits a candidate from personally to the Supreme Court. Although “impartiality” was used soliciting or accepting campaign contributions, although the throughout the Eighth Circuit's opinion, the briefs, the candidate may establish committees to conduct campaigns, Minnesota Code of Judicial Conduct and the ABA Model and solicit contributions and public support from attorneys. Code, the high court pointedly noted that “none of these The committees shall not seek, accept, or use political sources bothers to define it.” Id. at 775, 122 S.Ct. 2528. endorsements or disclose to the candidate the identity of

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contributors. Relying heavily upon White I, the Eighth Circuit held both clauses to be constitutionally infirm.

Were Justice Hecht's Statements Core Political Speech?

The court first addressed the partisan activities clause, focusing upon the fact that the canon treated political parties The Examiner contends that the canons do not encroach differently than special interest groups. Id. at 753 n. 7. The on Justice Hecht's right to engage in core political speech. court viewed the clause in the context of the state's interest in It claims that White I extends only to a judge's comments ensuring unbiased judges. “[T]he underlying rationale for the or opinions in connection with his or her own campaign. partisan-activities clause—that associating with a particular Because Justice Hecht was speaking about Miers' beliefs group will destroy a judge's impartiality—differs only in form and values rather than his own, the Examiner argues that no from that which purportedly supports the announce clause— political speech was abridged: that expressing one's self on particular issues will destroy a judge's impartiality.” Id. at 754 (Emphasis in original). In It is not disputed that [Justice Hecht] other words, “the Supreme Court's analysis of the announce shared with reporters and interviewers clause ... is squarely applicable to the partisan-activities some of his own personal views clause.” Id. While a judicial candidate could not consort with on issues such as abortion and a political party, the candidate could align with a special gay marriage while discussing the interest group, such as the National Rifle Association, the Miers' nomination. However, [Justice National Association for Women, the Christian Coalition, the Hecht] has never been sanctioned NAACP, or the AFL–CIO. for making those statements, nor has he been charged in this proceeding A judicial candidate's stand, for with violating any provision of the example, on the importance of the Texas Code of Judicial Conduct by right to keep and bear arms may telling reporters those views. To not be obvious from her choice of the contrary ... [Justice Hecht] was political party. But, there can be little sanctioned for assisting Miers and her doubt about her views if she is a candidacy by publicly expressing what member of or endorsed by the NRA. he believed were Miers' views on Yet Canon 5 is completely devoid of disputed political and legal matters. any restriction on a judicial candidate attending or speaking to a gathering of Examiner's Brief at 18 (Emphasis in original). Applying this an interest group; identifying herself analytical construct, the Examiner then concludes that Justice as a member of an interest group; Hecht's oratory “was simply the expression of a personal or seeking, accepting, or using an opinion for which he was not entitled to any heightened First endorsement from an interest group. Amendment protection.” Id., citing Scott v. Flowers, 910 F.2d 201 (5th Cir.1990).

White II, 416 F.3d at 760. Consequently, the partisan activities clause was underinclusive. In Scott, the Fifth Circuit addressed the First Amendment in the context of a civil rights action brought by a Texas The solicitation clause suffered the same fate. Minnesota justice of the peace challenging a public reprimand by the argued that keeping judicial candidates from soliciting Commission. The reprimand stemmed from an open letter campaign funds served its interest in an impartial judiciary by written by Judge Scott to county officials attacking the district preventing undue influence. But a number of other scenarios attorney's office and the county court at law for dismissing would allow a candidate “to stumble onto the names of the majority of traffic ticket appeals. Characterizing the contributors” since campaign finances are reported, publicly communications as “insensitive,” the Commission found available, and widely disseminated. Id. at 766. the judge's conduct to be inconsistent with the proper performance of his duties as a justice of the peace and served *591 Bearing in mind the teachings of White I, look now to cast public discredit upon the judiciary. He was warned to to the three prongs of a strict scrutiny analysis with regard to be more restrained and temperate in the future. Justice Hecht's statements.

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Judge Scott ultimately filed suit against the members of the Commission, both individually and in their official capacities, Preamble

claiming that his letter and comments to the press were protected speech for which he could not constitutionally be Our legal system is based on the principle that an subjected to discipline. The district court granted summary independent, fair and competent judiciary will interpret and judgment in favor of the Commission. apply the laws that govern us....

The Fifth Circuit began by noting that public employees Canon 1. Upholding the Integrity and Independence of occupy a unique position in First Amendment jurisprudence. the Judiciary Scott, 910 F.2d at 210. While they do not shed constitutional An independent and honorable judiciary is indispensable protections when they enter the workplace, their rights must to justice in our society. A judge should participate in be balanced against the interests of the state in promoting establishing, maintaining and enforcing high standards of the efficiency of the public services it performs through its conduct, and shall personally observe those standards so employees. Id., citing Pickering v. Board of Educ., 391 U.S.

that the integrity and independence of the judiciary is 563, 568, 88 S.Ct. 1731, 1734, 20 L.Ed.2d 811 (1968). In preserved.

Pickering, the court adopted a two-step approach to evaluate TEX.CODE JUD. CONDUCT, Preamble and Canon 1, claims of First Amendment violations by public employees.

reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit G, First, the court must determine in light of the content, form, app. B (Vernon 2005).

and context of the speech in question, whether it addresses a In the wake of White I, the Texas Supreme Court created the matter of legitimate public concern. Scott, 910 F.2d at 211, Task Force of the Code of Judicial Conduct to “review [the citing Pickering, 391 U.S. at 571, 88 S.Ct. 1731. If so, the Texas Code of Judicial Conduct] to ensure that the integrity court must then “balance the employee's first amendment and independence of our judiciary is preserved.” Order rights against the governmental employer's countervailing Creating Task Force on Code of Judicial Conduct, Misc.

interest in promoting the efficient performance of its normal Docket No. 03–9148 (August 22, 2003). The court asked the *592 functions.” Scott, 910 F.2d at 211. If not, the inquiry Task Force to “make recommendations to th[e] Court for must end. The court ultimately determined that Scott's letters revisions required by law, to make suggestions on improving and comments were not simply an expression of the judge's the effectiveness of existing cannons [sic] and to suggest other personal opinion, but addressed matters of legitimate public modifications consistent with the Code's broad purpose of concern. Id.

upholding the integrity, independence and competence of the judiciary.” Id. The final report and recommendations were I first question the continued viability of Scott inasmuch as delivered in January 2005. The Task Force recommended a judge's ability to offer personal opinions or viewpoints has adding the word “impartial” to both the Preamble and Canon since been found to be protected speech. Nevertheless, like 1 “to underscore the compelling state interest of judicial the Fifth Circuit, I find the content, form, and context of Justice Hecht's speech to be a matter of legitimate public impartiality.” 15 This recommendation has yet to be adopted, concern and accordingly, I move to the balancing test, which although the Texas “announce clause” was repealed. 16 requires that we balance his First Amendment rights against the state's countervailing interest. *593 Nevertheless, the state has a compelling interest in preserving the independence and integrity of the Texas judiciary and in maintaining public confidence in our court Is There a Compelling State Interest? system. White I, 536 U.S. at 793, 122 S.Ct. 2528 (Kennedy, J., concurring)(nothing in the court's opinion should be Justice Hecht maintains that the Examiner has failed to read to cast doubt on the fact that judicial integrity is articulate that compelling interest. He refers to discovery a “state interest of the highest order”); In re Raab, 100 requests which the Examiner pointedly refused to answer. Yet N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d 1287, 1290 I believe that the canons themselves identify the compelling (N.Y.2003) (preserving the impartiality and independence of state interests: the judiciary and maintaining public confidence in the courts are compelling state interests).

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Court. He was censured by the New York Judicial Conduct Commission for engaging in improper political activity in Are the Canons Narrowly Tailored?

the course of a judicial campaign. The New York Code A narrowly tailored restriction is one that actually advances of Judicial Conduct prohibits judges and judicial candidates the state's interest (is necessary), does not sweep too broadly from (1) participating in any political campaign for any office (is not overinclusive), does not leave significant influences or permitting his or her name to be used in connection with bearing on the interest unregulated (is not underinclusive), any activity of a political organization; (2) publicly endorsing and could be replaced by no other regulation that could or publicly opposing (other than by running against) another advance the interest as well with less infringement of speech candidate for public office; *594 (3) making speeches on (is the least-restrictive alternative). White II, 416 F.3d at behalf of a political organization or another candidate; (4) 751. “In short, the seriousness with which the regulation of attending political gatherings; and (5) soliciting funds for, core political speech is viewed under the First Amendment paying an assessment to, or making a contribution to a requires such regulation to be as precisely tailored as political organization or candidate. Raab, 793 N.E.2d at 1290, possible.” Id. (Emphasis in original). citing 22 NYCRR 100.5(A)(1)(c), (d), (e), (f), (g), (h). The Code allows an incumbent or candidate to participate in his or her own campaign for elective judicial office.

Canon 5(2) Judge Rabb complained that the rules were both underinclusive and overinclusive. The court rejected his (The Endorse Clause) argument, focusing on the “critical” difference between conduct integral to a judicial candidate's own campaign and The Examiner argues that White I addressed only the issue activity in support of other candidates or party objectives. of a judicial candidate's right to announce his or her own Raab, 793 N.E.2d at 1292. The court concluded that by views on disputed legal or political issues. The opinion “did participating in the phone bank and candidate screening, not concern itself with whether the First Amendment protects Judge Rabb “went beyond what was necessary or integral to a judicial candidate's right to endorse other candidates for his own judicial races.” Id. at 1293. public office” and consequently, does not apply to this case. Examiner's Brief at 16. Cautioning that the opinion In response to the Examiner's argument that Raab is is now four years old, the Examiner explains that in the controlling, Justice Hecht recounts the differences between intervening period, no court has held that a canon prohibiting the New York and Texas canons. Texas judges can (1) endorsements violates the First Amendment. Instead, it affiliate with a political party; (2) attend political events; continues, the only court to address the issue concluded that (3) express views on political matters; (4) contribute to an endorsement prohibition is constitutional. See In re Raab, political campaigns of other candidates; and (5) criticize a 793 N.E.2d at 1289. candidate for public office. He points to the ability of Texas judges to criticize other candidates and compares Canon 5(2)

State District Judge Ira Rabb admittedly called prospective with the New York Code of Judicial Conduct and the ABA voters urging their support for a legislative candidate, Model Code. Both New York and the ABA prohibit a judge although he did not give his name or identify himself as a from either publicly endorsing or publicly opposing another judge. His purpose was to garner goodwill with the Working candidate. The Examiner responds: Families Party in hopes that the party would endorse him as a judicial candidate in his own campaign for the Supreme As a matter of clarification, Examiner Court later that year. Three months later, he attended a would point out that [Justice Hecht] party candidate screening meeting. He was not scheduled is mistaken in his view that a judge to be interviewed, but he sat with members of the party, would not be sanctioned under Canon participated in the interviews, and asked candidates for both 5(2) for criticizing another candidate. judicial and non-judicial offices if they would publicize the There is simply no authority to party's endorsement in their campaign literature. Judge Rabb support his belief that statements that was ultimately nominated by the Democratic Party, endorsed are critical of another candidate for by the Working Families Party, and elected to the Supreme office, aside from the judge's own opponent, would be treated differently

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In re Hecht, 213 S.W.3d 547 (2006)

than statements in favor of another is to preserve and protect judicial independence, integrity, candidate for office. and impartiality, it must protect these values from attacks on all fronts. From the standpoint of public perception, one Examiner's Brief at 26. But the canons do not make thousand dollars is every bit as compromising as one thousand that distinction, and the Examiner offers no support for words. the commentary. I suspect the 3700 judges who await this decision would be disquieted to learn that one could If the concern is that a judge's be sanctioned for conduct not delineated in the Code. endorsement or support of a candidate Nevertheless, the Texas canons differ in other material for public office will damage respects. that judge's impartiality apparently because she is seen as aligning herself Members of the Texas judiciary are permitted to provide with the candidate's view or ideology, factual information or favorable comments, either formally or that is no less so when a judge informally, to screening committees, appointing authorities, contributes to a candidate's political and members of the Senate Judiciary Committee. The campaign, which is not prohibited. Examiner concedes this is true. Examiner's Brief at 8, 11. A judge may privately introduce judicial candidates to friends Petitioner's Brief at 34. I agree. and recommend that the friends vote for the candidates. See OP. TEX. ETHICS COMM'N No. 2 (1975). This liberty of private introduction and recommendation has been extended Canon 2B to all candidates for public office. See OP. TEX. ETHICS COMM'N No. 13 (1976).

(The Promote Clause)

Most significant in my view is the fact that, unlike a member Finally, Justice Hecht challenges the constitutionality of of the New York judiciary, a Texas judge may put his Canon 2B as applied. Quoting White I, he begins by defining money where his mouth can't go. Simply stated, a judge terminology. The canon prohibits a judge from lending the may make campaign contributions to other candidates—

prestige of his office to advance the private interests of including presidential candidates, congressional candidates, another. He defines “prestige” as:

gubernatorial candidates, legislative candidates, county and municipal candidates, and other judicial candidates. In turn, 1. the power to impress or influence, as because of success, we may accept contributions from these same sources as well wealth, etc. as special interest groups. In his brief, Justice Hecht points to several members of the Commission who have routinely 2. reputation based on brilliance of achievement, character, contributed to political campaigns, and he bitingly reveals etc. *595 that one member contributed to Hillary Clinton's Webster's New World Dictionary of the American Language, campaign only a month before he [Justice Hecht] was Second College Edition (1980). He contends that the sanctioned:

comments of a Texas Supreme Court jurist would hold little One wonders how it can be reconciled sway with the members of the Senate Judiciary Committee. that a political candidate can be Petitioner's Brief at 39. But Justice Hecht's assistance was not supported by a judge with money, but solicited by Karl Rove and the White House to influence the not words. What's good for Hillary committee. His help was needed to shore up the conservative should be good for Harriet. One would base of the Republican Party to whom many committee think. members owed allegiance. The idea was to have a well-

respected, influential and conservative jurist reassure the Petitioner's Brief at 6. His remark is right on the money— committee members' constituents as a means to obtain Senate it cannot be reconciled. From this, I conclude that Canon confirmation. In this context, the promote clause cannot 5(2) is underinclusive, and “woefully” so. Because it cannot be said to serve the state's interest in preserving judicial survive strict scrutiny, it is unconstitutional, both facially independence, integrity and impartiality. Whether Justice and as applied. If the purpose of the endorsement clause Hecht's national interviews persuaded individual senators or

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In re Hecht, 213 S.W.3d 547 (2006)

concern for the relationship between judicial conduct and swayed public opinion, his independence and impartiality public perception. Lowery, 999 S.W.2d at 647. “While the would be called into question only if the individuals, entities, legal profession has historically been considered a noble one, or affiliates appeared in a case before him. In that instance, modern-day portrayals paint a picture of scorn and ridicule.

recusal would be the least restrictive alternative. Because In the courtroom called the media, in the trial by public Canon 2B is not narrowly tailored to serve the compelling perception, the image of the judicial system is at an all-time state interests, it is unconstitutional as applied to Justice low.” Id.

Hecht.

I offer two caveats before I close. First, the Commission is charged with enforcing the provisions of the Code of Judicial CONCLUSION Conduct as promulgated by the Texas Supreme Court. I believe it has endeavored to do so in good faith while awaiting I have previously served as the presiding justice of a formal action by the Supreme Court on the remainder of the Task review tribunal. In upholding the Commission sanction, I Force's recommendations. Second, the robe means something wrote for the majority:

to me. Every time I slip it on, I remember my oath—a vow “to Does the Code of Judicial Conduct preserve, protect and defend the constitution and laws of the intrude into a judge's private life? Most United States and of this state.” If ever I look in the mirror and definitely. But that is a path chosen see a judge who has ruled on the basis of politics, expediency, when the decision to seek office is or personal gain rather than the rule of law, it is time to remove made. A judge must observe the high the robe and leave the bench. The citizens of this state deserve standards promulgated by the Code of nothing less. As for the 3700 judges who want to know what Judicial Conduct both on and off the to do, it is my fervent hope that each one will pause to consider bench in order to maintain the integrity this: Our ability to speak does not mean that we should speak. of the judiciary. I haven't, and I won't.

*596 In re Lowery, 999 S.W.2d 639, 657 (Tex.Rev.Trib.1998, pet.denied). Though today I strike down All Citations the enforcement of portions of the Code, the aspirations live 213 S.W.3d 547

on. Judicial accountability arises in part from a justifiable

Footnotes 1 The Honorable Kerry FitzGerald, Justice, Court of Appeals, Fifth District of Texas at Dallas: Presiding Justice of the Special Court of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random selection.

2 The Honorable Ann McClure, Justice, Court of Appeals, Eighth District of Texas at El Paso: Justice of the Special Court of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random selection.

3 The Honorable Amos Mazzant, Justice, Court of Appeals, Fifth District of Texas at Dallas: Justice of the Special Court of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random selection.

4 If we had determined Petitioner violated the Canons, we would have undertaken a constitutional analysis. The commission assumed the Canons were constitutional and proceeded accordingly.

5 We are mindful of the Supreme Court's principle of avoiding constitutional questions where possible. See Ashwander v.

Tenn. Valley Auth., 297 U.S. 288, 346–48, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring). Two iterations of this principle apply here: “It is not the habit of the [C]ourt to decide questions of a constitutional nature unless absolutely necessary to a decision of the case” and “The Court will not pass upon a constitutional question although properly presented by the record if there is also present some other ground upon which the case may be disposed of.” Id. at 347, 56 S.Ct. 466. These principles apply to federal courts. See Secretary of State v. Joseph H. Munson Co., 467 U.S. 947, 972, 104 S.Ct. 2839, 81 L.Ed.2d 786 (1984) (citing Ashwander, 297 U.S. at 346, 56 S.Ct. 466, for constitutional decision- avoidance principles, and stating “We may require federal courts to follow those rules, but we have no power to impose them on state courts.”). But our Texas Supreme Court applies the same principle of avoiding constitutional questions where possible as expressed in Ashwander. See, e.g., In re B.L.D., 113 S.W.3d 340, 349 (Tex.2003) (“As a rule, we only

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In re Hecht, 213 S.W.3d 547 (2006)

decide constitutional questions when we cannot resolve issues on nonconstitutional grounds.”), Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex.1999) (same). The constitutional decision-avoidance principle is a “traditional policy” of the courts and “was conceived out of considerations of sound judicial administration.” Alma Motor Co. v. Timken–Detroit Axle Co., 329 U.S. 129, 142, 67 S.Ct. 231, 91 L.Ed. 128 (1946). Thus, in view of our disposition of the issues relative to Canons 5(2) and 2B, we do not analyze or decide Petitioner's constitutional arguments based upon content and viewpoint restrictions. See Republican Party v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002); Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 115 S.Ct. 2510, 132 L.Ed.2d 700 (1995).

6 The Texas Constitution states that the commission consists of thirteen members. TEX. CONST. art. V, § 1–a(2). Judge Monica Gonzales, the chairman of the commission during these events, testified that three of the positions were vacant and two members recused themselves from the proceedings.

7 Judge Gonzales testified she could not remember the vote tally for finding Petitioner violated the Canons and imposing the admonition. She testified that the commission's deliberations were concerned with the level of sanction to impose, not whether Petitioner violated the Canons. “All I remember, if there was any discussion at all, it had more to do with what level of sanction, not whether or not there was a violation of the canon. I don't remember that being a major discussion at all.”

8 The commission's conclusions and findings were based on The New York Times and the Texas Lawyer articles only. 9 The commission's conclusion stated:

The Commission concludes from the facts and evidence presented that [Petitioner] allowed his name and title to be used by the press and the White House in support of his close friend, Harriet Miers, a nominee for the office of United States Supreme Court Justice. Such public support by a judicial official elected to the highest court in Texas, in the eyes of the public and the rest of the judiciary, would be construed as an endorsement of Miers' candidacy, as those terms are commonly used and understood. Because the Commission views Miers' desire for a lifetime appointment to the United States Supreme Court to be a private interest, the efforts of Petitioner in promoting his friend's candidacy by responding to media inquiries and assisting the White House in its efforts to convince powerful special interest groups to support her candidacy, constituted an improper use of his office and position to promote Miers' private interest. Citing Republican Party v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002), and In Re Raab, 100 N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d 1287, 1291 (2003), the commission rejected Petitioner's argument that the application of Canons 2B and 5(2) infringed his First Amendment right to freedom of speech. The commission then stated, Based on the circumstances surrounding this matter, the Commission concludes that [Petitioner's] actions on behalf of Harriet Miers constituted persistent and willful violations of Canons 2B and 5(2) of the Texas Code of Judicial Conduct.

10 The Stipulation and Petitioner's Trial Exhibit No. 1 reflect Petitioner's service record in more detail:

[Petitioner] is the Senior Justice of the Supreme Court of Texas, having been elected in 1988 and re-elected in 1994 and 2000. He is the senior Texas appellate judge in active service. Throughout his service on the Court, [Petitioner] has overseen revisions to the rules of administration, practice, and procedure in Texas courts. In 2000, he was appointed by the Chief Justice of the United States to the Advisory Committee on Civil Rules for the Judicial Conference in the United States. [Petitioner] began his judicial service in 1981, when he was appointed to the 95th District Court in Dallas County. He was elected to that bench in 1982 and re-elected in 1984. In 1986 he was elected to the Court of Appeals for the Fifth District of Texas at Dallas, where he served until he was elected to the Supreme Court. Before taking the bench, [Petitioner] was a partner in the Dallas law firm of Locke Purnell Boren Laney & Neely (now Locke Liddell & Sapp). He joined that firm in 1976 and practiced mainly in the area of general business and commercial litigation. [Petitioner] received a B.A. degree with honors in philosophy from Yale University in 1971. He attended Southern Methodist University School of Law as a Hatton W. Sumners Scholar, and received his J.D. degree cum laude in 1974. He was elected to Order of the Coif and served as an editor for the Southwestern Law Journal. Following law school, he served as a law clerk to the Hon. Roger Robb, Circuit Judge, U.S. Court of Appeals for the District of Columbia Circuit. He also served in the U.S. Naval Reserve Judge Advocate General Corps, achieving the rank of Lieutenant. He was honorably discharged from military service in 1979. [Petitioner] is licensed to practice in Texas and the District of Columbia. He is a member of the American Bar Association, the District of Columbia Bar Association, the State Bar of Texas, the Dallas Bar Association, and the Austin Bar Association. He is also a member of the American Law Institute, a fellow in the American Bar Foundation,

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a life fellow in the Texas Bar Foundation, and a founding fellow of the Dallas Bar Foundation. He received the Outstanding Young Lawyer Award from the Dallas Association of Young Lawyers in 1984, the Southern Methodist University School of Law Distinguished Alumni Award for Judicial Service in 2000, and the Hatton W. Sumners Foundation Distguished Public Service Award in 2004. He has taught as an Adjunct Professor at the University of Texas School of Law. [Petitioner] is a member of the Texas Philosophical Society. He attends the Cornerstone Christian Church of Dallas, where he is a pianist, organist, and teacher.

11 Justice Owen now sits on the United States Court of Appeals for the Fifth Circuit. 12 The Texas Lawyer article states, in part:

“I'm a PR office for the White House,” [Petitioner] says jokingly about the 120 press interviews he estimates he did the week of October 3 to discuss Miers.... Media outlets reported that [Petitioner] and Miers dated on and off over the years, but [Petitioner] doesn't like that characterization. “Dating to me sounds like what you did in high school,” [Petitioner] says. “We saw one another and went to dinner. We were good, closely connected friends then, and we are now.” [Petitioner] says he called White House Deputy Chief of Staff Karl Rove ... to see if it was OK for him to speak with the media. [Petitioner] says his mission is clear: to fill in the gaps about Miers' background and to counter some conservatives' skepticism about her qualifications to be a U.S. Supreme Court justice. [Petitioner] ... relays an anecdote about Miers and himself from the 1980s: One evening, he and Miers had attended a lecture together at the Valley View Christian Church in North Dallas, where they were members. After that lecture, Miers shared with [Petitioner] her belief that life begins at conception and abortion is wrong. By repeating that story to reporters nationwide, [Petitioner] ... says he's not saying that he knows how Miers would decide any particular case that might come before her as a justice. But he says he knows she opposes abortion. [Petitioner] says conservatives should rest easy about Miers' nomination and should not draw comparisons between Bush's nomination of Miers and President George H.W. Bush's 1990 nomination of Justice David Souter, whose slim record held no indication of his eventual liberal leanings on the court. “I have the utmost respect for President Bush No. 41, but I doubt he could have picked Justice Souter out of a lineup the day before he appointed the man,” [Petitioner] says. “By contrast, Harriet and the president have worked together hand and glove for 10 years. He's called her for legal advice, he's called her for campaign advice, he's called her to vet judicial appointments. And he knows her as well as you could know anybody. And he's stood there and watched. You can never be totally sure, particularly concerning someone who has been given a lifetime appointment. But the difference between that situation and this one is night and day.”

13 Petitioner testified he was not interviewed for the story and that it was written without any input from him. 14 The New York Times article states:

But she [Miers] still felt something was missing in her life, and it was after a series of long discussions—rambling conversations about family and religion and other matters that typically stretched from early evening into the night —with [Petitioner], a junior colleague at the law firm, that she made a decision that many of the people around her say changed her life. “She decided that she wanted faith to be a bigger part of her life,” [Petitioner], who now serves on the Texas Supreme Court, said in an interview. “One evening she called me to her office and said she was ready to make a commitment” to accept Jesus Christ as her savior and be born again, he said. He walked down the hallway from his office to hers, and there amid the legal briefs and court papers, Ms. Miers and Petitioner “prayed and talked,” he said. To persuade the right to embrace Ms. Miers's selection despite her lack of a clear record on social issues, representatives of the White House put [Petitioner] on at least one conference call with influential social conservative organizers on Monday to talk about her faith and character. Ms. Miers sometimes attended Mass at St. Jude Chapel in downtown Dallas, but before embracing evangelical Protestantism, her experience with religion was lukewarm and her attendance sporadic, [Petitioner] said. A close relationship with [Petitioner]—also a longtime member of Valley View—who frequently appears with Ms. Miers at social functions in Washington and in Texas, has been a steady feature of her life for nearly 30 years. [Petitioner] is known as one of the most conservative members of the Republican-dominated Texas Supreme Court. Newspapers in Texas have reported that [Petitioner] and Ms. Miers were romantically involved, and when asked in an interview whether that was still the case, [Petitioner] responded that they were close, without going into great detail. “She works in Washington, I work in Austin,” [Petitioner] said. “We have dinner when she's here; if she invites me to Washington I happily go. We talk on the phone all the time.”

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[Petitioner] and Ms. Miers spoke on Sunday evening, but she did not tell him about the pending announcement that she had been offered the nomination, he said. “She's a stickler for the rules,” he said. He never asked Ms. Miers how she would vote on the issue of abortion if it came before the Supreme Court, he said. “She probably wouldn't answer, she wouldn't view it as appropriate.” “Yes, she goes to a pro-life church,” [Petitioner] said, adding, “I know Harriet is, too.” The two attended “two or three” anti-abortion fund-raising dinners in the early 1990's, he said, but added that she had not otherwise been active in the anti-abortion movement. “You can be just as pro-life as the day is long and can decide the Constitution requires Roe” to be upheld, he said. Apart from the questions about abortion and other issues Ms. Miers will face in confirmation hearings, the strong tie she and [Petitioner] have to their church is undergoing a test. The congregation at Valley View is in the middle of a schism, and Mr. [Petitioner] said he and Ms. Miers are siding with the splinter groups that are forming a new church under Valley View's longtime pastor, Ron Key.

15 Affidavit of Thomas R. Phillips:

My name is Thomas R. Phillips. I have personal knowledge of the facts stated in this affidavit. I served as Chief Justice of the Supreme Court of Texas from January 4, 1988, until I retired on September 3, 2004. One of the administrative duties of the Supreme Court is the promulgation of the Code of Judicial Conduct. While I was Chief Justice, the Supreme Court completely revised the Texas Code of Judicial Conduct on one occasion and made discrete changes and additions several additional times. In each instance, I presided over that process and took a very active role in the Court's efforts. Over the years, I believe that I have developed an expertise in the Code. I have spoken on judicial speech under the ABA Model Code and various state Codes on many occasions including to the Washington Judicial Conference in Tacoma and to the entire Conference of Chief Justices. As a part of my efforts to reform judicial selection and enhance judicial independence, I frequently participated in commissions and task forces that explored, among other things, the balance between a judge's right (and occasionally obligation) to speak on matters of public concern versus the public's right to a court system which is and is seen as being impartial and unbiased. I explored such issues in some detail in the 2001 National Summit on Judicial selection, of which I was one of two co-convenors, and in my service on the American Bar Association's Commission on 21st Century Judiciary in 2002–03 and its Judicial Selection and Judicial Campaign Committee in 2001–03. Even though I have now returned to private practice, I remain interested in and involved in issues of judicial speech. Most significantly, I am counsel of record for the State of Minnesota on petition to the United States Supreme Court for writ of certiorari in Republican Party v. White, 416 F.3d 738 (8th Cir.2005), a case involving the constitutionality of certain restrictions on political speech by judges and judicial candidates. I am also a lifetime member of the Conference of Chief Justices, a member of the National Advisory Counsel of the American Judicature Society, and will soon begin serving on the Lawyers' Committee of the National Center for State Courts. Each of these groups is particularly interested in judicial speech issues. I have read the response of [Petitioner] to the Letter of Inquiry in Nos. 06–0129–AP and 06–0130–AP before the Texas Commission on Judicial Conduct. In my opinion, his actions referred to in the Letter of Inquiry and described in the response, taken in connection with the nomination of Harriet Miers to be an Associate Justice of the United States Supreme Court, did not violate Canon 2(B) or Canon 5(2) of the Texas Code of Judicial Conduct. This affidavit is based on the Letter of Inquiry and [Petitioner's] response. Canon 5(2) states in relevant part: “A judge or judicial candidate shall not authorize the public use of his or her name endorsing another candidate for any public office....” In my opinion, Harriet Miers was not “another candidate for ... public office” within the meaning of Canon 5(2). By “another candidate,” the Canon refers to a candidate like “[a] judge or judicial candidate,” that is, a political candidate for elected office. Ms. Miers was President Bush's nominee for a judicial position subject only to confirmation by the United States Senate. Furthermore, in commenting on Ms. Miers's background and experience, [Petitioner] was not “endorsing” her but was responding to legitimate press inquiries about her background and qualifications, matters of intense national interest and importance. Canon 2(B) states in relevant part: “A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others ...” In my opinion, in commenting on Harriet Miers's qualifications to sit on the Supreme Court of the United States, [Petitioner] was not lending the prestige of his office in any respect. He was asked to comment, not because he is a judge, but because he has a long, close, public relationship with Ms. Miers. This is demonstrated, I think, by the fact that none of [Petitioner's] current colleagues on the Court were asked to make any comments about Ms. Miers during the confirmation process. The issue was not whether a judge [Petitioner] thought Ms. Miers

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was qualified for the position to which the President had nominated her, but whether [Petitioner], Harriet's friend, had unique information that would help the American public and, ultimately, the nation's 100 Senators decide whether she was qualified. In legal parlance, [Petitioner] did not “thrust himself into the vortex” of this controversy. His extremely close relationship with Ms. Miers was well known in legal circles throughout Texas and in Washington, D.C. When reporters began searching for photographs of the significant milestones in Ms. Miers' professional career, [Petitioner] was invariably accompanying her or pictured very close by. There is simply no way he could have avoided being deluged with questions, and no way that his failure to cooperate with the press and with others could have been construed an anything other that a deliberate obstruction of the public's right to know about the President's appointee. Nor was [Petitioner] in any way advancing his own private interests. His comments were about Ms. Miers, not himself. He never identified himself as a candidate for elected office or otherwise sought to draw attention to his own credentials and talents, as considerable as those are. Moreover, because [Petitioner's] unique position, his statements about Ms. Miers' background and qualifications were not necessarily made to advance Ms. Miers' interests. As I have stated, his long and close friendship with Ms. Miers gave him an overriding responsibility to help the American public become better acquainted with her. What he said in his various interviews was no doubt viewed favorably by some and unfavorably by others; his comments worked to help her nomination in some quarters and worked to hinder it in others. Thus, the circumstances in which [Petitioner] found himself were highly unusual, perhaps unique in the history of the American judiciary. After all, [Petitioner] has not made a single public statement about Judge Alito or any prior Supreme Court nominee, nor, I suspect has he ever been asked to do so. But even if he had not been so close to Ms. Miers, and even if she had not been a nominee for perhaps the most powerful governmental body in the world, I do not believe that his actions in speaking frankly and favorably about someone he knew would violate the Code of Judicial Conduct. Judges are frequently asked to introduce speakers or help present awards to people. In so doing, they inevitably must detail the subject's accomplishments and extol their virtues. I gave dozens of such speeches during my judicial service, sometimes in praise of individuals who were at the time candidates for higher office. For example, I gave farewell tributes in public ceremonies in the House of Representatives Chamber when Justices Cornyn and Abbott resigned from the Texas Supreme Court to stand for election as Attorney General. I did not endorse either person, but my remarks were intended to be laudatory and might have swayed a voter who chanced to be present. [Petitioner], as the senior justice of the state's highest court and as a gifted speaker, is frequently asked to make public remarks about a judge, a lawyer, or a community leader. I suspect that every judge in Texas has done likewise at some point or another during their tenure in office. As long as the judge does not make such remarks with the primary purpose of political gain for himself or the honoree, I do not think such conduct can be taken to violate the Texas Code of Judicial Conduct. Finally, regardless of how the literal words of our Code might be interpreted, there are also larger constitutional questions at stake. In my opinion, [Petitioner's] actions described in the Letter of Inquiry and his response were protected by the First Amendment to the United States Constitution and by article I, section 8 of the Texas Constitution. His comments were directed to core issues of public importance. As such, his speech was protected under the rational set forth by the Supreme Court in Republican Party of Minnesota v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002).

16 Judge Parsons was also aware of the amicus curiae briefs filed by parties which he perceived might normally have competing interests. We have been assisted by briefs filed by the following: Texans for Lawsuit Reform; Donna G. Davidson and Tina J. Benkiser, Chairman of the Republican Party of Texas, on behalf of the Republican Party of Texas; a group of Texas lawyers including Travis E. Vanderpool, William Stephen Boyd, Orrin L. Harrison, Robert W. Jordan, Timothy W. Mountz, Joseph D. Jamail, Jr., Charles W. Schwartz, George E. Bowles, Jerry K. Clements, Michael M. Boone, Brian D. Melton, John L. Estes, Robert A. Wooldridge, George W. Bramblett, Jr., S. Michael McColloch, Wayne Fisher, Larry P. Boyd, and R. Jack Ayres; and The ACLU Foundation of Texas.

17 40 TEX. B.J. 131 (1977); see Op. Tex. Att'y Gen. No. LO–89–21 (1989). 18 The Judicial Section of the State Bar of Texas created the Committee on Judicial Ethics in 1974. ROBERT P. SCHUWERK & LILLIAN B. HARDWICK. HANDBOOK OF TEXAS LAWYER AND JUDICIAL ETHICS S § 21.02 (Tex. Practice Series 2005). The committee issues advisory opinions. Both the committee and the commission agree the advisory opinions are not binding. Id. The commission rigidly adheres to the committee's advisory opinions. Id. The committee also does not knowingly make comments on pending or impending proceedings before the commission. Id.

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19 This provision was relocated twice, first in 1994 to Canon 5(3) and then in 2002 to Canon 5(2). TEX.CODE JUD.

CONDUCT, Canon 5(3), 57 TEX. B.J. 1080 (1994); 65 TEX. B.J. 798 (2002). The language of this provision, however, remains unchanged from 1990.

20 Petitioner was the only witness called to testify about this provision. During his testimony, he responded to the suggestion of the commission's attorney that Canon 5(2)'s purpose was to eliminate corruption.

Q. In canon 5(2) part of the reason that was created, Canon 5(2), you were talking earlier about being muscled or hustled into cross endorsing each other. It sounds to me like that's some sort of an anti corruption statute that goes to corruption.... [I]sn't there a quid pro quo problem that 5(2) addresses, where you do me a favor, and then one day I'll come to you and I'll ask a favor, and I better get it paid back. Isn't that part of what 5(2) was trying to address when it was created? A.... [T]hat may have been a small part of it, the cross, but this canon was brought to the Court by the judges, which is a very unusual thing, because judges don't like the canons, generally speaking, not for more of them, but for less of them, but they were for this one because they wanted—the principal reason was they wanted an excuse to give the mayor of the City Council person, mostly the county commissioners, so that they didn't get tangled up in politics. But it wasn't really corruption, it was just that the commissioners said, you know, I expect your endorsement. If you didn't give it, you were afraid what was going to happen to you at budget time. You're always fearful of what's going to happen to you at budget time. So it was not a corruption thing. I'm not aware of a corruption problem. I'm just not aware. Q. It's just a question I have regarding how the—how this was tailored. The question was, there does appear to be a fear about quid pro quo stopping this type of pressure on the judges regarding quid pro quo endorsements. A. I'm just not aware of the trading part. It was more, you give it to me or else I'm not going to give you what you want, your telephone budget, or your pencil budget is not—it's just what the Court is trying to use to operate. But there were problems, primarily it was in the country, although occasionally there would be problems in the more urban areas. But that was principally what—that's one of the problems. People bring you language, and it's aimed at a particular circumstance, or even class of circumstances, but then the language can be used in circumstances that you don't immediately envision in ways that were never intended, and that's the problem you have there. Petitioner testified further on this subject on examination by the commission: Q. Do you believe that Ms. Miers was a candidate for public office in the sense of—that it was intended by the Texas Supreme Court in this canon? A. No. Q. And why not? A. Well, because this canon, again as I said earlier, and Judge Parsons reiterated, is getting at the kind of entanglements, I wouldn't call it corruption, I suppose maybe there could be a case like that, but mostly it's the entanglements that you get into when you're getting involved in other people's elections. And especially, well, no, not especially. I was going to say especially when they're in another branch. But the whole problem here was that judges were being asked to get involved in other people's races, and there was no way that you can get tangled up in endorsing a nominee for the Supreme Court of the United States. There's no entanglement to get into. There is no question. I'm not likely to be partial or impartial because of that endorsement, or any statement made in connection with that nomination. It just doesn't have any application in that situation.

21 In effect, in 1990, members of the judiciary sought relief from a pressing political quagmire. On occasions, politically connected candidates would flex their “muscle” in order to “persuade” or pressure a judge to let the candidates show the judge as an endorser in an unrelated political contest. According to the conventional wisdom at the time, who better to show on a list of prominent endorsements than “the respected local judge.” The supreme court acceded to the request, creating the “authorization” prohibition. The amendment addressed the specific problem head on by providing a safe harbor for the judge. The judge could now “reluctantly” decline to let a politically connected candidate use his name endorsing the candidate without fear of reprisal. The judge need only cite the “authorization” prohibition in the Code to resolve what could otherwise become a delicate and politically sensitive dilemma. Thus, the “authorization” prohibition had absolutely nothing to do with “endorsing,” that is, making supportive political statements. Rather, it addressed a different situation: “cover.” The provision centered on customary “endorsements” so familiar to the voting public, that is, a compilation of well-known and respected persons who consented to the use of their names supporting a particular candidate.

Petitioner's testimony went unchallenged by the commission.

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22 The Task Force members' statements, while not precedential, are enlightening because they addressed—and failed to resolve—the very issues facing the Court today. They expressed grave concern that there is no definition for “endorsing” within the Texas canons and case law.

23 The commission was established by the Texas Constitution, article V, section 1–a(2). The constitution empowered the commission, inter alia, to discipline or censure any Justice or Judge for “willful or persistent violation of rules promulgated by the Supreme Court of Texas, incompetence in performing the duties of the office, willful violation of the Code of Judicial Conduct, or willful or persistent conduct that is clearly inconsistent with the proper performance of his duties or casts public discredit upon the judiciary or administration of justice.” TEX. CONST. art. V, § 1–a(6). Clearly, the commission is the entity charged with enforcement of the Code. In addition, article V, section 1–a(10) provides:

[T]he Commission may issue a public statement through its executive director or its Chairman at any time during any of its proceedings under this Section when sources other than the Commission cause notoriety concerning a Judge or the Commission itself and the Commission determines that the best interests of a Judge or of the public will be served by issuing the statement. TEX. CONST. art. V, § 1–a(10) (emphasis added).

24 The commission filed a First Amended Charging Document, stricken by this Court on other grounds, which alleged in part that Petitioner “authorized the public use of his name and title to ‘support or endorse’ his close friend, Harriet Miers, a candidate for public office....”

25 The commission, during its closing presentation, inexplicably injected the concept of “assembly line justice.” The commission initially argued this Court should find Petitioner violated the Code. While skeptical of Petitioner's challenges of the Code, the commission acknowledged lurking problems and sought judicial assistance in interpreting the Code provisions at issue. The commission then argued: “The sad reality of this case is Petitioner, at the day of his hearing, was merely next. The worst thing you can be in a government proceeding is next, merely next in a series of others that were prosecuted for similar violations.” The commission asked this Court to give it guidance, and, in the event it found the Code unconstitutional, to strike it down, in order that the commission could “get on with the business of regulating the rest of the conduct of the judges in the State.” Counsel for Petitioner replied that Petitioner should not be treated as “merely next” as if within an “assembly line.” He asserted that the commission totally ignored Canon 8 and the rules of reason, and that Petitioner was “being sanctioned for speaking truthful speech on a matter of public importance that is core speech in our democracy....” Assembly line justice is a close cousin to no justice at all, and is, in reality, an absurd oxymoron. Assembly line justice should be foreign to a judge's vocabulary and an extinct concept in our democracy.

26 In its entirety, JR 4–101 provides:

A judge shall not knowingly (1) make a public statement in support of the election or defeat of any candidate for a nonjudicial public office or to promote or influence the passage or defeat of laws or regulations at any level of government, or (2) contribute or solicit funds services or property to elect or defeat any candidate for a nonjudicial public office or to promote or influence the passage or defeat of laws or regulations at any level of government, or (3) lend the judge's name in support of an action, by any person or group, to elect or defeat any candidate for a nonjudicial public office or to promote or influence the passage or defeat of laws or regulations at any level of government, if in doing (1), (2) or (3) above, the judge: (A) Creates a reasonable doubt about the judge's impartiality toward persons, organizations or factual issues that would likely come before the court on which the judge serves, including, but not limited to, circumstances that require the judge's disqualification under JR2–106. (B) Supports in the judge's official capacity, a cause other than one pertaining to the legal system, legal education, the improvement of the law, the integrity of the judicial process, the administration of justice, or court administration, including judicial benefits. This subsection does not limit the ability of a judge to join, pay dues to, and participate in activities of any professional association or organization, which activities may include lobbying for judicial benefits such as salary and retirement. (C) Represents that the judge making the public statement speaks on behalf of the judicial branch of government unless the judge has been authorized to do so. OR.CODE JUD. CONDUCT JR 4–101.

27 The conduct in question included “an improper contribution” and “actively campaign[ing] for a legislative candidate by participating in a phone bank and assist[ing] Working Families Party officials at a candidate screening meeting by questioning other judicial and nonjudicial candidates on behalf of the party.” Raab, 763 N.Y.S.2d 213, 793 N.E.2d at 1293. Several of the relevant canons included: “Prohibited political activity shall include: ... (c) engaging in any partisan political activity (except as to own campaign); (d) participating in any political campaign for any office or permitting his or her name

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to be used in connection with any activity of a political organization; (e) publicly endorsing or publicly opposing (other than by running against) another candidate for public office; (f) making speeches on behalf of a political organization or another candidate; and (g) attending political gatherings.” Id. at 1289 n. 2. Both the conduct and the relevant provisions of the New York Code are clearly distinguishable from Petitioner's conduct and the Texas Code. The commission extracted from this case an excerpt referring to political corruption. We observe that there is not even a hint of corruption in the case before us. In fact, the commission admitted that it did not contend the statements at issue were false or deceptive.

28 The commission's attorney asked Petitioner, Q. Now, when you were giving these interviews, you knew you couldn't control what they would write about? A. Absolutely.

***

Q....When it goes out, it's out, you cannot control the media, right? A. Absolutely.

29 While the commission listed members of the news media as potential witnesses, none were called. The commission called no witnesses other than Petitioner.

30 We do not suggest the commission advanced this position. As previously noted, the commission cast a blind eye to the “authorized” requirement and never proffered any argument or evidence on this subject.

31 The Task Force hearings on the Code also reflect some insightful remarks and observations of distinguished Professor Laycock and Dean Attanasio as to the broad nature of the term “endorse” and what, if any, distinctions can be drawn between “support” and “endorse.” Their concerns, shared by other members of the committee, related to interpreting the language in order to conform to the rules, and to determining whether the terminology would pass constitutional muster.

32 The commission's brief provides this Court with approximately one page of analysis on its position. 33 We take notice that “[i]n late January 2005, the American Bar Association's joint commission released new draft rules on political activity by judges and judicial candidates which is covered in Canon 5 of the existing code. The draft revisions specifically address the activities of candidates seeking judicial office in partisan public elections.” The new draft rules permit candidates to “publicly endorse or oppose candidates running for other judgeships in the same judicial office.” N.D. Family Alliance, Inc. v. Bader, 361 F.Supp.2d 1021, 1041 n. 2 (D.N.D.2005).

34 The Code of Judicial Conduct in a number of states permit endorsing. For example, In California, Canon 5A(2) provides:

5A. Judges and candidates for judicial office shall not ... (2) make speeches for a political organization or candidate for nonjudicial office or publicly endorse or publicly oppose a candidate for nonjudicial office;

the comment to Canon 5A states that:

Under this Canon, a judge may publicly endorse another judicial candidate. Such endorsements are permitted because judicial officers have a special obligation to uphold the integrity and impartiality of the judiciary and are in a unique position to know the qualifications necessary to serve as a competent judicial officer.

In addition, Canon 5C states:

Candidates for judicial office may speak to political gatherings only on their own behalf or on behalf of another candidate for judicial office.

CAL.CODE JUD. CONDUCT, Canons 5A(2) & cmt., 5C. Idaho's Code of Judicial Conduct states:

(1) A judge or a candidate subject to public election may, except as prohibited by law: (a) when a candidate for election ... (iv) publicly endorse or publicly oppose other candidates for the same judicial office in a public election in which the judge or judicial candidate is running.

IDAHO CODE JUD. CONDUCT, Canon 5C(1)(a)(iv). In Illinois, Canon 7B states:

(1) A judge or candidate may, except as prohibited by law: ... (b) when a candidate for public election ... (iv) publicly endorse or publicly oppose other candidates in a public election in which the judge or judicial candidate is running.

ILL.CODE OF JUD. CONDUCT, Canon 7B(1)(b)(iv). In Kansas, Canon 5C states:

(1) A judge or a candidate subject to public election may, except as prohibited by law: ... (b) when a candidate for election ...

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(iv) publicly endorse or publicly oppose other candidates for the same judicial office in a public election in which the judge or judicial candidate is running. KAN.CODE JUD. CONDUCT, Canon 5C(1)(b)(iv). In Maine, Canon 5(C)(2)(d) states:

A candidate for election or reelection as judge of probate may, while a candidate, publicly endorse or publicly oppose any candidate for public office. ME.CODE JUD. CONDUCT, Canon 5(C)(2)(d). Michigan's Code of Judicial Conduct provides that:

(2) A judge or candidate for judicial office may: ... (a) attend political gatherings; (b) speak to such gatherings on the judge's own behalf or on behalf of other judicial candidates.... MICH.CODE OF JUD. CONDUCT, Canon, 7A(2)(a), (b). In North Carolina, a judge or judicial candidate may:

(2) if [a judge] is a candidate, endorse any individual seeking election to any office or conduct a joint campaign with and endorse other individuals seeking election to judicial office, including the solicitation of funds for a joint judicial campaign.... N.C.CODE JUD. CONDUCT, Canon 7B(2). In North Dakota, the commentary to Canon 5 states that the “canons do not prohibit candidates from campaigning on their own behalf or from endorsing or opposing candidates for a position on the same court for which they are running.” N.D.CODE OF JUD. CONDUCT, Canon 5A, Commentary, para. 4. In Pennsylvania, Canon 7A states:

(2) Judges holding an office filled by public election between competing candidates, or a candidate for such office, may, only insofar as permitted by law, attend political gatherings, speak to such gatherings on their own behalf when they are a candidate for election or reelection, or speak on behalf of any judicial candidate for the same office, identify themselves as a member of a political party, and contribute to a political party or organization. PA.CODE JUD. CONDUCT, Canon 7A(2) (emphasis added). In Tennessee,

[a] judge, subject to retention election, may, at any time, publicly endorse or oppose a judge standing for retention or a candidate for appointment to the court of which the judge is a member. TENN.CODE OF JUD. CONDUCT, Canon 5D. Vermont has a similar provision which states that a candidate for election or reelection as judge of probate or assistant judge may, while a candidate “publicly endorse or publicly oppose any candidate for the same office.” VT.CODE OF JUD. CONDUCT, Canon 5C(2).

35 For example: Alabama and Oregon. The Oregon Code prohibits a judge from making public statements and lending the judge's name in relation to other candidates who are running for nonjudicial office, but makes no mention of a similar prohibition with respect to candidates for judicial office. OR.CODE OF JUD. CONDUCT, JR 4–101 to 4–104.

36 In a less populated area, everyone in the community may qualify as the judge's “friend.” In a larger area, even given that the audience may initially be limited to several thousand persons, the post-endorsement wave of activity by the judge's friends generated by the initial endorsement may well increase exponentially to very sizeable numbers.

37 For example, Arizona, Colorado, Connecticut, Georgia, Massachusetts, New Hampshire, New Jersey, New Mexico, North Carolina, Pennsylvania, and Utah.

38 For example, Arkansas, Delaware, Florida, Hawaii, Indiana, Kansas, Kentucky, Louisiana, Minnesota, Nebraska, Nevada, New York, Ohio, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, and Wyoming.

39 North Carolina's Code of Judicial Conduct also defines “candidate,” limiting its meaning to “a person actively and publicly seeking election to judicial office.” N.C.CODE JUD. CONDUCT, Canon 7A(1). Had the Texas Supreme Court defined “candidate,” “endorse,” and other terms in the Texas Code of Judicial Conduct, many of the questions before us would not have arisen.

40 Our review of a portion of the evidence shows numerous statements made by prominent jurists before the Senate Judiciary Committee supporting previous judicial nominees to the United States Supreme Court. Utah State Judge Lindberg described her “enthusiastic support” for Judge Roberts nomination as Chief Justice and went into detail about his “towering intellectual skills and engaging personality.” Judge Klein, Presiding Justice of the California Court of Appeals, spoke in behalf of Judge O'Connor, whom she found “exceptionally well qualified” as well as “brilliant, fair, pragmatic....” She described her integrity as being “above reproach,” and emphasized she was moderate and “gracious” and had “every

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potential for becoming an outstanding Supreme Court Justice.” United States District Judge Jack Tanner described Judge Thomas as “well qualified to become an Associate Justice” and “the best man for the job.” United States District Judge “endorse[d] wholeheartedly the nomination[s]” of Judge Powell and William Rehnquist. He praised Mr. Rehnquist for his academic achievements and professional skills and “could find no one that [he] would recommend more highly.” United States Court of Appeals Judge Barry, of the Third Circuit in Pennsylvania, said Judge Alito was “a man of remarkable intellectual gifts” and “impeccable legal credentials” who would make a “marvelous and distinguished” Associate Justice.

A careful review of the public statements of judges who appeared before a Senate Judiciary Committee shows each witness' testimony more often than not “endorsed,” by any definition, the nominee. According to Professor Hazard, whose testimony was stipulated to by the commission: “[J]udges talk to the media and public about nominees to the federal bench, and he is not aware of any judge who has been sanctioned by a state or federal committee or by a court for making comments to the press or public about a nominee to the federal bench.”

41 The Preamble of the Code stresses the principle that “an independent, fair and competent judiciary will interpret and apply the laws that govern us.” It also emphasizes judges “must respect and ”the judicial office as a “public trust.” TEX.CODE JUD. CONDUCT, Preamble.

Canon 1 states: “A judge should participate in establishing, maintaining, and enforcing high standards of conduct, and should personally observe those standards so that the integrity and independence of the judiciary is preserved. The provisions of this Code are to be construed and applied to further that objective.” TEX.CODE JUD. CONDUCT, Canon 1. Canon 2 states a judge must “act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary.” Id. Canon 2. Canon 3B(10) states in part that a judge is not prohibited from “making public statements in the course of their official duties or from explaining for public information the procedures of the court.” TEX.CODE JUD. CONDUCT, Canon 3B(10). Canon 4B(1) states that a judge may “speak, write, lecture, teach and participate in extra-judicial activities concerning the law, the legal system, the administration of justice and non-legal subjects, subject to the requirements of this Code....” TEX.CODE JUD. CONDUCT, Canon 4B(1). Canon 5(1)(ii) states: “A judge ... shall not: ... knowingly or recklessly misrepresent the identity, qualifications, present position, or other fact concerning the candidate or an opponent....” TEX.CODE JUD. CONDUCT, Canon 5(1)(ii). Canon 5(2), in its entirety, states:

A judge or judicial candidate shall not authorize the public use of his or her name endorsing another candidate for any public office, except that either may indicate support for a political party. A judge or judicial candidate may attend political events and express his or her views on political matters in accord with this Canon and Canon 3B(10). TEX.CODE JUD. CONDUCT, Canon 5(2).

42 In its entirety, Canon 2B provides:

A judge shall not allow any relationship to influence judicial conduct or judgment. A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others; nor shall a judge convey or permit others to convey the impression that they are in a special position to influence the judge. A judge shall not testify voluntarily as a character witness. TEX.CODE JUD. CONDUCT, Canon 2B.

43 Rather than focusing on a definition of “private interest,” the commission argues from the position that Canon 2B, like Canon 5(2), prohibits a judge from publicly endorsing other candidates. However, we have already concluded Petitioner's conduct did not violate the “authorization” provision of Canon 5(2).

44 We are aware the commission, in its brief identified Miers' “private interests” under Canon 2B as:

political ambition, including but not limited to a candidate's desire for lifetime tenure, prestige, and power, which motivates a candidate to seek a life-time appointment to the federal bench in the first place and there is no position more prestigious, more powerful, or more remarkable and exclusive than justice of the United States Supreme Court. The commission must prove, not just allege or argue, Petitioner lent the prestige of his judicial office “to advance the private interests” of Harriet Miers. Even if we assumed Canon 2B applied, we would reject the commission's position. The United States Constitution sets forth the length of the term of a Justice of the United States Supreme Court life tenure. In essence, the commission singled out part of a constitutional provision and, without any evidentiary support, argues it politically motivated Miers to seek the nomination. The commission further argues the power and prestige of the judicial position drove Miers to seek the nomination. This argument is likewise unsubstantiated by any evidence and is entirely speculative. We conclude it is spurious. The uncontroverted evidence shows Miers never sought, suggested, aspired to, or requested the nomination. She “dreaded” the idea but acceded to the President's request. Miers was

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prompted to accept the nomination in the public interest, in effect, to further serve. The flaw in the commission's position is that it assumes but does not prove political ambition. The commission has failed to even attempt to provide a scintilla of evidence of Miers' political ambition, and thus, failed to prove Petitioner advanced Miers' “private interests.” Even if pursuing the nomination at the President's request is some evidence Miers' political ambition to a seat on the Supreme Court, Jimenez recognizes a balancing between such private motivation and the public interest. See Jimenez, 841 S.W.2d at 581. The commission offered no argument or evidence that Miers' private interest, that is, her “political ambition,” outweighed the public interest under Jimenez, and our review of the evidence shows no such imbalance.

45 The North Carolina Code recognizes this inherent problem and permits the judge to endorse his own candidacy. The North Carolina Code specifically excepts the judge “so long as he does not expressly endorse a candidate (other than himself ) for a specific office....” N.C.CODE JUD. CONDUCT, Canon 7B(1) (emphasis added).

46 See In re Davis, 82 S.W.3d 140, 150 (Tex.Spec.Ct.Rev.2002) (using position of judge to retaliate against an assistant district attorney); Public Reprimand of Ken Reilly, Municipal Court Judge, No. 04–0360–MU (Comm'n Jud. Conduct Nov. 2, 2004) (part-time municipal judge who served one-half day per month advertised his public-speaking private business, which was his primary occupation, with statements like “Bring ‘The Judge’ to your next meeting as a keynoter”); Public Reprimand and Order of Additional Education of Santos Benevides, Justice of the Peace, No. 04–0513–JP (Comm'n Jud. Conduct Nov. 2, 2004) (judge ordered felon arrestee released on personal recognizance bond because arrestee was son of 25–year acquaintance of judge); Public Admonition of Alonzo Villarreal, Justice of the Peace, No. 04– 0285–JP (Comm'n Jud. Conduct June 25, 2004) (judge contacted municipal judge about another person's traffic ticket; when municipal judge said that was inappropriate use of judicial office, judge said “we judges help each other”); Public Admonition of Jose Canales, Justice of the Peace (Comm'n Jud. Conduct June 27, 2003) (judged telephoned another judge to obtain favorable treatment for county official's daughter on traffic citation pending in other judge's court); Public Admonition of Frederick Edwards, District Court Judge (Comm'n Jud. Conduct Apr. 12, 2001) (using position as judge in attempt to avoid arrest and prosecution for driving while intoxicated); Public Reprimand of Marvin Mitchell, Former Justice of the Peace (Comm'n Jud. Conduct Aug. 18, 2000) (judge telephoned girls on probation in his court for truancy and engaged in explicit sexual conversations); Public Admonition of Don Jarvis, County Court at Law Judge (Comm'n Jud. Conduct Oct. 22, 1999) (judge became romantically involved with married woman who had matters pending in the judge's court); Private Admonition of a County Court at Law Judge, (Comm'n Jud. Conduct Mar. 6, 2006) (state judge used official court letterhead to write letter to federal judge requesting leniency in sentencing state judge's relatives); Private Reprimand of a Justice of the Peace, (Comm'n Jud. Conduct July 14, 2004) (judge instigated groundless criminal investigation of constable who tried to serve papers on judge's son).

47 We note Canon 5 is entitled: “Refraining From Inappropriate Political Activity” and does specifically apply to political statements. See TEX.CODE JUD. CONDUCT, Canon 5.

1 Canon 5(2) does not expressly utilize the term “support” but “endorse” is commonly defined as meaning “to give support or approval to; sanction”. Webster's New Universal Unabridged Dictionary 600 (2nd Ed.1972).

2 James C. Dobson, Ph.D., is founder and chairman of Focus on the Family, a non-profit conservative religious organization that emphasizes family values.

3 The Times article is captioned, “Texas Justice, With Ties to Bush and His Supreme Court Choice, Serves as Her Spokesman.” It offers the following reason: “For the right audiences, Justice Hecht, 55, is known as one of the most conservative jurists on the Texas Supreme Court....He has become so well known in his home state that this year he was named by Texas Monthly as one of 25 most powerful people in Texas politics.”

4 Exhibit 1 is the Texas Lawyer article that formed the basis for the complaint received by the Commission. The majority correctly explains that the Commission's conclusions and findings were based on the Texas Lawyer and The New York Times articles only. Since this Special Court of Review is a de novo proceeding, additional media reports were introduced into evidence and are part of the record before us.

5 Justice Hecht also takes issue with the fact that other members of the judiciary spoke publicly about Miers without facing judicial sanctions. It is true that United States Supreme Court Justice Antonin Scalia, United States District Judge Ed Kinkeade of the Northern District of Texas, Justice Elizabeth Lang–Miers of the Court of Appeals for the Fifth District of Texas, and State District Judge Jim Parsons all publicly supported Miers and spoke well of her credentials and qualifications. Of course, the Texas Canons of Judicial Conduct do not apply to federal judges. TEX.CODE JUD. CONDUCT, Canon 6A, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit G, app. B (Vernon 2005). And the mere fact that other state judges felt unencumbered by the canons neither justifies nor condones their conduct, nor does it lead me to the conclusion that Justice Hecht did not violate them. Sardino v. State Commission on Judicial Conduct, 58 N.Y.2d 286, 291, 448 N.E.2d 83, 85, 461 N.Y.S.2d 229, 231 (N.Y.1983) (each judge is personally obligated to act in accordance

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In re Hecht, 213 S.W.3d 547 (2006)

with the standards of judicial conduct; if a judge disregards or fails to meet these obligations, the fact that others may be similarly derelict can provide no defense). I offer no opinion on the stipulated fact that the Commission has filed no charges against any of these individuals. Nor do I address the apparently contested issue of whether the Commission could sua sponte investigate their conduct in the absence of a complaint.

6 “[E]very good judge is fully aware of the distinction between the law and a personal point of view.” Republican Party of Minnesota v. White, 536 U.S. 765, 798 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002) (Kennedy, J., concurring).

7 Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973). 8 In a separate interview with The Dallas Morning News, Justice Hecht explained the distinction further. “The mistake is trying to extrapolate from those personal principles, even if they're extremely important to a person, into how you're going to decide a case.” According to the article, Justice Hecht “noted that Justice Antonin Scalia, one of the Supreme Court's most conservative justices, wrote an opinion declaring a free-speech right to burn an American Flag. ‘Can you imaging [sic] Justice Scalia burning a flag? It's not going to happen,’ he said. ‘But what does the Constitution say, can you do it or not? Yes, the Constitution says you can do it.’ ” Examiner's Exhibit 3.

9 Gary Bauer is the president of the American Values Group and is a former presidential candidate. 10 Pat Buchanan is an NBC political analyst and a former presidential candidate. 11 Justice Hecht was, in fact, contacted by staff attorneys for the Senate Judiciary Committee, who asked him to testify at Miers' confirmation hearing. He was out of the office at the time of the call, and Miers had withdrawn her nomination before he could return it.

12 The court emphasized that the “announce” clause is much broader than the “pledges or promises” clause, which separately prohibits judicial candidates from making pledges or promises of conduct other than the faithful and impartial performance of judicial duties, a prohibition on which it expressed no view. White I, 536 U.S. at 770, 122 S.Ct. 2528.

13 Writing for the majority, Justice Scalia opined that when a case turns on a legal issue on which the judge as a judicial candidate has taken a particular stand, the party advocating the opposing viewpoint is likely to lose, but not because of bias against that party or favoritism toward the other. “Any party taking that position is just as likely to lose.” White I, 536 U.S. at 776–77, 122 S.Ct. 2528 (Emphasis in original).

14 “Open-mindedness” demands that a judge be willing to consider views that oppose his preconceptions and remain open to persuasion. This seeks to guarantee each litigant “not an equal chance to win the legal points in the case, but at least some chance of doing so.” White I, 536 U.S. at 778, 122 S.Ct. 2528 (Emphasis in original).

15 In both White I and White II, the term “impartiality” was used interchangeably with “independence.” See White I, 536 U.S.

at 775 n. 6, 122 S.Ct. 2528; White II, 416 F.3d at 753.

16 As a member of the Supreme Court, Justice Hecht participates in decisions concerning amendments to the Code of Judicial Conduct. For many years, he served as the court's liaison to the Supreme Court Rules Advisory Committee. After White I, he concurred in the repeal of the Texas announce clause. Writing separately, he predicted the instant debate: “It is less clear whether other Code provisions relating to judicial speech—Canon 3(B)(10) and the remainder of Canon 5—are likewise infirm.... Therefore I join in the code amendments approved today although I remain in doubt whether they are sufficient to comply with the First Amendment.” Statement of Justice Hecht Concurring in the Amendments to the Texas Code of Judicial Conduct Approved August 21, 2002, Misc. Docket No. 02–9167.

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of the right on the same terms and conditions offered by or to a bona fide purchaser.

400 S.W.3d 644

Court of Appeals of Texas, Cases that cite this headnote Tyler.

Ben JARVIS, Appellant [2] Contracts v. Options; rights of first refusal Robert J. PELTIER, and Calvin C. Smith, Appellees. The holder of a right of first refusal has no right to compel or prevent a sale.

No. 12–12–00180–CV. | April 24, 2013.

Cases that cite this headnote Synopsis Background: Owner of middle tract of land brought action against owner of neighboring eastern- and western-tracts [3] Contracts who sold his tracts to purchaser despite agreement between Options; rights of first refusal middle-tract owner and eastern- and western-tracts owner that An “option” is a privilege or right that the owner was labeled an option agreement. The District Court, Smith of the property gives another to buy certain County, Jack Skeen, J., entered summary judgment in favor property at a fixed price within a certain time. of eastern- and western-tract owner and purchaser. Middle- tract owner appealed. Cases that cite this headnote

[4] Contracts

Holdings: The Court of Appeals, James T. Worthen, C.J., Options; rights of first refusal held that: By acquiring an option to purchase property, the holder of the option purchases the right to compel [1] ownership of tracts in severalty and right of first refusal a sale of the property on stated terms before the were consideration for partition; expiration of the option.

Cases that cite this headnote [2] agreement did not violate the rule against perpetuities;

[3] failure of holder of right of first refusal to exercise the [5] Appeal and Error right within 30 days after he learned of sale was excused by Cases Triable in Appellate Court his inability to obtain reasonable disclosure of sale; and Court of Appeals reviews the trial court's summary judgment de novo.

[4] holder established right to judgment as a matter of law.

Cases that cite this headnote

Reversed, rendered, and remanded.

[6] Appeal and Error

Judgment Court of Appeals reviews the evidence presented West Headnotes (31)

in motion for traditional summary judgment and response in the light most favorable to the [1] Contracts party against whom the summary judgment was Options; rights of first refusal rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding A right of first refusal or preemptive right contrary evidence unless reasonable jurors could to purchase requires the owner of the subject not.

property to offer the property first to the holder

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The resultant holding in severalty of each party Cases that cite this headnote to a partition is a benefit accruing to each, and alone constitutes sufficient consideration for the [7] Appeal and Error partition.

Particular orders or rulings reviewable in Cases that cite this headnote general Appeal and Error Rendering Final Judgment [12] Partition Agreements as to partition When both sides move for summary judgment and the trial court grants one side's motions and Vendor and Purchaser denies the other side's, Court of Appeals reviews Requisites and validity the summary judgment evidence presented The consideration for the privilege of purchasing by both sides and determines all questions property under a right of first refusal is not presented; Court then renders the judgment that separate from the consideration for the partition the trial court should have rendered. of real property.

Cases that cite this headnote Cases that cite this headnote

[8] Contracts [13] Partition Necessity in general Agreements as to partition Consideration is a fundamental element of every Vendor and Purchaser valid contract. Requisites and validity Where an agreement to partition real property Cases that cite this headnote and a right of first refusal constitute one contract, the provisions of which are interdependent, the [9] Contracts consideration for the partition will also support Nature and Elements the right of first refusal.

“Consideration” is defined as either a benefit Cases that cite this headnote to the promisor or a loss or detriment to the promisee.

[14] Partition

Cases that cite this headnote Agreements as to partition Ownership of tracts of real property in severalty [10] Partition and right of first refusal in agreement, which Operation and Effect was labeled an option agreement, constituted Partition consideration for partition.

Actual Partition

Cases that cite this headnote In a partition, each cotenant receives a specific share of property and holds it to the exclusion of the other cotenants who formerly had equal [15] Perpetuities rights to possession with him. Creation of Future Estates in General Agreement between neighboring landowners Cases that cite this headnote that was labeled an option agreement, but was actually an agreement for the right of [11] Partition first refusal, did not violate the rule against Agreements as to partition perpetuities.

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Cases that cite this headnote [21] Contracts Options; rights of first refusal

[16] Contracts A transfer in violation of the preemptive right Options; rights of first refusal to purchase is equivalent to a declaration by the owner that he intends to sell the property;

A right of first refusal is essentially a dormant consequently, when the rightholder learns of a option.

sale in violation of his right, he again has the Cases that cite this headnote opportunity to elect to purchase or decline to purchase within the time frame specified in the contract creating the right of first refusal.

[17] Contracts Options; rights of first refusal Cases that cite this headnote A right of first refusal requires the owner, before selling the property to another, to offer the [22] Contracts property to the rightholder on the same terms or Options; rights of first refusal conditions specified in the offer by or to a bona The holder of right of first refusal does not have fide purchaser.

a duty to act in order to exercise his preferential Cases that cite this headnote purchase right unless and until he receives a reasonable disclosure of the terms of the sale.

[18] Contracts Cases that cite this headnote Alternative stipulations and options A property owner who grants a right of first [23] Vendor and Purchaser refusal has an initial duty to make a reasonable Requisites and validity disclosure of the offer's terms.

The new property owner who has purchased Cases that cite this headnote the property from a vendor, despite vendor having given right of first refusal, has a duty to make reasonable disclosure of the terms of the [19] Contracts purchase to holder of right.

Options; rights of first refusal When the property owner expresses its intention Cases that cite this headnote to sell, the owner of right of first refusal must, in compliance with the terms of the right, elect [24] Specific Performance to either purchase the property or decline to Necessity purchase it and allow the owner to sell it to Where a defendant has openly and avowedly another.

refused to perform his part of the contract for Cases that cite this headnote right of first refusal or declared his intention not to perform it, the rightholder need not make tender of payment of the consideration before [20] Contracts bringing suit for specific performance.

Alternative stipulations and options A purchaser from a seller who has given a right Cases that cite this headnote of first refusal to buy takes the property subject to that right. [25] Specific Performance Necessity

Cases that cite this headnote Where a defendant has openly and avowedly refused to perform his part of the contract for

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right of first refusal or declared his intention the holder of the right is a breach of contract not to perform it, a tender of consideration is for which the remedy of specific performance is excused in action for specific performance where available. the property owner intentionally avoids giving the rightholder an opportunity of making it. Cases that cite this headnote

Cases that cite this headnote [30] Specific Performance Purchasers in general

[26] Vendor and Purchaser When a purchaser who has knowledge of the Exercise right of first refusal purchases real property, Failure of holder of right of first refusal to he stands in the shoes of the original seller exercise the right with 30 days after he learned when specific performance is sought and may be of sale was excused by his inability to obtain compelled to convey title to the first purchaser. reasonable disclosure of the terms under which vendor sold the property. Cases that cite this headnote

Cases that cite this headnote [31] Judgment

Sales cases in general

[27] Contracts Holder of right of first refusal established right Grounds of action to judgment as a matter of law as required for To prove a breach of contract claim, the summary judgment in action against vendor and following elements must be satisfied: (1) there purchaser, where holder and vendor had a valid was a valid contract, (2) the plaintiff performed option agreement that required vendor to first or tendered performance, (3) the defendant offer the property to holder upon receiving an breached the contract, and (4) the plaintiff was offer that vendor would accept, vendor received damaged as a result of the breach. an offer and sold the property to purchaser, holder was ready, willing, and able to purchase Cases that cite this headnote the property under the same terms, purchaser brought the property with notice of the recorded [28] Specific Performance option agreement, and holder attempted to learn Nature and grounds of duty of plaintiff the terms of the sale from vendor and purchaser, but neither provided him with the requested Specific Performance information prior to the suit.

Necessity

To prove that plaintiff performed or tendered Cases that cite this headnote performance as required to recover for breach of contract, a party seeking specific performance of a contract for the sale of real property must prove only that he is ready, willing, and able to pay Attorneys and Law Firms the agreed price for the property and perform the essence of the agreement and offer to do so. *647 M. Keith Dollahite, Tyler, for Ben E. Jarvis.

Cases that cite this headnote Gregory S. Porter, Houston, Charles H. Clark, Tyler, for Robert J. Peltier.

[29] Specific Performance Vance L. Metcalf, Billy D. Anderson, Tyler, for Calvin C.

Options Smith.

A sale or transfer of property burdened by a right of first refusal without making an offer to Panel consisted of WORTHEN, C.J., GRIFFITH, J., and HOYLE, J.

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For and in consideration of the premises and a part of the consideration of the partition deed this date executed OPINION

by Ben E. Jarvis and myself, [sic] I have granted and do JAMES T. WORTHEN, Chief Justice. hereby gran[t] unto Ben E. Jarvis an option to purchase the 4.041 acre tract in the T. Coulter Survey, Smith **1 Ben Jarvis appeals the summary judgment granted in County, Texas which was set aside to me by deed from favor of Robert J. Peltier, Sr. and Calvin C. Smith. In two Ben E. Jarvis. issues, Jarvis contends the trial court improperly granted Peltier's and Smith's motions for summary judgment and The terms of the option are that if I desire to sell the denied Jarvis's competing motion for summary judgment. We property and I have an offer I would accept, I will submit reverse, render in part, and remand in part. the offer to Ben E. Jarvis, who shall have thirty days from the date of the submission of the offer to accept. If he does not accept within said 30 day period, I will complete the sale to the other party who made the offer.

BACKGROUND Dated this the 11th day of March 1998.

Jarvis and Smith were cotenants in a twelve acre tract in /s/ Calvin C. Smith Smith County, with Jarvis owning an undivided two-thirds interest *648 and Smith owning an undivided one-third CALVIN C. SMITH interest. Jarvis owned two acres in fee simple adjoining the east side of the twelve acre tract that he and Smith jointly THE STATE OF TEXAS owned. Jarvis proposed to Smith that they partition the twelve COUNTY OF SMITH

acre tract, with Jarvis receiving the eight contiguous acres adjoining his two acre tract, and Smith receiving the four This instrument was acknowledged before me on this the westernmost acres. Jarvis also informed Smith that if they 11th day of March, 1998 by CALVIN C. SMITH. could not reach an agreement, he planned to ask the court to divide the property for them. (NOTARY SEAL)

Smith made a counterproposal to Jarvis that he would /s/ Tara L. Nowlin partition the twelve acre tract without going to court if he Notary of Public, State of Texas could have the middle four acres of the tract. Jarvis would On December 17, 2007, Smith entered into a contract then have the western four acres as well as the eastern four of sale with Peltier in which he agreed to sell his four acres of the tract. Smith explained that he wanted the middle acre tract to Peltier for $80,000.00. Peltier received a title four acres because he had already been farming that tract.

policy commitment issued by First American Title Insurance Jarvis accepted Smith's proposal with the condition that he be showing on its Schedule B as an exception from coverage given an “option” to purchase Smith's four acre tract if and the “[t]erms of that certain option by and between Calvin C.

when Smith decided to sell it.

Smith and Ben E. Jarvis as recorded in volume 5039, page 22, Official Public Records, Smith County, Texas.” On January On March 11, 1998, Jarvis and Smith exchanged deeds to 17, 2008, Smith executed a deed conveying the property to carry out their partition agreement. Additionally, on the same Peltier for $80,000.00.

day, Smith signed the following document: 1 **2 In late January 2010, Jarvis learned that Smith had sold the four acre tract to Peltier. He immediately sent both the OPTION following letter:

THE STATE OF TEXAS January 29, 2010

COUNTY OF SMITH *649 Mr. Calvin C. Smith

819 Lyons Ave.

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for attorney's fees. Jarvis filed a traditional motion for Tyler, Texas 75701 summary judgment in which he argued that, as a matter of law, his option was enforceable and he was entitled Mr. Robert J. Peltier, Sr.

to summary judgment enforcing the option and awarding P.O. Box 7028 him attorney's fees from Peltier and Smith. In the same motion, he argued that Peltier and Smith were not entitled Tyler, Texas 75711 to summary judgment on their affirmative defenses. Without specifying its reasons, the trial court granted Peltier's and Re: 4.037 acres, Tobias Coulter Survey Smith's summary judgment motions, including Smith's claim for attorney's fees, and denied Jarvis's motion. This appeal Gentlemen:

followed.

This last week we discovered that Calvin C. Smith and wife, Jimmye Ruth Smith executed a deed to Robert J. Peltier, Sr. dated January 14, 2008, covering 4.037 acres in THE “OPTION”

the Tobias Coulter Survey, A–199 Smith County, Texas.

Initially, we note that the parties disagree about the effect Attached hereto is a copy of the Option from Calvin C.

of the document (the “option agreement”) Smith signed on Smith to me dated March 11, 1998 as recorded in Volume March 11, 1998. Jarvis contends it gave him a “right of first 5039, Page 22 of the Smith County Official Records.

refusal” if Smith decided to sell his four acre tract. Peltier This was the first notice I have had of the above mentioned and Smith contend that, according to the plain language of the deed. document, Jarvis acquired an ordinary option to purchase the four acre tract. Because “right of first refusal” and “option”

I have talked to Mr. Peltier regarding the price he paid to have distinct meanings, we must first decide which applies in Mr. Smith. He declined to tell me the sales price. this case.

It would be appreciated of [sic] both of you would contact **3 [1] [2] A right of first refusal or preemptive right me regarding this matter. At this time, I would like to to purchase requires the owner of the subject property to exorcise [sic] the option. offer the property first to the holder of the right on the same terms and conditions offered by or to a bona fide purchaser.

I will need a copy of the cancelled check, closing statement Tenneco, Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, and title policy before declining or accepting any offer.

644 (Tex.1996); *650 City of Brownsville v. Golden Spread If I do not receive the information requested within 10 days Elec. Co-op., Inc., 192 S.W.3d 876, 880 (Tex.App.-Dallas from your receipt of this letter, I will forward this to my 2006, pet. denied). The holder of a right of first refusal has attorney with instructions to file suit to enforce my option. no right to compel or prevent a sale. Hicks v. Castille, 313 S.W.3d 874, 881 (Tex.App.-Amarillo 2010, pet. denied).

Yours very truly, [3] [4] An option, on the other hand, is a privilege or /s/ Ben E. Jarvis right that the owner of the property gives another to buy certain property at a fixed price within a certain time. Casa Ben E. Jarvis El Sol–Acapulco, S.A. v. Fontenot, 919 S.W.2d 709, 717 Neither Smith nor Peltier provided the requested information n. 9 (Tex.App.-Houston [14th Dist.] 1996, writ dism'd). By on the 2008 sale of the four acres. Consequently, Jarvis filed acquiring an option to purchase property, the holder of the suit against both of them. option purchases the right to compel a sale of the property on stated terms before the expiration of the option. Id.;

Peltier filed a traditional motion for summary judgment Riley v. Campeau Homes (Tex.), Inc., 808 S.W.2d 184, 188 asserting three affirmative defenses, and Smith adopted (Tex.App.-Houston [14th Dist.] 1991, writ dism'd). Peltier's motion. Later, Smith filed his own traditional motion for summary judgment in which he asserted the In this case, the option agreement states that Jarvis is granted same affirmative defenses, but added a claim against Jarvis an “option to purchase” the four acre tract. But the option

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agreement does not give Jarvis a right to compel Smith to sell that affirmative defense. See Randall's Food Mkts., Inc. v. the property and does not state a fixed purchase price for the Johnson, 891 S.W.2d 640, 644 (Tex.1995). Once the movant property. See Fontenot, 919 S.W.2d at 717 n. 9; Riley, 808 has established a right to summary judgment, the burden S.W.2d at 188. Nor does it specify a fixed expiration date. shifts to the nonmovant to respond to the motion *651 See Fontenot, 919 S.W.2d at 717 n. 9; Riley, 808 S.W.2d at and present to the trial court any issues that would preclude 188. Instead, the option agreement states that if Smith desires summary judgment. See City of Houston v. Clear Creek Basin to sell the property and has an offer he would accept, he Auth., 589 S.W.2d 671, 678–79 (Tex.1979). will submit the offer to Jarvis, who would then have thirty days “to accept.” This language creates a preemptive right [5] [6] We review the trial court's summary judgment de to purchase in the event Smith should decide to sell. See novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, Tenneco, Inc., 925 S.W.2d at 644. Accordingly, we conclude 661 (Tex.2005). We review the evidence presented in the that the option agreement is, in substance, a right of first motion and response in the light most favorable to the party refusal. See id.; Sanchez v. Dickinson, 551 S.W.2d 481, 483, against whom the summary judgment was rendered, crediting 484 (Tex.Civ.App.-San Antonio 1977, no writ) (holding that, evidence favorable to that party if reasonable jurors could, based on language, “Option Contract of Purchase” was right and disregarding contrary evidence unless reasonable jurors of first refusal). could not. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005).

[7] When, as here, both sides move for summary judgment SUMMARY JUDGMENT—OPTION AGREEMENT and the trial court grants one side's motions and denies In his first issue, Jarvis contends the trial court improperly the other side's, we review the summary judgment evidence granted Peltier's and Smith's summary judgment motions, presented by both sides and determine all questions presented. and should have granted Jarvis's summary judgment motion. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 Peltier and Smith contend that summary judgment in their S.W.3d 844, 848 (Tex.2009). We then render the judgment favor was proper. In their motions, Peltier and Smith raised that the trial court should have rendered. Id. affirmative defenses asserting that (1) the option agreement was not supported by consideration, (2) the option agreement Lack of Consideration

violated the rule against perpetuities, and (3) Jarvis failed to Peltier and Smith first contend that the trial court correctly comply with the option agreement. However, their arguments granted summary judgment in their favor because they in their summary judgment motions and on appeal are based established that the option agreement between Smith and on their contention that Jarvis acquired an ordinary option Jarvis was not supported by consideration.

to purchase the property. We have concluded that Jarvis acquired a right of first refusal. Therefore, we resolve Peltier's [8] [9] [10] [11] Consideration is a fundamental element and Smith's issues on appeal by applying the law pertaining of every valid contract. Critchfield v. Smith, 151 S.W.3d to rights of first refusal.

225, 233 (Tex.App.-Tyler 2004, pet. denied). Consideration is defined as either a benefit to the promisor or a loss or Standard of Review detriment to the promisee. N. Natural Gas Co. v. Conoco, **4 The standard for reviewing a traditional summary Inc., 986 S.W.2d 603, 607 (Tex.1998). In a partition, each judgment is well established. See Provident Life & Accident cotenant receives a specific share of property and holds it to Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex.2003); Sysco the exclusion of the other cotenants who formerly had equal Food Servs. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994); rights to possession with him. Garza v. Cavazos, 148 Tex. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 138, 221 S.W.2d 549, 552 (1949). The resultant holding of (Tex.1985). The movant for traditional summary judgment each in severalty is a benefit accruing to each, and alone has the burden of showing that there is no genuine issue of constitutes sufficient consideration for the partition. Hamilton material fact and that it is entitled to judgment as a matter v. Keller, 148 S.W.2d 1011, 1014 (Tex.Civ.App.-Eastland of law. TEX.R. CIV. P. 166a(c); Nixon, 690 S.W.2d at 548. 1941, no writ). A defendant must establish each element of an affirmative defense when it moves for summary judgment based on [12] [13] The consideration for the privilege of purchasing property under a right of first refusal is not separate from

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the consideration for the partition of real property. See Riley, and Smith refused to provide him with the terms of their sale, 808 S.W.2d at 188. Where an agreement to partition real he never had the opportunity to comply. He also argues that property and a right of first refusal constitute one contract, his duty to strictly comply with the option agreement was the provisions of which are interdependent, the consideration excused. for the partition will also support the right of first refusal. See Henderson v. Nitschke, 470 S.W.2d 410, 414 (Tex.Civ.App.- [16] [17] [18] [19] A right of first refusal is essentially a Eastland 1971, writ ref'd n.r.e.). dormant option. A.G.E., Inc. v. Buford, 105 S.W.3d 667, 673 (Tex.App.-Austin 2003, pet. denied). It requires the owner, **5 [14] In this case, Jarvis told Smith that he wanted before selling the property to another, to offer the property the eight contiguous acres adjoining his two acre tract, to the rightholder on the same terms or conditions specified and would file a partition suit if he and Smith could not in the offer by or to a bona fide purchaser. See Tenneco, reach an agreement. Smith wanted the middle four acres Inc., 925 S.W.2d at 644; City of Brownsville, 192 S.W.3d because he farmed it. Jarvis agreed to Smith's proposal on at 880. The property owner has an initial duty to make the condition that he be granted an “option” to purchase a reasonable disclosure of the offer's terms. McMillan v. the middle four acres. The option agreement states that it Dooley, 144 S.W.3d 159, 174 (Tex.App.-Eastland 2004, pet. is a part of the consideration for the partition. Thus, the denied). When the property owner expresses its intention to agreement to partition real property and the option agreement sell, the rightholder must, in compliance with the terms of constitute one contract, and its provisions are interdependent. the right, elect to either purchase the property or decline to See id. As such, the resulting ownership of the tracts in purchase it and allow the owner to sell it to another. See severalty constituted consideration for partition as well as Buford, 105 S.W.3d at 673. the March 11, 1998 option agreement. See Hamilton, 148 S.W.2d at 1014. Accordingly, we hold that Peltier and **6 [20] [21] [22] [23] A purchaser from a seller who Smith failed to establish their right to summary judgment on has given a right of first refusal to buy takes the property their affirmative defense of lack of consideration. Therefore, subject to that right. See Sanchez, 551 S.W.2d at 485. A summary judgment in their favor on this ground was transfer in violation of the preemptive right is equivalent to a improper. declaration by the owner that he intends to sell the property.

Martin v. Lott, 482 S.W.2d 917, 922 (Tex.Civ.App.-Dallas 1972, no writ). Consequently, when the rightholder learns of *652 Rule Against Perpetuities a sale in violation of his right, he again has the opportunity to [15] Peltier and Smith next contend that the trial court elect to purchase or decline to purchase within the time frame correctly granted summary judgment in their favor because specified in the contract creating the right of first refusal. See they established that the option agreement violated the rule Buford, 105 S.W.3d at 673. The rightholder does not have a against perpetuities. We have concluded, however, that the duty to act in order to exercise his preferential purchase right option agreement is, in substance, a right of first refusal. unless and until he receives a reasonable disclosure of the In Texas, a preferential right to purchase or a right of first terms of the sale. See McMillan, 144 S.W.3d at 174. The new refusal does not violate the rule against perpetuities. Cherokee property owner has a duty to make reasonable disclosure of Water Co. v. Forderhause, 641 S.W.2d 522, 526 (Tex.1982). the terms of the purchase to the rightholder. See Buford, 105 Therefore, the option agreement in this case does not violate S.W.3d at 673. the rule against perpetuities. See id. Consequently, Peltier and Smith failed to establish their right to summary judgment on [24] [25] Where a defendant has openly and avowedly their affirmative defense that the option agreement violates refused to perform his part of the contract or declared the rule against perpetuities. Thus, summary judgment in their his intention not to perform it, the rightholder need not favor on this ground was improper. make tender of payment of the consideration before bringing suit. SeeChambers v. Hunt Petroleum Corp., 320 S.W.3d 578, 583 (Tex.App.-Tyler 2010, no pet.). Moreover, a Noncompliance with Option Agreement tender of consideration is excused where the property owner Finally, Peltier and Smith argue that the trial court correctly intentionally avoids giving the rightholder an opportunity of granted summary judgment in their favor because Jarvis making it. Id.

failed to comply with the terms of the option agreement when he attempted to enforce it. Jarvis responds that because Peltier

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*653 Here, Smith failed to comply with the option agreement by not informing Jarvis of Peltier's offer and then Here, Jarvis argued that he was entitled to summary selling the property to Peltier. Once Jarvis learned of the sale, judgment enforcing the option agreement as a matter of which was approximately two years after it was completed, he law. Specifically, he argued that Smith breached the option contacted Peltier and Smith in an attempt to learn the terms of agreement by selling the four acre tract to Peltier without the sale and exercise his right of first refusal. Neither Peltier first submitting Peltier's offer to Jarvis. He contended further nor Smith provided Jarvis with the information he requested, that the right of first refusal was enforceable against Peltier and he filed suit against them. Ultimately, Jarvis learned the because the four acre tract was burdened by the option terms of the sale by conducting discovery in his suit. agreement, which created a right of first refusal, when Peltier acquired the property.

[26] Nevertheless, Peltier and Smith argue that Jarvis is not entitled to enforce his right of first refusal because he did not [31] Jarvis's summary judgment evidence consists of Jarvis's exercise it within thirty days after he learned of the sale. They correspondence with Smith relating to the proposed partition; assert that Jarvis's right matured into an enforceable option the deeds partitioning the original twelve acre tract between once he learned of the sale and that he was then required Jarvis and Smith; the option agreement; the real estate to act in strict compliance with its terms. However, upon contract, title policy commitment, closing documents, and learning of the sale, Jarvis was unable to obtain reasonable warranty deed relating to Smith's sale of the four acre tract disclosure of the terms under which Peltier purchased the to Peltier; Jarvis's letter to Peltier and Smith after he learned property. Therefore, he was prevented from exercising his of the sale of the property to Peltier; excerpts from the right of first refusal within thirty days after he learned of the depositions *654 of Jarvis and Smith; and Jarvis's affidavit. sale. See Chambers, 320 S.W.3d at 583. This excused his This evidence conclusively shows that (1) Smith and Jarvis failure to act. See id. Accordingly, we hold that Peltier and had a valid option agreement, which required Smith to first Smith did not establish their right to summary judgment on offer the property to Jarvis upon receiving an offer Smith their affirmative defense that Jarvis failed to comply with the would accept; (2) Smith received an offer to purchase from option agreement. Thus, summary judgment in their favor on Peltier and sold the property to Peltier without first offering that ground was improper. the property to Jarvis on the same terms; (3) Jarvis has at all times been ready, willing, and able to purchase the property on the same terms under which Smith sold it to Peltier;

Jarvis's Motion for Summary Judgment (4) Peltier acquired the property from Smith with notice of **7 [27] [28] [29] To prove a breach of contract claim, the recorded option agreement; and (5) Jarvis attempted to the following elements must be satisfied: (1) there was a valid learn the terms of the sale from both Peltier and Smith, but contract, (2) the plaintiff performed or tendered performance, neither Peltier nor Smith provided him with the requested (3) the defendant breached the contract, and (4) the plaintiff information prior to his filing suit. Therefore, we conclude was damaged as a result of the breach. Critchfield, 151 that Jarvis established a right to summary judgment as a S.W.3d at 233. Regarding the second element, a party seeking matter of law that the option agreement was enforceable specific performance of a contract for the sale of real property against Peltier and Smith. Thus, the burden shifted to Peltier must prove only that he is ready, willing, and able to pay the and Smith to present to the trial court any issues that agreed price for the property and perform the essence of the would preclude summary judgment. See City of Houston, 589 agreement and offer to do so. Riley, 808 S.W.2d at 188. A S.W.2d at 678–79. sale or transfer of property burdened by a right of first refusal without making an offer to the holder of the right is a breach **8 In their responses to Jarvis's summary judgment motion, of contract for which the remedy of specific performance is Peltier and Smith raised the three affirmative defenses that available. Id. they relied on in their motions for summary judgment.

We have held that Peltier and Smith did not establish [30] When a purchaser who has knowledge of the right of their affirmative defenses and therefore were not entitled to first refusal purchases real property, he stands in the shoes summary judgment as a matter of law. We also hold that the of the original seller when specific performance is sought assertion of these same affirmative defenses was insufficient and may be compelled to convey title to the first purchaser. to preclude summary judgment in Jarvis's favor. Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d 518, 527 (Tex.App.-Amarillo 1998, pet. denied).

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Peltier refers us to his argument in the trial court that Jarvis (Tex.App.-Houston [14th Dist.] 2003, pet. denied). An award failed to comply with the terms of the option agreement when of reasonable attorney's fees to a party recovering on a claim he attempted to exercise it and requested documentation for founded on a written or oral contract is mandatory under the terms of the sale that was not mentioned in the option Texas law. Jackson Law Office, P.C. v. Chappell, 37 S.W.3d agreement. He argues that this “called into question” whether 15, 23 (Tex.App.-Tyler 2000, pet. denied). But Section Jarvis was in fact “ready, willing, and able to perform” the 38.001(8) does not authorize recovery of attorney's fees by option agreement and created a fact issue for the jury. We a defendant who only defends against a plaintiff's claim and have already addressed Peltier's argument regarding Jarvis's presents no claim of his own. Thottumkal v. McDougal, 251 noncompliance with the option agreement and concluded that S.W.3d 715, 719 (Tex.App.-Houston [14th Dist.] 2008, pet. strict compliance was excused. And we do not agree that denied). Jarvis's request for documentation of the terms of the sale creates a fact issue for the jury. Moreover, “[w]hen the seller **9 The Declaratory Judgment Act provides in pertinent has conspicuously breached the contract, it is only necessary part that “[a] person ... whose rights, status, or other legal that the purchaser be ready and willing, and offers to perform relations are affected by a ... contract ... may have determined within his pleadings.” Abraham Inv. Co., 968 S.W.2d at any question of construction or validity arising under the ... 527. It is sufficient for the purchaser to plead that he “is contract ... and obtain a declaration of rights, status, or ready, able and willing” to perform. Burford v. Pounders, other legal relations thereunder.” TEX. CIV. PRAC. & 145 Tex. 460, 199 S.W.2d 141, 145 (1947). Jarvis included REM.CODE ANN. § 37.004(a) (West 2008). The court may this language in his first amended petition, in his motion award costs and reasonable and necessary attorney's fees as for summary judgment, and in his affidavit submitted as are equitable and just in a declaratory judgment action. TEX. summary judgment evidence. Therefore, he has satisfied this CIV. PRAC. & REM.CODE ANN. § 37.009 (West 2008). requirement.

Analysis

Conclusion Jarvis sought a summary judgment for attorney's fees against Peltier and Smith failed to establish their right to summary Peltier and Smith. Peltier responded that Jarvis was not judgment on their affirmative defenses as a matter of law. entitled to recover attorney's fees against him because the They also failed to include any matters in their responses to lawsuit was a breach of contract suit between Jarvis and Jarvis's motion for summary judgment that would preclude Smith. Therefore, Peltier urged, any claim for declaratory summary judgment in Jarvis's favor. Therefore, the trial court relief was an impermissible attempt to recover attorney's fees. erred in granting Peltier's and Smith's motions for summary Smith filed his own response that did not address attorney's judgment and denying Jarvis's motion. Jarvis's first issue is fees, and also adopted Peltier's response to the extent it sustained. did not “conflict with [Smith's] position.” He later filed a supplemental motion for summary judgment in which he sought attorney's fees from Jarvis. The trial court granted summary judgment for Smith's attorney's fees, denied Jarvis's SUMMARY JUDGMENT—ATTORNEY'S FEES summary judgment motion for attorney's fees, and ordered In his second issue, Jarvis contends that the trial court erred in Jarvis to pay $32,800 to Smith for attorney's fees through trial awarding Smith his attorney's fees from Jarvis, and denying and on appeal. Jarvis his attorney's fees from Peltier and Smith.

1. Breach of Contract

*655 Applicable Law Smith cited Texas Civil Practice and Remedies Code Section A person may recover reasonable attorney's fees, in addition 38.001 in support of his request for attorney's fees. But Smith to the amount of a valid claim and costs, if the claim is only defended against Jarvis's breach of contract claim; he “for an oral or written contract.” TEX. CIV. PRAC. & did not present his own breach of contract claim. Section REM.CODE ANN. § 38.001(8) (West 2008). A “valid claim” 38.001(8) does not authorize recovery of attorney's fees by under this statute is not limited to an action for monetary a defendant who only defends against a plaintiff's claim. damages and may include an action for specific performance. Thottumkal, 251 S.W.3d at 719. And even if attorney's fees Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 were available for successfully defending against a breach of

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contract claim, we have held that the trial court erroneously doing so, and therefore his failure to act was excused. He also granted Smith's motion for summary judgment against Jarvis. implicitly argues that he still has an opportunity to exercise Therefore, Smith is no longer a prevailing party. Because his right of first refusal. See Buford, 105 S.W.3d at 673. These Smith did not establish that he was entitled to summary allegations relate to the enforceability of the option agreement judgment as a matter of law for attorney's fees under Section against Peltier. 38.001(8), summary judgment for attorney's fees based on that section was improper. In paragraph 9, Jarvis requested a declaratory judgment “that the Option is valid and enforceable; that Peltier acquired the property from [Smith] subject to the Option; that Jarvis is 2. Declaratory Judgment entitled to enforce the Option; and that Peltier must convey Smith also asserted that Texas Civil Practice and Remedies the property to Jarvis on the same terms as Peltier acquired Code Section 37.009 supports summary judgment for his the property.” This request for relief also relates to the attorney's fees. Jarvis contended in the trial court, and enforceability of the option against Peltier and is consistent continues to argue here, *656 that he did not sue Smith with the allegations in paragraph 8. under the Declaratory Judgment Act. Smith maintains that paragraph 9 in Jarvis's first amended petition and the prayer In Jarvis's prayer, he requested “declaratory relief as specified for relief, when read together, mandate a contrary conclusion. [in paragraph 9].” Based upon our reading of paragraphs 1 To resolve the question, we consider Jarvis's prayer for through 9 and our consideration of the prayer in that context, relief in the context of the language in the entire body of we hold that Jarvis's request for declaratory relief pertains the petition, rather than along with paragraph 9 only. See to Peltier only and that the only claim Jarvis alleged against Denver City Indep. Sch. Dist. v. Moses, 51 S.W.3d 386, Smith was for breach of contract. Accordingly, we further 391–92 (Tex.App.-Amarillo 2001, no pet.); In re City of hold that Smith did not establish that he was entitled to Dallas, 977 S.W.2d 798, 804 (Tex.App.-Fort Worth 1998, summary judgment as a matter of law for attorney's fees under orig. proceeding). Section 37.009, and summary judgment for attorney's fees under that section was improper.

**10 In paragraphs 1 through 7 of his petition, Jarvis alleged a breach of contract claim against Smith for selling the four acre tract to Peltier without first offering it to Jarvis's Attorney's Fees Jarvis as required by the option agreement. As part of We have held that the trial court should have denied Smith's paragraph 7, Jarvis alleged that he “does not have an adequate motion for summary judgment on his affirmative defenses remedy at law and is entitled to the equitable remedy of and granted Jarvis's motion for summary judgment on his specific performance. Accordingly, Jarvis requests an order breach of contract claim against Smith. Therefore, Jarvis was compelling Smith to specifically perform his obligations as successful on his breach of contract claim against Smith and provided in the Option.” is entitled to recover attorney's fees from Smith. SeeTex.

Civ. Prac. & Rem.Code Ann. § 38.001(8); *657 Chappell, Peltier was not a party to the option agreement, but Jarvis 37 S.W.3d at 21. Because the award of Jarvis's attorney's sought to enforce the option agreement against him as well. fees against Smith is mandatory, we conclude that remand is Accordingly, in paragraph 8, Jarvis alleged that (1) his appropriate. See Chappell, 37 S.W.3d at 21. duty to act under the option agreement was never triggered because Smith never submitted Peltier's offer to Jarvis as **11 Peltier argues that Jarvis cannot recover attorney's required by the terms of the option agreement; (2) after fees against him because Jarvis “simply [added] a claim for discovering Smith's sale to Peltier, Jarvis wrote a letter to declaratory relief to a breach-of-contract claim for which Smith and Peltier attempting to learn the terms on which fees would not otherwise be permitted.” In MBM Financial Peltier purchased the property; (3) Smith and Peltier did Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660 not provide the terms of sale; and (4) Smith's failure to (Tex.2009), cited by Peltier, the appellee asserted claims for comply with the option agreement by submitting the offer to breach of contract, fraud, and declaratory relief against the Jarvis excused any alleged noncompliance by Jarvis. By these appellant. Id. at 663. After a bench trial, the appellee was allegations, Jarvis in effect asserts that, even though he did awarded money damages on its breach of contract claim not exercise his right of first refusal within the time frame and attorney's fees under Section 38.001. Id. Ultimately, provided in the option agreement, he was prevented from the supreme court rendered judgment that the appellee take

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When declaratory relief is requested and the trial court awards nothing as damages on its breach of contract claim and held attorney's fees to the party who prevailed in the trial court, that the attorney's fee award could not be affirmed based on we may remand upon reversal of the trial court's judgment for Chapter 38 of the civil practice and remedies code. Id. at 666. The court further concluded that attorney's fees could not reconsideration of attorney's fees in light of our disposition on appeal. See Coghill v. Griffith, 358 S.W.3d 834, 841 be awarded under the Declaratory Judgment Act because the (Tex.App.-Tyler 2012, pet. denied). Under the facts presented declarations in the judgment duplicated issues already before here, we conclude that remand is appropriate. See id.

the court. Id. at 671.That is not the case here.

**12 Jarvis's second issue is sustained.

Jarvis's breach of contract claim was based on Smith's failure to offer the four acre tract to Jarvis, as required by the option agreement, before selling it to Peltier. A favorable judgment on this claim allows Jarvis to enforce the option agreement DISPOSITION against Smith. Peltier correctly points out that “a subsequent purchaser stands in the shoes of the original seller when Because we have sustained Jarvis's two issues against both specific performance is sought and may be compelled to Smith and Peltier, we reverse the judgment against Jarvis. convey title to the first purchaser.” Abraham Inv. Co., 968 We render judgment granting Jarvis's request for specific S.W.2d at 527. But specific performance against Peltier is performance of the option agreement against Smith and available only upon Jarvis's showing that Peltier purchased Peltier. Specifically, with respect to Peltier, we render the property from Smith with knowledge of Jarvis's right judgment declaring that (1) the *658 option agreement dated of first refusal and that Jarvis's right is enforceable against March 11, 1998, between Calvin C. Smith and Ben E. Jarvis is Peltier despite his failure to exercise it in accordance with the enforceable against Peltier; (2) Peltier acquired the four acre terms of the option agreement. This proof was not necessary tract subject to the option agreement; (3) Jarvis is entitled to for Jarvis to prevail on his breach of contract claim against enforce the option agreement; and (4) Peltier must convey Smith. Therefore, unlike the appellee in MBM Financial the property to Jarvis on the same terms as Peltier acquired Corp., Jarvis's declaratory judgment claim does not merely the property from Smith. We render judgment that Smith duplicate issues already before the court. See MBM Fin. take nothing for his claim of attorney's fees against Jarvis. Corp., 292 S.W.3d at 671. And finally, we sever the issue of Jarvis's attorney's fees and remand this cause to the trial court for further proceedings to A declaratory judgment was an appropriate vehicle for determine the amount of attorney's fees Jarvis is entitled to establishing the enforceability of the option agreement recover from Peltier and Smith under Texas Civil Practice and against Peltier. SeeTEX. CIV. PRAC. & REM.CODE ANN. Remedies Code Sections 37.009 and 38.001(8) and 37.009. § 37.009; MBM Fin. Corp., 292 S.W.3d at 671. Because we have held that Jarvis was entitled to summary judgment All Citations

on his claim for declaratory relief against Peltier, an award of attorney's fees in Jarvis's favor may be equitable and 400 S.W.3d 644, 2013 WL 1755797 just. SeeTEX. CIV. PRAC. & REM.CODE ANN. § 37.009.

Footnotes 1 After Jarvis filed suit, Smith stated that he did not specifically recall signing the option, but he did not deny that he signed it.

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Jones v. Kelley, 614 S.W.2d 95 (1981)

[2] Frauds, Statute Of

KeyCite Yellow Flag - Negative Treatment Separate Writings Distinguished by Speedemissions, Inc. v. Bear Gate, L.P., Tex.App.-

Where property was listed by real estate agent Hous. (1 Dist.), April 4, 2013 as one tract, where purchasers intended to 614 S.W.2d 95 purchase entire tract, and where both earnest Supreme Court of Texas. money contracts referred to financing agent which was involved in transaction only as means Eugene C. JONES et ux., Petitioners, of achieving financing of purchase, two earnest v. money contracts, application and contract for Jared L. KELLEY, Sr. et al., Respondents. sale of financing agent, and vendor's affidavit could be construed together as one contract for No. B-9739. | March 4, 1981. conveying entire tract of land and to provide | Rehearing Denied April 15, 1981. description sufficient to satisfy statute of frauds.

V.T.C.A. Bus. & C. § 26.01(b)(4).

Vendors of land appealed from judgment entered in the District Court, Jefferson County, Thomas A. Thomas, J., 14 Cases that cite this headnote decreeing specific performance of certain earnest money contract for sale of vendor's land. The Court of Civil [3] Frauds, Statute Of

Appeals, 602 S.W.2d 573, affirmed, and vendor appealed Sufficiency in General

judgment requiring specific performance, and purchaser appealed denial of attorney fees. The Supreme Court, Spears, Frauds, Statute Of J., held that: (1) two earnest money contracts, financing Writings Connected by Internal Reference agent's application and contract for sale, and vendor's For conveyance or contract of sale to meet affidavit could be construed together as one contract; (2) requirements of statute of frauds, it must, insofar four instruments construed together satisfied statute of frauds; as property description is concerned, furnish (3) there were pleadings to support jury's award of attorney within itself or by reference to other identified fees; and (4) letter sent by financing agent to vendor writings then in existence, means or data by and telephone conversation between vendor and purchaser which particular land to be conveyed may be establish presentment entitling purchaser to attorney fees. identified with specific certainty. V.T.C.A., Bus.

& C. § 26.01(b)(4).

Judgment affirmed as reformed.

22 Cases that cite this headnote Campbell, J., dissented and filed opinion in which Greenhill, C. J., and Pope, J., joined. [4] Frauds, Statute Of Sufficiency in General

Where vendors intended to sell entire 116 West Headnotes (10) acre tract which was all land vendor owned in specified county, where vendors recited in affidavit, which was one document [1] Contracts consummating transaction, that they were Construing Instruments Together owners of such property conveyed by deed Separate instruments or contracts executed at the to them, and metes and bounds description same time, for same purpose, and in course of of property was in evidence, and where plat same transaction are to be considered as one showing location within larger 116 acre tract instrument, and are to be read and construed of 36 acres to be conveyed to financing agent together. was in evidence, 36 acres from larger tract was sufficiently located at time of signing, and 72 Cases that cite this headnote description of entire property to be conveyed was

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Jones v. Kelley, 614 S.W.2d 95 (1981)

sufficient to satisfy statute of frauds. V.T.C.A., Bus. & C. § 26.01(b)(4). [9] Costs Contracts

6 Cases that cite this headnote Under statute requiring presentation of claim to opposing party prior to recovery of attorney fees [5] Reformation of Instruments in suit on written contract, no particular form Matter of Description of presentment is required. Vernon's Ann.Civ.St.

art. 2226.

Where there was no mutual mistake as to identity of subject property, only as to acreage, 84 Cases that cite this headnote reformation of number of acres involved, which was supported by jury finding, was proper.

[10] Specific Performance Cases that cite this headnote Costs Where vendor admitted he received letter from [6] Costs purchaser's financing agent stating that purchaser Form and Requisites of Application in intended to go through with transaction, and General where telephone conversation between vendor and purchaser made it clear that purchasers were Where purchasers' amended petition in specific insisting that sale go through and were in process performance suit specifically plead that of contacting attorney, necessary presentment to purchasers made demand on vendors to convey recovery of attorney fees was established in suit subject property more than 30 days preceding for specific performance of written contract for the filing of action, but that said land was not sale of land. Vernon's Ann.Civ.St. art. 2226.

conveyed, pleadings supported jury's award of attorney fees. Vernon's Ann.Civ.St. art. 2226. 2 Cases that cite this headnote

8 Cases that cite this headnote

[7] Costs Attorneys and Law Firms Contracts

Necessary requisite for recovery of attorney fees *96 Provost, Umphrey, Doyle & McPherson, Steven M. in suit on written contract is presentment of Rienstra, Port Arthur, for petitioners. contract claim to opposing party and failure Hebinck & Associates, Bernard L. Hebinck, Houston, for of that party to tender performance. Vernon's respondents.

Ann.Civ.St. art. 2226.

Opinion

38 Cases that cite this headnote SPEARS, Justice.

[8] Costs This is a suit for specific performance to convey real estate.

Contracts

Buyers, Jared L. Kelley and Olga Kelley and the Texas Purpose of requirement in suit based on written Veterans Land Board, brought suit against sellers, Eugene contract for presentation of claim is to allow Jones and Della Mae Jones, for specific performance of two person against whom it is asserted an opportunity earnest money contracts for the sale of a tract of land in Shelby to pay claim within 30 days after they have notice County. Trial was to a jury, and based upon its findings, of claim without incurring obligation for attorney judgment was entered for the Kelleys decreeing specific fees. Vernon's Ann.Civ.St. art. 2226. performance. The trial court, however, granted that portion of the Joneses' motion for judgment notwithstanding the verdict 61 Cases that cite this headnote denying the Kelleys recovery of attorney's fees. The court

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Jones v. Kelley, 614 S.W.2d 95 (1981)

of civil appeals affirmed the judgment of the trial court. tract they owned in Shelby County to the Kelleys. The 602 S.W.2d 573. Both parties have filed applications in this relevant portions of the documents may be summarized as court. The Joneses' application attacks the judgment requiring follows: specific performance. The Kelleys' application complains of the failure of the court of civil appeals to hold that 1. An earnest money contract wherein Jones agrees to presentment of their claim was made, entitling them to the sell to Kelley, for the sum of $400 per acre, in cash, the attorney's fees found by the jury. premises described as the property “(l)ying and situated in the State of Texas, County of Shelby, and described as We reform the judgment of the court of civil appeals to follows:” provide for the recovery by the Kelleys of attorney's fees in “36 acres out of the W. W. Wagstaff the amount determined by the jury. In all other respects the Survey, A-796 in Shelby County, judgment is affirmed.

Texas.”

Three issues are presented: (1) whether the four documents This contract acknowledged that the “(p)urchaser has made consummating the sale of the subject property may application to purchase through Texas Veteran Land Board be construed together as one contract; (2) whether the and has been assigned # 03147.” description of the property contained in the four documents if they are construed together is sufficient to satisfy the statute This contract also provides “(s)eller to furnish current of frauds, Tex.Bus. & Com.Code Ann. s 26.01(b)(4); and (3) survey by registered Surveyor as required by Veteran Land whether presentment of the Kelleys' claim was established as Board.” a matter of law entitling the Kelleys to the jury's award of attorney's fees. 2. An earnest money contract wherein Jones agrees to sell to Kelley the premises described as:

The Joneses owned a 116 acre tract of land in Shelby “91.55 Acres out of the W. W. Wagstaff Survey A-796 County. 1 They listed the tract for sale with a real estate and D. G. Green Survey A-263, in Shelby County, agency specifying that the purchase price was to be paid either Texas” for a consideration of $400 per acre, with a cash in “cash or G.I.”. Mr. Kelley, a veteran, secured the aid of the payment of $5,493, and “(p)urchaser to make Note and Texas Veterans *97 Land Board to assist him in purchasing Deed of Trust in favor of Seller” for the balance of the the property. The Joneses cooperated with the Kelleys in the purchase price. financing arrangements with the Veterans Land Board.

This contract provides that “(s)eller to furnish current Their agreement was to sell the entire 127.55 acre tract and survey by certified Surveyor,” and further that “(t)his consisted of two earnest money contracts between the Joneses contract to be closed in conjunction with 36 Ac Vet Land and the Kelleys, the Veterans Land Board Application and Bd contract # 03147.” Contract for Sale, and the Joneses' affidavit. Under one of the 3. “Application and Contract of Sale Texas Veterans' Land earnest money contracts, the parties agreed that the contract Program,” providing that, with reference to the 36 acre was assignable by the Kelleys to the Veterans Land Board tract, Jones “shall attach hereto a field note description of which would take title to 36 acres of the Joneses' property in the above referenced property ....”

its name for cash. The Board would then resell that 36 acres to the Kelleys under the provisions of the Texas Veterans Land 4. “Affidavit of Seller Veterans Land Board of Texas” Act, art. 5421m Tex.Rev.Civ.Stat.Ann. The Joneses would wherein Jones aver that they were the sellers of the sell the remainder of the property, 91.55 acres, directly to the described 36 acre tract, and that such tract “is a part Kelleys for cash plus a note executed by the Kelleys, the note of 127.55 acres that I purchased from C. Balsimo on to be secured by a Deed of Trust lien on the 91 acres. The May 1970 for a total consideration of $10,000.00 .... A Joneses would not retain any title or security interest in the surveyor field note description of an access easement is land conveyed directly to the Veterans Land Board. being furnished.”

The Kelleys were the grantees in both earnest money contracts in which the Joneses agreed to convey the entire

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Jones v. Kelley, 614 S.W.2d 95 (1981)

The Kelleys, in relying upon their agreement with the Joneses, for member banks' employees. The trustee was to acquire life expended $6,181.40 for survey fees, escrow payments, and insurance on each participant from participating bank funds. fees and payments to the Veterans Land Board. Southern Life issued individual life insurance policies on each employee. Southern Life asserted that it had not violated any The Jones couple later refused to convey the property. On group insurance law because individual policies had been September 7, 1977, the Joneses sent a letter to the Veterans issued. This court held that the insurance policies, the trust Land Board advising them that they would not go through agreement, and the agreement between Great Southern and with the sale. The Veterans Land Board replied, by letter the Bankers Association must be construed together. We to the Joneses, that the Kelleys intended to go through with stated: “All of the instruments were a necessary part of the the sale. Further, an uncontroverted transcript of a telephone same transaction, without any one of which the transaction conversation appears in the record between Mrs. Kelley and was not complete.” In the present suit the transaction is the Mr. Jones in which Mrs. Kelley repeatedly told Mr. Jones of sale of the entire tract. Without the Veterans Land Board her determination to go through with the sale. financing referred to in the contracts, the sale of the entire tract would not be complete.

The Joneses contend that the description of the acreage in the earnest money contracts does not satisfy the statute of In Veal v. Thomason, supra, separate oil and gas leases were frauds, Tex.Bus. & Com.Code Ann. s 26.01(b)(4). *98 involved covering a group of contiguous tracts of land owned Specifically, they argue that there were two separate and by the various lessors in severalty. Each instrument contained distinct conveyances involved, and neither the 36 acre recitals showing that the execution of similar leases by other tract to be conveyed to the Veterans Land Board nor the lessors was contemplated by the parties, and the several leases remaining acreage were sufficiently described. It is conceded, were held to constitute but one contract just as though all of however, that if the documents are construed together as one the lessors had signed the same piece of paper. contract there is an adequate description of the property. 2 If the transaction consisted of two separate transactions, the Although admitting that the documents were executed as property description is inadequate as to both tracts and the part of one transaction, the Joneses argue that the purpose transaction fails. in executing the documents was not the same. The Joneses urge a distinction in that the 36 acre tract was to be sold for [1] We hold that the four instruments may be construed cash while as to the remaining acreage, the Joneses were to together and thus the description satisfies the statute of frauds. retain a substantial security interest *99 in the property. In The general rule is that separate instruments or contracts Miles v. Martin, supra, we said that the principle of construing executed at the same time, for the same purpose, and in the contracts together was a “device for ascertaining and giving course of the same transaction are to be considered as one effect to the intention of the parties and cannot be applied instrument, and are to be read and construed together. Miles arbitrarily and without regard to the realities of the situation.” v. Martin, 159 Tex. 336, 321 S.W.2d 62, 65 (1959); Veal Id. 321 S.W.2d at p. 65. v. Thomason, 138 Tex. 341, 159 S.W.2d 472, 475 (1942); Braniff Inv. Co. v. Robertson, 124 Tex. 524, 81 S.W.2d 45, 50 [2] Looking at the complete transaction it was the clear (1935); Libby v. Noel, 581 S.W.2d 761, 764 (Tex.Civ.App. intent of both the Joneses and the Kelleys that the execution of El Paso 1979, writ ref'd n. r. e.). the four documents was for the primary purpose of conveying all the subject property to the Kelleys. The property was listed The courts have construed contracts and instruments together by the real estate agent as one tract and the Kelleys intended in various situations in order to ascertain the intent of the to purchase the entire tract. Financing through the Veterans parties. Several decisions indicate that instruments may be Land Board was only a means of achieving this objective. The construed together or treated as one contract even though they Veterans Land Board was only interested in aiding Kelley, are not between the same parties. See Miles v. Martin, supra. a veteran, in his purchase of the property and not in any In Board of Insurance Commissioners v. Great Southern acquisition of its own. The Joneses and Mr. Kelley executed Life Ins. Co., 150 Tex. 258, 239 S.W.2d 803 (1951), Texas the Veterans Land Board documents at the Joneses' daughter's Bankers Association entered into a trust agreement with home in Sheldon. Both of the earnest money contracts refer to Houston Bank and Trust Company. The agreement provided the Veterans Land Board. The execution of four documents in for the establishment of a pension trust and retirement plan this instance was only a means of accomplishing the singular

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Jones v. Kelley, 614 S.W.2d 95 (1981)

and primary purpose of conveying the Joneses' entire tract to of the four documents consummating this transaction, the the Kelleys. Joneses recited that they were the owners of the property conveyed by deed from C. Balsimo to Jones and the metes Since we have determined that the four documents must be and bounds description of this property is in evidence. There construed together as one contract we need to determine is direct evidence that the Joneses actually chose the 36 acres whether the property description contained in these four to be conveyed to the Veterans Land Board. Both Kelley and documents satisfies the statute of frauds. Harmon, the real estate agent, testified that Jones aided in outlining with a yellow pen marker the 36 acres and placing [3] For a conveyance or contract of sale to meet the the easements on a plat at the time of the signing of the requirements of the statute of frauds, it must, insofar as the Veterans Land Board documents on May 1, 1977. This plat property description is concerned, furnish within itself or showing the location of the 36 acres within the larger 116 acre by reference to other identified writings then in existence, tract and containing calls for course and distance of the 36 the means or data by which the particular land to be acres, *100 is in evidence and clearly and easily locates the conveyed may be identified with specific certainty. Morrow exact 36 acres referred to. A complete and accurate survey of v. Shotwell, 477 S.W.2d 538, 539 (Tex.1972); Wilson v. the 36 acres with minor changes and field notes was made a Fisher, 144 Tex. 53, 188 S.W.2d 150, 152 (1945). week later on May 8, 1977 and was sent in attached to the Veterans Land Board Contract and Application, document In Kmiec v. Reagan, 556 S.W.2d 567 (Tex.1977), this court No. 3 above. As mentioned, the Joneses signed this document stated: “(w)hen the grantor is stated to be the owner of the along with all the others. Thus, it is clear the 36 acres from property to be conveyed and it is proved that the grantor the larger tract was sufficiently located by the plat before owns only a single tract answering the description, the the parties at the time of signing. When the instruments are land is identified with reasonable certainty.” Id. at 569. In construed together, the description of the entire property to Pickett v. Bishop, 148 Tex. 207, 223 S.W.2d 222 (1949), the be conveyed is sufficient to satisfy the statute of frauds. question concerned the sufficiency of a property description Further, the reformation of the number of acres involved, contained in a memorandum. The body of the memorandum being supported by the jury finding, was proper. There was describes the land as “my property described on the opposite no mutual mistake as to the identity of the subject property, side hereof.” The reverse side of the memo contained an only in the acreage. inadequate description. This court held that phrases such as “my property,” “my land,” or “owned by me,” are [6] We turn now to the third issue involved in this case sufficient when it is shown by extrinsic evidence that the party attorney's fees. The court of civil appeals held that the owns only one tract of land answering the description. We Kelleys did not plead or point to any evidence of presentment. explained this holding by stating: The Kelleys' Third Amended Petition specifically pleads:

“plaintiffs Kelley made demand on defendants to convey the The stated ownership of the property is property made the subject of this lawsuit more than 30 days in itself a matter of description which preceding the filing of this action, but said land was not leads to the certain identification of conveyed ....” Thus, there were pleadings to support the jury's the property and brings the description award of attorney's fees. within the terms of the rule that the writing must furnish within itself, or [7] We turn now to the question concerning presentment of by reference to some other extrinsic the contract claim. Article 2226, Tex.Rev.Civ.Stat.Ann., as writing, the means or data by which amended in 1979, provides for the recovery of a reasonable the particular land to be conveyed may amount as attorney's fees in addition to one's claim and costs, be identified with reasonable certainty. for the successful prosecution of a suit founded on a written Id. at 224.

contract. 3 A necessary requisite for the recovery of attorney's fees is the presentment of the contract claim to the opposing [4] [5] It is undisputed that the jury found that the Joneses party and the failure of that party to tender performance. The intended to sell the entire 116 acre tract which the evidence statute further provides that it is to “be liberally construed to shows was all the land the Joneses owned in Shelby County. promote its underlying purposes.” In the Joneses' affidavit to the Veterans Land Board, one

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Jones v. Kelley, 614 S.W.2d 95 (1981)

[8] [9] The purpose of the requirement for presentation of a claim is to allow the person against whom it is asserted The first contract, summarized in the Court's opinion, is an opportunity to pay a claim within 30 days after they to convey 36 acres for cash to the Veterans Land Board. have notice of the claim without incurring an obligation for The second is to convey 91.55 acres to the Kelleys. In this attorney's fees. No particular form of presentment is required. transaction the Kelleys were to make a $5,493.00 down Huff v. Fidelity Union Life Ins. Co., 158 Tex. 433, 312 payment and the balance was to be evidenced by a promissory S.W.2d 493, 500 (1958); Hudson v. Smith, 391 S.W.2d 441, note secured by a Deed of Trust. 452 (Tex.Civ.App. Houston 1965, writ ref'd n. r. e.).

A Veterans Land Board sale is not a method of financing as to Various forms of presentment have been held to be sufficient the Joneses. It is a cash sale, conveyed to the Veterans Land to support an award of attorney's fees under art. 2226. In Board of Texas (VLB) by general warranty deed. The VLB Huff v. Fidelity Union Life Ins. Co., supra, both oral and enters into a contract for deed with the veteran purchaser. written demands were held to be sufficient. In Welch v. We have two contracts to convey two tracts of land to two Gammage, 545 S.W.2d 223, 226 (Tex.Civ.App. Austin 1977, purchasers with two deeds, one to the VLB and one to the writ ref'd n. r. e.), the court held that the request for admission Kelleys. We must determine if the property descriptions are and its response in which the party admitted he refused to sufficient to enforce each of these conveyances. pay a claim were sufficient as presentment. Finally, in King Optical v. Auto. Data Processing, etc., 542 S.W.2d 213, The Statute of Frauds, Section 26.01 of the Business and 217 (Tex.Civ.App. Waco 1976, writ ref'd n. r. e.), the court Commerce Code, provides: held that an oral request for payment met the presentment requirement of art. 2226. Section 26.01. Promise or Agreement Must be in Writing.

[10] The letter sent by the Veterans Land Board to the (a) A promise or agreement described in Subsection (b) Joneses and the transcript of the telephone conversation of this section is not enforceable unless the promise or between Mrs. Kelley and Mr. Jones establish presentment as agreement, or a memorandum of it, is a matter of law. Mr. Jones admitted he received the letter, and (1) in writing; and

the contents of the letter and the telephone transcript were never controverted. During the telephone conversation Mrs. (2) signed by the person to be charged with the promise Kelley made it very clear that the Kelleys were insisting that or agreement or by someone lawfully authorized to sign the sale go through and were in the process of contacting an for him. attorney. 4 (b) Subsection (a) of this section applies to *101 The judgment of the court of civil appeals is reformed ....

to provide for attorney's fees in the amount found by the jury, and as reformed is affirmed. (4) a contract for the sale of real estate;

This Court has held that the writing must furnish within itself, or by reference to some other existing writing, the means Dissenting opinion by CAMPBELL, J., in which or data by which the particular land to be conveyed may be GREENHILL, C. J., and POPE and BARROW, JJ., join.

identified with reasonable certainty. U. S. Enterprises, Inc. v. Dauley, 535 S.W.2d 623 (Tex.1976); Williams v. Ellison, 493 CAMPBELL, Justice, dissenting. S.W.2d 734 (Tex.1973); Morrow v. Shotwell, 477 S.W.2d I dissent. 538 (Tex.1972); Wilson v. Fisher, 144 Tex. 53, 188 S.W.2d 150 (1945).

The facts of this case are a classic example of what the Statute of Frauds was intended to prevent. The problem is whether The two earnest money contracts provide: “Seller to furnish the cumulative property descriptions in the four separate current survey by registered surveyor ....” It is undisputed instruments are sufficient to enforce the two earnest money that a current survey did not exist when these contracts were contracts. signed. The field note description, subsequently attached

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Jones v. Kelley, 614 S.W.2d 95 (1981)

Green survey A-263 in Shelby County, to Instrument No. 3, cannot be considered because it was Texas.”

not “some other existing writing” as required by U. S. Enterprises, Inc. v. Dauley, supra, Williams v. Ellison, supra, This contract is lacking for the same reason as the 36 Morrow v. Shotwell, supra, Wilson v. Fisher, supra, and acre contract. Additionally, this 91.55 acre tract lies in two Hobbs v. Bass, 279 S.W.2d 480 (Tex.Civ.App. Texarkana surveys, Wagstaff and Green, and the 36 acre tract was to be 1955, writ ref'd n. r. e.). taken only from the Wagstaff survey.

Instruments 1, 3 and 4 refer only to the VLB sale. The third As evidenced by the two earnest money contracts, the Joneses instrument, the application and contract for sale, provides no and Kelleys contracted for two separate conveyances. There assistance. The only description is “36 acres located in W. W. is no way to determine which 36 acres will go to the VLB Wagstaff survey, A-796 Shelby County, Texas 12 miles N. without lien or to which portion the Joneses are to retain (direction) from Center (County Seat), Texas ....” The fourth their lien. These factors are highly significant to the VLB instrument, Affidavit of Seller Veterans Land Board, states and to the Joneses. The VLB application and contract of sale that the 36 acres is a part of 127.55 acres that the Joneses provide that if the 36 acres does not abut on a public road the purchased from C. Balsimo in May 1970. This Court has seller will provide a usable easement to a public road. The held such a description to be insufficient. In Smith v. Sorelle, Kelleys attempted to show that the 36 acres was to have been 126 Tex. 353, 87 S.W.2d 703 (1935), we held that a deed at the back side of the farm and not abutting on a public road. purporting to convey *102 land, which describes it only by However, no attempt was made to provide a description of quantity and as being part of a larger tract, with nothing to the easement. Whether the land on which the Joneses were identify what specific portion of the larger tract is intended to retain a lien abutted on a public road and whether the land to be conveyed, is invalid for uncertainty of description. In was to be encumbered with an easement would be decisive Pfeiffer v. Lindsay, 66 Tex. 123, 1 S.W. 264 (1886), this to them. Court held the following description to be insufficient:

The four instruments fail to provide sufficient description to “(F)ifty acres of the J. M. Moss comply with the Statute of Frauds.

survey, abstract No. 462, situated near the town of Burlington, in Montague county, Texas.”

GREENHILL, C. J., and POPE and BARROW, JJ., join in The second contract, the earnest money contract between the this dissenting opinion. Joneses and the Kelleys, described the land to be conveyed to the Kelleys as follows: All Citations

“91.55 acres out of the W. W. 614 S.W.2d 95 Wagstaff survey A-796 and D. G.

Footnotes 1 The land was originally thought to contain 127.55 acres, but was determined by the jury to contain 116 acres. There is no dispute over the actual acreage found by the jury nor over the reformation of the contract by the trial court.

2 During oral argument, counsel for the Joneses acknowledged that if the four instruments were construed as one transaction, the property description of the entire tract was legally sufficient:

JUDGE : Would you agree that the court of civil appeals was correct, or would say they were incorrect, in their conclusion that you can tell where the property is and what the property is from examination of all four instruments with the field notes attached? COUNSEL : I concede that if you take their initial conclusion that this is one transaction yes, I concede that the law is that that being all the land that my clients owned in Shelby County yes, you can determine from that what land you are talking about in total, but you still cannot distinguish what any one of these instruments refers to and I still contend .... which 36 or which remainder where it is. And that the terms of the sales are simply different; it's simply on its face not a single contract. No, I concede once you reach that point and say, “yes, it's one contract to sell the whole farm,” yes, they are absolutely correct on that point.

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Jones v. Kelley, 614 S.W.2d 95 (1981)

3 Section 2 of the 1979 amendatory act provides that the act is remedial in character and is intended to apply to all pending actions regardless of the time of institution of the suit. 1979 Tex.Gen.Laws, ch. 314, s 2 at 718.

4 The following is an excerpt from the transcript of the telephone conversation:

Mrs. Kelley: Well, sir, we are not in anyway going to sell that land to anyone else when we so desparately want it for ourselves. Now I am going to tell you, we have contacted a lawyer and you will be hearing from him. The Land Board is notified of the facts that you are trying to back out of the deal, and we will not in any way give up this piece of land. We have too much money invested in it now.

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

Presumptions and burden of proof 416 S.W.3d 618 Statutory presumption under Texas Residential Court of Appeals of Texas, Construction Commission Act (TRCCA) that Houston (1st Dist.). recommendation of a third-party inspector constitutes a rebuttable presumption of the Gary JONES and Carolyn Jones, Appellants existence or nonexistence of a construction v. defect did not relieve homeowners of their PESAK BROTHERS burden, as plaintiffs, to prove that builder should CONSTRUCTION, INC., Appellee. be held liable for the substandard grading and the resulting damage; presumption established No. 01–12–00535–CV. | Sept. 10, 2013. only that the grading was defective, not that builder had assumed responsibility to perform Synopsis the grading. V.T.C.A., Property Code § 426.008. Background: Homeowners sued their builder for breach of a construction contract, express and implied warranties, Cases that cite this headnote negligent construction of the home, and for violations of the Texas Deceptive Trade Practices Act. The 2nd 25th District [2] Contracts

Court, Colorado County, William C. Kirkendall, J., entered a Presumptions and burden of proof take-nothing judgment, in accordance with the jury's verdict, and homeowners appealed. Under Texas Residential Construction Commission Act (TRCCA), statutory presumption regarding the existence of a construction defect does not have the same Holdings: The Court of Appeals, Jane Bland, J., held that: meaning as the existence of a defendant's liability for a construction defect. V.T.C.A., Property [1] evidence supported jury's verdict for builder on Code § 426.008. homeowners' breach-of-contract and breach-of-warranty claims stemming from improper grading; Cases that cite this headnote

[2] jury's decision not to assign fault to builder for [3] Appeal and Error

homeowners' Deceptive Trade Practices Act (DTPA) claims, Great or overwhelming weight or stemming from improper grading, was not against the great preponderance

weight and preponderance of the evidence;

When a party attacks the factual sufficiency of an adverse finding on an issue on which she [3] builder owed no independent legal duty not to negligently has the burden of proof, she must demonstrate inflict emotional distress in performing under the construction on appeal that the adverse finding is against the contract with homeowners; and great weight and preponderance of the evidence.

[4] trial court did not err in refusing to submit homeowners' 1 Cases that cite this headnote negligent undertaking claim to the jury as a separate cause of action against builder.

[4] Contracts

Express warranties

Affirmed. Contracts Nature and Form of Remedy Although breach of warranty and breach of West Headnotes (22) contract are distinct causes of action, an express warranty comprises part of the basis of the bargain and thus is contractual in nature.

[1] Contracts

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

charged, but the document signed by the person Cases that cite this headnote to be charged must plainly refer to the other writing.

[5] Contracts Cases that cite this headnote Acts or Omissions Constituting Breach in General Contracts [9] Antitrust and Trade Regulation Warranties Construction, renovation, improvement, and repair

Both breach-of-contract and breach-of-warranty claims involve a party seeking damages based Antitrust and Trade Regulation on an opponent's failure to uphold its end of the Weight and sufficiency bargain. Jury's decision not to assign fault to builder for homeowners' Deceptive Trade Practices Cases that cite this headnote Act (DTPA) claims, stemming from improper grading, was not against the great weight and [6] Contracts preponderance of the evidence; reference to Sufficiency of evidence as to building compliance with building codes did not appear contracts in the construction agreement and, as a result, could not be attributed to builder so as to Contracts impose liability as a matter of law, certificate Building contracts

of completion did not specifically address the Evidence supported jury's verdict for builder grading work, disclaimer at the bottom of the on homeowners' breach-of-contract and breachhouse plans, stating that any engineering aspects of-warranty claims stemming from improper to be specified to actual site and construction grading; homeowner told builder that he would conditions, was from the plan designer and take responsibility for grading the property, meant only that the home was not designed for as well as for installing the sidewalks, patio, any particular lot or its conditions. V.T.C.A., driveway, and landscaping, builder's willingness Bus. & C. § 17.50(a)(1, 3).

to repair the grading defects did not constitute an admission of liability, and task of resolving Cases that cite this headnote the conflicting evidence as to who should have graded the land belonged to the jury.

[10] Action

Cases that cite this headnote Nature of Action If the defendant's conduct gives rise to liability because it breaches an agreement between the [7] Contracts parties, the plaintiff's claim ordinarily sounds Matters annexed or referred to as part of only in contract.

contract Documents incorporated into a contract by 1 Cases that cite this headnote reference become part of that contract.

1 Cases that cite this headnote [11] Action Nature of Action

In determining whether the plaintiff may recover [8] Contracts on a tort theory, if the damages sought are only Matters annexed or referred to as part of loss or damage to the subject matter of the contract contract, the cause of action is ordinarily on the Unsigned paper may be incorporated by contract.

reference into a paper signed by the person to be

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

Negligent undertaking liability requires the 1 Cases that cite this headnote presence of the following specific duty predicates: (1) defendant undertook to perform [12] Negligence services that it knew or should have known Voluntarily Assumed Duty were necessary for the plaintiffs' protection, (2)

defendant failed to exercise reasonable care in Absent a duty to act independently of the promise performing those services, and either (3) third made, failure to perform on a promise will not party charged with protecting the plaintiffs relied give rise to a cause of action for negligence.

upon the defendant's performance, or (4) the 1 Cases that cite this headnote defendant's performance increased the plaintiffs'

risk of harm.

[13] Negligence Cases that cite this headnote Necessity and Existence of Duty If no legal duty exists, neither does a cause of [17] Negligence

action for negligence.

Voluntarily Assumed Duty

1 Cases that cite this headnote Negligence Breach of Duty

[14] Damages As with a simple negligence claim, a negligent undertaking claim requires proof that the Breach of Contract or Warranty defendant owed the plaintiff a legal duty and Dead Bodies violated it.

Civil liabilities

Certain “special relationships,” including a 1 Cases that cite this headnote very limited number of contracts dealing with intensely emotional noncommercial subjects [18] Negligence

such as preparing a corpse for burial, may give Liabilities relating to construction, rise to a legal duty to avoid causing mental demolition and repair

anguish.

Because homeowners did not show a separate Cases that cite this headnote undertaking from the construction contract itself, or any increased risk of harm separate from the performance under the contract, the trial court [15] Damages did not err in refusing to submit homeowners'

Particular cases

negligent undertaking claim to the jury as a Builder owed no independent legal duty not separate cause of action against builder. to negligently inflict emotional distress in performing under the construction contract with 1 Cases that cite this headnote homeowners, and homeowner's heart attack was not a foreseeable result of any allegedly defective [19] Evidence

performance of the construction contract that Cause

would otherwise give rise to a legal duty.

Because builder owed homeowners only the Cases that cite this headnote contractual duties arising under the construction agreement, the trial court acted within its discretion in excluding causation testimony from [16] Negligence homeowner's treating cardiologist, stating that Voluntarily Assumed Duty

stress from the foundation problems caused Negligence homeowner to suffer a heart attack, insofar as Voluntarily assumed duties it purported to support a negligence cause of

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

action; however, trial court allowed the jury to consider evidence that homeowner suffered a Cases that cite this headnote heart attack in connection with the homeowner's mental anguish claim.

Cases that cite this headnote Attorneys and Law Firms

*620 Thomas J. Pearson, Attorney at Law, Houston, TX, [20] Evidence Donna C. Kline, Attorney at Law, Montgomery, TX, for Physical facts

Appellants.

Evidence Sources of Data Britton B. Harris, Brett J. Sileo, Harris, Hilburn & Sherer, In homeowners' action against builder for Houston, TX, for Appellee. construction defects, expert, who had general Panel consists of Justices JENNINGS, BLAND, and engineering experience, was qualified to render MASSENGALE.

an opinion relating to the foundation, and although expert did not specifically refer to any building code provision or address the concrete's compressive strength in his testimony, those OPINION issues went to the weight of the evidence, not its JANE BLAND, Justice.

admissibility.

When their newly-constructed house showed signs of Cases that cite this headnote foundation distress, Gary and Carolyn Jones sued their builder, Pesak Brothers Construction Company (Pesak [21] Appeal and Error Brothers), for breach of a construction contract, express and Particular types of evidence implied warranties, negligent construction of the home, and Absent a showing that the trial court's exclusion for violations of the Texas Deceptive Trade *621 Practices of homeowner's notes of his conversations Act. After a jury trial on the Joneses' claims, the trial court with builder, probably caused the rendition of entered a take-nothing judgment, in accordance with the jury's an improper judgment, appellate court would verdict. not disturb the trial court's evidentiary ruling in homeowner's action against builder for On appeal, the Joneses challenge the legal and factual construction defects. sufficiency of the evidence supporting the jury's findings.

They also contend that the trial court erred in refusing to 1 Cases that cite this headnote submit their negligence claim to the jury and by striking their sixth amended petition, and they raise challenges to certain of the trial court's evidentiary rulings. We hold that sufficient [22] Pleading evidence supports the jury's verdict, and the trial court did Necessity

not err in deciding the other challenged rulings. We therefore Pleading affirm.

Affected by time of application in general If an amended pleading is filed within seven days of trial, leave of court is required, and trial Background

court does not abuse its discretion by refusing to consider an amended petition filed fewer In 2006, the Joneses hired Pesak Brothers to build a house than seven days before trial if the party fails to for them on the Joneses' seventy-eight-acre property near seek leave of court. Vernon's Ann.Texas Rules Columbus, Texas. Pesak Brothers referred the Joneses to Civ.Proc., Rule 63. Steven Kieschnick, of Kieschnick's Designs in Wood, to select a floor plan from several blueprints that he had

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

available. After selecting a plan, the Joneses returned to Pesak under the construction agreement, and that the Joneses also Brothers and signed a two-page construction agreement. The saved money by choosing to grade the property themselves. agreement specifies the square footage of the living area, garages, and porches, as well as the materials that Pesak Pesak Brothers completed construction, and the Joneses Brothers would use in constructing the home. It itemizes the closed on the house in December 2006. Pesak presented the specifications for the foundation, framing, roofing, electrical Joneses with a final invoice in the amount of $334,839.96. wiring, insulation, exterior finish, painting, plumbing, floors, Pesak explained that the amount due exceeded the estimate doors, windows, interiors, gas outlets, and air conditioning contained in the agreement because of additional items not and heating. Pesak Brothers bid $310,000 for the total accounted for in the original estimate that Pesak Brothers construction cost, but the agreement explains that the Pesak provided, at the Joneses' request, during construction. Mr. Brothers would calculate the amount due based “on a cost Jones protested that final amount and insisted that he had plus 10% for operating expenses and liability insurance.” The agreed to pay no more than $300,000 for the house. Mr. Jones agreement does not address grading of the land surrounding told the jury that he suspected that Pesak Brothers had added the construction site. the “cost plus ten percent” provision after the Joneses signed the agreement. The parties negotiated the claimed overage.

Kieschnick provided a list entitled “[s]pecifications for Pesak Brothers ultimately agreed with the Joneses to split the home of Mr. & Mrs. Gary Jones.” The list identifies the difference in the claimed overage amount and accepted Kieschnick as a “draftsman and craftsman,” and it reiterates $20,000 in exchange for signing the certificate of completion. and elaborates on the construction tasks and items identified In the certificate, the parties averred: in the Pesak agreement. Pertinent to this appeal, the list recites that “[g]eneral notes, all materials and workmanship 1. Improvements Debts or Liens. Except as indicated should meet or exceed local building code and also below, Contractor states that there are no unpaid debts the Universal Building Code Book. Any changes made and OWNER states that he has not received any notices should be cleared with the homeowner.” Among other from any contractors or subcontractors with respect to things, Kieschnick's list specifies: “Excavation—virgin soil”; the Project or with respect to any of the following “Gutters and Downspouts—none”; and “Landscaping—by items which may be remaining on the Property: Mirror, owner.” Kieschnick's list is otherwise silent with respect to shutters on the front of house, Home Warranty Policy, the diversion of water outside the home or the grading or other concrete steps and bonus room as per plans and improvements to the land. Kieschnick's list is unsigned, and specifications dated as of March 22, 2006 neither the Pesak agreement nor Kieschnick's list refers to or ....

acknowledges the existence of the other.

3. Certificate of Completion. The project has been Before Pesak Brothers completed its construction, Robert completed in a good and workman-like manner and in Pesak and Mr. Jones discussed who would take responsibility accordance with the plans and specifications approved for completing the grading near the house and hardscaping by the Owner. The Contractor has duly paid all bills on the lot. Pesak asked Mr. Jones “if he wanted [Pesak and invoices for any labor and/or materials furnished Brothers] to do the grading and he said no, that he was in connection with the Project and has not received going to.” Mr. Jones owned three pieces of earth-moving notices of any claim of mechanic's or materialman's liens equipment—a tractor, a front-end loader, and an excavator. against the property. The OWNER has fully accepted the He had gained experience using them to clear over 200 fallen completed Project and has not received notices of any trees on his Louisiana property following Hurricane Katrina, kind of any claim of mechanic's or materialman's liens and he enjoyed moving soil around on his property with against the property. them. Mr. Jones told Pesak that he would contract directly with Sanchez Construction to install the concrete driveway, The evidence is uncontested that, other than the typical patio, and sidewalks surrounding the house. Mr. Jones grading that builders perform in the course of constructing acknowledged that, by contracting with Sanchez directly the home, neither Pesak Brothers nor its subcontractors for the hardscaping, the Joneses avoided the “cost plus ten graded the site before the parties executed the certificate of percent” that Pesak Brothers *622 would have charged completion.

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

In January 2007, around the same time that the Joneses moved windows and doors to stick or drag and cracks in the sheetrock into the house, Sanchez added a sidewalk on the north side of and brick veneer. the house, a driveway on the east side, and a patio on the south side. Mr. Jones used his front-end loader to contour the land In a July 7, 2008 letter to the Joneses' attorneys, Pesak around the house. Mr. Jones also attempted to divert water Brothers offered to make Brown's suggested repairs without from the house's foundation by cutting three terraces on the additional charge and explained how it would remedy each west side, and he built a stone wall uphill from the house. defect identified in Brown's report. With respect to the He conceded that he did not know any particular grading foundation issues identified in Brown's report, Pesak Brothers requirements, such as the degree of slope, to use. proposed to grade the area on the west side of the home to the proper five percent slope to divert the water from the In February, Mr. Jones called Pesak to report that he foundation and repair cracks and other cosmetic distress. The had found cracks in the exterior mortar. Pesak told Mr. Joneses, who had instituted this lawsuit several days before Jones to add soil around the foundation. Eventually, cracks receiving the letter, did not accept Pesak Brothers' offer. appeared in the inside walls, and windows and doors began to stick. According to Pesak, Mr. Jones's failure to grade the Mr. Jones suffered a heart attack in December 2008. The foundation soon after Pesak Brothers completed construction Joneses amended their pleadings to include, as part of their caused this damage. Pesak also testified that the placement DTPA claim, allegations that Pesak Brothers' conduct caused of the sidewalks, patio, and driveway prevented adequate Mr. Jones's heart attack and that he was entitled to damages grading around the home. He explained that the *623 for his physical injury and mental anguish. hardscaping around the house acted like a dam: instead of diverting rainwater away from the foundation, it detoured the At the close of the Joneses' case in chief, Pesak Brothers water flow around the foundation until it settled underneath moved for a directed verdict on the Joneses' negligence claim. the west side. The trial court took the motion under advisement, telling the parties it would decide the issue before submitting the charge The Joneses hired engineer Gary Boyd, who prepared a report to the jury. At the charge conference, the trial court declined in January 2008 concluding that the foundation slab was the Joneses' proposed submission of a negligence claim. The tilting, or “heaving,” and stating that it was his “professional jury found that Pesak Brothers was not liable for the Joneses' recommendation that proper drainage be established adjacent remaining contract, DTPA, and breach of warranty claims. to the foundation sufficient to satisfy the International Residential Code [IRC] Building Requirements.”

Discussion

The Joneses initiated an administrative complaint against Pesak Brothers with the now-defunct Texas Residential I. Evidentiary Sufficiency

1

Construction Commission (TRCC). TRCC sent its own inspector, John Brown, to investigate. He concluded in April A. Legal sufficiency of the evidence supporting the 2008 that the surrounding soil had not been properly graded jury's adverse findings *624 on the Joneses' breach-ofand that, as a result, the foundation had experienced post- contract and breach-of-warranty claims construction differential movement that had damaged the According to the Joneses, the TRCC inspector's report house. created a presumption that Pesak Brothers had breached both the contract and warranties of good and workmanlike Brown also opined that the areas enclosed by the sidewalk construction, and thereby shifted the burden of proof should be “filled and graded to provide a drainage slope away to Pesak Brothers to show that the inspector's findings from the foundation.” Brown identified nineteen construction were inconsistent with applicable building and performance defects in the house. These included wiring problems and a standards. Because of the inspector's report, the Joneses leak in the septic tank fill line, but of paramount concern was contend, the evidence conclusively established Pesak the failure to provide an adequate slope around the foundation Brothers' liability. Though the jury found to the contrary, the away from the house to protect the foundation from damage Joneses are entitled to reversal and rendition of the judgment due to surface drainage. He concurred with Boyd that the in their favor if they have established Pesak Brother's liability lack of proper grading resulted in heaving, which caused the as a matter of law. See Dow Chem. Co. v. Francis, 46

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

S.W.3d 237, 241 (Tex.2001) (explaining that a party attacking legal sufficiency of adverse finding on an issue on which 1. Standard of review

party bears burden of proof “must demonstrate on appeal that the evidence establishes, as a matter of law, all vital [3] The Joneses next challenge the factual sufficiency of facts in support of the issue,” and that party may prevail the evidence supporting the jury's findings in response to the on appeal only if no evidence supports finding and “the Joneses' breach of contract, breach of warranty, and DTPA contrary proposition is conclusively established”); see also liability issues. “When a party attacks the factual sufficiency City of Keller v. Wilson, 168 S.W.3d 802, 815–16 (Tex.2005) of an adverse finding on an issue on which she has the burden (explaining nature of conclusive evidence). of proof, she must demonstrate on appeal that the adverse finding is against the great weight and preponderance of the [1] In the trial court, the parties agreed that a presumption evidence.” Dow Chem. Co., 46 S.W.3d at 242. In reviewing created by the TRCCA applied to their dispute. 2 The court the record under this standard, we consider and weigh all therefore instructed the jury, congruent with the former of the evidence; we set aside a verdict only if the evidence statute, that is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Id. We must “detail the evidence relevant to the in any action involving a construction defect brought issue” and “state in what regard the contrary evidence greatly after a recommendation of a third-party inspector or outweighs the evidence in support of the verdict.” Id. (quoting ruling by a panel of state inspectors on the existence Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986)). of the construction defect or its appropriate repair, the The jury is the sole judge of the witnesses' credibility, and it recommendation or ruling shall constitute a rebuttable may choose to believe one witness over another; a reviewing presumption of the existence or nonexistence of a court may not impose its own opinion to the contrary. City of construction defect or the reasonable manner of repair of Keller, 168 S.W.3d at 819. Because it is the jury's province the construction defect. to resolve conflicting evidence, we must assume that jurors [2] The Joneses point to the instruction, coupled with the resolved all conflicts in harmony with their verdict. Id. at 820. inspector's report, as conclusively establishing liability. We disagree with the Joneses' interpretation. “[T]he existence ... 2. Analysis All of the Joneses' causes of action turn on of a construction defect” does not have the same meaning whether Pesak Brothers was responsible for the improper as “the existence of a defendant's liability for a construction grading and, consequently, for the damage to the foundation defect.” No party disputed the existence of the construction and other parts of the home. 3 The Joneses' live petition defect at issue in this case; Pesak Brothers agreed with the alleged that Pesak Brothers:

Joneses that the soil around the house was not properly graded. Their dispute turned not on whether the grading was substandard, but instead, on whether Pesak Brothers had • failed to prepare grading and drainage around the agreed to grade the Joneses' property in the first place. The foundation as required by the TRCC; presumption relied on by the Joneses does not relieve them of their burden, as plaintiffs, to prove that Pesak Brothers • represented that the house would be built in a should be held liable for the substandard grading and the workmanlike manner in compliance with accepted resulting damage. The presumption established only that the building standards and methods and that it was grading was defective, not that Pesak Brothers had assumed habitable when it had not graded the site to provide responsibility to perform the grading. We hold that the appropriate drainage “that was essential to the Joneses do not prevail as a matter of law on their breach structural integrity of the foundation”; and of contract and breach of warranty claims, so as to require reversal of the jury's verdict. • failed to disclose that the “landscaping” referred to in the agreement was actually finish grading that was essential to proper drainage.

*625 B. Factual insufficiency challenge Each of their claims required the Joneses to prove that Pesak Brothers had a duty—whether derived from the contract or imposed by law—to grade the site after

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

constructing the house. We consider this issue in the Trico Marine Servs., Inc. v. Stewart & Stevenson Tech. Servs., context of each claim below. Inc., 73 S.W.3d 545, 549 (Tex.App.-Houston [1st Dist.] 2002, orig. proceeding) (quoting Owen v. Hendricks, 433 S.W.2d 164, 166 (Tex.1968)). The document signed by the defendant, a. Breach-of-contract and breach-of-warranty claims however, must plainly refer to the other writing. Id. No [4] [5] [6] Although breach of warranty and breach of reference to Kieschnick's list appears in the Pesak Brothers contract are distinct causes of action, an express warranty agreement. comprises part of the basis of the bargain and thus is contractual in nature. Med. City Dall., Ltd. v. Carlisle Corp., At trial Pesak testified that he had offered to provide the 251 S.W.3d 55, 60 (Tex.2008). Both breach-of-contract grading work at the cost-plus-ten-percent rate set forth in and breach-of-warranty claims “involve[ ] a party seeking the agreement, but Mr. Jones declined the offer. Mr. Jones damages based on an opponent's failure to uphold its end of told Pesak that he would take responsibility for grading the bargain.” Id. (citing U.S. Pipe & Foundry Co. v. City the property, as well as for installing the sidewalks, patio, of Waco, 130 Tex. 126, 108 S.W.2d 432, 434 (1937)). We driveway, and landscaping. The record shows that Mr. Jones therefore consider the Joneses' factual-sufficiency challenges complained that Pesak Brother's final invoice on the home on these issues together. was excessive, even though his complaint was inconsistent with the agreement's financial terms. The jury could have Charge question 1 asked the jury: considered the evidence concerning the parties' financial discussions to find that the additional cost the Joneses would *626 Did Pesak Brothers Construction, Inc. fail to comply have incurred by having the work performed under the written with the material terms of the agreement with Gary and agreement led to their decision to assume the responsibility Carolyn Jones? for the grading, hardscaping and landscaping, which, the jury heard, also involves grading the soil around the house to In deciding whether the parties reached an agreement, protect the foundation. you may consider what they said and did in light of the surrounding circumstances, including any earlier course of The Joneses contend that Pesak Brothers' July 2008 letter dealing. You may not consider the parties' unexpressed offering to repair defects identified by the state inspector is thoughts or intentions. tantamount to an admission that Pesak Brothers had assumed the responsibility to grade at least the western side of the The charge defined an express warranty as “any affirmation property surrounding the house. The relevant contents of that of fact or promise made by Pesak Brothers Construction, Inc.

letter follow:

that relates to the construction of the home and becomes part of the basis of the bargain.” The charge explained that an We have reviewed the inspection report filed by John implied warranty includes “failing to perform services in a Brown as part of the TRCC SIRP process. As we have good and workmanlike manner” or “[s]elling a home that was stated before, we are very aware of the problems that exist not suitable for human habitation.” The jury found no breach with the Jones home and are still willing to fix them, with of a material term of the agreement, and no failure to comply the cooperation of the Jones[es]. with a warranty that was producing cause of any damage to the Joneses. We have listed each alleged defect from the inspection report and the suggested method of repair:

[7] [8] The written construction agreement does not mention grading. The Joneses assert that Kieschnick's list # 1 Alleged Defect: Improper grading and drainage around was part of their agreement with Pesak Brothers through foundation. the doctrine of incorporation by reference. We disagree.

*627 Repair Method: Pesak Brothers Construction will “Documents incorporated into a contract by reference become grade the area on the west side of the home to the proper 5% part of that contract.” In re 24R, Inc., 324 S.W.3d 564, slope to defer water from the foundation. Pesak Brothers 567 (Tex.2010) (orig. proceeding) (citing In re Bank One, Construction did not construct the sidewalks, the driveway, N.A., 216 S.W.3d 825, 826 (Tex.2007) (orig. proceeding)

nor the back porch patio area surrounding the remainder (per curiam)). “[A]n unsigned paper may be incorporated by reference into a paper signed by the person to be charged.”

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of the home. Therefore, we should not be responsible for builder to grade the soil to establish a proper slope. Gessner those areas. criticized the quality of the foundation, but he did not attribute the foundation's movement to any of the particular flaws ... he identified relating to its construction; in fact, Gessner specified that he had no opinion about the cause of the # 11 Alleged Defect: Cracks in brick on front and west side foundation's movement. Further, although Gessner included of house.

grading among the requirements for a stable foundation, he Repair Method: We agree with [the Boyd's engineer testified that he did not know who had taken responsibility and the TRCC inspector's] observations of the ground for the grading around the house and that he did not offer any “heaving” around the foundation. We also agree to slope opinion about that issue. the area around the foundation on the west side of the house to satisfy the IRC [International Residential Code] The remaining evidence supports a finding that the lack Building Code requirements (5% grade slope for the first of proper grading caused the damage to the home. The 10 feet around foundation).... TRCC inspector agreed with Boyd's report that the foundation movement resulted directly from the poor drainage around We are anxious to make these repairs upon the okay by the the home, and that the resulting heaving caused the problems homeowner, Mr. Gary Jones. We are and have been very with the windows and doors, as *628 well as the cracks in cooperative throughout this whole ordeal and area ready to the sheetrock and brick veneer. settle these problems.

The Joneses also direct us to Mr. Jones's testimony, in which This letter does not render the jury's no-breach findings he recounted a conversation with Pesak: against the great weight and preponderance of the evidence. Pesak Brothers sent the letter, albeit untimely, in connection Q. During the conversations you had with the Pesak with the dispute resolution process available under the Brothers personnel on the west wall, on the west end TRCCA. Former section 27.004 of the Texas Property Code of your house, did it become apparent to you, without gave Pesak Brothers the option to respond to the Joneses' saying what they said, that they knew that that place claim with an offer to repair any claimed construction defect needed to be graded? and describe in reasonable detail the repairs it would make. If the claimants received a compliant offer to repair, the statute A. Yes. required them either to accept the offer or refuse the offer in Q. And did you ask them to do it?

writing and explain in reasonable detail why they considered the offer unreasonable. Act of June 15, 2007, 80th Leg., R.S., A. I believe I did. ch. 843 § 3, 2007 Tex. Gen. Laws 1753 (formerly codified at TEX. PROP.CODE ANN. § 27.004(d)). This testimony contradicts Pesak's testimony that Mr. Jones had refused Pesak's offer to perform the grading. The jury Pesak Brothers' letter explained that it was in response reasonably could choose to credit Pesak's testimony over Mr. to the TRCC's inspection report, and it expressly declared Jones's testimony on this issue. See Figueroa v. Davis, 318 that it “was ready to settle these problems.” Pesak testified S.W.3d 53, 60 (Tex.App.-Houston [1st Dist.] 2010, no pet.). that, when he made the offer to repair, the grading work would have cost approximately $2,000. Viewed in this Pesak Brothers' implied warranty obligations to the Joneses context, the jury reasonably could have rejected the Joneses' extended to the work within its control. Cf. Centex contention that Pesak Brother's willingness to repair the Homes v. Buecher, 95 S.W.3d 266, 274–75 (Tex.2002) defects constituted an admission of liability. (holding that implied warranty of good workmanship can be disclaimed when agreement expressly provides for manner Next, the Joneses cite the testimony of their engineering of performance or quality of construction). The Joneses expert, Thomas Gessner, opining that: (1) under the standard point to Pesak's lack of familiarity with the IRC provisions of care for local builders, Pesak Brothers should have had addressing grading requirements. Whether Pesak knew the an engineer design the foundation; (2) a properly designed IRC, however, does not bear on whether Pesak Brothers had foundation would not have been damaged by soil heaving the responsibility to perform the grading work. when it got wet; and (3) the standard of care required the

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

a good and workmanlike manner” constitutes an actionable The task of resolving the conflicting evidence as to who misrepresentation, because Pesak failed to complete the should have graded the land belonged to the jury. Because grading around the foundation. Before Pesak executed the some evidence supports the jury's findings, we hold that the certificate, the parties had discussed the final grading work, trial court properly entered judgment on the jury's verdict and and the jury resolved the conflicting evidence on that issue denied the Joneses' motion for new trial on their breach-of- in favor of Pesak Brothers. The certificate of completion contract and breach-of-warranty claims. does not specifically address the grading work, and the jury's resolution of the conflicting evidence on that issue supports the conclusion that the certificate of completion does not contain any actionable misrepresentation.

b. DTPA claims

[9] A consumer may bring a DTPA cause of action for Third, the Joneses contend that Pesak Brothers committed either a violation of section 17.46(b) of the DTPA (the a DTPA violation as a matter of law by concealing other “laundry list”) or for an unconscionable action or course of foundation problems with the home. This record, however, action if the violation “constitute[s] a producing cause of does not support that contention. The Joneses' own foundation economic damages or damages for mental anguish.” TEX. expert, Daniel Wick, testified that he did not observe any BUS. & COM.CODE ANN. § 17.50(a)(1), (3) (West 2011). issues with the slab other than a slight wave in one area that The Joneses brought both types of claims, which the jury was not unusual in construction, and that the issue was so considered under charge questions 2 and 3. insignificant that he did not bother to mention it to Pesak Brothers.

Charge question 2 asked the jury to find whether Pesak Brothers “engage[d] in any false, misleading, or deceptive Fourth, the Joneses claim that Pesak Brothers deviated from act or practice that Gary or Carolyn Jones relied on to their a disclaimer at the bottom of the house plans, stating that detriment” and was a producing cause of their damages. The “any engineering aspects to be specified to actual site and charge asked the jury to consider whether Pesak Brothers: construction conditions,” which, they contend, committed Pesak Brothers to hire a foundation engineer. The jury a. Represent[ed] that the home as completed had or would reasonably could have rejected the interpretation that this not have had the characteristics that the home did not language required the builder to hire an engineer. Pesak have, or Brothers explained that the disclaimer is from the plan designer and meant only that the home was not designed for b. Represent[ed] that the home was or would be of a any particular lot or its conditions. The jury was entitled to particular quality when it was of another, or credit that explanation and find that the disclaimer did not constitute an actionable misrepresentation under the DTPA.

c. Fail[ed] to disclose information about the home that was known at the time of the transaction with the intention to Charge question 3 tasked the jury with finding whether induce Gary or Carolyn Jones into a transaction that they Pesak Brothers' conduct violated the provision of the DTPA otherwise would not have entered into if the information that prohibits unconscionable conduct. See TEX. BUS. & had been disclosed.

COM.CODE ANN. § 17.50(a)(3). In accordance with the The jury answered “no.” statute, the charge defined “unconscionable action or course of action” as “an act or practice that, to a consumer's The Joneses first point to the construction agreement as detriment, takes advantage of the lack of knowledge, ability, evidence supporting their DTPA claim because the home did experience, or capacity of a consumer to a grossly unfair not comply with any applicable building code. The reference degree.” The jury found that Pesak Brothers did not engage to compliance with building codes, however, appears in in any unconscionable action or course of action that was a *629 Kieschnick's list, not in the construction agreement producing cause of damages to either Mr. or Mrs. Jones. The and, as a result, cannot be attributed to Pesak Brothers Joneses' complaints, in the main, are problems that arose from so as to impose liability as a matter of law. The Joneses the lack of proper grading. The evidence does not support further contend that the statement in the certificate of the conclusion that Pesak Brothers failed to comply with any completion that Pesak Brothers had completed its work “in code requirement that produced the foundation's heaving and

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

movement. We hold that the jury's decision not to assign fault claim for negligent construction of their home, holding that to Pesak Brothers for Joneses' DTPA claims is not against the when the injury is only to the economic loss to the subject great weight and preponderance of the evidence. of the contract itself, the action sounds in contract alone. 711 S.W.2d 617, 618 (Tex.1986).

II. Refusal to Submit Negligence Claim [10] [11] [12] [13] To distinguish between contract The Joneses contend that the trial court erred in refusing to and tort causes of action, we analyze the source of the duty submit their negligence claim to the jury, effectively granting and the nature of the remedy. Formosa Plastics Corp. v. Pesak Brothers' motion for directed verdict on that claim. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 45 The Joneses premised their negligence claim on allegations (Tex.1998) (citing DeLanney, 809 S.W.2d at 494–95). If that Pesak Brothers failed to act with due care by selecting the defendant's conduct gives rise to liability because it a construction site for the house that had serious drainage breaches an agreement between the parties, the plaintiff's problems, which it then failed to remedy. In addition to claim ordinarily sounds only in contract. Id. at 494. In seeking economic damages, the Joneses sought damages for determining whether the plaintiff may recover on a tort Mr. Jones's *630 physical injuries, alleging that the Pesak theory, if the damages sought are only loss or damage to the Brothers' negligence caused Jones to suffer his heart attack. subject matter of the contract, the cause of action is ordinarily on the contract. Id.; Jim Walter Homes, 711 S.W.2d at 618. In The issue of whether the evidence at trial gives rise to a fact other words, absent a duty to act independently of the promise issue for jury determination on the existence of a legal duty, made, failure to perform on a promise will not give rise to and for granting or denying a directed verdict, is one of legal a cause of action for negligence. DeLanney, 809 S.W.2d at sufficiency. See City of Keller, 168 S.W.3d at 809, 827. We 495 n. 2 (citing W. Keeton, D. Dobbs, R. Keeton & D. Owen, consider whether there the record contains any evidence of PROSSER AND KEETON ON THE LAW OF TORTS § 92 probative force to raise a fact issue on the question presented. at 655 (5th ed. 1984)). If no legal duty exists, neither does Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, a cause of action for negligence. See Centeq Realty, Inc. v. 684 (Tex.2004). We will credit the favorable evidence if Siegler, 899 S.W.2d 195, 197 (Tex.1995). reasonable jurors could and disregard the contrary evidence unless reasonable jurors could not. City of Keller, 168 S.W.3d [14] [15] The Joneses have not identified any duty that at 827. “A directed verdict is warranted when the evidence Pesak Brothers purportedly owed other than the duties is such that no other verdict can be rendered and the moving connected with construction of the home, the subject matter party is entitled, as a matter of law, to a judgment.” Byrd v. of the contract. Pesak Brothers owed no independent legal Delasancha, 195 S.W.3d 834, 836 (Tex.App.-Dallas 2006, no duty “not to negligently inflict emotional distress” *631 in pet.).

performing under the contract. 4 See Temple–Inland Forest Prods. Corp. v. Carter, 993 S.W.2d 88, 91 (Tex.1999); City of The Joneses rely on the Texas Supreme Court's 1949 decision Tyler v. Likes, 962 S.W.2d 489, 500 (Tex.1997). Mr. Jones's in Montgomery Ward & Co. v. Scharrenbeck in asserting that heart attack was not a foreseeable result of any allegedly Pesak Brothers' negligent performance of the construction defective performance of the construction contract that would contract caused their damages. 146 Tex. 153, 204 S.W.2d 508 otherwise give rise to a legal duty. See Snellenberger v.

(1947). In Scharrenbeck, the defendant contracted to repair Rodriguez, 760 S.W.2d 237, 237–38 (Tex.1988) (holding a water heater, but improper installation caused a fire that that person who ran over child was not liable in negligence destroyed the plaintiff's home. Id. at 509. The Court held for death of police officer who suffered heart attack after that the defendant breached its contract by failing to repair controlling crowd around injured child).

the water heater properly, but, because the defendant's error caused the destruction of the plaintiff's home, the defendant [16] [17] [18] The Joneses also sought to hold Pesak breached a common-law duty as well, allowing for recovery Brothers liable for negligence under a voluntary undertaking in tort. Id. at 510 (discussed in Sw. Bell Tel. Co. v. DeLanney, theory, because they had taken Pesak's suggestion to build 809 S.W.2d 493, 494 (Tex.1991)).

the home on a site downhill from the location they originally considered. The Texas Supreme Court has stated that “one In Jim Walter Homes, Inc. v. Reed, the Texas Supreme Court who voluntarily undertakes an affirmative course of action for distanced itself from Scharrenbeck by reversing an award the benefit of another has a duty to exercise reasonable care for punitive damages made in connection with the Reeds'

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

that the other's person or property will not be injured thereby.” admit evidence for an abuse of discretion. In re J.P.B., 180 Colonial Savs. Ass'n v. Taylor, 544 S.W.2d 116, 119–20 & S.W.3d 570, 575 (Tex.2005). A court abuses its discretion if n. 2 (Tex.1976) (citing RESTATEMENT (SECOND) OF it acts without reference to any guiding rules or principles. TORTS § 323 (1965)); Tex. Woman's Univ. v. Methodist Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, Hosp., 221 S.W.3d 267, 283–84 (Tex.App.-Houston [1st 687 (Tex.2002); Downer v. Aquamarine Operators, Inc., 701 Dist.] 2006, no pet.). Undertaking liability requires the S.W.2d 238, 241–42 (Tex.1985). To show the trial court presence of the following specific duty predicates: abused its discretion, an appellant must demonstrate that: (1)

the court erred in not admitting the evidence; (2) the excluded (1) [the defendant] undertook to evidence was controlling on a material issue dispositive of perform services that it knew or the case and was not cumulative; and (3) the error probably should have known were necessary caused rendition of an improper judgment in the case. See for the plaintiffs' protection, (2) TEX.R.APP. P. 44.1(a) Tex. Dep't of Transp. v. Able, 35 [the defendant] failed to exercise S.W.3d 608, 617 (Tex.2000); Sharma v. Vinmar Int'l, Ltd., reasonable care in performing those 231 S.W.3d 405, 422 (Tex.App.-Houston [14th Dist.] 2007, services, and either (3) [a third no pet.). We uphold the trial court's evidentiary ruling if we party charged with protecting the discern a legitimate basis for it. Owens–Corning Fiberglas plaintiffs] relied upon [the defendant's] Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998). performance, or (4) [the defendant's] performance increased the plaintiffs' [19] The Joneses proffered Dr. Heine's testimony to show risk of harm. that the stress from the foundation problems caused Mr. Jones to suffer a heart attack in December 2008. Because Pesak Torrington Co. v. Stutzman, 46 S.W.3d 829, 838 (Tex.2000).

Brothers owed the Joneses only the contractual duties arising As with a simple negligence claim, a negligent undertaking under the agreement, the trial court acted within its discretion claim still requires proof that the defendant owed the in excluding Dr. Heine's causation testimony insofar as it plaintiff a legal duty and violated it. Id. at 837; see purported to support a negligence cause of action. The trial Entergy Gulf States, Inc. v. Akrotex, Inc., 40 S.W.3d 201, court allowed the jury to consider evidence that Mr. Jones 206 (Tex.App.-Beaumont 2001, no pet.). In arguing for suffered a heart attack in connection with the Joneses' mental a negligent undertaking claim, the Joneses rely solely on anguish claim. As a result, the trial court's ruling had little, if Mrs. Jones's testimony that the downhill site presented more any, impact on the judgment. See TEX.R.APP. P. 44.1(a).

problems for the house's foundation than the uphill site would have presented, and do not point to an injury separate from [20] The Joneses contend that the trial court erred in the claims arising from the construction of the home. The admitting Kubena's testimony about the effect of trees and Joneses did not present any testimony to support a finding tree roots on the home's foundation, because Pesak Brothers that proper final grading would not have corrected for any failed to establish that Kubena was qualified to render an difference in drainage between the two sites. Because the opinion on that subject matter. The record, however, shows Joneses have not shown a separate undertaking from the that Kubena had general engineering experience that qualified construction contract itself, or any increased risk of harm him to render an opinion relating to the foundation, and separate from the performance under the contract, the trial he testified on that issue in his deposition, relying on soil court did not err in refusing to submit the Joneses' negligent boring reports showing the presence of tree roots near the undertaking claim to the jury as a separate cause of action.

foundation. Kubena did not specifically refer to any building code provision or address the concrete's compressive strength III. Evidentiary Complaints in his testimony, but those issues go to the weight of the The Joneses complain that the trial court erred in excluding evidence, not its admissibility. the testimony of Dr. Jon Heine, Mr. Jones's treating cardiologist and the Joneses' medical expert, and in admitting [21] With respect to the trial court's exclusion of Mr. Jones's certain testimony of *632 Mark Kubena, Pesak Brothers' notes of his conversations with Pesak, the Joneses do not contend that the notes contain evidence that they were not engineering expert. 5 They also contend that the trial court able to convey through Mr. Jones's testimony, or that the trial should have admitted Mr. Jones's notes of his conversations court prevented Mr. Jones from using the notes to refresh his with Pesak. We review a trial court's decision to exclude or

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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)

See TEX.R. CIV. P. 63; Mensa–Wilmot v. Smith Int'l, 312 recollection. Absent a showing that the trial court's exclusion S.W.3d 771, 778–79 (Tex.App.-Houston [1st Dist.] 2009, no of the notes probably caused the rendition of an improper pet.)

judgment, we will not disturb the trial court's evidentiary ruling. See TEX.R.APP. P. 44.1(a).

Conclusion

IV. Propriety of the Trial Court's Decision to Strike the Joneses' Sixth Amended Petition Because legally and factually sufficient evidence supports the [22] Finally, the Joneses contend that the trial court erred jury's verdict, we hold that the trial court properly rendered in denying leave to file their sixth amended petition. The judgment on it. We further hold that the trial court did not err record *633 shows that the Joneses filed their sixth amended in refusing to submit a negligence claim, or in deciding the petition within seven days before the date of trial and did not other challenged rulings. We therefore affirm the judgment seek leave of court. If an amended pleading is filed within of the trial court. seven days of trial, leave of court is required. See Houtex Ready Mix Concrete & Materials v. Eagle Constr. & Envt'l Servs., L.P., 226 S.W.3d 514, 520 (Tex.App.-Houston [1st All Citations Dist.] 2006, no pet.). A trial court does not abuse its discretion 416 S.W.3d 618

by refusing to consider an amended petition filed fewer than seven days before trial if the party fails to seek leave of court.

Footnotes 1 The Texas Residential Construction Commission Act expired September 1, 2009, through application of the Texas Sunset Act, when the Legislature abolished the Residential Construction Commission. See Act of June 20, 2003, 78th Leg., R.S., ch. 458, § 1.01, 2003 TEX. GEN. LAWS 1703, 1705 (former TEX. PROP.CODE ANN. § 401.006). During its existence, the Commission administered a state-sponsored inspection and dispute resolution process, which a homeowner or builder had to invoke before filing suit on an action for damages or other relief arising from a “construction defect.” See Act of June 20, 2003, 78th Leg., R.S., ch. 458, § 1.01 (former TEX. PROP.CODE ANN. § 426.005(a)).

2 We express no opinion about the applicability of the TRCCA—in particular, of former section 426.008(a)—to this case.

See Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Res. Co., 299 S.W.3d 106, 112 (Tex.2009) (“Because there was no objection to the charge as submitted, we assume, without deciding, that the instruction was correct and measure the evidence by the charge as given.”) (citing Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex.2000) (holding that court's charge measures sufficiency of evidence in absence of objection)).

3 The Joneses also alleged that Pesak Brothers made errors in constructing the foundation itself, but the evidence at trial did not prove as a matter of law either that Pesak Brothers constructed a faulty foundation or that any error in constructing the foundation caused the damages claimed by the Joneses.

4 Certain “special relationships,” including “a very limited number of contracts dealing with intensely emotional noncommercial subjects such as preparing a corpse for burial,” may give rise to a legal duty to avoid causing mental anguish. City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex.1997); Noah v. UTMB at Galveston, 176 S.W.3d 350, 356 (Tex.App.-Houston [1st Dist.] 2004, pet. denied). The Joneses do not contend that any such duty existed here.

5 The Joneses also complain about the trial court's evidentiary rulings relating to the testimony of the parties' damages experts. Because the record supports the jury's no-liability findings, we do not reach those issues.

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Miller v. Compton, 185 S.W.2d 754 (1945)

possession to third person and in refusing to pay balance of rent, but tenant was entitled to KeyCite Yellow Flag - Negative Treatment remain in possession until lease was terminated Distinguished by Comeaux v. Suderman, Tex.App.-Hous. (14 Dist.), as provided therein.

July 18, 2002

185 S.W.2d 754 1 Cases that cite this headnote Court of Civil Appeals of Texas, Eastland.

[2] Landlord and Tenant MILLER Attornment to third person v.

Landlord and Tenant

COMPTON.

Transfer or Termination of Landlord's Estate

No. 2495. | Feb. 9, 1945.

A sale of reversion by landlord does not Appeal from District Court, Knox County; Lewis M. terminate tenancy or affect tenant's rights or Williams, Judge. obligations, but tenant becomes in contemplation of law the tenant of purchaser, and may attorn to Suit by J. E. Miller against Bob Compton to recover rent under him. a written lease, wherein the defendant filed a cross-action to recover damages accruing by reason of having to surrender Cases that cite this headnote possession of leased land. Judgment for the defendant, and the plaintiff appeals. [3] Vendor and Purchaser By tenant

Judgment reversed and rendered.

Where tenant was in actual possession of land for grazing purposes, purchaser thereof was deemed to have notice of tenant's rights under lease West Headnotes (11) and could not claim standing of an innocent purchaser.

[1] Landlord and Tenant Cases that cite this headnote Surrender, forfeiture, or waiver Landlord and Tenant [4] Landlord and Tenant Effect Tenant's Notice of Intention to Quit Landlord and Tenant Landlord and Tenant Sufficiency Transfer or Termination of Landlord's Landlord and Tenant Estate Transfer or Termination of Landlord's A provision of lease requiring tenant to give Estate possession within 30 days after sale of land and Landlord and Tenant receipt of written notice thereof was for benefit Vacation, Surrender, or Abandonment of of landlord and could not be availed of by tenant Premises as authority for terminating lease upon being Where lease prohibited sale of land by landlord informed by purchaser that land had been sold. unless tenant had been given opportunity to Cases that cite this headnote purchase and gave tenant 30 days to vacate after receipt of written notice of sale, information obtained by tenant from third person that third [5] Landlord and Tenant person had bought leased land and desired Existence, scope, and validity possession did not justify tenant in surrendering Specific Performance

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Miller v. Compton, 185 S.W.2d 754 (1945)

Options

[10] Landlord and Tenant A provision of lease giving tenant option to Continued liability for rent purchase demised property is not subject to attack on ground that it lacks elements of a A tenant's voluntary abandonment of possession binding contract, but right conferred thereby may of leased premises before expiration of term will be enforced by suit for specific performance, not defeat landlord's right to rental. and purchaser of premises may be compelled to 1 Cases that cite this headnote execute a conveyance to tenant.

Cases that cite this headnote [11] Landlord and Tenant Particular Grounds of Discharge from [6] Landlord and Tenant Liability Conditions precedent Where lease required that landlord before selling Under lease reserving to landlord right to sell leased premises give tenant an opportunity to land and terminate lease at end of any rental year purchase, but tenant relinquished possession to on six months' notice, and giving tenant privilege third person, who claimed to have purchased of buying land, option to buy is conditional upon premises, before tenant was given opportunity to landlord's election to terminate lease by making exercise option to purchase land and failed to do a sale, and does not apply to sale made subject to so, tenant was liable for unpaid rent under lease. tenant's rights.

Cases that cite this headnote 1 Cases that cite this headnote

[7] Landlord and Tenant Attorneys and Law Firms

Presumptions and burden of proof A tenant desiring to escape liability for rent must *754 C. F. Sentell and John E. Sentell, both of Snyder, for show facts leading to conclusion that he has been appellant. released of his obligation.

M. F. Billingsley, of Munday, and D. J. Brookreson, of 1 Cases that cite this headnote Benjamin, for appellee.

Opinion

[8] Landlord and Tenant Cancellation of lease LESLIE, Chief Justice.

Where lease has been abrogated by agreement, J. E. Miller instituted this suit against Bob Compton to recover tenant may not be held liable thereon because he rent under a written contract whereby Miller leased *755 for has occupied the premises.

grazing purposes to Compton for a term of five years 4,160 Cases that cite this headnote acres of land in Knox and Foard Counties. The defendant Compton denied liability and alleged the plaintiff breached the lease contract, thereby relieving him from any further [9] Landlord and Tenant payments of rent. By way of cross-action defendant Compton Failure to give or take possession sought to recover damages accruing to him by reason of The failure of tenant to enter into possession of having to surrender possession of the leased land and dispose leased premises does not relieve him of liability of many of his cattle at a loss. Further, by way of cross-action, for stipulated rental. he charged Plaintiff Miller with wrongfully causing a writ of attachment to be levied on his property, resulting in both Cases that cite this headnote actual and exemplary damages. That the affidavit, etc., for the writ was false and the proceeding unlawful.

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Miller v. Compton, 185 S.W.2d 754 (1945)

placed of record July 21, 1941, in Foard County. J. E. Miller The trial before the court without a jury resulted in a judgment testified the transaction was a mortgage to enable him to for Compton on the ground that said Miller breached the procure financial assistance through his father, but the finding contract, relieving him, Compton, from the further payment of the court is in effect that same was a conveyance of the title of rents, but the judgment denied Compton any recovery to the land. Be that as it may, the testimony is undisputed that for damages by reason of having to dispose of his stock insofar as that transaction (of July 6th) is concerned, neither on account of the loss of pasturage and also denied him of the Millers ever gave any notice nor took any steps to any recovery of actual or exemplary damages by reason of dispossess Compton and regain possession of the land as in wrongful attachment. The plaintiff appeals. the lease provided. Both J. E. Miller and Compton so testify.

Later the lands, etc., were returned to J. E. Miller.

There are no assignments of error challenging the action of the court with reference to any phase of Compton's cross-action Compton testified that just before the November 6, 1941, and no appeal is prosecuted from that part of the judgment installment of rent fell due he was told by a party named Davis denying him recovery of damages. The rights of the litigants that J. E. Miller had conveyed the land to his father, R. N. are believed to turn upon the meaning and legal effect of the Miller, and that prompted by such statement he investigated following provision in the lease contract as applied to the and found such deed on the records in Foard County. That other undisputed facts and testimony in the case: immediately thereafter he received from R. N. Miller a letter —postmarked November 8, 1941—confirming the July 6th ‘This lease is made subject to sale at any time during the life conveyance and stating that he desired to sell the land, and of this lease, and in case of sale lessee agrees to give complete further saying in that letter to Compton:

possession within thirty days after sale has been completed and receipt of written notice of such sale and demand for ‘If you would be interested in buying it get in touch with me possession; however, it is understood and agreed that no sale right away. I want to give you the first chance to buy, being of the above described land can be made by lessor, unless you have it leased * * *.’ and until lessee has been given an opportunity to purchase the same at the same price and terms, and has refused to so *756 Compton further testified that after finding said deed purchase, or failed to so purchase, within ten days after offer of record and receiving the above letter from R. N. Miller he has been submitted; did not pay the installment of rent falling due November 6, 1941, and thereafter. When asked about his failure to pay said ‘In case of sale, lessee is to be reimbursed for all unearned installments of rent, Compton testified: rental previously paid.’

‘Q. Did you pay him (J. E. Miller) then? If you didn't, why It is the appellant's contention that said 30 day provision didn't you? A. Because it was deeded over to his Daddy (R. contained in the lease contract was for the exclusive use and N. Miller.)’ benefit of the lessor and owner of the land, and that it could not be used by the lessee as an excuse for terminating the lease Further on in his testimony and in response to questions by as hereinafter stated. That the trial court erred in concluding his own attorney Compton testified: that J. E. Miller breached the lease contract in such way as to relieve Compton of the further payment of rents under the ‘Q. Would you have given the pasture up down there at all if original lease contract. Points 1, 4 and 9 are briefed together, you hadn't thought this fellow Davis had the right to demand specifically presenting such contention from different angles. possession of it? A. I sure wouldn't.

The lease was for a definite term of five years from November ‘Q. Did that cause you the loss you have alleged in your 6, 1939, to November 6, 1944, for the sum of $1700 for the petition here? A. It sure did. first year and $1456 each year thereafter, payable in semi-

‘Q. He told you he had bought it (the leased land) and you annual installments of $728 each in advance. The $1700 turned it over to him? A. Yes, sir.

payment and the two $728 payments satisfied the rents under the contract until November 6, 1941. ‘Q. You didn't deal with him until he showed you a written contract? A. That is right.’

July 6, 1940, J. E. Miller conveyed said land to his father, R. N. Miller. That conveyance was in form a warranty deed and

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Miller v. Compton, 185 S.W.2d 754 (1945)

affirms such fact. Therefore, as effecting his right to terminate Compton also testified that when Davis informed him about the lease on any such ground, or violation thereof, the rule of the Miller deed of July 6th, he, Davis, also told him that law is: ‘he bought the place from Miller's dad.’ That Davis at that time demanded possession of the land and he yielded same to him (Davis) about November 25, 1941, for a consideration of ‘In the absence of any provision to the contrary in the lease, $200, which was about twice as much as the unearned rental the established rule is that a sale of the reversion by the paid in advance. For other reasons for his action in doing landlord does not terminate the tenancy or affect the tenant's so, see Compton's testimony above. Compton also testified rights or obligations. The tenant being in possession at the that Davis showed him a contract with R. N. Miller for the time of the sale, the purchaser is deemed to have had notice purchase of the land. That he did not know what became of the of his rights under the lease, and hence may not claim contract, and that he saw no deed whatever from R. N. Miller the standing of an innocent purchaser. The lessee or tenant to Davis. That he did not know R. N. Miller's hand writing. becomes in contemplation of law the tenant of the purchaser, and may attorn to the latter. The purchaser is entitled to Davis did not appear and testify. His whereabouts were not enforce the covenants of the lease—or, at any rate, covenants definitely known, but possibly Mineral Wells. There is no which ‘run with the land.’ Thus the grantee of the reversion competent evidence that R. N. Miller ever executed a deed has a right to declare a forfeiture of the leasehold on proof to Davis and neither is there any statement, other than that of a breach of a covenant which was incorporated in the above and properly objected to, that there was any contract by lease contract *757 and which in character is a covenant which R. N. Miller, or anyone else, was to convey said lands ‘running with the land.” 27 T.J. p. 67, sec. 18; Wilson v. Beck, to Davis. Henry v. Phillips, 105 Tex. 459, 151 S.W. 533, pt. Tex.Civ.App., 286 S.W. 315, 321; O'Neil v. Davis, 1 White & 6. Davis' interest in the matter is otherwise unexplained, but, W.Civ.Cas.Ct.App. § 415; Davidson v. Wallingford, 88 Tex. as shown by the record, Compton apparently acted in material 619, 32 S.W. 1030; 16 R.C.L. p. 633, sec. 118, et seq.; 35 C.J. respects on Davis' representations. p. 1214, sec. 544; p. 1224, sec. 565; p. 1231, sec. 573.

Compton does not claim that he attempted to communicate From O'Neil v. Davis, supra, we take the following: with either R. N. or J. E. Miller concerning such claims and representations as were made by Davis, or that he otherwise ‘Where D. leased the pasture from P. for the year, he had a endeavored to verify the same. legal right to use it during the year, and a sale by P. of the [1] Obviously the transactions with Davis and the pasture or a portion of it would not destroy or affect D.'s rights representations by the latter did not, under the circumstances under the lease. Such sale would pass the land subject to the of this case, justify Compton in surrendering the possession right of pasturage in D., and D. being on the land at the time of the ranch to Davis or in his refusing to pay the balance of of such sale, and using it for pasturage, the purchaser would the rent to J. E. Miller, or his order. be charged with notice of his rights, and would take the land subject to such rights.’ [3] [4] Without doubt Compton was in actual and visible The original lease was made subject to sale of the land at any possession and use of said land for grazing purposes at the time during the life of the lease. The lessee Compton agreed date of conveyance to R. N. Miller, regardless of whether to give ‘complete possession within 30 days after the sale has that was an outright sale by warranty deed or a mortgage in been completed and receipt of written notice of such sale, and form of such, as claimed by J. E. Miller. Conceding it to be demand for possession.’ an outright conveyance to R. N. Miller, then he is deemed to have had notice of Compton's rights under the lease, and he, The manner for terminating the lease by the lessor or owner is Miller, could not claim the standing of an innocent purchaser thus clearly expressed and is mandatory and in no other way at any time during which the rents are sought to be recovered could the lessor or owner terminate the lease. Until terminated in this suit. Lester v. Zink, Tex.Civ.App., 154 S.W. 1161.

in the way provided, the lessee was not legally disturbed in However, it conclusively appears that R. N. Miller had at no his right of occupancy and use of the premises for grazing time made any such claim or that he in any way manifested a purposes.

wish or desire that Compton relinquish to him the possession [2] It is undisputed that no 30 day notice of sale, written of the land. To the contrary he sought to interest Compton notice, or demand for possession based on the conveyance by in the purchase of the same, extending him a preference J. E. Miller to R. N. Miller was ever given lessee Compton. He

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Miller v. Compton, 185 S.W.2d 754 (1945)

right, as indicated in his above letter. In fact, neither of court held that the option to buy was conditional upon the the Millers at any time sought possession of the land by lessor's electing to terminate the lease by making a sale, and pursuing the method stated in the lease and providing a way that it did not apply to a sale which was made subject to the in which the lessor or owner could do so; and it follows lessee's rights to the end of his term.’ 27 T.J. p. 65, sec. 16. that no such provision therein for the benefit of the lessor or owner was available to the lessee Compton. Martin Weiss Applying these rules of law to the undisputed facts of the Co. v. Schwartz, Tex.Civ.App., 295 S.W. 197; Morris v. case, Compton's possession *758 and rights under the lease DeWolf, 11 Tex.Civ.App. 701, 33 S.W. 556; Brady v. Nagle, were never legally impaired or threatened by anything done Tex.Civ.App., 29 S.W. 943; Collier v. Wages, Tex.Civ.App., by the Millers, or either of them, and his abandonment of 246 S.W. 743. possession of the premises was voluntary on his part and wholly unwarranted in fact or in law. The law afforded him ample means and methods for asserting and establishing his ‘Not infrequently, the duration of the lessee's tenure is in rights under the terms of the lease if he was longer interested effect declared to be dependent upon the giving of notice in them. Compton does not seek specific performance or by one of the parties. Where the lease provides for notice otherwise affirmatively assert any rights under the option in to vacate by the lessor to the lessee, the lessee may not his favor. terminate the contract by the giving of notice; the provision [7] [8] [9] [10] Under the established facts Compton's is for the lessor's benefit exclusively. ‘There is no authority liability for the unpaid rents, regardless of the owner at any in law authorizing the lessee to take advantage of such a particular time, is reflected by specific rules of law in such stipulation and appropriate it to his own use in terminating a cases: lease contract which he had agreed to and had omitted to have inserted therein a like provision in his own interest.’ Again, where a lease contract contains a proviso that on nonpayment ‘In the case of a dispute as to the liability of the tenant to of rent the term shall cease, the lessor, and not the lessee, pay rental, the primary implication is that he is bound by his has the elective right of determining it upon breach. ‘The agreement to make payment; and, in order to escape liability, principle that no man is permitted to take advantage of his he must show facts which lead to the conclusion that he has own wrong, prevents the lessee from doing so.’' 27 T.J. p. been released of his obligation. It has been observed: ‘Where 297, sec. 170, 171. the rental contract exists by which the tenant is entitled to [5] [6] Further, the following rules of law have application occupy the leased premises for a given term, and by which under the fact of Compton's undisputed possession of the land the landlord is entitled to receive a fixed rent for the entire until he abandoned same: term, the tenant cannot resist the demand for rent unless he shows evidence under paramount title, or that for some reason, recognized by law as sufficient, he was entitled to ‘A provision which is occasionally embodied in leases and did quit the possession.’ If he relies upon an offer by the confers upon the lessee an option to purchase the demised landlord to cancel the lease and release him of liability for the property. Such a provision is not open to attack on the ground payment of the stipulated rentals, he must establish that the that it lacks the elements of a binding contract; and the right offer was accepted. Of course, the obligation of the lessee to conferred thereby may be enforced by a suit for specific pay rental may be contingent. performance. One who has purchased the premises from the lessor may be compelled to execute a conveyance to the ‘If the contract of renting has been abrogated by agreement lessee; nor can the defendant claim the standing of an innocent of the parties, the lessee may not be held liable thereon by purchaser, it seems, the lessee's possession of the property reason of the fact that he has occupied the premises. The being notice of the state of the title and the option conferred circumstance that he has never entered into possession of by the lease. the premises does not relieve the lessee of liability for the stipulated rental. ‘It requires no argument to show that a ‘And where a lease contained a proviso reserving to the lessor tenant is not released from liability upon his express covenant the right to sell the land and terminate the lease at the end of to pay rent by mere failure upon his part to accept possession any rental year on six months' notice and giving the lessee the of the leased premises.’ Nor may he claim any deduction by privilege of buying the land at a price to be fixed by the lessor, reason of the fact that he has not occupied the property during and which might be bona fide offered by any other party, the the whole period of the agreed term. And, by abandoning

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Miller v. Compton, 185 S.W.2d 754 (1945)

possession of the premises before the expiration of the term, the tenant cannot prejudice the landlord's right to recover No right to avoid the payment of rent accrues to Compton the full amount of the rental. ‘He cannot defeat the right by reason of this transaction and he asserts no such rights by of the landlord to have the rent become due under the reason of the same. Further notice will not be given to this terms of the contract by his own voluntary abandonment of transaction. the leased premises.’' 27 T.J. p. 85, sec. 28. (Italics ours.) Sellers v. Radford, Tex.Civ.App., 265 S.W. 413; Ramsey v. If we are correct in the foregoing conclusions, the evidence Odiorine, Tex.Civ.App., 210 S.W. 615; Goldman v. Broyles, establishes Compton's liability for the unpaid rents in suit, Tex.Civ.App., 141 S.W. 283. with interest thereon from the due date of each installment, and the evidence has been fully developed on said issue.

The testimony further discloses that Miller did not re-enter The judgment of the trial court will, therefore, be reversed and take possession of the lands when Compton abandoned and judgment here rendered in favor of J. E. Miller for said them, and what has been said demonstrates Compton had no amounts, and also establishing his rights under the attachment right to abandon same and did so at his own risk. proceeding and replevy bond therein. [11] From the record it appears that R. N. Miller reconveyed said land to J. E. Miller, and on August 23, 1943, also assigned For the reasons assigned, the judgment of the trial court is and relinquished to him the unpaid rents provided for in the reversed and here rendered for plaintiff J. E. Miller as above original lease. Thereafter, J. E. Miller, finding a bona fide indicated and left undisturbed in all other respects. It is so purchaser for the land and consummating a sale thereof at ordered. $5.50 per acre gave Compton notice of such prospective sale to enable him to exercise his option and purchase the land as All Citations stipulated for in the original lease. Compton did not exercise 185 S.W.2d 754

his option to then purchase the land, and the same was sold by J. E. Miller to Tom Proctor Hughes, who received a deed therefor from J. E. Miller on February 15, 1944.

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Norra v. Harris County, Not Reported in S.W.3d (2008) 2008 WL 564061

Panel consists of Justices YATES, FOWLER, and 2008 WL 564061 GUZMAN.

Only the Westlaw citation is currently available.

SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS. MEMORANDUM OPINION

MEMORANDUM OPINION EVA M. GUZMAN, Justice. Court of Appeals of Texas, *1 This is an appeal from the trial court's award of civil Houston (14th Dist.).

penalties, injunctive relief and attorney's fees in a civil Carol Ann NORRA, Appellant enforcement proceeding filed by the State of Texas and Harris v. County against the owner of two mobile home parks in Harris County. In two issues, appellant, Carol Ann Norra, argues HARRIS COUNTY, Texas; Texas Commission that the civil penalties assessed against her for numerous on Environmental Quality; and Texas and repeated violations of the State's public health laws Department of Health, Appellees.

are exemplary damages subject to Chapter 41 of the Texas Civil Practice & Remedies Code. She further argues that No. 14-05-01211-CV. | March 4, 2008.

her United States constitutional right to due process was violated by the imposition of these penalties. She frames these West KeySummary arguments as legal sufficiency challenges to the evidence.

But we conclude that these complaints are not challenges to the legal sufficiency of the evidence and are instead legal 1 Appeal and Error arguments that were not presented to the trial court. As such, Amount of Recovery or Extent of Relief she has failed to preserve error on these challenges, and we The owner of mobile home parks failed to therefore affirm the judgment of the trial court. preserve challenge to civil penalties for 15,387 wastewater and drinking water violations as exemplary damages subject to the cap in the Texas Civil Practice & Remedies Code or I. FACTUAL AND PROCEDURAL BACKGROUND due process. She failed to make this challenge In 2003, appellant Carol Ann Norra owned two mobile home to the trial court in a bench trial, and it parks in Harris County: (1) North Fork or Reidland Road was thus an entirely new legal argument.

Mobile Home Park, and (2) Lauder Road Mobile Home U.S.C.A. Const.Amend. 14; Rules App.Proc., Park. She has owned both properties continuously since at Rule 33.1(d).

least January 1, 1990, with the exception of a brief period Cases that cite this headnote of time from January 27 to July 6, 2004 when she did not own the Lauder Road property. She also owned the drinking water and wastewater treatment systems serving these two properties during the same time period. On February 27, 2003, Harris County filed suit against Norra for numerous On Appeal from the 55th District Court, Harris County, violations of the State's drinking water and sanitation statutes.

Texas, Trial Court Cause No.2003-10164.

The Texas Commission on Environmental Quality (“TCEQ”)

Attorneys and Law Firms and the Texas Department of Health (“TDH”) were joined as necessary parties.

Daniel K. Craddock and Darryl Wayne Pruett, for Carol Ann Nora. At her bench trial conducted on December 12-13, 2003, Norra stipulated to over 15,330 violations regarding the Grant T. Gurley, Michael R. Hull and Mary Elizabeth Smith, maintenance and upkeep of the water systems at both for Harris County, Texas.

properties. 1 She disputed various other alleged sanitation and

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Norra v. Harris County, Not Reported in S.W.3d (2008) 2008 WL 564061

illegal discharge violations. The State and County presented 33.1(d). The State responds that her complaints are not legal testimony and exhibits supporting these violations. Norra has sufficiency issues, but instead unpreserved legal challenges conceded the sufficiency of the evidence supporting fifty- that were not asserted in the trial court. We agree. seven of these sewage and wastewater violations. 2 Generally, to preserve a complaint for appellate review, a On August 25, 2005, the trial court rendered judgment party must have presented to the trial court a timely request, awarding civil penalties of $384,460.00 to Harris County objection, or motion stating the specific grounds for the and $384,460.00 to the State. The trial court also awarded desired ruling, if they are not apparent from the context the State $4,969.00 as an administrative penalty, and of the request, objection or motion. Tex.R.App. P. 33.1(a). awarded attorneys' fees of $30,000.00 to Harris County Subsection (d) of this rule, however, permits a legal or factual and $114,200.00 to the State, as well as costs and post sufficiency claim, including complaints that damages are judgment interest. The trial court further entered a permanent excessive or inadequate, to be made for the first time on injunction against Norra with respect to the drinking water appeal in non-jury cases. Tex.R.App. P. 33.1(d). In a legal and wastewater treatment systems at both properties. Norra sufficiency challenge, the party bringing the challenge asserts requested findings of fact and conclusions of law on that there is no evidence to support the trial court's findings. September 12, 2005, which the trial court entered on February See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005) 8, 2006. Norra timely filed notice of appeal on November 23, (noting that “no evidence” points challenge the evidence of 2005. a “vital fact”).

Here, to the contrary, Norra does not challenge the trial court's findings. As noted above, Norra stipulated II. ISSUES PRESENTED to approximately 15,330 drinking water violations and admits in her briefing that at least fifty-seven sewage and *2 In her first issue, Norra asserts that the $768,920 awarded wastewater violations were supported by the evidence. At a to Harris County and the State as civil penalties are actually minimum, the uncontested evidence supports at least 15,387 exemplary damages under Texas law. She further contends that Chapter 41 of the Texas Civil Practice & Remedies violations. 4 Each of these violations is punishable by a $50 Code precludes the award of these “exemplary damages” to $1,000 fine. SeeTEX. HEALTH & SAFETY CODE ANN. because no actual damages were awarded in this case as § 341.048. Under the statute, the trial court could have required for such an award. In her second issue, Norra asserts imposed a penalty of between $769,350.00 and $15,387,000. that because no actual damages were awarded, the award of See id.Thus, the trial court's award of $768,920.00 in “civil penalties, i.e., exemplary damages” necessarily exceeds civil penalties is actually less than that which it could any constitutionally permissible ratio between actual and have properly awarded, considering simply the number of exemplary damages. This lack of a reasonable ratio between violations. Legally sufficient evidence therefore supports the actual and exemplary damages, according to Norra, violates award. her right to due process of law under the 14th Amendment to the United States Constitution. The State responds inter *3 Instead of challenging the legal sufficiency of the alia that Norra failed to preserve these complaints for appeal evidence to support the civil penalties, Norra asserts a because she did not assert these legal arguments in the trial novel legal basis for avoiding the penalties assessed. She asserts that, although the penalties assessed against her were court. 3 within the scope of those permitted by statute, these civil penalties are exemplary damages, subject to either the cap on exemplary damages in Chapter 41 of the Civil Practice & III. ANALYSIS Remedies Code or a due process challenge. For example, in her briefing, Norra states:

Norra frames her challenges to the civil penalties awarded against her as challenges to the legal sufficiency of the Ms. Norra contends that the civil penalties awarded against evidence. She argues that, because this is an appeal from her are actually exemplary damages, and that Chapter 41 a non-jury case, her complaints may be made for the first of the Texas Civil Practice and Remedies Code applies to time on appeal under Texas Rule of Appellate Procedure

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Norra v. Harris County, Not Reported in S.W.3d (2008) 2008 WL 564061

Norra has not directed this court to any part of the record preclude the award of any exemplary damages against her.

in which she notified the trial court of her contention This is a legal sufficiency issue....

that the civil penalties imposed in this case are actually exemplary damages subject to (a) the cap provided in the Texas Civil Practice & Remedies Code or (b) a due process ... analysis. Further, she has not provided any argument or authority suggesting we may review these issues absent such Ms. Norra's argument involves the interpretation of a statute. preservation. 6 SeeTex.R.App. P. 33.1(a). Accordingly, we conclude that, because Norra did not raise her complaints in the trial court, we may not properly address them on appeal.

...

Ms. Norra contends that the civil penalties awarded against her are exemplary damages.... IV. CONCLUSION

Norra has not established that her challenges to the civil ... penalties assessed against her are based on the sufficiency of the evidence. Further, she has stipulated to over 15,330 This record shows statutory violations, but no physical drinking water violations and admits in her brief that the harm, no injury and no property damage to any actual evidence is sufficient to support an additional fifty-seven human being. Since the trial court did not award sewage and wastewater violations in this case. The penalty compensatory damages, and the record contains no imposed by the trial court is within the range allowed by evidence of any actual damage which could be a basis statute; Norra therefore has no basis to claim that the evidence for an award of compensatory damages, it was error for is insufficient. Her challenges to the “legal sufficiency”

the trial court to award $384,460.00 in civil penalties to of the evidence are instead entirely new legal arguments Harris County and also error to award $384,460.00 in civil for avoiding the civil penalties she was assessed. These penalties to the State of Texas.

legal arguments were not presented to the trial court, and (emphasis added). In support of her contention that her due thus have not been preserved for our review. Under these process rights were violated by the assessment of these circumstances, we affirm the judgment of the trial court.

penalties, Norra repeatedly refers to the civil penalties as “punitive damages .” Thus, her second issue is premised on her argument that the civil penalties assessed in this case All Citations are exemplary or punitive damages. 5 Not Reported in S.W.3d, 2008 WL 564061

Footnotes 1 The civil penalty range for each violation is between $50 and $1,000 per day, per violation. SeeTEX. HEALTH & SAFETY CODE ANN. § 341.048(b) (Vernon 2001).

2 The civil penalty range for these violations is the same as that for drinking water violations. Id. 3 The State also argues that Chapter 41 of the Civil Practice & Remedies Code is inapplicable in a situation such as Norra's, in which penalties and fines have been imposed for statutory violations. The State suggests that the legislative history and findings make clear that “Chapter 41 was intended as a tort reform measure and not as a sub silentio repeal of penalty statutes.”The State further indicates that Chapter 41 implicates only damages, and “statutory penalties and fines are not, and have never been, considered damages.”Additionally, the State emphasizes that the Legislature has continued to amend and add new statutes including statutory penalties and fines since Chapter 41 was enacted; thus, “reading Chapter 41 to countermand statutes permitting or ordering statutory penalties and fines would be an absurd result.”Finally, the State points out that Norra's due process challenge must fail because the seminal case examining this issue explicitly applies only to cases involving punitive damages. Indeed, comparing a punitive damages award and civil or criminal penalties that could be imposed for comparable misconduct provides an indicium of the excessiveness of the punitive damages award because a reviewing court should “accord ‘substantial deference’ to legislative judgments concerning appropriate sanctions for the conduct at issue.”BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 583, 116 S.Ct.

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Norra v. Harris County, Not Reported in S.W.3d (2008) 2008 WL 564061

1589, 1603, 134 L.Ed.2d 809 (1996) (quoting Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301, 109 S.Ct. 2909, 2934, 106 L.Ed.2d 219 (1989); see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 428, 123 S.Ct. 1513, 1526, 155 L.Ed.2d 585 (2003) (“The third guidepost in Gore is the disparity between the punitive damages award and the ‘civil penalties authorized or imposed in comparable cases.’ ”). Regardless of the persuasiveness of the State's arguments, however, we need not determine whether Chapter 41 applies to an award of civil penalties and fines or whether a due process analysis of the ratio of actual to punitive damages is appropriate in this case, because, as discussed supra, Norra failed to preserve these complaints for our review.

4 Norra acknowledges as much in her briefing:

In the trial court, the parties stipulated to in excess of 15,000 drinking water violations by Ms. Norra, that is, violations of Chapter 341 of the Texas Health & Safety Code, and the regulations promulgated thereto.The trial court was authorized to assess a civil penalty of not less than $50 nor more than $1,000 for each violation.Each day of a continuing violation is a separate violation. The evidence will also support an inference of approximately fifty-seven sewage and wastewater violations by Ms. Norra, for which the trial court was authorized to assess a civil penalty of not less than $50 nor more than $1,000 for each violation. The civil penalties awarded by the trial court were thus within the scope of the penalties awarded by statute. (citations omitted, emphasis added).

5 At best, Norra challenges the excessiveness of the award against her. But the standard of review for an excessive damages complaint is factual sufficiency of the evidence. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406 (Tex.1998); see also Healthcare Ctrs. of Tex., Inc. v. Rigby, 97 S.W.3d 610, 623 (Tex.App.-Houston [14th Dist.] 2002), disapproved of on other grounds, Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 853 (Tex.2005). Norra has provided no argument or authority regarding the factual sufficiency of the evidence and has thus waived any such challenge. SeeTex.R.App. P. 38.1(h); San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 338 (Tex.App.-Houston [14th Dist.] 2005, no pet.)Moreover, as noted supra, Norra has admitted to sufficient violations to justify the civil penalties assessed in this case.

6 “[A]bsent fundamental error, an appellate court has no discretion to reverse an otherwise error-free judgment based on a new argument raised for the first time on appeal.”Coleman v. Klöckner & Co. AG, 180 S.W.3d 577, 587 (Tex.App.- Houston [14th Dist.] 2005, no pet.).

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

266 S.W.3d 559 West Headnotes (28)

Court of Appeals of Texas, Fort Worth.

[1] Appeal and Error PACIWEST, INC., Appellant and Cross–Appellee, Allowance of Remedy and Matters of v. Procedure in General WARNER ALAN PROPERTIES, LLC, Court of Appeals reviews a trial court's ruling and Warner Alan/Westcliff, Ltd., sustaining or overruling objections to summary Appellees and Cross–Appellants. judgment evidence for an abuse of discretion.

No. 2–07–443–CV. | Sept. 11, 2008. 15 Cases that cite this headnote | Rehearing Overruled Oct. 2, 2008.

[2] Appeal and Error Synopsis Abuse of Discretion

Background: Purchaser of commercial real estate brought suit for specific performance and breach of sales contract To determine whether a trial court abused when vendor refused to close transaction. The 96th District its discretion, Court of Appeals must decides Court of Tarrant County, Jeff Walker, J., 2007 WL whether trial court acted without reference to any 5472774, granted purchaser summary judgment of specific guiding rules or principles; in other words, Court performance. Vendor appealed. Purchaser appealed denial of of Appeals decides whether the act was arbitrary damages. or unreasonable.

1 Cases that cite this headnote

Holdings: The Court of Appeals, Terrie Livingston, J., held [3] Appeal and Error that:

Abuse of Discretion Merely because a trial court may decide a matter [1] statements contained in vendor's affidavit were legal within its discretion in a different manner than an conclusions rather than statements of fact;

appellate court would in a similar circumstance does not demonstrate that an abuse of discretion [2] parties agreed to amendment of contract;

has occurred.

[3] purchaser waived provision allowing assumption of 2 Cases that cite this headnote existing loan;

[4] purchaser was not barred by clean hands doctrine from [4] Judgment seeking specific performance; Matters of Fact or Conclusions Statements contained in vendor's summary [5] specific performance was appropriate remedy; judgment affidavit, submitted in litigation arising out of commercial real estate transaction, [6] contract was supported by adequate consideration; and that parties never agreed on an amendment to the contract and that vendor's understanding was [7] election of remedies did not preclude award of damages that amendments must be written, were legal to purchaser. conclusions, rather than statements of fact, and were properly excluded.

Affirmed in part, reversed and remanded in part. Cases that cite this headnote

[5] Contracts

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

Intent of Parties When reviewing a summary judgment, Court of Contracts Appeals takes as true all evidence favorable to Necessity of Assent the nonmovant, and indulges every reasonable inference and resolve any doubts in the In analyzing contract issues, a determination of nonmovant's favor.

whether a meeting of the minds has occurred is based on an objective standard, and evidence of a Cases that cite this headnote party's subjective belief about what the contract says or about whether an amendment occurred is not relevant to whether there was a meeting of [10] Vendor and Purchaser the minds sufficient to amend the contract. Modification by Subsequent Agreement Vendor's letter indicating that purchaser could 2 Cases that cite this headnote choose either to assume vendor's note or obtain third party financing for transaction was offer [6] Appeal and Error to purchaser to choose which option it wanted, Particular Orders or Rulings Reviewable in which purchaser accepted by failing to send in General assumption fees and by sending letter to vendor indicating that it would seek third party financing Appeal and Error and would not assume vendor's loan, and once Rendering Final Judgment

parties agreed to change financing terms, vendor When both parties move for summary judgment could not unilaterally change them back to and the trial court grants one motion and terms in original contract, absent purchaser's denies the other, the reviewing court should agreement. review both parties' summary judgment evidence and determine all questions presented, and the Cases that cite this headnote reviewing court should render the judgment that the trial court should have rendered.

[11] Vendor and Purchaser Cases that cite this headnote Conditions and Provisos Provisions in an earnest money contract that provide for termination of a contract if the buyer [7] Judgment is unable to obtain financing are solely for the Weight and Sufficiency

benefit of the buyer and may be waived by the A plaintiff is entitled to summary judgment on buyer. a cause of action if it conclusively proves all essential elements of the claim. Cases that cite this headnote

Cases that cite this headnote [12] Specific Performance Enforcement by Purchaser

[8] Judgment Specific Performance

Weight and Sufficiency

Necessity

A defendant who conclusively negates at least Even a buyer who has not strictly complied one essential element of a cause of action is with the financing terms in an earnest money entitled to summary judgment on that claim.

contract, but who is nevertheless able to meet Cases that cite this headnote its obligations to close a transaction, may enforce specific performance against a seller who thereafter refuses to close the transaction [9] Appeal and Error on the ground that the buyer did not obtain the Judgment

financing on the express terms provided for in the contract.

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

The doctrine of unclean hands operates as a bar Cases that cite this headnote to the equitable relief of specific performance.

2 Cases that cite this headnote [13] Vendor and Purchaser Conditions and Provisos

Financing provision in contract for sale [18] Equity of commercial real estate, which permitted He Who Comes Into Equity Must Come purchaser to assume vendor's loan, was for with Clean Hands benefit of purchaser, and could be waived by it. The party claiming unclean hands has the burden to show that it was injured by the other party's Cases that cite this headnote unlawful or inequitable conduct.

2 Cases that cite this headnote [14] Specific Performance Certainty

A contract is subject to specific performance [19] Equity if it contains the essential terms of a contract, He Who Comes Into Equity Must Come expressed with such certainty and clarity that with Clean Hands it may be understood without recourse to parol The clean hands doctrine should not be applied evidence. unless the party asserting the doctrine has been seriously harmed and the wrong complained of Cases that cite this headnote cannot be corrected without the application of the doctrine.

[15] Specific Performance 3 Cases that cite this headnote Discretion of Court

Specific Performance Form of Remedy [20] Equity Nature of Unconscionable Conduct Specific performance is an equitable remedy that may be awarded at the trial court's discretion Even if purchaser's letter requesting price upon a showing of breach of contract. reduction letter contained intentional falsehoods, clean hands doctrine did not bar purchaser from 10 Cases that cite this headnote obtaining specific performance, since any harm suffered by vendor was due to its insistence that contract had not been validly amended to [16] Specific Performance allow purchaser to purchase the property through Inadequacy of Remedy at Law third party financing rather than assumption of Specific Performance vendor's loan and by refusing to close unless loan Form of Remedy

was assumed rather than paid off.

Specific performance is not a separate cause of action, but rather it is an equitable remedy used 1 Cases that cite this headnote as a substitute for monetary damages when such damages would not be adequate. [21] Deposits and Escrows Performance of Conditions or Occurrence 5 Cases that cite this headnote of Contingency Before a grantor or obligee may assert any [17] Equity rights under an escrow contract, it must show He Who Comes Into Equity Must Come compliance with the conditions of the escrow, with Clean Hands either actual performance or an offer to perform

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

that was prevented through no fault of the grantor vendor's loan at closing, purchaser was obligated or obligee. to fund purchase price at closing if it failed to terminate during the bargained-for inspection Cases that cite this headnote period, and that obligation was consideration for contract.

[22] Contracts Cases that cite this headnote Time as of the Essence of the Contract An actual tender in strict compliance with the provisions of the contract, within the time [26] Specific Performance allowed by the contract, is always required Recovery of Compensation or Damages when a contract provides that time is of the Instead of Specific Performance essence unless it is shown that the defaulting The general rule is that damages constitute an party (1) prevented actual tender by the party alternative remedy available only when specific attempting to perform or (2) when the defendant performance either is not sought or is not has repudiated the contract before the time for available. performance.

4 Cases that cite this headnote 1 Cases that cite this headnote

[27] Specific Performance [23] Specific Performance Recovery of Damages in Addition to Nature and Grounds of Duty of Plaintiff Specific Performance Upon showing either that the defaulting party (1) In appropriate circumstances, a court may order, prevented actual tender by the party attempting in addition to specific performance, payment of to perform or (2) the defendant has repudiated the expenses incurred by plaintiffs as a result of contract before the time for performance, a party a defendant's late performance, which are not seeking specific performance must only plead considered breach of contract damages but are and prove that it is ready, willing, and able to intended to equalize any losses occasioned by the perform its part of the contract according to its delay by offsetting them with money payments. terms.

1 Cases that cite this headnote 2 Cases that cite this headnote [28] Election of Remedies [24] Specific Performance Inconsistency of Alternative Remedies Necessity Specific Performance Tender otherwise required for specific Recovery of Damages in Addition to performance of commercial real estate Specific Performance transaction was excused because vendor clearly Purchaser who sought specific performance repudiated the contract by not only insisting in breach of contract litigation arising out that purchaser assume vendor's note after having of commercial real estate transaction was not agreed to all cash sale, but also by sending letter precluded by election of remedies doctrine from indicating that the contract was terminated. seeking post-closing damages for lost rental, increased construction costs and increased Cases that cite this headnote interest rate on third party financing; such damages were not in the nature of benefit of [25] Vendor and Purchaser the bargain damages, but rather an accounting Modification by Subsequent Agreement between the parties pending performance of the Upon amendment of commercial real estate contract. contract to provide that purchaser would pay off

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

Fort Worth, Texas. The agreement provided that the purchase 1 Cases that cite this headnote price for the property would be $5,780,000, payable as follows:

(a) a portion of the Purchase Price shall be paid by Attorneys and Law Firms [Warner Alan's] assuming (subject to any limitations on personal liability applicable thereto) the outstanding *562 Decker, Jones, McMackin, McClane, Hall & Bates; principal balance owing on the Closing Date (hereinafter Mark S. Dugan, Brian K. Yost, and Leslie L. Hunt, Fort defined) on that certain Promissory Note (the “Note”) Worth, TX, for Appellant/Cross-Appellee. dated October 10, 2002, in the original principal amount of $4,000,000, executed by [Paciwest]....

Carrington, Coleman, Sloman & Blumenthal, L.L.P.; Tim Gavin, Brett Kutnick, and Tim Chastain, Dallas, TX, for (b) The balance of the Purchase Price shall be payable at Appellees/Cross-Appellants. the Closing (hereinafter defined) in immediately available funds.

PANEL: LIVINGSTON, DAUPHINOT, and McCOY, JJ.

“Closing” was defined as “9:00 a.m. on the date fifteen (15) days after written approval of [Warner Alan's] assumption of OPINION the Note by [the] Lender.” The contract also provided that closing could be extended if the lender had not timely sent the TERRIE LIVINGSTON, Justice. title company the signed documents required to evidence the lender's approval of the loan assumption.

Introduction

Shortly after the parties executed the contract, Ted Broadfoot This case involves competing motions for summary judgment and Chris Neill of Warner Alan began discussing with in a suit over a failed *563 real estate transaction. The Dziem “Jim” Nguyen of Paciwest the possibility that Warner trial court granted summary judgment for the purchaser, Alan would seek third party financing rather than assume appellee Warner Alan/Westcliff, Ltd. (Westcliff), and Paciwest's note. On August 6, 2005, Nguyen sent Warner appellee Warner Alan Properties, LLC (Warner Alan), Alan a letter to Neill's attention in which he stated the Westcliff's predecessor-in-interest in the purchase and sale following: contract. It also ordered that Westcliff was entitled to specific performance of the contract as a remedy for the seller's I am writing you this letter just want to recap my default. The seller, appellant Paciwest, Inc., brings three conversation with you and Ted regarding financing of the issues on appeal in which it contends that the trial court erred sale: by sustaining appellees' objections to Paciwest's summary 1) You will run the number[s] and look into the alternative judgment proof, by denying Paciwest's motion for summary of paying off the existing note including defeasance or judgment and granting appellees', and by granting appellees'

yield maintenance by financing with another third party;

request for specific performance. In a single issue in a and you will decide which way this coming week and will cross-appeal, appellees contend that the trial court erred send in the 2 assumption fees check of $3,000 each to [the by determining that they were precluded from recovering lender] then if assumption is still the choice.

damages in addition to specific performance because of the election of remedies doctrine. We affirm in part and reverse 2) To accommodate that, I will prepare the assumption and remand in part. paper to send to [the lender] but will not send in until Wednesday or next Thursday morning....

....

Background Facts

4) If you choose to assume the note, Parking [repairs] will On July 28, 2005, Paciwest and Warner Alan entered into have to be done prior to the assumption's approval. Then, a Purchase Agreement under which Paciwest would sell let me know to what extent you want that done and we will Warner Alan its interest in the Westcliff Manor Apartments in

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

need an *564 addendum to do the repair and increase the worth 2.8 million at an 8 percent contract price. [Emphasis added.] capitalization rate[.] We are willing to purchase a sizeable portion of the On August 17, 2005, Neill faxed Nguyen a letter stating, upside, but simply cannot put 2[.]5 “Please allow this to serve as notice that we will not be million in cash in this deal[.] The assuming the current ... loan which is in place for Westcliff unfortunate reality is that we are at a Manor. We will be placing new debt on this property through point where we can move forward and La Jolla Bank.” Subsequently, on August 30, 2005, Nguyen try to increase funding but the chances sent a letter to Paciwest's lender, stating, “Please accept of that are slim [.] We want to do the this letter as our intent to pay off Loan 01–0207891 within deal but are at the 23rd hour and are thirty (30) days (by September 30, 2005). At this time we running out of options and need some are requesting payoff information be faxed to (972) 613– help from you. [illegible.].”

Nguyen was angry when he received this letter and decided Nguyen faxed Broadfoot a proposed First Amendment to the not to go forward with the transaction under any terms other contract on August 31, 2005. The amendment included the than those in the original contract; in other words, Paciwest following terms: (1) Warner Alan would pay, in addition to would perform its obligations under the contract only if the purchase price, “all the fees in connection with paying off Warner Alan was still able to assume Paciwest's note. the existing note early, including but not limited to the pre- payment yield maintenance,” (2) Warner Alan's inspection The next day, September 6, 2005, Broadfoot faxed Nguyen a period would end at 5 p.m. on September 7, 2005, and letter with changes to the proposed First Amendment. In the (3) closing would take place on or before September 30, cover letter, he noted that the lender had 2005, with the option to extend for an additional fifteen days upon Warner Alan's depositing an additional, nonrefundable indicated that part of prepaying the earnest money of $10,000. It also included a representation notes is paying the accrued interest that neither party had defaulted under the contract up to that expense which is a full month time and a statement that “[a]ll of [Paciwest's] warranty and regardless of prepay date. We do indemnification to [Warner Alan] in the [a]greement with not want to double pay interest respect to the existing Loan documents now becomes null and and therefore would not want to void.” close anytime other than month end.

Currently, our lender believes they The next correspondence between the parties occurred on will be ready for September 30th, September 5, 2005, when Neill faxed a letter to Nguyen *565 but in case they are not, we asking for a price reduction of $300,000. In the letter, Neill would want to extend for 30 days stated that “the appraiser has indicated that the value is much instead of 15. lower than expected and there is a lot of deferred maintenance The only changes marked on the amendment are the addition outside of our original rehab scope.” Additionally, he noted “to the best of their knowledge” to the end of the provision that “[t]he occupancy on the property has declined as has in which each party was to acknowledge that there had been the economic collection” and that the “sizeable drop in no breach or default of the contract, the deletion of the collections is greatly impacting the value of the property.”

provision that Paciwest's representations and warranties in Neill goes on to state that the agreement about the existing loan documents are null [a]ll of these items are causing our and void, and the change from fifteen to thirty days on the lender to lower the amount they are extension date. According to Neill, Warner Alan did not think willing to finance[.] While I fully an amendment to the contract was necessary, but they “were admit that the property is a nice trying to be accommodating.” property in a good area[,] I also have to realistically point out that on paper Nguyen sent another letter on September 9, 2005, in which the property is worth significantly he stated that Paciwest could not approve either the price less than 5[.]8 million and is in fact reduction requested by Warner Alan, nor the requested

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

modifications to the amendment. Thus, Nguyen said, “the of such projects. They also included an alternative prayer for contract stands unchanged, as written.” On September 20, relief for damages only. 2005, Warner Alan's attorneys sent a letter to Paciwest by fax and certified mail indicating that Warner Alan was “ready, Appellees filed a traditional motion for partial summary willing and able to close this transaction on September 30, judgment on the liability and specific performance issues, 2005” and that Westcliff, 1 reserving the damages issues for trial. Paciwest responded and also filed a competing traditional motion for summary judgment that would dispose of all of appellees' claims. The the affiliate of [Warner Alan] to which the Contract will trial court granted appellees' motion, denied Paciwest's, and be assigned, will be present at the September 30 closing ordered the following: and will tender full performance of all its obligations under the Contract, including but not limited to full payment of [It is] ORDERED, ADJUDGED, DECREED AND the Purchase Price. The Note will be fully discharged out DECLARED that Warner Alan Properties, LLC has the of the sale proceeds and any prepayment penalty will be right to pay a portion of the purchase price by paying off paid by the purchaser. Therefore the net amount received Paciwest's loan instead of assuming it; and it is further by [Paciwest] will be the same as the net amount it would ORDERED, ADJUDGED, DECREED AND have received had the Note been assumed.

DECLARED that [Paciwest] breached the contract by On September 28, 2005, Paciwest's attorney sent Warner failing to convey the Westcliff Manor Apartments ... on Alan a letter indicating that the contract had automatically September 30, 2005; and it is further terminated by its own terms as of September 26, 2005 because Warner Alan had failed to obtain lender approval to ORDERED, ADJUDGED, DECREED AND assume Paciwest's loan. Neill and Broadfoot both attended DECLARED that the Court GRANTS Warner Alan/ the scheduled closing. Warner Alan wired $5,621,031.91 to Westcliff, Ltd. specific performance and ORDERS the title company, representing the purchase price, less the [Paciwest] to perform the contract and convey the Westcliff initial escrow deposit of $35,000, rent and tax prorations, and Manor Apartments ... to Warner Alan/Westcliff, Ltd.; and a credit for security deposits held by Paciwest. Warner Alan it is further also wired an additional $250,000 and had additional funds available if more money was needed. However, Paciwest did ORDERED, ADJUDGED, DECREED AND not attend and refused to close the transaction. DECLARED that the only remaining issues to be determined at trial are the amount of [appellees'] damages Appellees sued Paciwest on October 3, 2005, seeking specific caused by Paciwest's failure to convey the Westcliff Manor performance of the contract and a declaratory judgment that Apartments on September 30, 2005, and the amount of (1) the contract did not terminate on September 26, 2005 [appellees'] reasonable and necessary attorneys' fees and or at any other time, (2) appellees are not in breach of the expenses. contract, (3) Westcliff can fulfill its obligations under the contract in an all-cash transaction as opposed to assuming Thus, after the trial court granted appellees' motion, the the loan, (4) Paciwest breached and repudiated the contract only issues remaining for trial were whether appellees were by refusing to close and treating the contract as terminated, entitled to damages as well as specific performance of the and (5) the September 30 closing date was in compliance contract. with the contract terms. They also sought attorneys' fees. Paciwest timely filed an answer. Appellees amended their Paciwest subsequently objected to appellees' damages expert petition in March, October, and November 2006 to include and additionally argued that the contract did not provide for claims for damages for (1) “the difference in interest rates and the remedy of damages as well as specific performance but interest payments caused by [Paciwest's] failure to transfer rather that the two are mutually exclusive remedies under the [p]roperty on September 30, 2005,” (2) lost profits, the contract. The trial court agreed, leaving attorneys' fees as management fees, and fair rental value of the property since the only issue to be decided. The parties then entered into a September 30, 2005, and (3) damages for *566 increases in stipulation on attorneys' fees. the cost of repair and improvement projects and the financing The trial court entered a final judgment incorporating all of its rulings and the parties' stipulation on attorneys' fees on

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September 28, 2007. Appellees filed a notice of appeal on Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985), cert. December 13, 2007, and Paciwest filed a notice of appeal denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 on December 21, 2007. The parties later filed an agreed (1986). Merely because a trial court may decide a matter motion to realign the parties, which this court granted, making within its discretion in a different manner than an appellate Paciwest the appellant and cross-appellee and Warner Alan court would in a similar circumstance does not demonstrate and Westcliff appellees and cross-appellants. that an abuse of discretion has occurred. Id.

[4] Appellees objected to Nguyen's statement that the parties never agreed on an amendment to the contract as being a Issues Presented

“legal conclusion.” The trial court agreed. Paciwest contends In three issues, Paciwest contends that the trial court erred that the trial court abused its discretion by sustaining this by sustaining appellees' objections to its summary judgment objection because it did not sustain its similar objection to proof, by granting appellees' motion for partial summary a statement in Broadfoot's affidavit that “[i]n a subsequent judgment and denying Paciwest's motion for summary conversation, Mr. Nguyen and I agreed that the closing would judgment, and by granting appellees' request for specific take place on September 30, 2005,” or a statement by Neill performance. In their cross-appeal, appellees contend that in his affidavit that “Warner Alan and Paciwest orally agreed the trial court erred by refusing to allow them to recover that Warner Alan could pay-off Paciwest's Note instead of incidental damages to compensate for Paciwest's delay in assuming it.” According to Paciwest, appellees opened the conveying the property. door to Nguyen's statement by introducing similar testimony by Neill and Broadfoot. Also, they contend that by sustaining appellees' objection but denying Paciwest's, the trial court prevented Paciwest from presenting conflicting evidence on Objections to Summary Judgment Evidence the matter. We conclude and hold that the trial court did not abuse its discretion by sustaining appellees' objection Appellees objected to several statements in Nguyen's affidavit to Nguyen's statement as a legal conclusion. Neither Neill's offered by Paciwest as summary judgment evidence; the trial nor Broadfoot's statements attempt to broadly conclude that *567 court sustained some but not all of these objections.

an amendment to the contract was or was not reached; they Specifically, Paciwest complains about the trial court's simply address the underlying facts of what terms were sustaining appellees' objections to the following statements:

specifically agreed upon. In contrast, Nguyen's statement “There was never an agreement reached between the parties opines that no legally binding amendment was reached.

concerning an amendment to the Contract,” and “It was This is more in the nature of a legal conclusion than a Paciwest's understanding, which was in accordance with statement of fact. See Brownlee v. Brownlee, 665 S.W.2d 111, the express terms of the contract, that if an amendment or 112 (Tex.1984); Souder v. Cannon, 235 S.W.3d 841, 849 modification was not agreed to in writing that the amendment (Tex.App.–Fort Worth 2007, no pet.).

or modification was not finalized, nor enforceable.”

[5] Moreover, we also conclude and hold that the trial court [1] [2] [3] We review a trial court's ruling sustaining did not abuse its discretion by sustaining appellees' objection or overruling objections to summary judgment evidence for to Nguyen's statement that Paciwest's understanding was that an abuse of discretion. Garner v. Fidelity Bank, N.A., 244 if an amendment or modification was not in writing, it was S.W.3d 855, 859 (Tex.App.–Dallas 2008, no pet.); Bd. of not enforceable, and that Paciwest's understanding was in Trustees of Fire and Police Retiree Health Fund v. Towers, accordance with the terms of the contract. To begin with, the Perrin, Forster & Crosby, Inc., 191 S.W.3d 185, 192–93 part of the statement indicating that Paciwest's understanding (Tex.App.–San Antonio 2005, pet. denied); see Reynolds v.

is in accordance with the contract terms is an impermissible Murphy, 188 S.W.3d 252, 259–61 (Tex.App.–Fort Worth legal *568 conclusion. See Brownlee, 665 S.W.2d at 112;

2006, pet. denied), cert. denied, ––– U.S. ––––, 127 S.Ct.

Souder, 235 S.W.3d at 849. Moreover, as Paciwest pointed 1839, 167 L.Ed.2d 323 (2007). To determine whether a out in its objection to the evidence, Paciwest's subjective trial court abused its discretion, we must decide whether intent is irrelevant to the issue of whether the parties agreed the trial court acted without reference to any guiding rules to change the contract terms. A determination of whether a or principles; in other words, we must decide whether the meeting of the minds has occurred is based on an objective act was arbitrary or unreasonable. Downer v. Aquamarine

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standard; thus, evidence of Nguyen's subjective belief about Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 what the contract says or about whether an amendment S.W.3d 794, 798 (Tex.2004); see Tex.R. Civ. P. 166a(b), (c). occurred is not relevant to whether there was a meeting of the minds sufficient to amend the contract. See Cox v. S. Garrett, [9] When reviewing a summary judgment, we take as true L.L.C., 245 S.W.3d 574, 579 (Tex.App.–Houston [1st Dist.] all evidence favorable to the nonmovant, and we indulge 2007, no pet.); Copeland v. Alsobrook, 3 S.W.3d 598, 604 every reasonable inference and resolve any doubts in the (Tex.App.–San Antonio 1999, pet. denied). nonmovant's favor. Mason, 143 S.W.3d at 798. Questions of law are appropriate matters for summary judgment. Rhone– We overrule Paciwest's third issue. Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999);

Westchester Fire Ins. Co. v. Admiral Ins. Co., 152 S.W.3d 172, 178 (Tex.App.–Fort Worth 2004, pet. denied) (op. on reh'g).

Competing Motions for Summary Judgment

In its first issue, Paciwest challenges the summary judgment 2. Analysis

for appellees, contending that Westcliff is not entitled to specific performance because (1) the statute of frauds and a. Appellees' Evidence of Amendment to Contract section 9.4 of the contract prohibit enforcement of the *569 Paciwest's first four arguments rest on the assumption contract under the terms proposed by appellee, (2) the that there is no evidence showing the parties amended the trial court disregarded the contract's automatic termination contract to allow appellees to obtain third party financing provision and imposed additional obligations on the parties instead of assuming Paciwest's loan. that were not included in the original contract, (3) Warner Alan did not have the unilateral right to change the contract's The statute of frauds requires a real estate contract to be payment method from assumption to an all-cash transaction, in writing and signed by the person against whom it is to (4) compliance with the contract by Warner Alan was still be charged. Tex. Bus. & Com.Code Ann. § 26.01(a), (b) possible once it received notification from Paciwest that the (4) (Vernon Supp.2008); Chambers v. Pruitt, 241 S.W.3d contract would not be amended as requested, (5) specific 679, 687 (Tex.App.–Dallas 2007, no pet.). Section 9.4 of the performance is unavailable to Warner Alan because it has contract provides that unclean hands, (6) specific performance is unavailable to Warner Alan because it did not establish that it properly [n]either this Agreement nor any tendered performance, and (7) the original contract is provision hereof may be waived, neither valid nor enforceable because it is not supported by modified, amended, discharged or consideration and lacks mutuality of obligation. terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, 1. Standard of Review modification, amendment, discharge [6] When both parties move for summary judgment and or termination is sought, and then the trial court grants one motion and denies the other, only to the extent set forth in such the reviewing court should review both parties' summary instrument. judgment evidence and determine all questions presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 [10] The plain language of Nguyen's August 6, 2005 letter, (Tex.2005). The reviewing court should render the judgment which was signed by Nguyen and on Paciwest letterhead, that the trial court should have rendered. Id.

indicates that Warner Alan could choose either to assume the loan or obtain third party financing (with payoff of defeasance [7] [8] A plaintiff is entitled to summary judgment on a or yield maintenance, in other words, any prepayment cause of action if it conclusively proves all essential elements of the claim. See Tex.R. Civ. P. 166a(a), (c); MMP, Ltd. penalty); 2 Nguyen instructed that Warner Alan should pay v. Jones, 710 S.W.2d 59, 60 (Tex.1986). A defendant who the assumption fees if assumption was its choice. It is conclusively negates at least one essential element of a cause undisputed that Warner Alan did not pay the assumption fees. of action is entitled to summary judgment on that claim. IHS Thus, Nguyen's letter is an offer to Warner Alan to choose which option it wants. See KW Constr. v. Stephens & Sons

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Concrete Contractors, Inc., 165 S.W.3d 874, 883 (Tex.App.– ref'd n.r.e); cf. Potcinske v. McDonald Prop. Invs., 245 Texarkana 2005, pet. denied) (“To prove a valid offer, a party S.W.3d 526, 530–31 (Tex.App.–Houston [1st Dist.] 2007, no must show (1) the offeror intended to make an offer; (2) pet.) (distinguishing Advance Components and holding that the terms of the offer were clear and definite; and (3) the analysis of materiality of financing provisions for purposes offeror communicated the essential terms of the offer to the of contract enforcement differs from analysis for purposes of offeree.”). contract formation).

Warner Alan accepted that offer not only by failing to send [13] Here, a reading of the entire contract shows that the in the assumption fees but also by sending a written letter to financing provision, although negotiated, was for Warner Paciwest on August 17, 2005 indicating that it would seek Alan's benefit and Warner Alan waived its rights involving third party financing and it would not assume Paciwest's assumption of Paciwest's loan. The August 17, 2005 letter loan. 3 Thus, the parties agreed in writing that Warner Alan indicating that Warner Alan chose to pay off the loan would no longer be obligated to assume Paciwest's existing rather than assume it, the September 6, 2005 letter enclosing note. Once the parties agreed to change the financing terms, changes to the proposed amendment and indicating that Paciwest could not unilaterally change them back to the terms Warner Alan wanted the option to extend for thirty days in the original contract without evidence that Warner Alan to minimize interest payments, and the September 20, 2005 subsequently agreed that the original terms of the contract letter indicating that Warner Alan was ready to pay the would be effective. There is no such evidence in the summary purchase price and any prepayment penalty at closing all judgment record. indicate Warner Alan's intention to waive the benefit of the assumption financing provisions, including the automatic In addition, Warner Alan's letters referencing a September termination provision. 30 closing, along with *570 Nguyen's August 30 letter to Paciwest's lender, show an agreement by the parties to close Paciwest claims that the financing provisions in the contract no later than September 30. See EP Operating Co. v. MJC could not be to appellees' benefit only because other Energy Co., 883 S.W.2d 263, 266 (Tex.App.–Corpus Christi provisions of the contract were dependent upon them and 1994, writ denied). Moreover, a September 30 closing—two because an all-cash transaction would work a detriment to months after the effective date of the contract that originally Paciwest in that it would not receive its tax and insurance called for lender approval of a loan assumption—would not reserves from the lender until up to seven days after closing, have been unreasonable and, thus, could be implied. See rather than at closing from the purchaser, as was contemplated O'Farrill Avila v. Gonzalez, 974 S.W.2d 237, 244 (Tex.App.– between the parties in the contract. However, there is no San Antonio 1998, pet. denied). evidence that the other provisions in the contract, such as the closing date, were tied to assumption for any particular reason [11] [12] Further, even if the writings between the parties other than to facilitate the closing date as quickly as possible, are not sufficient to show an agreement by Paciwest to an all- which purpose was not thwarted by the all-cash transaction. cash transaction, provisions in an earnest money contract that Additionally, Paciwest offered no evidence that a seven-day provide for termination of a contract if the buyer is unable to delay in receiving its escrow from the lender would have any obtain financing are solely for the benefit of the buyer and material or detrimental effect on Paciwest. Accordingly, we may be waived by the buyer. See R. Conrad Moore & Assocs., conclude and hold that either (a) sufficient writings indicated Inc. v. Lerma, 946 S.W.2d 90, 94–95 (Tex.App.–El Paso an agreement to an all-cash transaction closing on or before 1997, writ denied); Renouf v. Martini, 577 S.W.2d 803, 803– September 30 or *571 (b) Warner Alan was entitled to 04 (Tex.Civ.App.–Houston [14th Dist.] 1979, no writ). Thus, waive the benefit of the financing provisions to its benefit and even a buyer who has not strictly complied with the financing proceed with an all-cash transaction. terms in an earnest money contract, but who is nevertheless able to meet its obligations to close a transaction, may enforce b. Whether Westcliff Is Entitled to Specific Performance specific performance against a seller who thereafter refuses Paciwest contends that Westcliff is not entitled to specific to close the transaction on the ground that the buyer did not performance because Warner Alan's wrongful conduct in obtain the financing on the express terms provided for in sending the price reduction letter is what caused the failure the contract. See Advance Components, Inc. v. Goodstein, of the transaction and because Westcliff failed to tender 608 S.W.2d 737, 739–40 (Tex.Civ.App.–Dallas 1980, writ performance, which Paciwest claims is a prerequisite to

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specific performance in this case, because Westcliff did not v. Watson, 204 S.W.3d 30, 41 (Tex.App.–Fort Worth 2006, tender the correct purchase price at closing. pet. denied). Here, the evidence shows that any harm suffered by Paciwest was its own doing; it had no obligation to lower [14] A contract is subject to specific performance if it the purchase price and it rejected Warner Alan's attempt to do contains the essential terms of a contract, expressed with so. Ultimately, by failing to terminate during the inspection such certainty and clarity that it may be understood without period, Warner Alan obligated itself and Westcliff to the recourse to parol evidence. Johnson v. Snell, 504 S.W.2d purchase price as set forth in the contract. However, by 397, 398 (Tex.1973); Rus–Ann Dev., Inc. v. ECGC, Inc., insisting that the contract had not been validly amended 222 S.W.3d 921, 927–28 (Tex.App.–Tyler 2007, no pet.) to allow Warner Alan to purchase the property through (holding that lack of closing date in option contract did not third party *572 financing rather than assumption and by preclude enforcement by specific performance). We have refusing to close unless the loan was assumed rather than paid already determined that the summary judgment record shows off, Paciwest was responsible for its own default under the that the original written contract was validly amended, in contract. Accordingly, we conclude and hold that the trial writing, to provide that Warner Alan could pay the purchase court did not abuse its discretion in determining that Westcliff price via third party financing, rather than assumption of was not barred from seeking specific performance by the Paciwest's loan and that the parties would close within a “unclean hands” doctrine. See Stafford, 231 S.W.3d at 536 n. reasonable time, no later than September 30, 2005. 4; Dunnagan, 204 S.W.3d at 41.

[15] [16] Specific performance is an equitable remedy that may be awarded at the trial court's discretion upon a ii. Tender of Performance showing of breach of contract. Kress v. Soules, 152 Tex. 595, [21] [22] [23] Before a grantor or obligee may assert 261 S.W.2d 703, 704 (1953); Bell v. Rudd, 144 Tex. 491, any rights under an escrow contract, it must show compliance 191 S.W.2d 841, 843 (1946); Stafford v. S. Vanity Magazine, with the conditions of the escrow—actual performance—or Inc., 231 S.W.3d 530, 535 (Tex.App.–Dallas 2007, pet. an offer to perform that was prevented through no fault of denied). Specific performance is not a separate cause of the grantor or obligee. Bell, 191 S.W.2d at 844; Roundville action, but rather it is an equitable remedy used as a substitutePartners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex.App.– for monetary damages when such damages would not be Austin 2003, pet. denied). In cases in which the seller's and adequate. Stafford, 231 S.W.3d at 535; Scott v. Sebree, 986 buyer's contract obligations are mutual and dependent, in that S.W.2d 364, 368 (Tex.App.–Austin 1999, pet. denied). a deed is required to be delivered upon tender of the purchase price, the purpose of a tender satisfies two purposes: first, it invokes the seller's obligation to convey and places him in i. Unclean Hands default if he fails to do so; second, it satisfies the fundamental [17] [18] The doctrine of unclean hands operates as a bar prerequisite of specific performance—that the buyer show to the equitable relief of specific performance. Stafford, 231 that he has done or offered to do, or is then ready and willing S.W.3d at 536 n. 4; Lazy M Ranch, Ltd. v. TXI Operations LP, to do, all the essential and material acts which the contract 978 S.W.2d 678, 683 (Tex.App.–Austin 1998, pet. denied). requires of him. Krayem v. USRP (PAC), L.P., 194 S.W.3d The party claiming unclean hands has the burden to show 91, 94 (Tex.App.–Dallas 2006, pet. denied); Roundville, 118 that it was injured by the other party's unlawful or inequitable S.W.3d at 79. An actual tender in strict compliance with the conduct. Stafford, 231 S.W.3d at 536 n. 4; Willis v. Donnelly, provisions of the contract, within the time allowed by the 118 S.W.3d 10, 38 (Tex.App.–Houston [14th Dist.] 2003), contract, is always required when a contract provides that aff'd in part and rev'd in part on other grounds, 199 S.W.3d time is of the essence unless it is shown that the defaulting 262, 278–79 (Tex.2006). party (1) prevented actual tender by the party attempting to perform or (2) when, as here, the defendant has repudiated [19] [20] The evidence is disputed as to whether the price the contract before the time for performance. Krayem, 194 reduction letter contains intentional falsehoods; however, S.W.3d at 94; Roundville, 118 S.W.3d at 79–81. 4 Upon even if it does, Westcliff is not barred from obtaining either showing, a party seeking specific performance must specific performance. The clean hands doctrine should not only plead and prove that it is ready, willing, and able to be applied unless the party asserting the doctrine has been perform its part of the contract according to its terms. Rus– seriously harmed and the wrong complained of cannot be Ann Dev., Inc., 222 S.W.3d at 927; 17090 Parkway, Ltd. v. corrected without the application of the doctrine. Dunnagan

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McDavid, 80 S.W.3d 252, 258 (Tex.App.–Dallas 2002, pet. Section 1.3, describing the initial escrow to be deposited denied). by Warner Alan, specifically states that if Warner Alan terminates the contract by right under the contract, Paciwest [24] Here, the summary judgment evidence shows would be entitled to $100 of the initial escrow deposit as that regardless of whether appellees actually tendered independent consideration for the contract. performance in strict compliance with the contract terms, such tender is excused because Paciwest clearly repudiated As to Paciwest's argument that Section 4.4 of the contract the contract by not only insisting that appellees continue —which states in one part that Warner Alan's “failure to the assumption process but also by sending the September obtain Lender's approval of the proposed assumption in a 28, 2005 letter indicating that the contract was terminated. 5 manner consistent with [section 4.4] shall not be a default by See Jenkins v. Jenkins, 991 S.W.2d 440, 447 (Tex.App.– [Warner Alan] under [the contract], but shall entitle [Warner Fort Worth 1999, pet. denied) (stating that repudiation Alan] to terminate [the contract], [and] receive a refund of “consists of words or actions by a contracting party that the Escrow Deposit”—allowed Warner Alan to avoid any indicate he is not going to perform his contract in the obligation under the contract by simply failing to seek the future”). Appellees' pleadings indicate that they “remain lender's approval of the loan assumption, Paciwest reads this ready, willing and able to pay the purchase price, [and] any single sentence of section 4.4 out of context. The beginning prepayment penalty, and will perform any other obligations of the provision obligates Warner Alan to, they have.” Moreover, they presented summary judgment [w]ithin five (5) business days after evidence *573 that they were ready, able, and willing [its] receipt of Lender's list of to perform these obligations, including paying the entire required information, ... apply to prepayment penalty, 6 on September 30, 2005. Thus, we Lender for its consent to [Warner conclude and hold that the trial court did not abuse its Alan's] acquisition of the Property discretion by determining, upon the undisputed facts set forth pursuant to this Agreement and for in the summary judgment record, that specific performance permission to assume the Note, and is an appropriate remedy for appellees. See Longfellow v. thereafter [to] diligently seek to obtain Racetrac Petroleum, Inc., No. 02–06–00124–CV, 2008 WL Lender's approval of such application. 2404233, at *2–3, 5 (Tex.App.–Fort Worth June 12, 2008, [Emphasis added.] pet. denied) (mem.op.).

Thus, even the provision pointed to by Paciwest, when read in its entirety, shows that both parties were mutually c. Validity and Enforceability of Original Contract obligated under the contract, regardless of the termination [25] Paciwest additionally contends that the original rights available to Warner Alan. We conclude and hold that contract is neither valid nor enforceable because it is not the summary judgment record shows that the contract, as supported by consideration and lacks mutuality of obligation. initially entered into and as amended, was supported by Specifically, Paciwest claims that the contract obligates adequate consideration. See Alex Sheshunoff Mgmt. Svcs., Inc. Warner Alan to purchase the property only if it receives the v. Johnson, 209 S.W.3d 644, 658 (Tex.2006). lender's approval of the loan assumption but that it is not under any obligation to seek such approval and that it could simply We overrule Paciwest's first issue. terminate by failing to seek such approval. Thus, according to Paciwest, it had the obligation to sell the property at all times, but Warner Alan never had the obligation to purchase it. d. Whether Trial Court Should Have Granted Paciwest's Motion

Paciwest's argument fails to take into account the evidence *574 Paciwest's second issue incorporates the arguments showing that it had agreed to amend the contract to provide in its first issue that Westcliff is not entitled to specific that Warner Alan would pay off Paciwest's loan at closing; performance of the contract. However, it also argues that upon that agreement, Warner Alan was obligated to fund if this court does hold that the trial court did not err by the purchase price at closing if it failed to terminate during determining that Westcliff is entitled to specific performance, the bargained-for inspection period. Moreover, numerous there are nevertheless fact issues precluding summary contract provisions bind both Warner Alan and Paciwest. judgment. Specifically, it contends that there are fact issues

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

concerning “whether any agreement existed as to the different terms or modifications alleged by Warner Alan and accepted That the matters to which Dr. Voorvaart was designated to by the Trial Court.” However, Paciwest cites no other testify are directed at these additional damages; evidence that was not already discussed in its first issue, and That [Paciwest's] [o]bjections are well taken and should we discern no fact issues precluding the trial court's grant be SUSTAINED, that Dr. Voorvaart's opinions should of summary judgment in appellees' favor. Thus, we overrule be STRICKEN, and that [appellees] should be prohibited Paciwest's second issue.

from presenting the testimony and opinions of Dr. Voorvaart at the time of trial. It is therefore,

Cross–Appeal ORDERED, ADJUDGED, and DECREED that [Paciwest's] Objections and Supplemental Objections to In a single issue on cross-appeal, appellees challenge the trial Reliability and Foundation of Opinions of Dr. Frank court's ruling that the only relief to which they are entitled is Voorvaart are SUSTAINED, Dr. Voorvaart's opinions are specific performance. hereby STRICKEN, and that [appellees] are prohibited from presenting any of the Dr. Voorvaart's testimony and This ruling occurred as a result of Paciwest's Robinson opinions at trial. challenge to appellees' damages expert. The trial court held a hearing on Paciwest's objections on May 17, 2007. At the Although Paciwest contends that the trial court could have hearing, the trial court specifically directed the parties to brief based its ruling on its other objections to Dr. Voorvaart's whether appellees were entitled to additional damages having testimony, construing the trial court's order as a whole to elected to seek, and having obtained, specific performance. give effect to all provisions, we conclude that the trial court's ruling was based solely on its conclusion that damages were After taking the issue under advisement, on June 18, 2007, no longer available to appellees after they had already elected the trial court sent the parties a letter stating that to seek, and had obtained, specific performance as a remedy.

See Shanks v. Treadway, 110 S.W.3d 444, 447 (Tex.2003).

[i]t appears that Texas law favors Thus, we will *575 confine our analysis to the trial court's [Paciwest's] Objections to Reliability specific ruling. 7 and Foundation of Opinions of Dr. Frank Voorvaart. I agree with [26] [27] [28] The general rule is that damages [Paciwest] that [appellees'] remedies constitute an alternative remedy available only when specific are limited to those allowed by the performance either is not sought or is not available. Foust terms of the contract and there is v. Hanson, 612 S.W.2d 251, 253 (Tex.Civ.App.–Beaumont no contractual foundation for Dr. 1981, no writ); see Heritage Housing Corp. v. Ferguson, Voorvaart's damage opinions because 674 S.W.2d 363, 365 (Tex.App.–Dallas 1984, writ ref'd [appellees] sought and obtained n.r.e.). But in appropriate circumstances, the court may order, summary judgment for specific in addition to specific performance, payment of expenses performance. incurred by plaintiffs as a result of a defendant's late performance. Heritage Housing Corp., 674 S.W.2d at 365– The trial court's order incorporating this ruling, dated June 26, 66; Foust, 612 S.W.2d at 253–54. This compensation is not 2007, states that appellees, considered breach of contract damages, but rather “equalizes having sought and obtained a summary judgment for any losses occasioned by the delay by offsetting them with specific performance, have elected specific performance as money payments.” Heritage Housing Corp., 674 S.W.2d at their remedy; 366. Thus, for example, a purchaser may recover the rental value of property from the time of its demand for performance Thus, the law and relevant contract provisions do not and tender of the purchase price. Id. provide for the recovery of the additional damages sought by [appellees] in this case; Here, appellees pled for, among other things, lost rental, increased construction costs, and an increased interest rate on their third party financing as a result of Paciwest's delay in

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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)

judgment rulings in favor of appellees. Having sustained performing its obligations under the contract. Because postappellees ' sole issue in their cross-appeal, however, we closing damages such as these are not in the nature of benefit reverse that part of the trial court's judgment barring appellees of the bargain damages, but rather an accounting between the from recovering damages attributable to Paciwest's delay in parties pending performance of the contract, we conclude and performing the contract. We remand that part of the case to hold that the trial court erred by determining that appellees the trial court for consideration of Paciwest's other objections were precluded from seeking and presenting evidence as to to the testimony of appellees' damages expert and for further these types of damages at trial.

proceedings as to those alleged damages consistent with this opinion.

We sustain appellees' sole issue in their cross-appeal.

All Citations

Conclusion

266 S.W.3d 559

Having overruled Paciwest's three issues, we affirm the part of the trial court's judgment incorporating its summary

Footnotes 1 Warner Alan assigned its rights and duties as purchaser under the contract to Westcliff sometime in September 2005.

The assignment document does not show the exact date the assignment occurred.

2 See River E. Plaza, L.L.C. v. Variable Annuity Life Ins. Co., 498 F.3d 718, 719, 721 (7th Cir.2007); George Lefcoe, Yield Maintenance and Defeasance: Two Distinct Paths to Commercial Mortgage Prepayment, 28 Real Est. L.J. 202, 202– 03 (2000).

3 Paciwest contends that any agreement the parties did come to was indefinite because Warner Alan did not specifically agree in writing to pay the prepayment penalty. However, Warner Alan's letter indicating that it chose to seek third party financing did not indicate that it would not pay any prepayment penalty, nor did it attempt to change the terms of Nguyen's offer in any way. Cf. Cessna Aircraft Co. v. Aircraft Network, L.L.C., 213 S.W.3d 455, 465–466 (Tex.App.–Dallas 2006, pets. denied) (“An acceptance must be identical to the offer, or there is no binding contract.”); Harris v. Balderas, 27 S.W.3d 71, 77 (Tex.App.–San Antonio 2000, pet. denied) (“If the purported acceptance contains terms that materially change the offer, the acceptance is actually a rejection and counter-offer.”). Additionally, by failing to pay the assumption fees, Warner Alan indicated its acceptance of Nguyen's offer on the terms outlined in his letter, which include the payment of any prepayment penalty. See United Concrete Pipe Corp. v. Spin–Line Co., 430 S.W.2d 360, 364 (Tex.1968) (holding that performance may be valid acceptance).

4 See also Rus–Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921, 927 (Tex.App.–Tyler 2007, no pet.); 17090 Parkway, Ltd.

v. McDavid, 80 S.W.3d 252, 258 (Tex.App.–Dallas 2002, pet. denied); Wilson v. Klein, 715 S.W.2d 814, 822 (Tex.App.– Austin 1986, writ ref'd n.r.e.).

5 This case is thus distinguishable from Riley v. Powell, in which this court held that actual tender was required when the seller decided not to close after reviewing closing documents drafted by the purchaser, a real estate broker who also represented the seller. 665 S.W.2d 578, 580–81 (Tex.App.–Fort Worth 1984, writ ref'd n.r.e.).

6 Neill averred in his affidavit that additional funds were available at closing to supplement the $250,000 paid toward the prepayment penalty.

7 Accordingly, appellees were not required to make an offer of proof to preserve this argument, as Paciwest contends.

See Echols v. Wells, 510 S.W.2d 916, 919 (Tex.1974); Lewis v. Lewis, 853 S.W.2d 850, 852 (Tex.App.–Houston [14th Dist.] 1993, no writ).

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Parson v. Wolfe, 676 S.W.2d 689 (1984)

Equitable conversion is that change in nature of property by which, for certain purposes, KeyCite Yellow Flag - Negative Treatment realty is considered as personalty and personalty Distinguished by Cherukula v. Spradling, Tex.App.-Austin, April 14, is considered as realty, and property is 2006 transmissible as so considered.

676 S.W.2d 689

Court of Appeals of Texas, 1 Cases that cite this headnote Amarillo.

[2] Equitable Conversion Mellane A. PARSON, Appellant, In general; nature and grounds of doctrine v.

The doctrine of equitable conversion is grounded Jamie R. WOLFE, Appellee.

on maxim that equity regards as done that which in fairness and good conscience should be done.

No. 07–83–0020–CV. | Aug. 30, 1984.

Cases that cite this headnote The sister of a woman who had died intestate before a contract for the sale of real estate of which she was part owner could be closed, claimed that she inherited one-half of the decedent's [3] Equitable Conversion interest in the land and was entitled to the proceeds from Conveyances and Contracts that interest. The decedent's husband claimed that, under the Equitable Conversion doctrine of equitable conversion, the land was to be treated Directions in Will as personalty and he was thus entitled to all proceeds from Equitable conversion may occur by will or by his wife's interest. The 110th Judicial District Court, Floyd contract.

County, George W. Miller, J., rendered judgment favorable to the husband as heir of personalty, and the sister appealed. The Cases that cite this headnote Court of Appeals, Countiss, J., held that: (1) a four-corners reading of the contract led to the conclusion that a liquidated damages clause was intended as the measure of the time that [4] Equitable Conversion was reasonable for the buyer's performance, and not as a Directions in Will condition that, if unfulfilled, would bar specific performance; In testamentary situations, doctrine of equitable (2) since sellers had the option to require performance or conversion is used to carry out intent of testator accept liquidated damages upon the purchaser's default, the who directs that certain realty be sold or contract was capable of enforcement by specific performance purchased. by either party; and (3) the doctrine of equitable conversion 2 Cases that cite this headnote was applicable and the decedent's interest in the land was to be treated as personal property which passed to her husband upon her death under the laws of descent and distribution. [5] Equitable Conversion Conveyances and Contracts Affirmed. In equitable conversion by contract, doctrine is used to decide status of parties' interests during period between execution of contract of sale and West Headnotes (11) actual transfer of legal title.

2 Cases that cite this headnote [1] Equitable Conversion Realty into personalty in general [6] Equitable Conversion Equitable Conversion Conveyances and Contracts Personalty into realty When there is equitable conversion by contract, purchaser of land is regarded in equity as owner

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Parson v. Wolfe, 676 S.W.2d 689 (1984)

of land and debtor for purchase money, and thus, there was no lack of mutuality of remedies vendor is secured creditor having legal position to bar specific enforcement by either party, and not unlike that of mortgagee. proceeds resulting from such enforcement were subject to equitable conversion.

1 Cases that cite this headnote 1 Cases that cite this headnote

[7] Equitable Conversion Conveyances and Contracts [11] Equitable Conversion Pivotal question, when determining whether Conveyances and Contracts equitable conversion by contract has occurred, is Doctrine of equitable conversion was applicable whether contract is specifically enforceable. where one of owners of real estate under contract to be sold died intestate before the contract Cases that cite this headnote could be closed and contract was specifically enforceable; thus, decedent's interest in land [8] Contracts was to be treated as personal property and Conditions Precedent in General passed to her husband under laws of descent and distribution. V.A.T.S. Probate Code, § 38(b), Whether condition precedent exists is par. 2.

determined from reading of entire contract.

1 Cases that cite this headnote Cases that cite this headnote

[9] Specific Performance Contracts subject to conditions Attorneys and Law Firms Four-corners reading of contract containing clause stating that it was “contemplated” that *690 Richard F. Stovall, Stovall & Laney, P.C., Plainview, purchaser of real property would obtain loan, for appellant. led to conclusion that clause was intended Lucian Morehead, Morehead, Sharp & Tisdel, Plainview, for as measure of time that was reasonable for appellee.

buyer's performance, and not as condition that, if unfulfilled, would bar specific performance, Before REYNOLDS, C.J., and COUNTISS and BOYD, JJ. where word “contemplated” indicated that loan was anticipated and permissible but not Opinion condition precedent, and parties used word “agree” when intending to create binding duty; COUNTISS, Justice. thus, the contract was specifically enforceable This is an equitable conversion case. Dissatisfied with a by either sellers or buyer, and proceeds from judgment favorable to the heir of the personalty, the heir of sale contracted for were subject to equitable one-half of the realty advances two points of trial court error.

conversion.

We affirm.

1 Cases that cite this headnote Shawna Wolfe, now deceased, and her sister, appellant Mellane A. Parson, contracted on September 17, 1981, to sell [10] Specific Performance 160 acres of their separate realty in Floyd County to their Mutuality of remedy paternal uncle. Before the *691 sale could be closed Mrs.

In contract for sale of real property, option to Wolfe died, intestate and childless. After her death, the sale perform or pay damages belonged to sellers, was closed and the proceeds in dispute were placed in the who had option to require performance or accept registry of the court. liquidated damages upon purchaser's default in accordance with liquidated damages clause;

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Parson v. Wolfe, 676 S.W.2d 689 (1984)

The dispute is between Mrs. Wolfe's surviving husband, [6] [7] When there is an equitable conversion by contract, appellee Jamie R. Wolfe, and her sister, Mrs. Parson, her only the purchaser of land is regarded in equity as owner of heirs at law. Mrs. Parson says she inherited one-half of Mrs. the land and debtor for the purchase money, and the Wolfe's interest in the land when Mrs. Wolfe died and she vendor is a secured creditor “having a legal position not is entitled to the proceeds from that interest. Mr. Wolfe says unlike that of a mortgagee.” Simpson, supra at 559. As the land must be treated as personalty, under the doctrine of indicated *692 by the quotation in marginal note 2, the equitable conversion, and he is entitled to all proceeds from pivotal question, when determining whether an equitable Mrs. Wolfe's interest. 1 Thus, the single issue raised by Mrs. conversion by contract has occurred, is whether the contract Parson's points of error is whether the doctrine of equitable is specifically enforceable. Accord, Sanderson v. Sanderson, conversion is applicable. If it is, Mrs. Wolfe's interest in the supra; Guzman v. Acuna, supra; Willie v. Waggoner, 181 land is to be treated as personalty under the laws of descent S.W.2d 319, 322 (Tex.Civ.App.—Austin 1944, writ ref'd). and distribution and it belongs to Mr. Wolfe.

In this case, the contract is properly executed and contains [1] [2] [3] [4] [5] Equitable conversion is generally all of the provisions necessary in order for it to be binding defined as that change in the nature of property by which, on, and specifically enforceable by, either the sellers or the for certain purposes, realty is considered as personalty buyer. Mrs. Parson advances two arguments to the contrary, or personalty is considered as realty, and the property is however. First, she points to the following provision in the transmissible as so considered. Toledo Soc. for Crippled contract: Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692, 698 It being contemplated that Purchaser (1953); Sanderson v. Sanderson, 130 Tex. 264, 109 S.W.2d will obtain a loan upon the 744, 748 (1937). The doctrine, developed in the English security of the real property above Court of Chancery over three hundred years ago, is grounded described to provide a part of the on the maxim that equity regards as done that which in consideration hereinabove provided fairness and good conscience should be done. Lampman v.

for, the reasonable time hereinafter Sledge, 502 S.W.2d 957, 959 (Tex.Civ.App.—Waco 1973, accorded Purchaser for performance writ ref'd n.r.e.); Simpson, Legislative Changes in the Law of the obligation required of him by of Equitable Conversion by Contract, 44 Yale L.J. 559, this Contract shall include a reasonable 560 (1935). Equitable conversion may occur by will or by time for processing and consummation contract. Simpson, supra, at 561; see Toledo Soc., supra.

of such loan.

In testamentary situations, the doctrine is used to carry out the intent of the testator who directs that certain realty That provision, she says, was a condition precedent be sold or purchased. Boulware v. Sinclair Prairie Oil unfulfilled when Mrs. Wolfe died; thus specific performance Co., 219 S.W.2d 536, 538 (Tex.Civ.App.—Beaumont 1949, was not a viable option at the critical time. writ ref'd); Simmons v. O'Connor, 149 S.W.2d 1107, 1113 (Tex.Civ.App.—Fort Worth 1941, writ dism'd judgmt cor.). [8] [9] Whether a condition precedent exists is determined See generally 1 H. TIFFANY, REAL PROPERTY §§ 297–98 from a reading of the entire contract. Hudson v. Wakefield, (3rd ed. 1939). In equitable conversion by contract, however, 645 S.W.2d 427, 430 (Tex.1983). In this case, the choice the doctrine is used to decide the status of the parties' interests of the word “contemplated” indicates that a loan was during the period between execution of the contract of sale anticipated, and permissible, but it does not indicate that a and actual transfer of legal title. See generally TIFFANY, loan was a condition precedent. See, e.g., Wall v. Ayrshire supra, §§ 307–310. It is utilized, for example, to allocate Corp., 352 S.W.2d 496, 500 (Tex.Civ.App.—Houston 1961, the increase or decrease in value of the property during this no writ); Zucht v. Stewart Title Guaranty Co., 207 S.W.2d period, Guzman v. Acuna, 653 S.W.2d 315, 319 (Tex.App. 414, 418 (Tex.Civ.App.—San Antonio 1947, writ dism'd); —San Antonio 1983, writ dism'd), or, as in this case, to Newsome v. Brown, 157 S.W. 203, 204 (Tex.Civ.App.— determine how the realty or personalty passes upon the Texarkana 1913, no writ). Additionally, we note that the death of either the vendor or vendee. Toledo Soc., supra; parties used the word “agree” in other portions of the contract Lampman, supra; Hardcastle v. Sibley, 107 S.W.2d 432, 437 when intending to create a binding duty. Dauray v. Gaylord, (Tex.Civ.App.—El Paso 1937, writ ref'd). 2 402 S.W.2d 948, 950–51 (Tex.Civ.App.—Dallas 1966, writ ref'd n.r.e.). Thus, from a four-corners reading of the contract,

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Parson v. Wolfe, 676 S.W.2d 689 (1984)

we must conclude that the clause was intended as a measure She argues that, because of this provision, there is no of the time that was reasonable for the buyer's performance, mutuality of remedies; therefore the contract cannot be and not as a condition that, if unfulfilled, would bar specific specifically enforced. She cites Willie v. Waggoner, 181 performance. Compare with Berman v. Rife, 644 S.W.2d S.W.2d 319 (Tex.Civ.App.—Austin 1944, writ ref'd), in 574, 576 (Tex.App.—Fort Worth 1982, writ ref'd n.r.e.); which it was held there was no equitable conversion because Lampman, supra; Faulkner v. Otto, 230 S.W. 447, 448 a liquidated damages provision under the contract made (Tex.Civ.App.—Amarillo 1921, writ dism'd). specific performance impossible. In that case, however, the option to perform or pay damages belonged to the purchaser.

[10] Mrs. Parson's second argument is grounded on the Id. at 322. In our case, it belongs to the sellers, who have the contract's liquidated damages clause, which says: option to require performance or accept liquidated damages, upon the purchaser's default. Thus, the contract was capable As earnest money for prompt of enforcement by specific performance by either party.

performance of this Contract on Sanderson, supra; Gala Homes, Inc. v. Fritz, 393 S.W.2d 409, his part, Seller [sic] shall deposit 411 (Tex.Civ.App.—Waco 1965, writ ref'd n.r.e.).

in escrow, together with copy of this Contract, in First National [11] We conclude that the doctrine of equitable conversion Bank, Floydada, Texas, the sum of is applicable to this case, that Mrs. Wolfe's interest in the land $5,000.00, and in event that Purchaser *693 is to be treated as personal property and that, upon her shall fail or refuse, upon tender of death, it passed to her husband under the laws of descent and performance by Sellers, to carry out distribution. Points of error one and two are overruled.

and perform the terms of this Contract, Sellers may, at their election, declare The judgment is affirmed.

this Contract terminated, whereupon such sum of $5,000.00 shall forfeit and become the absolute property All Citations

of Sellers as liquidated damages for breach of this Contract. 676 S.W.2d 689

Footnotes 1 Descent and distribution in this case is dictated by § 38(b) 2 of the Probate Code, which states:

2. If the deceased have no child or children, or their descendants, then the surviving husband or wife shall be entitled to all the personal estate, and to one-half of the lands of the intestate, without remainder to any person, and the other half shall pass and be inherited according to the rules of descent and distribution.... Tex.Prob.Code Ann. § 38(b)(2) (Vernon 1980).

2 Professor Simpson describes the differences in the two applications as follows:

“Equitable conversion by will is wholly a part of the law of wills, descent and distribution; equitable conversion by contract has a wide importance in the law of vendor and purchaser. The former depends upon the intention of the testator; the latter does not depend upon intention, but rather upon rules of law as to consequences of the right to specific performance of a land contract.”

Simpson, Legislative Changes in the Law of Equitable Conversion by Contract, 44 Yale L.J. 559, 561 n. 10 (1935).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

2015 WL 5076294 West Headnotes (14)

Only the Westlaw citation is currently available.

Court of Appeals of Texas, Houston (1st Dist.). [1] Appeal and Error On consent, offer, or admission Sandra Perez, Appellant For a judgment to be considered an agreed or v. consent judgment, such that no appeal can be Brian Williams, Appellee taken from it, either the body of the judgment itself or the record must indicate that the NO. 01–14–00504–CV | parties came to some agreement as to the case's Opinion issued August 27, 2015 disposition; simple approval of the form and substance of the judgment does not suffice.

Synopsis Background: Father filed petition in a Suit Affecting the Cases that cite this headnote Parent-Child Relationship (SAPCR), seeking to be named sole managing conservator of child and asking that mother be [2] Appeal and Error

ordered to pay child support. Mother counter-petitioned for On consent, offer, or admission divorce, alleging she had an informal marriage with father. The 257th District Court, Harris County, entered summary Each party must explicitly and unmistakably judgment finding that no informal marriage existed and, give its consent for a consent judgment to after bench trial, named mother and father joint managing be valid consent judgment, as would preclude conservators and granted father exclusive right to designate appeal. child's primary residence. Mother appealed.

Cases that cite this headnote

[3] Divorce

Holdings: The Court of Appeals, Evelyn V. Keyes, J., held Presumptions

that:

Court of Appeals would presume that trial court [1] trial court acted within its discretion in denying mother's did not consider mother's response to father's motion to substitute legal counsel; motion for summary judgment as to issue of whether mother and father had an informal [2] trial court was not required to take judicial notice marriage, in mother's divorce claim alleging of motions and written agreements which were filed in such a marriage existed, where mother filed connection with father's separate custody dispute with his ex- response the day before summary judgment wife; hearing, making response untimely, and nothing in record indicated that trial court granted leave [3] trial court acted within its discretion in excluding for mother to file her response late. Tex. R. Civ. photographs depicting bruises that mother alleged she P. 166a(c). received from father; and Cases that cite this headnote

[4] trial court acted within its discretion in awarding primary conservatorship rights to father. [4] Child Custody Hearing

Trial court acted within its discretion in denying Affirmed.

mother's motion to substitute legal counsel in child custody proceeding, where motion was made orally, mother did not file written motion

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

or notice to court and other parties, and motion was made mid-trial. Tex. R. Civ. P. 8, 10. [9] Child Custody Discovery

Cases that cite this headnote Trial court acted within its discretion in excluding photographs depicting bruises that [5] Appeal and Error mother alleged she received from father, Allowance of remedy and matters of in child custody dispute between mother procedure in general and father, where mother did not produce photographs during discovery, and mother Appellate court reviews a trial court's decision to offered no explanation for this failure. Tex. R.

grant or deny a motion to substitute counsel for Civ. P. 193.6(a), 193.6(b).

an abuse of discretion. Tex. R. Civ. P. 8, 10.

Cases that cite this headnote Cases that cite this headnote

[10] Child Custody

[6] Evidence Discovery

Mode of ascertaining facts required to be noticed; motions and notice of reliance Trial court acted within its discretion in precluding mother from questioning father as Trial court was not required to take judicial to whether father had seen a psychologist, in notice of motions and written agreements which custody dispute between mother and father in were filed in connection with father's separate which father acknowledged that, as part of his custody dispute with his ex-wife and which were agreement with ex-wife regarding custody of proffered by mother in custody dispute between father and ex-wife's children, father was to mother and father regarding mother and father's take children to assessments with psychologist;

child, where mother did not provide trial court mother did not make offer of proof or establish with certified copies of the documents at time she that testimony was material to custody issues requested that court take judicial notice. Tex. R.

regarding mother and father's child.

Evid. 201(b), 201(c)(2).

Cases that cite this headnote Cases that cite this headnote

[11] Divorce

[7] Evidence Pleadings

Proceedings in other courts Issue of whether a gift existed from father to A court will take judicial notice of another court's mother for a particular vehicle was not tried by records if a party provides proof of the records.

consent, in mother's petition for divorce alleging Tex. R. Evid. 201(b).

that mother and father had an informal marriage, Cases that cite this headnote where, at bench trial, father objected to mother's testimony about purported gift on ground that mother had not sought an adjudication of her [8] Evidence entitlement to the vehicle in any of her pleadings.

Proceedings in other courts The contents of an unauthenticated or uncertified Cases that cite this headnote record from another court are not the type of evidence of which the court can take judicial [12] Child Custody notice. Tex. R. Evid. 201(b). Primary caregiver Cases that cite this headnote Trial court acted within its discretion in awarding primary conservatorship rights for child to father, where father testified he had

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

regular employment, stable housing, and reliable Perez and Williams also have a minor child, E.A.W., over transportation, that he had been child's primary whom both parents sought custody. The trial court ruled, via caregiver since she was born and that he had Williams's motion for summary judgment, that no informal been her exclusive caregiver for approximately marriage existed. Following a bench trial, the trial court a year, that mother had become violent with named Perez and Williams joint managing conservators of father or one of mother's children on numerous E.AW. and granted Williams the exclusive right to designate occasions, and that mother had advertised on E.A.W.'s primary residence. adult entertainment websites, and mother did not contradict this evidence. In seven issues, Perez argues that the trial court erred:

(1) in granting Williams's motion for summary judgment Cases that cite this headnote determining that no informal marriage existed; (2) in denying her mid-trial motion to substitute legal counsel; (3) in refusing [13] Child Custody to take judicial notice of copies of court documents filed Discretion in judicial proceedings related to Williams's custody dispute over his three children from a previous relationship; (4) in Trial courts have wide discretion to determine a refusing to award her a vehicle that she asserts was a gift child's best interest, including issues of custody, from Williams; (5) in sustaining Williams's objection to four control, possession, and visitation.

photographs that she sought to admit into evidence; (6) in Cases that cite this headnote sustaining Williams's objection to her questioning regarding whether he had seen a psychologist; and (7) in “failing to award [her] primary conservatorship rights” to E.AW. or, [14] Child Custody alternatively, in failing to award her visitation pursuant to a Questions of Fact and Findings of Court standard possession order.

Appellate court will reverse a trial court's determination of conservatorship only if a review We affirm. of the entire record reveals that the trial court's decision was arbitrary or unreasonable.

Cases that cite this headnote Background

Perez and Williams began living together in May 2010. At that time, Perez was still married to Miguel Perez, and Williams had divorced his ex-wife, Devinah Finn, in On Appeal from the 257th District Court, Harris County, 2009. Both Perez and Williams had children from previous Texas, Trial Court Case No. 2013–05419 relationships. Perez's divorce from her previous husband Attorneys and Law Firms became final on November 3, 2010. E.A.W., the child of Perez and Williams, was bom on October 12, 2011.

David T. Altenbern, Altenbern & Associates, P.L.L.C., Houston, TX, for appellant. On January 29, 2013, Williams filed his original petition in a Suit Affecting the Parent–Child Relationship (“SAPCR”)

Janice L. Berg, Daniel J. Lemkuil, Houston, TX, for appellee. seeking to be named sole managing conservator of E.A.W.

and asking that Perez be ordered to pay child support to him.

Panel consists of Justices Keyes, Huddle, and Lloyd.

On March 1, 2013, Perez filed her original answer and counter-petition for divorce, alleging that an informal OPINION

marriage existed between Williams and herself and seeking a Evelyn V. Keyes, Justice disproportionate division of the resulting community estate.

She alleged that she and Williams “were married on or about *1 Appellant, Sandra Perez, alleged that she had a common- June 2010 and have ceased to live together as man and wife” law, or informal, marriage with appellee, Brian Williams.

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

and that they were the parents of E.A.W. She also sought to Williams testified that he had been E.A.W.'s primary be named E.A.W.'s sole managing conservator. caregiver, had taken her to her doctor's appointments, and had provided for her basic care and support. He stated that On October 7, 2013, Williams moved for partial traditional he had had exclusive care of E.A.W. since September 2013, and no-evidence summary judgment asserting that no genuine when Perez moved out of his house, “but even for the yearissue of material fact existed as to whether he should be and-a-half prior to that she was an absentee, inactive mother.” adjudicated the father of E.A.W. Williams also asserted Williams testified that Perez was “active during breastfeeding traditional and no-evidence grounds for summary judgment for a little bit and would be there, you know, a couple of on the issue of informal marriage. hours during the evenings, but she would run off to work and come back late at night.” He testified that he was the one who On December 4, 2013, Perez filed her “Original Answer to changed E.A.W.'s diapers, prepared her meals, and provided Partial Traditional and No–Evidence Summary Judgment.” other care. She argued that both she and Williams were married to other people when they first started their relationship, they Regarding his relationship with Perez, Williams testified that both divorced their respective spouses in 2010, they began he invited her and her two teenaged sons to move in with cohabitating on May 3, 2010, and E.A.W. was born on him in spring 2010. He testified that Perez's oldest child, who October 12, 2011. Perez argued that a fact question existed was eighteen at the time of the trial, had been physically as to whether the parties were informally married beginning violent toward him on multiple occasions and ultimately “had in January 2011, after her divorce from Perez was finalized. to leave the house” in the fall of 2012. Williams also stated She supported her response with her own affidavit, her 2010 that Perez had hit, pushed, or shoved him on “numerous divorce decree, E.A.W.'s birth certificate listing Williams as occasions.” He testified that he never sustained any injuries the father, a copy of a document in which Williams listed her requiring hospitalization because he was much larger than as his “relative for contact purposes,” copies of greeting cards Perez, but she was frequently violent. He testified specifically calling her “wife,” and photographs of her “wedding rings.” about an incident in December 2010 in which Perez “came at [him] with a knife” which resulted in a call to the police and *2 On December 5, 2013, the day after Perez filed her in Perez being charged with deadly conduct. He also testified response, the trial court held the summary judgment hearing. about an incident that occurred on Christmas Eve of 2012. On December 13, 2013, “[a]fter considering the motion Perez “became very violent in front of my three older kids, ... and evidence submitted,” the trial court granted Williams's picked up a Christmas tree, threw it over. Started punching motion for partial summary judgment. It adjudicated and punching me as I stood between her and [E.A.W.] as Williams to be E.A.W.'s father, stated that Williams and Perez she was threatening to run out of the house with the baby.” “are found and declared not to be married,” and dismissed the Williams stated that, at that point, he decided to ask Perez to issues of marriage and division of community property from leave his house and to file the underlying lawsuit. Williams the suit. testified that he had never hit Perez or hurt her. However, she had threatened to “make those allegations against him” and The parties tried the remaining issues of conservatorship of to “hurt herself and blame it on [Williams]” and had followed E.A.W., visitation, and child support to the bench on February through on those threats. 6, 2014, and, following a continuance to address problems with the translator, on March 28, 2014. On February 6, 2014, Williams testified that he filed the present suit one month after Perez was represented by attorneys Mark Lipkin and Diane the Christmas Eve incident, in January 2013. He also asked Perez. Williams, who was likewise represented by counsel, Perez to leave his home multiple times, but she kept returning testified that he had three children with his ex-wife, Finn, and periodically. He eventually changed the locks in September one child, E.A.W., with Perez. He had earned an MBA from 2013. He also testified that he provided Perez with money to Harvard Business School and worked as an investment banker use toward a deposit on an apartment so that she would have until “early 2013” when he started his own oil-field service somewhere else to go. business so that he would have more time to spend with his family. *3 Regarding Perez's relationship with E.A.W., Williams testified that he believed Perez loved E.A.W. However, he had also observed Perez “smack the baby in the face” for

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being “too fussy” and because Perez believed the child had “to would not let her see her daughter. Perez testified regarding learn to respect [Perez].” He stated that Perez had threatened an incident that had happened the day after Williams changed to take the baby to live in the Dominican Republic, where the locks in September 2013, when she “went with the police” Perez was born and where she still had family members but was refused entry by the neighborhood security. residing. He also testified about an occasion when Perez became violent with one of her sons from her previous The trial on the merits was then recessed “[b]ecause of relationship, and he introduced an audio recording supporting translator problems.” Trial resumed on March 28, 2014. his testimony. Attorney David Altenbern appeared on Perez's behalf, along with her attorneys from the first day of trial, Lipkin and Diane Williams also testified regarding Perez's employment. Perez. On the record in open court, Altenbern asked the trial Williams purchased a hair salon for Perez, and she operated court to grant Perez's motion to substitute him as her lead it from “early 2010” on for the next several years. Perez counsel. Williams's counsel objected on multiple grounds, told Williams that she “rent[ed] out rooms in the back where including that he had not been served with notice of the people would provide massages and sexual services” and that motion, and the trial court ultimately denied Perez's request she “was selling stolen items, clothing and other items in a to substitute Altenbern as lead counsel but allowed him to little boutique she built in one of the massage rooms.” He appear as co-counsel. also testified that Perez had indicated that drug deals had occurred at her salon on two occasions. Williams introduced *4 Perez then continued her testimony with her attorney, copies of internet advertisements for massage services and Lipkin, questioning her. Perez testified that she had no history “adult entertainment” showing Perez in revealing clothing. of psychiatric treatment, no criminal history, and no history Williams testified that he discovered the advertisements in of substance abuse or illegal drug use. Perez also testified that May 2013 by searching phone numbers from Perez's cell there were no restrictions on her custody or visitation with phone after he became “increasingly concerned by [Perez's] her other minor child—her son from her previous relationship behavior and complete absence from [E.A.W.'s] life....” The —and that she believed she had “always taken care of [her] trial court also admitted Perez's “entertainer license” issued children.” She also stated that if she were awarded custody of by “HPD Vice Division,” which Perez had told Williams she E.A.W., she would be able to provide for her care, that she needed to work in adult entertainment. Williams testified that would abide by the trial court's visitation orders, and that she he knew Perez was involved on the “periphery” of sexually- would allow Williams access to the child. oriented business, but he did not know that she herself was involved in it until after he filed the underlying suit. Perez testified that Williams had been violent with her on numerous occasions. She testified that, in one instance, Perez testified at trial that her relationship with Williams Williams struck her on the arm, and she offered into evidence started out well, but problems began to arise around the time photographs “of what happened on that day,” but the trial she got pregnant with E.A.W. Perez stated that Williams court refused to admit them into evidence after Williams “never wanted the child” and encouraged her to get an objected on the basis that Perez had not produced the abortion. Perez also testified regarding her employment. She photographs during discovery. Perez further acknowledged stated that she still owned the salon and that she knew at one that Williams had never been arrested based on her allegations point a “young lady ... was doing massages to lose weight” of violence. She acknowledged that she had been arrested, but at her salon, which Perez believed was illegal because the not convicted, for attacking Williams. woman did not have a license. Perez testified that she asked the woman to leave. Perez testified that she had last seen Williams's three children with Finn on December 24, 2012. She also testified that Perez testified that when she left Williams's home she took Williams had told her that he had supervised visitation with the Range Rover that he had given her to drive. She drove the his three children and that he had to see a psychologist. On vehicle until Williams eventually sent police to recover it, at cross-examination, she conceded that she had not seen any which time she returned it to Williams's residence. court orders from his custody dispute with Finn and that Williams told her that the visitation and family counseling Perez further stated that she attempted to visit E.A.W. “many arrangements were part of an agreement he had reached with times” after Williams locked her out of his home, but he Finn. Perez admitted that she had met with Finn and Finn's

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lawyers and that Finn's lawyers had offered her “money in this In her first issue, Perez argues that the trial court erred case to prolong it to affect that case” but she did not accept it. in granting summary judgment on the issue of informal marriage. Williams argues that the trial court did not err Perez asked the trial court to take judicial notice of two in granting summary judgment on this issue. Among other motions and a Rule 11 Agreement filed in Williams's custody grounds, Williams asserts that the trial court properly granted proceeding regarding his three children with Finn. Williams his no-evidence motion for summary judgment on this issue objected on multiple grounds, including that Perez had not because Perez failed to file a timely response. provided certified copies of the documents to the trial court in making her request, and the trial court sustained the objection. However, the trial court allowed Perez to recall A. Facts Relevant to Summary Judgment on Informal Marriage

Williams to testify on these issues. 1 Williams testified that Williams moved for summary judgment on October 7, his visitation with his and Finn's children was governed 2013, arguing, in relevant part, that he was entitled to by his 2009 divorce decree, that he picked his children no-evidence summary judgment on the issue of informal up at Finn's house pursuant to that decree, that it was marriage because Perez could provide no evidence that they “incorrect” that his visitation with his children was required had agreed to be married or that they had a reputation to be supervised, and that he had never been required in the community for being married. One day before the to pick his children up at a psychologist's office. Perez's hearing on Williams's summary judgment motion, Perez attorney asked multiple other questions regarding Williams's filed her response and supporting evidence. The record does custody arrangements with Finn and regarding documents not contain any indication that Perez sought leave to file filed in that custody dispute, including, “Have you seen her response late or that she sought a continuance of the a psychologist?” Williams's counsel objected on multiple summary judgment hearing. The trial court stated in its order bases, and the trial court sustained the objection. However, granting Williams's partial summary judgment motion that it Williams acknowledged that he entered into a Rule 11 considered “the motion and evidence submitted.”

Agreement with Finn, and he briefly described the content and purpose of that agreement on the record.

B. Standard of Review

[1] [2] On April 25, 2014, the trial court signed its order The party moving for no-evidence summary judgment must incorporating the previous summary judgment ruling that specifically state the elements as to which there is no Williams was adjudicated to be E.A.W.'s father and that evidence. SeeTEX. R. CIV. P. 166a(i). The burden then Williams and Perez were never married. The trial court shifts to the nonmovant to produce evidence raising a declared Williams and Perez joint managing conservators fact issue on the challenged elements. Id. The reviewing of E.A.W., with Williams receiving the exclusive right to court must view the evidence in the light most favorable designate E.A.W.'s primary residence. Perez was granted to the nonmovant, disregarding all contrary evidence and periods of visitation that were ordered to increase gradually inferences. SeeMerrell Dow Pharms., Inc. v. Havner, 953 until her visitation schedule conformed with a standard S.W.2d 706, 711 (Tex.1997). The trial court must grant the possession order by April 1, 2015. The trial court also ordered no-evidence summary judgment unless the respondent brings Perez to pay Williams child support in the amount of $195.69 forth more than a scintilla of probative evidence to raise a per month until October 30, 2018, at which time her monthly genuine issue of material fact. TEX. R. C IV. P. 166a(i); payments would increase to $223.64. Williams and Perez seeKing Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 both signed the order under a heading that provided that it was (Tex.2003). approved as to form and substance. 2 A trial court need only consider the record as it properly *5 Perez filed a motion for new trial complaining of various appears before it when the motion for summary judgment trial court rulings before and during trial. The trial court is heard. Billelo v. Techline Servs., L.P., 372 S.W.3d 232, denied the motion for new trial and this appeal followed. 235 (Tex.App.–Dallas 2012, no pet.)(citing WTFO, Inc. v.

Braithwaite, 899 S.W.2d 709, 721 (Tex.App.–Dallas 1995, no writ)); Marek v. Tomoco Equip. Co., 738 S.W.2d 710, 712 (Tex.App.–Houston [14th Dist.] 1987, no writ). The Summary Judgment on Informal Marriage Claim nonmovant must file its summary judgment response and

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evidence at least seven days before the summary judgment hearing, unless the nonmovant gets permission to file it later. Because nothing in the record indicates that the trial court TEX. R. CIV. P. 166a(c). If the court allows the late filing of granted leave for Perez to file her response late, we presume evidence, the court must affirmatively indicate in the record that the trial court did not consider it, and we likewise do acceptance of the late filing. SeeBenchmark Bank v. Crowder, not consider it on appeal. SeeFertic, 247 S.W.3d at 250–51 919 S.W.2d 657, 663 (Tex.1996); Goswami v. Metro. Sav. & (holding that appellate court would not consider plaintiff's Loan Ass'n, 751 S.W.2d 487, 490 n. 1 (Tex.1988); WTFO, motion for partial summary judgment filed in response Inc., 899 S.W.2d at 721. Absent any indication leave was to defendant's no-evidence motion for summary judgment granted, we must presume the trial court did not consider because, even if it construed plaintiff's motion as response, it the late-filed evidence. See Fertic v. Spencer, 247 S.W.3d was not timely filed and court presumed that trial court did 242, 250–51 (Tex.App.–El Paso 2007, pet. denied); see not consider it); Johnston v. Vilardi, 817 S.W.2d 794, 796 alsoBenchmark Bank, 919 S.W.2d at 663; WTFO, Inc., 899 (Tex.App.–Houston [1st Dist.] 1991, writ denied) (holding S.W.2d at 721. that appellant's untimely amended response to motion for summary judgment could not be considered); cf.Carpenter, *6 Furthermore, the summary judgment rules afford a party 98 S.W.3d at 687–88 (holding that trial court did not abuse who did not have adequate time an opportunity to obtain its discretion in denying motion for leave to file late response additional time to file a response, either by moving for leave because party offered no explanation for its failure to timely to file a late response or by requesting a continuance of respond). the summary-judgment hearing. TEX. R. CIV. P. 166a(c); Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, Thus, although Perez argues that genuine issues of material 685 (Tex.2002) (discussing remedies available for summary fact remain on all elements of her informal marriage claim, judgment nonmovants who have inadequate time to respond she failed to demonstrate that the record before the trial court to summary judgment motion and stating that trial court's contained any such evidence at the time the court heard ruling on motions for leave to late-file response or for Williams's motion for summary judgment. SeeBillelo, 372 continuance of hearing are reviewed for abuse of discretion). S.W.3d at 235. Accordingly, Perez failed to meet her burden to produce summary judgment evidence raising a genuine issue of material fact on these elements. SeeTEX. R. CIV. P.

C. Analysis 166a(i). We conclude that the trial court did not err in granting [3] Williams moved for summary judgment in part on the summary judgment in favor of Williams on Perez's informal basis that Perez could present no evidence that they had marriage claim. See id. agreed to be married or had represented to others that they were married. SeeTEX. FAM. CODE ANN. § 2.401(a)(2) *7 We overrule Perez's first issue. (Vernon 2006) (providing that informal marriage exists if parties (1) agreed to be married, (2) lived together in Texas as husband and wife after such agreement, and (3) represented to others that they were married). Thus, the burden shifted Motion to Substitute Legal Counsel to Perez to produce summary judgment evidence raising a [4] In her second issue, Perez argues that the trial court erred genuine issue of material fact on these elements. SeeTEX.

in denying her motion to substitute legal counsel following a R. CIV. P. 166a(i). Perez filed a response the day before the continuance of the trial on the merits. Perez argues that the summary judgment hearing; thus, her response was untimely.

trial court's denial of her motion to substitute counsel violated SeeTEX. R. CIV. P. 166a(c). Perez failed to move for leave her fundamental right to counsel of her own choosing.

to late-file her response or for a continuance of the summary judgment hearing. Perez did not present any explanation, either at trial or on appeal, for her failure to file a timely A. Facts Relevant to the Motion to Substitute Legal response to Williams's motion for summary judgment. Nor Counsel does it appear that the trial court considered Perez's late-filed On the second day of trial, Perez requested that the trial response—the trial court's partial summary judgment order court grant her motion to substitute new counsel, Altenbern. reflected that it considered only “the motion and evidence However, the trial court stated that it had not received a submitted” in granting summary judgment on Williams's motion for substitution and saw only Altenbern's notice of paternity of E.A.W. and Perez's informal marriage claim.

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entry of appearance. Altenbern informed the trial court that requested to be substituted as lead counsel for Perez in open the motion to substitute had been electronically filed earlier court at the beginning of the second day of trial. The trial court that same day, and he asserted Perez's right to have counsel stated on the record that it had not received a written motion to of her choosing represent her at trial. substitute, and Williams objected on the basis that he had not received notice of the substitution. The trial court sustained Williams's counsel opposed the motion to substitute, arguing this objection and denied Altenbern's request. that it was “completely a surprise” and a “trial tactic” to attempt to substitute new counsel with approximately an *8 Because the record does not demonstrate that Perez filed hour of trial remaining. He also argued that the motion to a written motion or notice to the trial court and all other substitute was untimely and not properly noticed and that parties, we cannot conclude that the trial court abused its Perez's first attorney had already begun questioning her and discretion in denying Perez's oral request, made on the record no other witnesses had been designated, so “[t]here [was] no mid-trial, to substitute new lead counsel. SeeTEX. R. CIV. P. functional ability for [Altenbern] to take over and examine 8, 10; Spinks, 103 S.W.3d at 459. any witness” under the “one witness, one lawyer rule.” The trial court denied Altenbern's motion to substitute, stating it We overrule Perez's second issue. was concerned that opposing counsel did not have notice of the motion.

Evidentiary Issues

Neither the notice of Altenbern's appearance on Perez's behalf nor the motion to substitute is included in the clerk's record In her third, fifth, and sixth issues, Perez argues that the trial on appeal. Nor does it appear from the record that Perez's court erred in making various evidentiary rulings. first attorneys, Lipkin and Diane Perez, sought to withdraw or were unable to adequately represent Perez at trial.

A. Standard of Review “Evidentiary rulings are committed to the trial court's sound B. Standard of Review discretion.” U–Haul Int'l, Inc. v. Waldrip, 380 S.W.3d 118, [5] We review a trial court's decision to grant or deny a 132 (Tex.2012). A trial court abuses its discretion if it motion to substitute counsel for an abuse of discretion. Spinks acts without regard for guiding rules or principles. Id. To v. Brown, 103 S.W.3d 452, 459 (Tex.App.–San Antonio show the trial court abused its discretion, an appellant must 2002, pet. denied). “Under an abuse of discretion standard, demonstrate that: (1) the court erred in not admitting the an appellate court may reverse the decision of a trial court evidence; (2) the excluded evidence was controlling on a only if the trial court's ruling was without reference to any material issue dispositive of the case and was not cumulative; guiding rules or principles.” Id.; seeDowner v. Aquamarine and (3) the error probably caused rendition of an improper Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985). judgment in the case. Jones v. Pesak Bros. Constr., Inc., 416 S.W.3d 618, 632 (Tex.App.–Houston [1st Dist.] 2013, no While a party has the right to be represented by counsel of its pet.)(citing Tex. R. App. P. 44.1(a), and Tex. Dep't of Transp. own choice, that right is not absolute. SeeSpinks, 103 S.W.3d v. Able, 35 S.W.3d 608, 617 (Tex.2000)). We uphold the trial at 459. The Rules of Civil Procedure provide that designations court's evidentiary ruling if we discern a legitimate basis for of new lead counsel and motions to withdraw and substitute it. Id. (citing Owens–Corning Fiberglas Corp. v. Malone, 972 new counsel must be made in writing and that the party S.W.2d 35, 43 (Tex.1998)). designating new counsel or substituting a new attorney must serve notice on the court and all other parties. SeeTEX. R. CIV. P. 8, 10. B. Court Documents [6] In her third issue, Perez argues that the trial court erred in refusing to admit copies of court documents relating C. Analysis to Williams's other judicial proceedings “pursuant to the Although Perez argues on appeal that she filed a written notice doctrine of judicial notice.” She argues that the documents of Altenbern's appearance as her counsel and a written motion were relevant to the conservatorship proceedings and to to substitute him as lead counsel, neither document appears E.A.W.'s best interests. in the record. The reporter's record reflects that Altenbern

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Perez asked the trial court to take judicial notice of two whose accuracy cannot reasonably be questioned.” TEX. R. motions and two copies of a Rule 11 Agreement—one EVID. 201(b); FreedomCommc'ns, Inc. v. Coronado, 372 handwritten draft and one typed final agreement—filed in S.W.3d 621, 623 (Tex.2012). Judicial notice is mandatory connection with Williams's custody dispute with Finn. In if a party makes the request and supplies the court with making her request for the trial court to take judicial notice, the necessary information. See TEX. R. EVID. 201(c)(2); her attorney stated that “certified copies are on the way, and I Coronado, 372 S.W.3d at 623; MCISales & Serv., Inc. v. want ... judicial notice taken in this case.” Williams objected, Hinton, 329 S.W.3d 475, 484 n. 7 (Tex.2010). “Under this arguing standard, a court will take judicial notice of another court's records if a party provides proof of the records.” Coronado, [the documents are] not a proper 372 S.W.3d at 623 (citing Hinton, 329 S.W.3d at 497 n. subject matter for the judicial notice. 21, and WorldPeace v. Comm'n for Lawyer Discipline, 183 He's required to provide the documents S.W.3d 451, 459 (Tex.App.–Houston [14th Dist.] 2005, pet. at the time he requests judicial denied)). The contents of an unauthenticated or uncertified notice. Additionally, all of the motions record from another court are not the type of evidence of are not by—by operation of law which the court can take judicial notice. Ex parte Luan Le, evidence of anything. They are No. 05–12–00248–CV, 2013 WL 2725593, at *4 (Tex.App.– requests and allegations subject to Dallas June 12, 2013, no pet.)(mem.op.); see alsoEx parte verification. So, I would object, one: Wilson, 224 S.W.3d 860, 863 (Tex.App.–Texarkana 2007, no Improper verification; two: Improper pet.) (“Judicial records ... from a domestic court other than the presentation in this proceeding; three: court being asked to take judicial notice have not been deemed Not evidence, as a matter of law. so easily ascertainable that no proof is required; they are to be established by introducing into evidence authenticated or The trial court confirmed that none of the proffered certified copies ... of those records.”).

documents were final orders, but rather were motions and a Rule 11 Agreement, and it sustained Williams's objection.

Furthermore, “while the trial court can take judicial notice of the existence of certain documents in its records, it ‘may However, Williams subsequently testified regarding some of not take judicial notice of the truth of factual statements the documents, including the Rule 11 Agreement with Finn.

and allegations contained in the pleadings, affidavits, or He stated that the purpose of the agreement was other documents in the file.’ ” Kenny v. Portfolio Recovery to see my children that my ex-wife Assocs., LLC, 464 S.W.3d 29, ––––, 2015 WL 1135410, at *3 has kept from me for over a year (Tex.App.–Houston [1st Dist.] 2015, no pet.)(citing Guyton because of the actions of Ms. Perez v. Monteau, 332 S.W.3d 687, 693 (Tex.App.–Houston [14th at Christmas last year, sir. And it Dist.] 2011, no pet.)). was so I could see my kids for one day at Christmas at the museum. And A trial court's erroneous decision whether to take judicial I agreed that I would take my kids notice of requested facts is subject to a harm analysis under and my ex-wife and me to individual Rule of Appellate Procedure 44.1(a). SeeTEX. R. APP. P. assessments with [a psychologist]. 44.1(a); In re Estate of Downing, 461 S.W.3d 231, 239 (Tex.App.–El Paso 2015, no pet.). Thus, we may not reverse *9 Perez subsequently asked to include the documents in the judgment of the trial court on this issue unless we conclude the record as part of a bill of exceptions, and the trial court that the trial court erred and that the error probably caused the admitted the documents for that purpose. The documents that rendition of an improper judgment. TEX. R. APP. P. 44.1(a). appear in the record are not certified—they contain only a file stamp from the Harris County Clerk's Office. Here, the trial court denied Perez's request to take judicial notice of two motions and a Rule 11 Agreement filed in [7] [8] To be the proper subject of judicial notice, an another court in conjunction with Williams's custody dispute adjudicative fact must be “either (1) generally known within with Finn. However, the record reflects that Perez did not the territorial jurisdiction of the trial court or (2) capable provide the trial court with certified copies of the documents of accurate and ready determination by resort to sources at the time she requested that the court take judicial notice.

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Rather, her attorney stated on the record that the certified in evidence that material or information that was not timely copies of the documents were “on the way,” and the copies disclosed ... unless the court finds that: provided in her bill of exceptions were likewise not certified. Under these circumstances, we cannot conclude that the trial (1) there was good cause for the failure to timely make, court erred in refusing to take judicial notice of the motions amend, or supplement the discovery response; or and Rule 11 Agreement filed in that other case. SeeEx parte (2) the failure to timely make, amend, or supplement the Luan Le, 2013 WL 2725593, at *4 (“[T]he contents of an discovery response will not unfairly surprise or unfairly unauthenticated or uncertified record from another court is prejudice the other parties.

not the type of evidence of which the court can take judicial notice.”). TEX. R. CIV. P. 193.6(a). The party seeking to introduce the evidence bears the burden of establishing good cause or *10 Moreover, even if we determined that the trial court had lack of unfair surprise or unfair prejudice. TEX. R. CIV. P. erred in refusing to take judicial notice of those documents, 193.6(b). Perez cannot show that any such error probably caused the rendition of an improper judgment. SeeTEX. R. APP. After Perez proffered the photographs, Williams's attorney P. 44.1(a); In re Estate of Downing, 461 S.W.3d at 239. objected on the basis that although he had requested the The trial court could only have taken judicial notice of the photographs during discovery, Perez had not produced them. existence of the documents—it could not have taken judicial Perez offered no explanation of her failure to produce the notice of the truth of any factual statements or allegations photographs during discovery. Her counsel stated that he contained in those documents. SeeKenny, 464 S.W.3d at “didn't do the discovery” in this case. Thus, Perez failed to ––––, 2015 WL 1135410, at *3. The existence of the motions meet her burden under Rule of Civil Procedure 193.6(b). or Rule 11 Agreement filed in Williams's custody dispute SeeCarpenter, 98 S.W.3d at 687 (citing predecessor rule to with Finn is not relevant to issues of E.A.W.'s conservatorship Rule 193.6 and holding that inadvertent failure to supplement or support. Furthermore, the trial court permitted Perez to responses was insufficient to establish good cause, even if question Williams regarding his custody dispute with his ex- admitting evidence would not be unfair to opposing party) wife, and he testified on the record regarding the purpose and (citing Sharp v. Broadway Nat'l Bank, 784 S.W.2d 669, 672 content of the Rule 11 Agreement. (Tex.1990)).

We overrule Perez's third issue. We cannot conclude that the trial court abused its discretion in excluding the photographs from evidence. SeeIn re T.K.D.– H., 439 S.W.3d 473, 480 & n. 4 (Tex.App.–San Antonio C. Photographs 2014, no pet.)(holding that trial court did not abuse its [9] In her fifth issue, Perez argues that the trial court erred discretion where proponent failed to produce photographs in excluding photographs depicting bruising that she alleges in discovery and failed to provide good cause for admitting she received from Williams.

photographs).

Perez testified regarding one occasion when Williams struck We overrule Perez's fifth issue.

her and offered the photographs as evidence “of what happened on that day.” Williams objected that she had laid an improper foundation for the photographs and that she had not D. Questioning produced the photos in discovery responses in spite of their [10] In her sixth issue, Perez argues that the trial court erred having been requested. The trial court asked Perez's counsel in sustaining Williams's objection to her question, “Have you whether they had been produced, and he responded, “I can't seen a psychologist?” tell you. I didn't do the discovery, honestly.” The trial court sustained Williams's objection. Perez asked Williams multiple questions about his custody dispute with Finn, including, “Have you seen a The Rules of Civil Procedure provide: psychologist?” Williams's attorney objected to this question, arguing, “There's no motion on file by them to request any A party who failed to make, amend, or supplement a kind of psychiatric care or examination.” The trial court discovery response in a timely manner may not introduce

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sustained the objection. Perez's attorney argued that evidence she testified that Williams intended that the Range Rover be of Williams's mental health, including whether and why he a gift to her and that Williams failed to provide any evidence had seen a psychologist, was relevant. Williams's attorney contradicting her testimony. responded that the question was “an impermissible attempt to get in the hearsay ... [and] impermissible filings and Perez testified that after Williams asked her to leave his the motions in the other case.” He also asserted that the home, she took the Range Rover with her. She stated that question was improper because Perez had not filed any she had driven the car for three years until Williams “sent pleadings challenging Williams's mental health or seeking for the car to be taken away from [her].” Perez testified that to require Williams to participate in counseling or mental she believed the Range Rover belonged to her. Williams's health treatment. The trial court again sustained Williams's counsel objected to this testimony on relevance grounds objection. Williams did not answer the question, and Perez and asserted that “[c]ar titles control ownership.... It's ... did not make an offer of proof regarding what information she not relevant what she thought.” The trial court sustained had expected to elicit from Williams on this issue. However, this objection. Williams's counsel also objected to further Williams acknowledged that, as part his Rule 11 Agreement questioning regarding ownership of the Range Rover, arguing with Finn, he “would take my kids and my ex-wife and me to that there were no property issues remaining to be resolved in individual assessments with [a psychologist].” the trial because “[t]he divorce [issue] has already been ruled on” and “there's no suit for conversion or anything else.”

*11 Perez cannot show that the excluded testimony was controlling on a material issue dispositive of the case and Perez's counsel asserted that Perez's testimony about the was not cumulative or that the trial court's ruling probably vehicle “doesn't have anything to do with property and caused the rendition of an improper judgment. SeeJones, 416 property rights, but it has to do with how Mr. Williams treated S.W.3d at 632. Perez failed to make an offer of proof, so her and allowed her to take care of her son [from her previous the record does not reflect what Williams's testimony on this relationship].” The trial court overruled Williams's objection topic would have been. SeeAkin v. Santa Clara Land Co., and allowed Perez to testify that Williams sent police to “take Ltd., 34 S.W.3d 334, 339 (Tex.App.–San Antonio 2000, pet. [the vehicle] away” and left her with no other way to transport denied) (“The failure to make an offer of proof containing her son from a previous relationship except to use a taxi. Perez a summary of the excluded witness's intended testimony testified, “[Williams] gave a Range Rover to me.... He told me waives any complaint about the exclusion of the evidence on that it was a present, that it was mine.” She acknowledged that appeal.”). Williams testified regarding his agreement with his Williams had asked her to return the Range Rover multiple ex-wife to attend family counseling, but he did not indicate times and had sent a certified letter requesting its return before whether he had actually begun the counseling. Thus, Perez he sent the police to collect the vehicle. The trial court also failed to establish that Williams's excluded testimony would admitted into evidence the title to the Range Rover, listing have been material to issues of custody and support of E.A.W. Williams as the owner. Perez acknowledged that she was not and that its exclusion probably caused the rendition of an listed as the owner of the vehicle. improper judgment, as required to demonstrate that the trial court abused its discretion. SeeJones, 416 S.W.3d at 632. The record demonstrates that the Range Rover's ownership was not at issue during the bench trial. The trial court granted Thus, we cannot conclude that the trial court abused its Williams's partial motion for summary judgment, ruling that discretion in sustaining Williams's objection to this question. the parties were never married and dismissing the issues SeeWaldrip, 380 S.W.3d at 132. of divorce and property division from the case. We have overruled Perez's complaints regarding this order. Perez did We overrule Perez's sixth issue. not file any other pleadings that might be construed as seeking a determination of ownership of the vehicle. SeeTEX. R. CIV. P. 301 (providing that judgment must conform to pleadings).

Gift of Vehicle

Furthermore, when the question of whether the Range Rover [11] In her fourth issue, Perez argues that the trial court was a gift from Williams to Perez arose at trial, Williams erred in “refusing to determine that a gift existed for an objected to Perez's testimony on the ground that she had not award of a Range Rover motor vehicle.” Perez argues that sought an adjudication of her entitlement to the Range Rover

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

in any of her pleadings. He also objected on the basis that the decision and indulge every legal presumption in favor of its title speaks for itself and establishes that Williams was the judgment. Holley, 864 S.W.2d at 706. sole owner of the vehicle. Perez's counsel then argued that the testimony was not intended to establish a property right When, as here, there are no findings of fact or conclusions of but to show how Williams treated her. Thus, the issue was law, we “presume that all factual disputes were resolved in not tried by consent. SeeReed v. Wright, 155 S.W.3d 666, 670 favor of the trial court's ruling.” Aduli v. Aduli, 368 S.W.3d (Tex.App.–Texarkana 2005, pet. denied) (holding that trial 805, 813 (Tex.App.–Houston [14th Dist.] 2012, no pet.). by consent applies in exceptional cases when record as whole Thus, we uphold the trial court's ruling unless “it is so contrary clearly demonstrates that parties tried unpled issue); Mastin to the overwhelming weight of the evidence as to be wrong v. Mastin, 70 S.W.3d 148, 154 (Tex.App.–San Antonio 2001, and unjust.” Id. at 814; seeWorford v. Stamper, 801 S.W.2d no pet.)(stating that to determine whether issue was tried by 108, 109 (Tex.1990). consent, appellate court must examine record for evidence of trial of issue).

B. Conservatorship Determination *12 We cannot conclude that the trial court erred in failing Perez argues that she had no psychological or substance abuse to grant relief that Perez never requested. problems and, thus, there is no evidence supporting the trial court's determination awarding Williams the exclusive right We overrule Perez's fourth issue. to designate E.A.W.'s primary residence. Even considering that evidence, we cannot conclude that the trial court abused its discretion.

Conservatorship of E.A.W. Viewing the evidence in the light most favorable to the trial court's decision and indulging every legal presumption in [12] In her seventh issue, Perez argues that the trial favor of its judgment, as we must, we conclude that the trial court erred in “awarding primary conservatorship rights” to court's ruling is not so contrary to the overwhelming weight Williams. Because the trial court made Perez and Williams of the evidence as to be wrong and unjust. SeeHolley, 864 joint managing conservators of E.A.W., we construe this as an S.W.2d at 706; Aduli, 368 S.W.3d at 813. Williams and Perez argument that the trial court abused its discretion by granting both testified regarding their interactions with each other and Williams the exclusive right to determine E.A.W.'s primary with E.A.W., their respective employment, and their home residence. In the alternative, Perez argues that the trial court environments.

erred in awarding her less-than-standard visitation.

Williams testified that he had regular employment, stable A. Standard of Review housing, and reliable transportation. Williams also testified [13] [14] Trial courts have wide discretion to determine that he had been E.A.W.'s primary caregiver since she was a child's best interest, including issues of custody, control, bom and that he had been her exclusive caregiver since possession, and visitation. Gillespie v.Gillespie, 644 S.W.2d September 2013. Williams stated that he was a former 449, 451 (Tex.1982); Holley v. Holley, 864 S.W.2d 703, 706 investment banker who had started a new career so that he (Tex.App.–Houston [1st Dist.] 1993, writ denied). Thus, we would have more time for his family. He testified about will reverse a trial court's determination of conservatorship numerous instances in which Perez became violent with only if a review of the entire record reveals that the trial him or one of her children, including E.A.W. Williams also court's decision was arbitrary or unreasonable. In re J.A.J., testified that since he and Perez had ended their romantic 243 S.W.3d 611, 616 (Tex.2007); Patterson v. Brist, 236 relationship Perez had advertised on “adult entertainment” S.W.3d 238, 239–40 (Tex.App.–Houston [1st Dist.] 2006, pet websites, and he provided copies of those advertisements to dism'd). A trial court does not abuse its discretion “as long the trial court. Perez did not contradict this evidence. Perez as some evidence of a substantive and probative character also acknowledged that she had been arrested for assaulting exists to support [its] decision.” In re W.M., 172 S.W.3d 718, Williams. 725 (Tex.App.–Fort Worth 2005, no pet.). We must view the evidence in the light most favorable to the trial court's *13 We conclude that the trial court's decision to grant Williams the exclusive right to determine E.A.W.'s residence was supported by “some evidence of a substantive and

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Perez v. Williams, --- S.W.3d ---- (2015) 2015 WL 5076294

a party seeks a ruling on some matter which, when rendered, probative character.” SeeIn re W.M., 172 S.W.3d at 725.

would not have any practical legal effect on a then-existing Thus, the trial court's conservatorship determination was not controversy.”).

arbitrary or unreasonable and did not constitute an abuse of discretion. SeeIn re J.A.J., 243 S.W.3d at 616.

We overrule Perez's seventh issue.

C. Visitation Perez also argues that, even if we affirm the trial court's Conclusion

conservatorship determination, the trial court erred in not granting her visitation pursuant to a standard possession We affirm the order of the trial court. order. However, we observe that the trial court's order provides that Perez is to have visitation with E.A.W. pursuant to a standard possession order as of April 1, 2015. Thus, this All Citations complaint is now moot. SeeIn re H & R Block Fin. Advisors, --- S.W.3d ----, 2015 WL 5076294 Inc., 262 S.W.3d 896, 900 (Tex.App.–Houston [14th Dist.] 2008, orig. proceeding) (“An issue may become moot when

Footnotes 1 The trial court also permitted Altenbern to conduct Williams's questioning. 2 In his brief, Williams argues that this statement makes the trial court's order an agreed order and, thus, Perez cannot complain on appeal of any of its provisions. However, for a judgment to be considered an agreed or consent judgment, such that no appeal can be taken from it, either the body of the judgment itself or the record must indicate that the parties came to some agreement as to the case's disposition; simple approval of the form and substance of the judgment does not suffice. See, e.g.,DeClaris Assoc. v. McCoy Workplace Solutions, L.P., 331 S.W.3d 556, 560 (Tex.App.–Houston [14th Dist.] 2011, no pet.); Oryx Energy Co. v. Union Nat'l Bank of Tex., 895 S.W.2d 409, 417 (Tex.App.–San Antonio 1995, writ denied) (holding that order, despite notation that it was “Approved and Agreed,” was not agreed order when “nothing in the record or the judgment indicates that the parties entered or even contemplated a settlement or agreed judgment”). Each party must explicitly and unmistakably give its consent for a consent judgment to be valid. Chang v. Nguyen, 81 S.W.3d 314, 318 (Tex.App.–Houston [14th Dist.] 2001, no pet.)(stating that, for instance, body of judgment must suggest that case had been settled or that judgment was rendered by consent). No such agreement is evident in this case.

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

KeyCite Yellow Flag - Negative Treatment West Headnotes (9)

Distinguished by Haden v. David J. Sacks, P.C., Tex.App.-Hous. (1 Dist.), May 7, 2009 [1] Alternative Dispute Resolution 124 S.W.3d 283 Decisions Reviewable Court of Appeals of Texas, Trial court's post-arbitration order granting Houston (14th Dist.). employer attorney fees and costs incurred to compel arbitration of former employee's breach Robert RASMUSSON, Appellant, of contract and fraud claims was not a final v.

judgment that was immediately appealable, LBC PETROUNITED, INC., Appellee. where trial court had not yet granted former employee's motion for nonsuit and the order No. 14–02–01053–CV. | Nov. 25, 2003.

therefore did not dispose of all pending claims, | Supplemental Opinion Dec. 23, 2003.

and the order did not contain language purporting Synopsis to dispose of all remaining claims or otherwise Background: Former employee brought action against unequivocally express an intent to finally dispose employer for fraud and breach of contract, and employer of the case. counterclaimed for specific performance of arbitration 2 Cases that cite this headnote provision of severance agreement and sought attorney fees and costs incurred to compel arbitration. The 269th District Court, Harris County, John Thomas Wooldridge, J., [2] Appeal and Error compelled arbitration, and thereafter, the arbitrator denied Final Judgments or Decrees former employee's claims and referred the issue of attorney Appeal and Error fees and costs to the trial court, and former employee Finality as to All Parties nonsuited his claims. The District Court awarded attorney Appeal and Error

fees and costs to employer. Former employee appealed.

Determination of Controversy A judgment issued without a conventional trial is final and therefore immediately appealable Holdings: The Court of Appeals, Richard H. Edelman, J., only if it either actually disposes of all claims held that: and parties then before the court, or states with unmistakable clarity that it is a final judgment as [1] employer was not statutorily precluded from recovering to all claims and parties, even if it is not. attorney fees incurred to compel arbitration;

Cases that cite this headnote [2] arbitration provision of severance agreement did not preclude such recovery; and [3] Appeal and Error Order or Decree of Dismissal [3] employer did not establish the costs it incurred were Appellate timetables run from the date an order reasonable and necessary, but employer's voluntary remittitur granting a nonsuit is signed, rather than the date of costs cured the reversible error.

a nonsuit is filed.

Cases that cite this headnote Affirmed as reformed.

[4] Alternative Dispute Resolution Costs

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

Statute pertaining to judgments confirming, Abuse of discretion was not the appropriate modifying, or correcting an arbitration award did standard for reviewing an award of attorney fees not preclude a party from recovering attorney and costs rendered by summary judgment. fees for compelling arbitration. V.T.C.A., Civil Practice & Remedies Code § 171.092(a). 2 Cases that cite this headnote

Cases that cite this headnote [9] Alternative Dispute Resolution Costs

[5] Alternative Dispute Resolution Conclusory statement, in summary judgment Costs affidavit of attorney for employer, that Arbitration provision of employee's severance “reasonable costs of $403.71 have been incurred agreement, making each party responsible for in performing the tasks cited above” to compel its own attorney fees and costs for any arbitration of former employee's claims for fraud disputes arising under or in connection with and breach of contract, with no indication of the agreement, did not preclude a party from what the costs consisted of, was insufficient to collecting attorney fees and costs incurred to prove the costs were reasonable and necessary, as compel arbitration. would be required for employer to recover costs incurred to compel arbitration.

Cases that cite this headnote 1 Cases that cite this headnote

[6] Costs Contracts

Specific Performance Attorneys and Law Firms

Costs

A “valid claim,” within meaning of statute *284 Kent M. Hanszen, Houston, for appellant. allowing a party to recover attorney fees in addition to the amount of a valid claim for Tracy C. Temple, Thomas M. Melo, Houston, for appellee. breach of contract, is not limited to a claim for Panel consists of Justices EDELMAN, FROST, and monetary damages, and may include a claim for GUZMAN.

specific performance. V.T.C.A., Civil Practice & Remedies Code § 38.001(8).

10 Cases that cite this headnote OPINION

RICHARD H. EDELMAN, Justice.

[7] Appeal and Error Judgment In this employment dispute, Robert Rasmusson appeals a A nonmovant need not respond to a motion for judgment in favor of LBC PetroUnited, Inc. (“LBC”) on summary judgment to contend on appeal that the the ground that the trial court erroneously awarded LBC movant's summary judgment proof is insufficient attorney's fees. We affirm in part and reverse and remand in as a matter of law to support summary judgment. part.

Cases that cite this headnote Background

[8] Appeal and Error Costs and Allowances Rasmusson filed suit against LBC, his former employer, alleging fraud and breach of contract. LBC filed a Appeal and Error counterclaim seeking specific performance of the arbitration Attorney Fees

provision of the parties' severance agreement (the

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

“agreement”) and recovery *285 of the attorney's fees and Although the motion does not contain the term, “summary costs expended to compel arbitration. LBC then moved to judgment,” it states that it was filed pursuant to Texas Rule compel arbitration, the trial court granted LBC's motion, and of Civil Procedure 166a, which describes the procedure the resulting arbitration award denied Rasmusson's claims and requirements for summary judgment motions. Similarly, and referred the issue of attorney's fees and costs to compel although *286 the statement of facts in Rasmusson's brief arbitration back to the trial court. Rasmusson subsequently states that the September judgment was entered without a nonsuited the claims he had originally filed in the trial court, motion for summary judgment, the brief not only does not and LBC filed a motion for judgment (the “motion”) on its dispute that the motion was filed in accordance with Rule claim for attorney's fees and costs. On September 6, 2002, the 166a, it recites the summary judgment standard of review trial court signed a final judgment (the September judgment) as being applicable to the case. We will follow the same awarding LBC those fees and costs. approach.

A traditional motion for summary judgment may be granted if the motion and summary judgment evidence show that Timeliness of Appeal

there is no genuine issue of material fact and the moving [1] As a preliminary matter, LBC claims that Rasmusson's party is entitled to judgment as a matter of law on the issues appeal should be dismissed because it was untimely. LBC expressly set out in the motion or response. TEX.R. CIV. P. contends that a February 19, 2002 order (the “February 166a. In reviewing a traditional summary judgment, we take order”), granting LBC attorney's fees and costs, was a all evidence favorable to the nonmovant as true and resolve final judgment because it disposed of the only claim then every doubt, and indulge every reasonable inference, in the remaining in the case and thus rendered Rasmusson's appeal, nonmovant's favor. Tex. Commerce Bank, N.A. v. Grizzle, 96 filed after the September judgment, untimely. S.W.3d 240, 252 (Tex.2002).

[2] [3] In a case, such as this, where only one final and appealable judgment can be rendered, a judgment issued Award of Attorney's Fees and Costs without a conventional trial is final for purposes of appeal only if it either actually disposes of all claims and parties then Rasmusson's sole point of error challenges the trial court's before the court, or states with unmistakable clarity that it is award of attorney's fees and costs to LBC on the grounds that: a final judgment as to all claims and parties (even if it is not). (1) the law does not allow recovery of attorney's fees incurred Guajardo v. Conwell, 46 S.W.3d 862, 863–64 (Tex.2001); in compelling arbitration; (2) the agreement unambiguously Lehmann v. Har–Con Corp., 39 S.W.3d 191, 192–3, 200 provides that each party will bear its own attorney's fees (Tex.2001). Appellate timetables run from the date an order incurred in any agreement dispute; (3) LBC failed to prove granting a nonsuit is signed, rather than the date a nonsuit is any contract damages supporting an attorney's fees award; filed. In re Bennett, 960 S.W.2d 35, 38 (Tex.1997). (4) LBC waived its claim for attorney's fees when it failed to present its breach of contract claim to the arbitrator, asking In this case, the record does not contain a signed order instead for fees incurred merely to compel arbitration; (5) the that had granted Rasmusson's motion for nonsuit at the time attorney's fees awarded were unreasonable and unnecessary; the February order was entered. Therefore, the record does (6) LBC's breach of contract claim was never adjudicated, and not reflect that the February order actually disposed of all Rasmusson never got his day in court to assert his defenses the claims remaining at that time. Nor did the February to it; and (7) LBC failed to provide any evidence in support order contain language purporting to dispose of all remaining of the costs awarded. claims and parties or otherwise unequivocally express an intent to finally dispose of the case. 1 Therefore, it was not a [4] In support of his first argument, Rasmusson contends final order that began the time period in which Rasmusson's that section 171.092 of the Texas Civil Practice and Remedies appeal had to be filed and caused his appeal to be untimely. Code (“CPRC”) disallows recovery of attorney's fees for compelling arbitration. However, that section pertains to a judgment confirming, modifying, or correcting an award, not an order compelling arbitration, as in this case. See TEX.

Standard of Review CIV. PRAC. & REM.CODE ANN. § 171.092(a) (Vernon

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

Supp.2004). 2 Therefore, Rasmusson has not demonstrated Rasmusson next contends that LBC waived asserting its claim that the law precludes a recovery of attorney's fees in this case. for attorney's fees as a claim for breach of contract by instead presenting it to the arbitrator as merely a claim for fees to [5] In support of his second argument, Rasmusson argues compel arbitration. 4 The only portion of our record that that the award of attorney's fees and costs directly contradicts reflects how LBC's attorney's fee claim was presented to the the plain language of the agreement, which requires each arbitrator is the following exchange: party to bear his or its own costs incurred in any dispute arising from the agreement:

ARBITRATOR: And [LBC] is seeking attorney's fees that Any disputes arising under or in it incurred in going to court and compelling arbitration connection with this Agreement shall pursuant to the arbitration clause of the [agreement].... be resolved by arbitration to be held Is that correct? in Houston, Texas in accordance with the rules and procedures of the [LBC'S COUNSEL]: Correct. American Arbitration Association. All The arbitration award similarly states:

arbitration fees shall be borne equally by [the parties] and [each shall be] [LBC] seeks $16,707.50 in attorney's fees and responsible for any attorneys' fees or $403.71 in court costs, [ [ 5 ] both of which were other expenses incurred by either [of incurred when compelling arbitration in this matter.

them].

However, pursuant to the District Court's order (the “arbitration provision”). On the contrary, this provision compelling arbitration, and its subsequent abatement applies only to fees and expenses incurred in resolving pending the arbitration outcome, it appears that the disputes by arbitration, i.e., in accordance with the agreement, merits of the case are to be determined by the not to costs necessitated by a party's opposition to resolving Arbitrator while the award of attorney's fees and costs *287 disputes by arbitration, in contravention of the to compel arbitration should be determined by the agreement. Therefore, Rasmusson has not demonstrated that District Court. Therefore, the Arbitrator refers the the award of attorney's fees and costs is inconsistent with the matter of attorney's fees and costs to the District Court agreement. for adjudication.

****

[6] Rasmusson next contends that attorney's fees could not be recovered by LBC under section 38.001(8) of the CPRC The cost of arbitration is to be shared equally by the because LBC recovered no other monetary contract damages parties. The issue of attorney's fees incurred in court to besides the attorney's fees and associated costs. See TEX. compel arbitration is reserved for the District Court. CIV. PRAC. & REM.CODE ANN. § 38.001(8) (Vernon 1997) (allowing recovery of attorney's fees “in addition to the All other relief not expressly granted is denied. amount of a valid claim” for breach of contract). However, (paragraph numbers omitted). While it is not clear on what a “valid claim” for this purpose is not limited to one for basis the arbitrator was distinguishing the “merits of the monetary damages 3 and may include a claim for specific case” from the award of attorney's fees, we cannot say from performance. See Jones v. Kelley, 614 S.W.2d 95, 96, 100– this record that LBC presented its claim for attorney's fees 01 (Tex.1981) (reforming judgment to award attorney's fees, to the arbitrator as something other than a *288 breach of in accordance with jury verdict, under predecessor statute contract claim and thereby waived its claim as such. 6 to section 38.001 in suit for specific performance of earnest Rasmusson next contends that the amount of attorney's money contract for sale of real estate). Because LBC sought fees sought and recovered by LBC was unreasonable and attorney's fees in addition to its claim for specific performance unnecessary for preparing and arguing a three-page motion of the arbitration provision of the agreement, its failure to to compel arbitration at a fifteen-minute hearing. However, recover other money damages did not preclude the award of because Rasmusson filed neither a cross-motion for summary attorney's fees.

judgment 7 nor summary judgment evidence controverting

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

judgment evidence LBC provided regarding costs was a that supporting LBC's motion on this issue, 8 we can neither single sentence in its attorney's affidavit: “Further, reasonable render judgment in Rasmusson's favor nor conclude that a fact costs of $403.71 have been incurred in performing the tasks issue was raised on the reasonableness and necessity of the cited above [to compel *289 arbitration].” Because there amount of attorney's fees awarded.

is no indication of what these costs consisted of, there is no basis to establish whether they were reasonable or necessary Rasmusson next argues that LBC never had its breach of other than the conclusory statement of the attorney, which contract claim formally adjudicated by the arbitrator or trial is insufficient to support a summary judgment. 10 Therefore, court and, accordingly, Rasmusson never got his day in we sustain Rasmusson's challenge to the sufficiency of the court on his defenses to those claims. However, the motion evidence to support the trial court's award of costs to LBC, plainly referred to the arbitration provision and argued that reverse the portion of the judgment making that award, Rasmusson's filing of suit rather than submitting the dispute remand that issue to the trial court for further proceedings, to arbitration was a breach of the agreement as a matter of and affirm the remainder of the judgment.

law, causing LBC to incur expense in filing its motion to compel arbitration, as described in the attached affidavit of LBC's attorney. Rasmusson filed a response to the motion (the “response”) in which he argued that: (1) LBC waived SUPPLEMENTAL OPINION the claim by failing to ask the arbitrator to rule on whether Rasmusson had breached the contract; (2) LBC's request for Following the issuance of our original opinion, reversing the relief from the court essentially sought to modify or vacate the costs awarded by the trial court's judgment, appellee, LBC arbitrator's award without satisfying the requisites for doing PetroUnited, Inc., timely filed a voluntary remittitur of those so; and (3) he disputed the reasonableness and necessity of the costs. See TEX.R.APP. P. 46.5. We conclude that LBC's fees (but without supporting summary judgment evidence). voluntary remittitur cures the reversible error and accept it. Under these circumstances, it is not apparent how LBC's Accordingly, we reform the judgment to remove the award breach of contract claim was not formally adjudicated by of costs and affirm the judgment in accordance with the summary judgment in its motion, Rasmusson's response, and remittitur. See id. the September judgment.

All Citations

[7] [8] [9] Rasmusson lastly asserts that the trial court erred in awarding costs against him because LBC failed to 124 S.W.3d 283 provide any evidence of those costs. 9 The only summary

Footnotes 1 The entire body of the February order stated:

Having considered all of the pleadings and the evidence in this case, this Court finds that [LBC's] Motion for Judgment on Fees and Costs is GRANTED. It is ordered that LBC is entitled to the sum of $16,707.50 in attorneys' fees and $403.71 in costs for a total of $17,111.21. By contrast, the September judgment is not only entitled “Final Judgment” but contains language unequivocally expressing an intent to finally dispose of the only remaining claim in the case (even though an order granting Rasmusson's nonsuit was apparently never entered): This case came before the Court for final adjudication.... On September 24, 2001, [Rasmusson] non-suited its [sic] own claims leaving [LBC's] counter-claim the only remaining claim at issue in the case.

****

It is therefore,

****

ORDERED, ADJUDGED AND DECREED that this is a Final Judgment and that all relief sought in this case which is not specifically granted is hereby denied.

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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)

2 Nor are we at liberty to extrapolate the effect of this statute to circumstances outside its scope. See City of Garland v.

Dallas Morning News, 22 S.W.3d 351, 358 (Tex.2000) (noting that courts are not responsible for omissions in legislation, but must take statutes as they find them).

3 Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 796 (Tex.App.-Houston [1st Dist.] 2001, no pet.). 4 However, neither party has cited a basis to recover attorney's fees to compel arbitration other than under section 38.001 of the CPRC.

5 The record does not reflect whether these costs were actually taxable court costs. 6 Rasmusson's brief states that the issue presented in this case is whether the trial court had authority to award attorney's fees. However, to the extent the claim for attorney's fees was within the scope of the arbitration provision, Rasmusson's brief does not challenge the authority of the arbitrator to refer it back to the trial court or the trial court's authority to decide the issue based on that referral.

7 See, e.g., Dow Chem. Co. v. Bright, 89 S.W.3d 602, 605 (Tex.2002) (reiterating that when both sides have moved for summary judgment, and one motion is granted and the other denied, the appeals court determines all questions presented and renders the judgment the trial court should have rendered).

8 See, e.g., Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995) (reiterating that once a movant produces evidence sufficient to establish a right to summary judgment, the nonmovant must present evidence sufficient to raise a fact issue).

9 LBC contends that Rasmusson waived this complaint by failing to raise it in his response and that a trial court's award of attorney's fees and costs is reviewed for abuse of discretion. However, a nonmovant need not respond to a motion for summary judgment to contend on appeal that the movant's summary judgment proof is insufficient as a matter of law to support summary judgment. M.D. Anderson Hosp. and Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000). Similarly, to whatever extent an award of attorney's fees and costs is reviewable for abuse of discretion in other contexts, LBC has not cited, and we have not found, any authority for doing so where such an award has been rendered by summary judgment.

10 See Earle v. Ratliff, 998 S.W.2d 882, 890 (Tex.1999) (reversing summary judgment because expert's affidavit, stating that defendant met the applicable standard of care, did not explain its basis to link that conclusion to the facts or explain why the procedure was medically warranted); Burrow v. Arce, 997 S.W.2d 229, 235 (Tex.1999) (reiterating that conclusory statements made by an expert witness are insufficient to support summary judgment).

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Redwine v. Hudman, 104 Tex. 21 (1911) 133 S.W. 426

Cases that cite this headnote KeyCite Yellow Flag - Negative Treatment Distinguished by Bourland v. Huffhines, Tex.Civ.App.-Amarillo, October 25, 1922 [3] Specific Performance Performance Impossible

104 Tex. 21 Specific performance of a contract will not be Supreme Court of Texas. decreed unless complete performance by each party can be enforced, and equity will not REDWINE

decree a conveyance pursuant to a contract of v.

sale which will defeat the title to be conveyed, HUDMAN.

or a conveyance which will not substantially accomplish the end intended.

Jan. 11, 1911.

5 Cases that cite this headnote Error to Court of Civil Appeals of Second Supreme Judicial District.

[4] Specific Performance Action by W. F. Hudman against R. A. Henderson and Performance Impossible another. There was a judgment of the Court of Civil Appeals A purchaser of school land contracted to sell reversing a judgment for defendants, and defendant M. M. the land to a third person before title had vested Redwine brings error. Judgment of Court of Civil Appeals in the purchaser by reason of continued actual reversed, and judgment of District Court affirmed. settlement for the required statutory period, and agreed to execute a deed on the termination, in favor of the purchaser, of a pending suit West Headnotes (7) involving the title to the land. The purchaser, before the completion of the time to acquire title by settlement, conveyed the land to another, who [1] Contracts settled on it and complied with the statute so Reasonableness of Construction as to become a purchaser from the state. Held, The court, in construing a contract, may reject that the third person could not compel a specific an unreasonable, suggested construction when a performance of the purchaser's contract, since more reasonable one is as consistent with the the contract to convey to the third person was language used. dependent on the purchaser's future action to acquire title, which action the court could not 1 Cases that cite this headnote control.

1 Cases that cite this headnote [2] Public Lands Abandonment

Where one settled and located his home on a [5] Specific Performance school section, and purchased it and two other Options sections from the state, and then conveyed the A contract stipulating that one of two things shall three sections to a third person, who settled be done at the election of the party who is to on the first section, it was necessary to the perform the contract, so as to give him the right acquisition of title that the actual settlement to elect to perform the act called for or to pay should continue either on the original home a specific sum, cannot be specifically enforced, section or on one of the additional sections for where the contract is satisfied by the payment of three years from the date of the original purchase. the money.

4 Cases that cite this headnote

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Redwine v. Hudman, 104 Tex. 21 (1911) 133 S.W. 426

consideration of the following described property, to wit: One [6] Specific Performance bay horse about 14 1/2 hands high, nine years old unbranded.

Options Also one bay horse about 14 1/2 hands high four years old A contract, stipulating that, in consideration of and branded X on left thigh. Also two sorrel horses, one four described personal property delivered by the and one five years old branded R. F. on left shoulder. *23 purchaser to the vendor, the latter agrees to Also four buggies, one Perry buggy, been in use about thirteen execute and deliver a deed to the purchaser of months and three new Banner buggies. Two new sets of single real estate described, and providing for the return harness and one set of old single buggy harness and one set of of the personal property if the vendor shall fail new double harness. Said property of the reasonable market or refuse from any cause to execute and deliver value of three hundred and twenty dollars. Said property this the deed, does not give the vendor the right to day sold and delivered by the party of the second part to the elect whether to return the personal property or said party of the first part herein. The said party of the first part execute a deed, but requires him to return the agree to make, execute and deliver to the party of the second personal property when his failure to convey is part a good and sufficient deed to a certain section of state justified, and the contract is in form subject to school land in Lynn county, Texas, after a certain suit which specific performance. is now pending involving the title to said land shall have been terminated in favor of the party of the first part herein. Said 10 Cases that cite this headnote land described as follows, to wit: Being all of state school section No. 448, Cert. No. 446, in block No. 1, E. L. & R. R. R.

[7] Specific Performance R. Co. Said land of a reasonable market value of three hundred Effect of Stipulations for Liquidated and twenty dollars. It is further agreed and understood by and Damages or Penalty between the parties herein mentioned that if the said party A contract which calls for the doing of an act, of the first part herein shall fail or refuse from any cause to with a sum annexed as penalty or damages, execute and deliver said deed to said party of the second part to secure the performance of the act, may be then and in that event the party of the first part shall deliver to specifically enforced. the party of the second part said property herein conveyed to him and in the event of his failure or inability to deliver said 2 Cases that cite this headnote property then the party of the first part shall pay to the party of the second part the reasonable market value of said property. It is further agreed and understood between and by the parties to this contract that the party of the second part agrees to pay Attorneys and Law Firms off and discharge any and all indebtedness that may be against said property herein conveyed and to warrant and defend the *22 **427 John P. Marrs, L. W. Dalton, G. W. Perryman, title to the same against any and all incumbrances, liens and and Wm. J. Berne, for plaintiff in error. claims whatsoever. In testimony whereof we have hereunto set our hands and seals this the 5th day of September, 1903.

H. C. Ferguson, for defendant in error. R. A. Henderson, Party of the First Part. W. F. Hudman, Party of the Second Part.” The judgment of the district court was in Opinion favor of defendant, but it was reversed by the Court of Civil WILLIAMS, J. Appeals, and another was rendered by that court in plaintiff's favor for the land, subject to such right as Redwine might This action was brought by Hudman against R. A. Henderson show to compensation for improvements in good faith, for for specific performance of a contract for the conveyance inquiry into which subject alone the cause was remanded. of land; Redwine, the plaintiff in error, being joined as a subsequent purchaser from Henderson. The contract is The first objection made to the judgment is that it is not as follows: “The State of Texas, County of Lynn. This authorized by the contract, which, it is urged, did not bind agreement this day entered into between R. A. Henderson, Henderson to convey the land, but left him the right to rfeuse party of the first part, and W. F. Hudman, party of the second to do so and, instead, to return the property received as the part, witnesseth: That said party of the first part, for and in consideration, or to pay its market value. Irrespective of the

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Redwine v. Hudman, 104 Tex. 21 (1911) 133 S.W. 426

other features of the case discussed later, **428 we do right, it must be because that right is necessarily involved not think the suggested construction of the contract is the in that which the contract allows. Was it the intention that proper one. Much has been well said in the opinions of this Henderson should not be bound to convey the land at all if court from Hemming v. Zimmerschitte, 4 Tex. 159, to Moss without just cause he should choose not to do so? That it was v. Wren, 102 Tex. 567, 113 S. W. 739, 120 S. W. 847, is the contention of the defendant, expressed in its simplest affirming the right to specific performance of contracts for form. We think it does not give proper weight to the word the conveyance of land which contain stipulations for the ‘cause.’ payment of sums of money, called penalties, or liquidated damages, inserted to secure the performance of the act agreed The contract does not say or mean that Henderson will to be performed. A different *24 class of contract is that return the property delivered or its value, if he elect or where one of the parties is given the election to do something choose not to convey, but that he will return, etc., if he else in lieu of conveying the land. fail or refuse to convey for cause, that is, for something causing him to fail or refuse, and justifying his failure or The principle which controls is well settled. It is thus stated: refusal rather than the mere exercise of his own volition. This ‘The question always is: What is the contract? Is it that explanation frees the contract from a criticism that would one certain act shall be done, with a sum annexed, whether render it not only unreasonable, but well-nigh futile. We thus by way of penalty or admages, to secure the performance characterize the contract, as the defendant would construe it, of this very act? Or is it that one of two things shall be because of the fact of the delivery of the perishable personal done at the election of the party who has to perform the property into the possession of the vendor, as the price of contract, namely, the performance of the act or the payment the land, to be held and enjoyed by him at least so long as of the sum of money? If the former, the fact of the penal the law suit referred to should last, with no corresponding or other like sum being annexed will not prevent the court obligation but that finally to elect whether he would convey enforcing the performance of the very act, and thus carrying the land *25 or return the property, or its value, with no into execution the intention of the parties. If the latter, the provision for deterioration in it or compensation for its use. contract is satisfied by the payment of a sum of money, and Of course mere improvidence in a contract does not control there is no ground for proceeding against the party having the its plain provisions, but an unreasonableness in a suggested election, to compel the performance of the other alternative.’ construction may justly prevent its adoption when a more Fry on Specific Performance, § 115. See, also, 36 Cyc. 571, reasonable one is as consistent with the language used. The 572. Whether a contract belongs to one class or the other construction contended for gives to the words so often quoted depends on the intention deduced from a proper construction the same meaning as if they were ‘if the vendor shall fail or of the instrument in which the parties have expressed their refuse for any reason satisfactory to himself.’ Those used may agreement. reasonably be interpreted differently so as to avoid absurd consequences.

There is certainly no room for the contention that the contract sued on belongs to the first class mentioned in the above We conclude that in the mere wording of the contract a quotation. No sum of money is mentioned either as a penalty conclusive reason is not found against specific performance, or as liquidated damages to secure the conveyance of the land. and, therefore, take up the next objection, which is that such On the contrary, the agreement is to return the consideration, relief cannot properly be adjudged because Henderson, a or its equivalent, in case the deed is not executed; that is, to purchaser of the land from the state as an actual settler under do that which would constitute a rescission. We think counsel the statutes regulating sales of the public school lands, not for defendant is clearly correct in giving that construction to having completed the required occupancy, could not legally the instrument. We are unable to admit, however, that the bind himself to convey as attempted. The facts are these: One rescission is authorized at Henderson's mere election. The Green first settled and located his home on another section agreement is not so expressed. The first stipulation is that he and then purchased it and two others in addition, one of will convey, and the second is that if he ‘fail or refuse from which is the land in controversy. He conveyed the three to any cause’ to execute the deed he shall do the other thing, Henderson, who also settled on the one first mentioned, and which is not apt or appropriate language in which to express properly recorded and filed in the land office his deed and was an unconditional right of rescission at the mere election of substituted in place of Green as purchaser. It was therefore the vendor. If it has the effect of a reservation of such a necessary to the acquisition of title that an actual settlement

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Redwine v. Hudman, 104 Tex. 21 (1911) 133 S.W. 426

is that the court could not have compelled him to do so, be continued either on the original home section, or on one of even if the contract had contemplated that he should, which the additional ones, for three years from the date of Green's is admitted not to have been the case. Specific performance purchase. Henderson made the contract with Hudman with his will not be decreed unless complete performance by each claim to the land in this situation, and afterwards, before the party can be enforced, which was not true here as to either completion of the three **429 years, conveyed the section party. Therefore at the time Henderson conveyed to Redwine in controversy and the other additional one to Redwine, who there was no right in Hudman to enforce a conveyance of the settled on the latter, and filed his deed and obligations in the land. Such a right could only have become complete from a land office in compliance with the statute so as to become compliance by Henderson with the statutory requirement as a purchaser from the state. The lawsuit referred to in the to occupancy and a consequent acquisition of the title. The contract was decided in 1908 in Henderson's favor.

contract to convey the land was necessarily dependent on Henderson's future action, and, as that action was not to be of We are not prepared to hold that the contract between a nature that could be required of Henderson by the decree of Henderson and Hudman was illegal, in that it was necessarily any court, no enforceable right to a conveyance could arise violative of the provisions or policies of the statutes, against him unless he obtained the title. He has never done under which the former held. The instrument contains no that; but Redwine, proceeding in strict accordance with the stipulation that, so far as we can now see, would necessarily statutes, has put himself in the position of purchaser from contravene any of the purposes disclosed in the statutes;

the state and as such has completed the necessary occupancy, and, if Henderson had retained the section in question until and, under positive statutory provisions, is entitled to be he completed his occupancy, it may be that there would recognized by the state as owner.

be no obstacle to the enforcement of his agreement. It is well, however, to proceed with caution in dealing with this When Henderson contracted to convey to Hudman, the title subject, and we find it unnecessary to determine this question was in the state to be acquired in accordance with the definitely. Conceding that the contract is a lawful one, it by no statute. Redwine has strictly complied with those statutes, means follows that it is one to which the remedy of specific and Hudman has not. The equitable jurisdiction of courts of performance can be applied. That it is not will, we think, equity to enforce specific performance is inapplicable to such appear from a proper consideration of the facts stated.

a situation.

Of course a court of equity will not decree a conveyance The judgment of the district court was correct, and that of the which will defeat the title to be conveyed, nor one which will Court of Civil Appeals erroneous.

not substantially accomplish the end intended. It is obvious that, if the lawsuit had been decided before the three years'

Judgment of Court of Civil Appeals reversed. Judgment of occupancy was complete, no performance of the contract district court affirmed.

could properly have been decreed. The reason is that the court could not have required Henderson to maintain the settlement necessary to the efficacy of the decree to confer any title. *26 Thus that title would have been exposed to a danger against All Citations which the court could not have provided. If it be said Hudman could have settled and completed the occupancy, the answer 104 Tex. 21, 133 S.W. 426

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

2 Cases that cite this headnote 118 S.W.3d 73

Court of Appeals of Texas, Austin. [3] Specific Performance Necessity

ROUNDVILLE PARTNERS, L.L.C. and Vendor and Purchaser Quintana Development Corporation, Appellants, Obligation to Convey in General v. Vendor and Purchaser Stephen M. JONES and Tender Frankie Sue Jones, Appellees. In cases where the vendor's and purchaser's contract obligations pertaining to the sale of real No. 03–02–00712–CV. | Aug. 29, property are mutual and dependent, in that a deed 2003. | Rehearing Overruled Nov. 13, 2003.

is required to be delivered upon tender of the Purchasers brought action against vendors arising out of purchase price, a valid tender of the purchase the failure to consummate a sale of real property, seeking price invokes the vendor's obligation to convey specific performance of the earnest money contract. Summary and places him in default if he fails to do so, judgment was awarded to vendors, and the Court of Appeals and the tender also satisfies the fundamental reversed and remanded. On remand, after a bench trial, prerequisite of specific performance—that the the 26th Judicial District Court, Williamson County, Billy purchaser show that he has done or offered to do, Ray Stubblefield, J., rendered judgment in favor of vendors. or is then ready and willing to do, all the essential Purchasers appealed. The Court of Appeals, David Puryear, and material acts which the contract requires of J., held that vendors' failure to perform their obligations him. under the contract did not prevent purchasers from tendering 5 Cases that cite this headnote performance, and thus purchasers were not entitled to specific performance.

[4] Tender

Affirmed. Mode and Sufficiency The term “tender” means to notify the other party that one intends to perform one's side of a bargain immediately or at a specific time and place and West Headnotes (10)

to demand that the other party do likewise.

[1] Appeal and Error 3 Cases that cite this headnote Sufficiency of Evidence in Support When the trial court acts as a fact finder, Court of [5] Specific Performance Appeals reviews its findings under the legal and Necessity factual sufficiency standards. In general, actual tender of performance is a prerequisite to obtaining the remedy of specific 2 Cases that cite this headnote performance; however, when actual tender would have been a useless act, an idle ceremony, [2] Specific Performance or wholly nugatory, constructive tender will Discretion of Court suffice.

Specific Performance Cases that cite this headnote Form of Remedy

Specific performance is an equitable remedy that rests in the discretion of the court. [6] Specific Performance Time as of the Essence of the Contract

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

When a contract for the sale of real property closing, contract never closed, and thus vendors' specifies that time is of the essence, the purchaser performance was not yet due. must make an actual tender of the price and demand of the deed within the time allowed by Cases that cite this headnote the contract in order to be entitled to specific performance. [10] Contracts Grounds of Action

2 Cases that cite this headnote The elements of a breach of contract claim are: (1) the existence of a valid contract, (2)

[7] Specific Performance performance or tendered performance by the Time as of the Essence of the Contract plaintiff, (3) breach of the contract by the When time is of the essence in a contract, a party defendant, and (4) damages to the plaintiff must perform or tender performance in strict resulting from the breach. compliance with the provisions of the contract and within the time prescribed in order to be 7 Cases that cite this headnote entitled to specific performance.

4 Cases that cite this headnote Attorneys and Law Firms

[8] Specific Performance *74 Eric J. Taube, Sarah Elizabeth Starnes, Hohmann, Necessity

Taube & Summers, L.L.P., Robert C. DeCarli, Law Offices Vendors' failure to execute a deed and other DeCarli & Irwin, Austin, R. Mark Dietz, Dietz & Associates, necessary documents under contract for sale P.C., Round Rock, for Appellants. of real property, and their failure to take affirmative action to close the contract, did not Don H. Magee, David B. Young, Michael A. Wren, prevent purchasers from tendering their own McGinnis, Lochridge & Kilgore, L.L.P., Austin, for performance before expiration of the contract, Appellees. and thus purchasers were not entitled to specific performance; purchasers executed all necessary Before Chief Justice LAW, Justices B.A. SMITH and documentation after expiration of the contract PURYEAR. even though vendors still had not performed the obligations purchasers alleged prevented them from tendering performance, and there was no OPINION evidence purchasers could not have done so DAVID PURYEAR, Justice.

before expiration of the contract.

After a sale of commercial real estate was not 1 Cases that cite this headnote consummated, appellants Roundville Partners, L.L.C. and Quintana Development *75 Corporation (collectively [9] Specific Performance “Roundville”) 1 sued Stephen M. and Frankie Sue Jones Necessity

seeking specific performance of the commercial earnest-

Vendors' failure to pay property taxes and money contract. Both parties moved for summary judgment, obtain a waiver of a right of first refusal and the district court granted the Joneses' motion and denied did not prevent purchasers from tendering Roundville's motion. Roundville appealed to this Court and performance under contract for sale of real we reversed and remanded, holding that a genuine issue property, and thus purchasers were not entitled to of material fact existed. See Roundville Partners, L.L.C. specific performance of contract, where contract v. Jones, No. 03–00–00724–CV, 2001 WL 838736, 2001 specified that vendors' obligations were due at Tex.App. LEXIS 4970 (Austin July 26, 2001) (not designated for publication) [hereinafter “Roundville I ”]. Following a

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

bench trial, the district court rendered judgment in favor of the Lot 1 included in contract two was not surveyed, the title Joneses and ordered that Roundville take nothing. On appeal, company would not issue a title commitment or title policy. Roundville claims that (1) there is legally and factually Additionally, Macs discovered that a partial conveyance of insufficient evidence to support the trial court's holding Lot 1 might jeopardize the property's status as a platted that Roundville was not entitled to specific performance; subdivision and cause the property's value to decrease (2) there is legally and factually insufficient evidence to significantly. The parties agreed to modify the property support several of the district court's findings of fact and description in contract two to encompass only Lot 4. conclusions of law, specifically its findings regarding the Although the amount of the property to be conveyed was Joneses' affirmative defenses; and (3) there is legally and reduced, there was no adjustment to the purchase price. factually insufficient evidence to support the district court's Consequently, at closing the Joneses received $560,000, an holding that Roundville is not entitled to attorney's fees. We amount that exceeded the fair market value of Lot 4, which will affirm the judgment of the district court. was approximately $68,000.

Because Roundville lacked sufficient cash to close contract two as originally agreed, the Joneses agreed to restructure FACTUAL AND PROCEDURAL BACKGROUND the financing for the $560,000 purchase price. As a result, In June 1997, Michael Macs, the president and sole Roundville paid the Joneses $331,537.17 in cash, rather than shareholder of Quintana, executed an earnest-money contract the $360,000 originally contemplated. Roundville executed with the Joneses, through their real estate agent, Bob Elder, a long-term note for $200,000 to the Joneses as originally for the sale of 22.3 acres of land. The property, a platted agreed and executed a second promissory note to the Joneses subdivision known as the Henderson Tract Subdivision, is for $6,862.83, payable on or before January 13, 1998. 5 Both located in Round Rock, Texas, and consists of five lots. Macs and Elder testified that the understanding of the parties The property included a single house that straddled lots 1 at the time contract two closed was that contract three would and 4. The parties negotiated a purchase price of $1,800,000 close within a couple of weeks, enabling Roundville to pay based on an average valuation of $1.83 per square foot, with the $6,862 contemporaneously with the closing of contract $360,000 to be paid in cash at closing and the balance of the three. purchase price to be financed by a long-term note payable to the Joneses (“contract one”). Prior to the closing date of Consistent with the changes made to contract two, the December 31,1997, Elder approached Macs with a request parties modified the property description in contract three to from the Joneses to restructure the deal into two separate encompass Lot 1 in its entirety, along with Lots 2, 3, and 5. contracts (“contract two” and “contract three”) to allow the Section nine of the contract required that the parties close the Joneses to take advantage of the tax deferral for the sale of sale on or before January 30, 1998. Further, in section twentytheir primary residence. Contract two is a residential earnest three, the parties agreed that “time is of the essence.” money contract and contract three is a commercial earnest- money contract. 2 The parties agreed to close the second Stegall had closing documents prepared on January 23, 1998, with an anticipated closing to be held on January 30, 1998.

contract on December 31, 1997. 3 The third contract was to Included in these documents was a HUD settlement statement close on or before January 30, 1998.

that showed the Joneses would need $15,000 at closing. Stegall testified that she was informed by the Joneses that Under contract two, the Joneses agreed to convey the they did not have the cash to close. Stegall told Elder, who property containing their residence, consisting of all of lot immediately called the Joneses and confirmed that they did 4 and approximately five acres of lot 1, for $560,000—

not have sufficient funds to close by January 30, 1998.

approximately $1.83 per square foot. 4 Macs was to pay $360,000 in cash and execute a long-term note to the Joneses Mr. Jones denied telling anyone that he lacked the funds to for $200,000. close, although in his earlier deposition testimony he stated that he could not remember whether he told anyone that he On December 31, 1997, the parties met at Alamo Title could not close on contract three because of a cash shortage. Company to close contract two. Carolyn Stegall, the closing He also admitted that he did not then possess the money agent, *76 informed Macs that because the portion of

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

necessary to close, but claimed he could have borrowed the closing, but the Joneses did not attend. At that time, Macs money from relatives. signed the deed of trust and accompanying real estate lien note. Another closing date was set for April 10, but that also Meanwhile, the due date on the $6,862 note from Roundville did not take place. Akin then scheduled a closing date for had passed. The Joneses told Elder they wanted payment on April 17, which was later delayed to April 20. This attempt to the note. Elder called Macs to inform him that the Joneses close contract three was also unsuccessful. were looking for payment on the second note. Macs expressed concern about giving more money to the Joneses before As a result of the failure to close contract three, Roundville contract three closed and wanted to tie the payment of filed suit against the Joneses in May 1998 to compel the the $6,862 note to the closing on contract three, either by Joneses to convey the remainder of the property as required crediting the note against the amount the Joneses owed at under contract three. Both parties moved for summary closing or by tendering the check to them at the closing. The judgment. Roundville moved for summary judgment on the Joneses refused this because they regarded the $6,862 note issue of specific performance. In support of their motion as a separate obligation under contract two, and unrelated for summary judgment, the Joneses claimed, among other to contract three. Mr. Jones testified that he viewed Macs's things, that Roundville had failed to tender performance attempt to *77 tie the payment of the note to the closing on and the contract had expired under its own terms. In June contract three as an attempt to “blackmail” him to close. 1999, the district court rendered judgment granting the Joneses' motion and denying Roundville's motion. Roundville The closing on contract three did not take place in January appealed to this Court, which reversed the trial court's 1998. Stegall, Elder, and Macs all testified that their summary judgment, finding that a genuine issue of material understanding of why contract three did not close in January fact existed concerning the Joneses' actions and whether they was that the Joneses needed more time because they lacked prevented Roundville from complying with the terms of the sufficient funds to close. The Joneses, however, testified that third contract. See Roundville I, No. 03–00–00724–CV, 2001 the reason contract three did not close was because they were WL 838736, 2001 Tex.App. LEXIS 4970. never told an exact date and time for the closing and they were never provided a closing statement showing how much Meanwhile, in May 1999, Roundville declared bankruptcy. money they needed to close. Roundville attempted to recover all monies conveyed to the Joneses under contract two that exceeded the fair market After the original closing date of January 30, 1998 passed, value of Lot 4, asserting that such amount was a fraudulent Macs, Elder, and Stegall all testified that they were under transfer under federal and Texas law. 6 See *78 11 U.S.C.A. the impression that the closing deadline would be extended. § 548(a)(1)(B)(i), (ii)(I) (West Supp.2003); Tex. Bus. & Elder asked Stegall to prepare an addendum to the purchase Com.Code Ann. § 24.006(a) (West 2002). After a bench trial, agreement extending the closing date. Stegall prepared the the bankruptcy court rejected Roundville's fraudulent-transfer extension and sent it to Elder, who then contacted the Joneses. argument. Roundville, however, did obtain a discharge of its Elder testified that he believed they were proceeding forward. obligation under the $200,000 note to the Joneses to the extent Both Elder and Macs signed the extension. The Joneses, that it exceeded the fair market value of Lot 4, apparently however, never signed the extension. because the Joneses did not file a proof of claim.

At some point after January 30, the Joneses hired Rick In June 2002, this case was tried to the court. After a bench Akins to collect the amount owed them on the $6,862 trial, the district court rendered judgment in favor of the note from Roundville. Meanwhile, both parties made several Joneses and against Roundville. It is from this judgment that subsequent attempts during the spring to close contract three. Roundville now appeals. Closing dates were set for February 27 and then again for March 3, but the parties did not consummate the sale on either of those dates. On March 20 by a letter to Akins, Roundville demanded that the Joneses close contract three DISCUSSION no later than March 27, 1998, at 5:00 p.m. On March 27, Standard of Review

Roundville notified Akin that the closing was set for that day [1] When the trial court acts as a fact finder, we review its at 4:00 p.m. Macs and Elder arrived at Stegall's office for the findings under the legal and factual sufficiency standards. In

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

re Doe, 19 S.W.3d 249, 253 (Tex.2000). When we review 704 (1953)). A decree of specific performance is not a matter legal sufficiency, we review the evidence in a light that tends of right even to enforce terms of a contract, but is “a matter to support the finding of the disputed facts and disregard all of grace” in the discretion of the court. 14 Powell on Real evidence and inferences to the contrary. Lee Lewis Const., Property § 81.04[1][c] (Michael Allan Wolf ed., 2000). Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex.2001). If more than a scintilla of evidence exists, it is legally sufficient. Id. More [3] [4] In Bell v. Rudd, the supreme court held, as a than a scintilla of evidence exists if the evidence furnishes fundamental matter, that before a grantee or obligee may some reasonable basis for differing conclusions by reasonable assert any rights under an escrow contract he must show minds about a vital fact's existence. Id. at 782–83. that he has complied with the conditions of the escrow, i.e., actually tendered performance, or has offered to perform In reviewing a factual sufficiency issue, we conduct a neutral and was prevented without fault of his own. 144 Tex. 491, review of all the evidence. Cain v. Bain, 709 S.W.2d 175, 176 191 S.W.2d 841, 844 (1946). In cases where the seller's and (Tex.1986). We reverse the ruling for factual insufficiency buyer's contract obligations are mutual and dependent, in of the evidence only if the ruling is so against the great that a deed is required to be delivered upon tender of the weight and preponderance of the evidence as to be manifestly purchase price, the purpose of a tender satisfies two purposes. erroneous or unjust. Id. We will not substitute our judgment First, a valid tender of the purchase price invokes the seller's for that of the trier of fact merely because we might reach a obligation to convey and places him in default if he fails to do different conclusion. The Cadle Co. v. Regency Homes, Inc., so. Second, the tender satisfies the fundamental prerequisite 21 S.W.3d 670, 674 (Tex.App.-Austin 2000, pet. denied). of specific performance—that the buyer show that he has done or offered to do, or is then ready and willing to do, all the essential and material acts which the contract requires Specific Performance of him. 7 Wilson v. Klein, 715 S.W.2d 814, 821 (Tex.App.-

In its first issue, Roundville claims that the evidence was Austin 1986, writ ref'd n.r.e.) (citing 4 Pomeroy's Equity legally and factually insufficient to support the trial court's Jurisprudence § 1407, p. 1050 (5th ed.1941); 17 Am.Jur.2d holding that it was not entitled to specific performance.

§§ 63, 64, pp. 91–92 (1973); annot., 79 A.L.R. 1240 (1932)).

Roundville first claims that it was entitled to specific performance based on the decision by this Court in Roundville [5] [6] [7] In Wilson, this Court contemplated under I, where we held that Roundville must show at trial that it what circumstances an actual tender is required or when was prevented from tendering performance by the Joneses.

a constructive tender will suffice. Id. In general, actual Roundville I, No. 03–00–00724–CV, 2001 WL 838736, 2001 tender is a prerequisite to obtaining the remedy of specific Tex.App. LEXIS 4970. Roundville claims that it established performance. However, when actual tender would have conclusively that the Joneses prevented it from tendering been a useless act, an idle ceremony, or wholly nugatory, performance by not performing several of their obligations constructive tender will suffice. Id. at 822. For example, when under contract three. Specifically, Roundville argues that the a seller has conveyed the property to a third person, actual failure of the Joneses to execute a warranty deed prevented tender by a buyer is unnecessary. Id. However, when the it from executing a real estate lien note. Further, Roundville contract specifies that “time is of the essence,” as this contract argues that the Joneses prevented a closing date from being does, there is a more particular rule that applies. Id. “In such set by causing all persons involved with the closing to believe cases, the buyer ‘must make an actual tender of the price and that they lacked money to close and wished to extend the demand of the deed’ within the time allowed by the contract.”

closing deadline.

Id. (quoting 4 Pomeroy, supra, at 1052). When time is of the essence in a contract, a party must perform or tender [2] As this Court discussed in Roundville I, specific performance in strict compliance with the provisions of the performance is an equitable remedy that rests in the discretion contract and within the time prescribed in order to be entitled of the court. Scott v. Sebree, 986 S.W.2d 364, 370 (Tex.App.-

to specific performance. Id. (citing Liedeker v. Grossman, 146 Austin 1999, pet. denied); Nash v. Conatser, 410 S.W.2d Tex. 308, 206 S.W.2d 232, 234–35 (1947)).

512, 519 (Tex.Civ.App.-Dallas 1966, no writ). This Court has previously acknowledged that this equitable remedy is Where one party claims that it was prevented from tendering frequently granted when a *79 valid contract to purchase actual performance in strict compliance within the prescribed real property is breached by the seller. Scott, 986 S.W.2d at time, as in this case, Ratcliffe v. Mahres is instructive. 122 370 (citing Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703,

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

S.W.2d 718, 721 (Tex.Civ.App.-El Paso 1938, writ ref'd). In Ratcliffe, the court of appeals considered a suit for specific The Joneses testified that the reason a closing was not performance on a contract to convey an undivided interest scheduled in January was because they were not provided in an oil well and certain oil leases. Id. The court noted with a closing statement indicating what they needed in order that the language of the contract, as well as the nature of to close. They also indicated that they were never told a time the transaction, indicated that time was of the essence. Id. or place when closing would occur. Mr. Jones testified that he The court then stated that for Ratcliffe to obtain specific never told anyone that he did not have enough cash to close. performance, he had to show that he had complied with He indicated that while he did not personally have sufficient the contract obligations, or that compliance was prevented funds, he had the ability to borrow what was needed from a by Mahres, attributing the rule *80 governing these family member. He claimed that he could not do so until he circumstances to Pomeroy's treatise, Equity Jurisprudence. was provided a closing statement showing him exactly how Id. at 721–22. After reviewing the evidence concerning much he needed. Mahres's conduct and noting that Ratcliffe had not produced evidence of facts sufficient to excuse his non-performance, It is clear that neither party involved made an explicit the court concluded that Ratcliffe was not entitled to specific request or demand that the contract close in January. The performance. Id. at 722. Joneses did not schedule a closing, nor did Roundville. The Joneses allowed the closing date to come and go without any [8] It is undisputed that Roundville did not actually tender affirmative action on their part to ensure that contract three performance on this contract within the time specified— closed by January 30. They claimed that they were waiting January 30, 1998. Because Roundville conceded that it did for *81 the title company to provide them with a closing not actually tender performance, it had the burden to prove statement and for notification of when and where the closing at trial that it was prevented from tendering performance by would take place. The Joneses were not in default under the the actions of the Joneses. In Roundville I, we held that a contract prior to or on January 30, at which time the contract genuine issue of material fact existed as to whether or not the expired by its own terms. We cannot say that the inaction Joneses prevented Roundville from tendering performance. on the part of the Joneses rises to the level of affirmatively Roundville I, No. 03–00–00724–CV, 2001 WL 838736 at preventing Roundville from tendering performance. *9–10, 2001 Tex.App. LEXIS 4970 at *29–31. Roundville asserts that it has satisfied the prerequisite of tender because, [9] Roundville claims that it was prevented from executing at all times it has been ready, willing, and able to tender a real estate lien note because of the failure of the Joneses performance on contract three but was prevented from doing to execute a deed conveying the property. 10 However, so by the actions of the Joneses. Roundville claims that the Roundville did execute a lien note without a deed on March Joneses failed to fulfill their obligations in the following 27, 1998. On March 20, Roundville demanded that the ways: (1) failure to execute a warranty deed and prepare other Joneses close contract three by March 27 at 5:00 p.m. necessary documents; (2) failure to obtain a right of first Roundville set the closing for March 27 at 4:00 p.m., refusal from GTE; 8 and (3) failure to pay property taxes. notifying the Joneses through Akin. Roundville then went to the title company and executed all the documents necessary Macs testified that all Roundville needed to do to close was for closing, even though the Joneses were not present and show up and sign a real estate lien note and deed of trust. did not furnish the documents called for in contract three, He said that when he stopped by the title company in late specifically the deed conveying the property. There is no January there was a draft of a note and deed, but they were evidence that Roundville could not have done the same incomplete, missing dates and some addresses. Stegall told thing on or before January 30, 1998. The Joneses' actions him that they would be filled in at the closing, which was or inactions did not prevent Roundville from tendering not yet scheduled. Macs testified that he was in constant performance in March. There is nothing in the record contact with Stegall to arrange for a closing date, yet a closing that explains why Roundville could not have executed the was never scheduled in January. However, a closing was necessary documents to close in January. scheduled at least six times after the January 30 closing date specified in the contract. Further, while Macs was in contact The evidence surrounding the events leading up to the with the title company, he never contacted the Joneses to offer attempted closing of contract three is not disputed. Roundville or demand to close on or before January 30. 9 did not set a closing or demand that one be set on or before

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

January 30. Neither did the Joneses. Neither party went to *82 Breach of Contract

the title company to tender performance of their obligations [10] In its fifth issue, Roundville argues that the trial court under contract three by the January 30 deadline, when the erred in its failure to find that the Joneses breached contract contract expired by its own terms. Roundville claims that it three. The elements of a breach of contract claim are: (1)

assumed, by the parties' actions that the contract had been the existence of a valid contract; (2) performance or tendered extended, but in fact the Joneses never signed the extension performance by the plaintiff; (3) breach of the contract by the agreement prepared by Elder. The only dispute is whether the defendant; and (4) damages to the plaintiff resulting from the actions of the Joneses prevented Roundville from tendering breach. National W. Life Ins. Co. v. Rowe, 86 S.W.3d 285, 297 performance. Roundville has not established that the Joneses (Tex.App.-Austin 2002, pet. filed). Because we have held that prevented it from actual tender of performance within the time Roundville did not tender performance and its tender was not specified.

prevented by the Joneses, its breach of contract claims also fails. We overrule issue five.

The acts Roundville complains of as preventing it from tendering performance under contract three do not establish that it was in fact prevented from performing its obligations. Attorney's Fees There were no contrary facts for the district court to consider. In its sixth issue, Roundville claims it conclusively Rather, the dispute is in the conclusion that the actions established its entitlement to attorney's fees. However, in complained of did or did not prevent Roundville from order to be entitled to attorney's fees, a party must prevail tendering performance. Because there is only one version of on its suit based on a written contract. See Tex. Civ. the facts on the pivotal point of whether the Joneses prevented Prac. & Rem.Code Ann. § 38.001(8) (West 1997). Because Roundville from tendering performance, we cannot say that Roundville has not prevailed on any of its claims, it is not the district court's judgment is clearly wrong or unjust. entitled to attorney's fees. Issue six is overruled. These convoluted negotiations appear to have produced an inequitable result, but under the facts presented, Roundville is not entitled to the remedy of specific performance. We hold CONCLUSION

that the evidence is legally and factually sufficient to support the district court's findings and conclusions that Roundville Having overruled Roundville's issues, we affirm the judgment is not entitled to specific performance. Issue one is overruled. of the trial court. Because we hold that the trial court did not err in holding that Roundville was not entitled to specific performance, it is unnecessary to reach issues two, three, and four. All Citations

118 S.W.3d 73

Footnotes 1 Quintana Development Corporation owns a seventy-percent interest in Roundville Partners, L.L.C. and serves as Roundville's manager.

2 Contract two and contract three do not contain any references to each other. 3 The Joneses needed to close contract two on December 31, 1997, because they had planned to use the proceeds of the sale in a simultaneous closing on a new house.

4 It was the intent of the parties that contract two would convey $560,000 worth of land at $1.83 per square foot, maintaining the price per square foot established in contract one.

5 In order to facilitate the closing in light of the cash shortage, Elder agreed to take his commission in the form of two notes —one from the Joneses and one from Roundville in the amount of $21,600. This note, coupled with the $6,862.83 note to the Joneses, covered the cash shortage of $28,462.83.

6 A transfer may be fraudulent if a debtor made the transfer without receiving a reasonably equivalent value in exchange, and the debtor was insolvent or became insolvent because of the transaction. 11 U.S.C.A. § 548(a)(1)(B)(i), (ii)(I) (West Supp.2003); Tex. Bus. & Com.Code Ann. § 24.006(a) (West 2002).

7 The term “tender” means to notify the other party that one intends to perform one's side of the bargain immediately or at a specific time and place and to demand that the other party do likewise. Perry v. Little, 419 S.W.2d 198, 200–01 (Tex.1967).

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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)

8 GTE had a lease on the property to be conveyed under contract three that included a right of first refusal on any offer to purchase the property. The Joneses were required to obtain a waiver of this right at closing.

9 Macs also testified that he was told that there would not be a closing in January because the Joneses did not have sufficient funds to close; however, this information was provided by Stegall or Elder, not the Joneses.

10 Roundville also claims that the Joneses failure to pay property taxes and obtain a right of first refusal from GTE prevented it from tendering performance. This argument is without merit. The contract specified that these items would be furnished at closing. Since this contract has not yet closed, performance is not yet due.

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

A temporary injunction's purpose is to preserve the status quo of the litigation's subject matter KeyCite Yellow Flag - Negative Treatment pending a trial on the merits.

Distinguished by Olley v. HVM, L.L.C., Tex.App.-Hous. (14 Dist.), October 14, 2014 Cases that cite this headnote 222 S.W.3d 921

Court of Appeals of Texas, [2] Injunction Tyler. Preservation of status quo In deciding whether to grant a temporary RUS–ANN DEVELOPMENT, INC., Appellant, injunction, the only question before the trial v.

court is whether the applicant is entitled to ECGC, INC., Appellee.

preservation of the status quo pending trial on the merits.

No. 12–06–00324–CV. | April 30, 2007. | Rehearing Overruled May 30, 2007. Cases that cite this headnote

Synopsis Background: Commercial lessee of golf course brought [3] Injunction action seeking a temporary injunction to prevent lessor from Grounds in general; multiple factors evicting it under the terms of the lease, and then amended its To obtain a temporary injunction, an applicant suit to seek specific enforcement of an option agreement. The must plead and prove three specific elements: 173rd Judicial District Court, Henderson County, Dan Moore, (1) the cause of action against the defendant; (2) J., entered the temporary injunction. Lessor appealed. a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim.

Holdings: The Court of Appeals, James T. Worthen, C.J., 3 Cases that cite this headnote held that:

[1] lessee did not breach its lease prior to timely exercise of [4] Appeal and Error its option to purchase leased property; Injunction Appeal and Error

[2] fact that lessee did not tender payment on the option Refusing injunction contract did not preclude it from demonstrating that it would Injunction

suffer probable injury if it did not obtain a temporary Discretionary Nature of Remedy injunction; and The decision to grant or deny a temporary writ of injunction lies within the sound discretion of [3] lessee was able to demonstrate a probable right of recovery the trial court, and the court's grant or denial is on its cause of action for specific performance of the option subject to reversal only for a clear abuse of that contract.

discretion.

Cases that cite this headnote Affirmed.

[5] Appeal and Error

Abuse of discretion

West Headnotes (24)

The trial court abuses its discretion when it misapplies the law to the established facts or [1] Injunction when the evidence does not reasonably support Preservation of status quo the conclusion that the applicant has a probable

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

right of recovery; the trial court does not abuse its discretion if some evidence reasonably supports [10] Landlord and Tenant its decision. Purchase under option When a tenant under a lease containing an Cases that cite this headnote option to purchase exercises the option, a binding bilateral contract is formed, and the relation of [6] Appeal and Error landlord and tenant ceases and that of vendor and Findings of fact and conclusions of law purchaser arises.

Appeal and Error Cases that cite this headnote Sufficiency of Evidence in Support When, on appeal from a trial court's decision to [11] Landlord and Tenant deny or grant a temporary injunction, specific Waiver of notice

findings of fact and conclusions of law are filed and a reporter's record is before the appellate Commercial lessee extended term of lease for court, the findings will be sustained if there is golf course notwithstanding lessee's alleged evidence to support them, and the appellate court failure to notify lessor in writing, as required by will review the legal conclusions drawn from the lease, of lessee's intent to extend the lease, where facts found to determine their correctness. lessee increased its monthly rental payment from $7500 to $8500 after original term of 2 Cases that cite this headnote lease ended, which lessee was permitted to do, and lessor accepted those increased monthly payments.

[7] Landlord and Tenant Existence of relation of landlord and tenant Cases that cite this headnote A forcible entry and detainer action is dependent on proof of a landlord-tenant relationship.

[12] Landlord and Tenant 1 Cases that cite this headnote Acceptance of rent A lessor waives its right to declare a lease terminated after its primary term if it continues [8] Forcible Entry and Detainer to accept monthly rental payments.

Justices of the peace

Jurisdiction of forcible entry and detainer actions Cases that cite this headnote is expressly given to the justice court of the precinct where the subject property is located.

[13] Landlord and Tenant Cases that cite this headnote Improvements Commercial lessee that allegedly failed to make required improvements to leased property, a [9] Justices of the Peace golf course, did not breach its lease in manner Forcible entry and detainer, and recovery of permitting lessor to terminate the lease prior to possession by landlord lessee's exercise of option to purchase the leased Landlord and Tenant property; addendum that included the allegedly Jurisdiction breached terms was entitled “Promissory Note”

Without a landlord-tenant relationship, a justice and was signed more than two months after court has no jurisdiction to enter a judgment in lease was signed, addendum was not signed on a forcible entry and detainer action and may be behalf of lessee, and lease set forth no deadline enjoined by a district court from doing so. by which lessee was to make the required improvements.

1 Cases that cite this headnote

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

Contracts Relating to Real Property Cases that cite this headnote Specific Performance

Contracts Relating to Personal Property [14] Landlord and Tenant Specific performance is more readily available Nature of the contract as a remedy for the sale of real estate than for The rights and duties of a lessor and lessee are the sale of personal property; this is because determined by the lease and are contractual. damages are generally believed to be inadequate in connection with real property.

Cases that cite this headnote Cases that cite this headnote [15] Landlord and Tenant Questions of law or fact [19] Specific Performance Whether a lease contract has been breached is a Necessity question of law. Where a defendant has openly and avowedly refused to perform his part of the contract or Cases that cite this headnote declared his intention not to perform it, the plaintiff need not make tender of payment of the [16] Injunction consideration before bringing suit for specific Landlord and tenant performance.

Specific Performance 2 Cases that cite this headnote Necessity

Commercial lessee was not required to tender [20] Specific Performance payment on its option contract for purchase of Nature and grounds of duty of plaintiff leased property and close sale within 90 days of exercising option in order to establish probable Where tender of performance is excused, the injury based on lessor's refusal to proceed with party seeking specific enforcement of a contract sale, in support of lessee's request for temporary must plead and prove that he is ready, willing, injunction preventing lessor from proceeding and able to perform. with forcible entry and detainer action to recover 2 Cases that cite this headnote leased golf course, thus giving lessee opportunity to show, at final hearing, that it was entitled to specific performance of option contract, where [21] Injunction lessor's refusal to proceed with sale was clear, Landlord and tenant and lessee was ready, willing, and able to Commercial lessee was able to demonstrate perform its duties under the option contract. a probable right of recovery on its cause of action for specific performance of an option Cases that cite this headnote contract to purchase leased property, a golf course, as required to allow lessee to obtain [17] Injunction a temporary injunction preventing lessor from Real property in general filing a forcible entry and detainer action, despite The potential loss of rights in real property is a lessor's contention that the option contract lacked probable, imminent, and irreparable injury that essential terms, defeating any right to specific qualifies a party for a temporary injunction. performance; the option contract contained the price, the property description, and the 3 Cases that cite this headnote seller's signature, and other material terms were determinable as they appeared in the parties' lease agreement.

[18] Specific Performance

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

4 Cases that cite this headnote Allen B. Boswell, Deborah J. Race, for appellee.

Panel consisted of WORTHEN, C.J., GRIFFITH, J., and [22] Frauds, Statute Of HOYLE, J.

Necessity that writing show all the terms Frauds, Statute Of Sufficiency OPINION Specific Performance Contracts relating to real property JAMES T. WORTHEN, Chief Justice.

Before a court will decree the specific Rus–Ann Development, Inc. appeals a temporary injunction performance of a contract for the sale of land, granted by the trial court enjoining it from proceeding with a or entertain a suit for damages for the breach forcible entry and detainer action to recover a golf course it thereof, the written agreement or memorandum had leased to ECGC, Inc. In three issues, Rus–Ann contends required by statute must contain the essential the trial court abused its discretion in granting the temporary terms of a contract, expressed with such certainty injunction because ECGC had not timely exercised the option and clarity that it may be understood without to purchase that was part of the lease, ECGC had failed recourse to parol evidence. to comply with essential terms of the option contract, and specific performance was not available to ECGC as a remedy.

5 Cases that cite this headnote We affirm.

[23] Frauds, Statute Of Description of Lands

BACKGROUND

Frauds, Statute Of Statement of price ECGC leased the Echo Creek Country Club (the “golf Frauds, Statute Of course”) from Rus–Ann for one year beginning October Agreements relating to land 1, 2004. ECGC exercised an option to continue the lease through September 30, 2006. On December 6, 2005, Homer The essential elements required, in writing, for A. Lambert, President of Rus–Ann Development Company, the sale of real property are the price, the property sent ECGC a letter declaring that it was in default under the description, and the seller's signature.

terms of the lease. On December 14, ECGC sent a letter in Cases that cite this headnote response stating that it was not in default but asking for more information on the alleged defaults. On December 21, 2005, ECGC filed suit seeking a temporary injunction to prevent [24] Specific Performance Rus–Ann from evicting it under the lease. Correspondence Completeness

flowed back and forth between Rus–Ann and ECGC over The failure of a real estate sales contract to the next several months regarding the alleged defaults under provide the fundamental provisions of a deed the terms of the lease. On March 21, 2006, Rus–Ann sent of trust, or terms relating to the proration of ECGC a letter declaring that the lease was terminated. The taxes, or the place of closing, does not render it next day, ECGC sent Rus–Ann a letter declaring that it was unenforceable by specific performance. exercising its option to purchase the golf course. On April 7, ECGC amended its suit for temporary injunction, stating that Cases that cite this headnote it was “prepared and willing to perform in accordance with the [option] agreement.” The trial court held two hearings on ECGC's temporary injunction. After the second hearing, the court said it would enter an order granting the temporary Attorneys and Law Firms injunction if ECGC tendered $400,000 into the registry of the *925 court along with a $1,000,000 promissory note *924 George S. Henry, for appellant.

made payable to Rus–Ann Development to be paid over thirty

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

years at six percent interest. These were the terms specified in law, any party may file a request for specified additional or the option to purchase. Following ECGC's compliance with amended findings of fact or conclusions of law. TEX.R. CIV. these terms, the trial court entered an order for a temporary P. 298; Gentry v. Squires Constr., Inc., 188 S.W.3d 396, 408 injunction enjoining Rus–Ann from any attempt to evict (Tex.App.-Dallas 2006, no pet.) ECGC from the golf course pending a trial on the merits in the case.

CAUSE OF ACTION

Rus–Ann requested findings of fact and conclusions of law, which were timely filed by the trial court. Rus–Ann appealed In its first issue, Rus–Ann contends the trial court abused its the granting of the temporary injunction to this court. discretion in granting a temporary injunction enjoining it from proceeding with its forcible entry and detainer action because there was no evidence or insufficient evidence that ECGC had STANDARD OF REVIEW timely exercised its option to purchase the golf course. In the absence of a timely exercise of the option, there can be no [1] [2] [3] A temporary injunction's purpose is to preserve cause of action for specific performance. the status quo of the litigation's subject matter pending a trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, [7] [8] [9] [10] A forcible entry and detainer action is 204 (Tex.2002). The only question before the trial court is dependent on proof of a landlord-tenant relationship. Dass, whether the applicant is entitled to preservation of the status Inc. v. Smith, 206 S.W.3d 197, 200 (Tex.App.-Dallas 2006, quo pending trial on the merits. Walling v. Metcalfe, 863 no pet.). Jurisdiction of forcible entry and detainer actions is S.W.2d 56, 58 (Tex.1993). To obtain a temporary injunction, expressly given to the justice court of the precinct where the the applicant must plead and prove three specific elements: property is located. Aguilar v. Weber, 72 S.W.3d 729, 731 1) the cause of action against the defendant; 2) a probable (Tex.App.-Waco 2002, no pet.). Without a landlord-tenant right to the relief sought; and 3) a probable, imminent, and relationship, *926 a justice court has no jurisdiction to enter irreparable injury in the interim. Butnaru, 84 S.W.3d at 204; a judgment and may be enjoined by a district court from doing Walling, 863 S.W.2d at 57. so. See id. at 732. When a tenant under a lease containing an option to purchase exercises the option, a binding bilateral [4] [5] The decision to grant or deny a temporary writ of contract is formed. Pitman v. Sanditen, 626 S.W.2d 496, 498 injunction lies within the sound discretion of the trial court, (Tex.1981). The relation of landlord and tenant ceases and and the court's grant or denial is subject to reversal only for that of vendor and purchaser arises. Id. Therefore, if ECGC a clear abuse of that discretion. Butnaru, 84 S.W.3d at 204. timely exercised its option to purchase, then the trial court The trial court abuses its discretion when it misapplies the properly enjoined Rus–Ann from continuing its forcible entry law to the “established facts or when the evidence does not and detainer action in the justice court. reasonably support the conclusion that the applicant has a probable right of recovery.” Khaledi v. H.K. Global Trading, [11] [12] Rus–Ann first contends that the contract Ltd., 126 S.W.3d 273, 280 (Tex.App.-San Antonio 2003, terminated because ECGC failed to notify it in writing, as no pet.) (citing State v. Southwestern Bell Tel. Co., 526 required by the lease, that it was extending the term of the S.W.2d 526, 528 (Tex.1975)). The trial court does not abuse lease past September 30, 2005. Evidence before the trial its discretion if some evidence reasonably supports the trial court showed that ECGC could continue the lease following court's decision. Butnaru, 84 S.W.3d at 211. September 30, 2005 by increasing its monthly rental payment from $7,500 to $8,500. It did so. Rus–Ann accepted these [6] When, as here, specific findings of fact and conclusions increased monthly payments. A lessor waives its right to of law are filed and a reporter's record is before the appellate declare a lease terminated after its primary term if it continues court, the findings will be sustained if there is evidence to to accept monthly rental payments. Nardis Sportswear v. support them, and the appellate court will review the legal Simmons, 147 Tex. 608, 614, 218 S.W.2d 451, 454 (1949). conclusions drawn from the facts found to determine their correctness. TMC Worldwide, L.P. v. Gray, 178 S.W.3d 29, [13] Rus–Ann also contends that it terminated the lease 36 (Tex.App.-Houston [1st Dist.] 2005, no pet.). After the by letter dated March 21, 2006, due to alleged breaches by trial court files its original findings of fact and conclusions of ECGC. Specifically, it complains that ECGC failed to install

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

a new entry gate, replace a shed, and install new carpet in the clubhouse as required by an addendum to the lease. On [17] [18] [19] In Texas, the potential loss of rights in March 22, 2006, ECGC sent Rus–Ann a letter declaring its real property is a probable, imminent, and irreparable injury intent to exercise its option to purchase the property. The trial that qualifies a party for a temporary injunction. See Franklin court made a finding that ECGC had exercised its option to Savs. Ass'n v. Reese, 756 S.W.2d 14, 15–16 (Tex.App.-Austin purchase. 1988, no writ) (op. on reh'g). It is well understood that specific performance is more readily available as a remedy for the [14] [15] The rights and duties of the lessor and lessee sale of real estate than for the sale of personal property. Scott are determined by the lease and are contractual. Exxon Corp. v. Sebree, 986 S.W.2d 364, 369 (Tex.App.-Austin 1999, pet. v. Pluff, 94 S.W.3d 22, 29 (Tex. App.–Tyler 2002, pet. denied). This is because damages are generally believed to denied) (op. on reh'g). Whether a lease contract has been be inadequate in connection with real property. Id. at 370. breached is a question of law. See id.; see also Jack v. It is thoroughly settled that where a defendant has openly State, 694 S.W.2d 391, 398 (Tex.App.-San Antonio 1985, and avowedly refused to perform his part of the contract or writ ref'd n.r.e.). Therefore, the issue of whether ECGC had declared his intention not to perform it, the plaintiff need not breached the contract in a manner that allowed Rus–Ann make tender of payment of the consideration before bringing to terminate the lease before ECGC exercised its option to suit. Burford v. Pounders, 145 Tex. 460, 466, 199 S.W.2d purchase was a question of law for the court to decide. The 141, 144 (1947). addendum including the allegedly breached terms is entitled “Promissory Note” and was signed more than two months [20] Beginning with its December 6, 2005 letter and after the lease was signed. Lambert signed for Rus–Ann, subsequent correspondence, Rus–Ann left no doubt that it but no one signed for ECGC. The lease does not impose a was refusing any attempt by ECGC to proceed with the deadline for accomplishing the three tasks. The court heard purchase of the golf course. Where tender of performance evidence from officers of both Rus–Ann and ECGC, who is excused, the party must plead and prove that he is gave conflicting testimony about whether the lease had been ready, willing, and able to perform. 17090 Parkway, Ltd. v. breached. The trial court does not abuse its discretion if McDavid, 80 S.W.3d 252, 256 (Tex.App.-Dallas 2002, pet. there is some evidence reasonably supporting its decision. denied). ECGC pleaded that it was “prepared and willing to Butnaru, 84 S.W.3d at 211; see also Advance Components, perform in accordance with the Agreement between Plaintiff Inc. v. Goodstein, 608 S.W.2d 737, 739 (Tex.Civ.App.-Dallas and Defendant.” During the two hearings on the temporary 1980 writ ref'd n.r.e.) (a departure from the contract terms, injunction, ECGC presented testimony that it was ready to not amounting to a material breach of the contract, will tender the $400,000 in cash and the $1,000,000 promissory not prevent the plaintiff from having the remedy of specific note into the registry of the court to close the purchase of performance). Rus–Ann's first issue is overruled. the golf course. Rus–Ann complains that ECGC changed its manner of financing for the $400,000 between the first and second hearings on the temporary injunction. This is irrelevant. When the trial court required tender into the PROBABLE INJURY

registry of the court, ECGC did so. The record shows [16] In its second issue, Rus–Ann contends that the that ECGC was not required to tender payment of the trial court abused its discretion in granting the temporary consideration before bringing suit due to Rus–Ann's refusal to injunction because there was no evidence or insufficient perform and that there is sufficient evidence that ECGC was evidence that ECGC had complied with the material terms ready, willing, and able to perform its duties under the terms of the contract and therefore was entitled to specific of the option contract. Rus–Ann's second issue is overruled. performance. Rus–Ann contends that ECGC was required to close the sale within ninety days of the date in which it exercised its *927 option to purchase the golf course. ECGC PROBABLE RIGHT OF RECOVERY contends that it is entitled to a temporary injunction and is allowed to show at the final hearing that it is entitled to [21] In its third issue, Rus–Ann contends that the trial specific performance even though it did not tender payment court abused its discretion in granting a temporary injunction within ninety days as required by the option to purchase. We because the option contract was not sufficiently clear and agree. definite for enforcement by specific performance. It argues

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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)

[24] Rus–Ann also contends that because the deed of trust that essential terms are missing, eliminating ECGC's right to clause stating whether the note is assumable or due on specific performance.

sale is not included in the contract, it is unenforceable by specific performance. We disagree. The failure of a real [22] [23] Before a court will decree the specific estate sales contract to provide the fundamental provisions performance of a contract for the sale of land, or entertain a of a deed of trust does not render it unenforceable by suit for damages for the breach thereof, the written agreement specific performance. Smith v. Hues, 540 S.W.2d 485, 492 or memorandum required by statute must contain the essential (Tex.Civ.App.Houston [14th Dist.] 1976, writ ref'd n.r.e.).

terms of a contract, expressed with such certainty and clarity Rus–Ann further complains that the option contract does not that it may be understood without recourse to parol evidence.

include terms relating to proration of taxes or the place of Wilson v. Fisher, 144 Tex. 53, 56, 188 S.W.2d 150, 152 closing. Again, failure to include these terms in the contract (1945); see also Johnson v. Snell, 504 S.W.2d 397, 398 (Tex.1973). (“Specific performance will be decreed only for the sale of real property does not render it unenforceable by specific performance. See id. Finally, Rus–Ann contends if the essential terms of the contract are expressed with that the option to purchase does not include whether ECGC reasonable certainty.”) The essential elements required, in had a right to the partial release of lots that it sold on the golf writing, for the sale of real property are the price, the property course during the thirty years. That matter was covered in the description, and the seller's signature. See *928 Lynx lease. Therefore, it is a term that can be determined by the trial Exploration and Prod. Co. v. 4–Sight Operating Co., 891 court at the final hearing. See Frost Nat'l Bank, 165 S.W.3d S.W.2d 785, 788 (Tex.App.-Texarkana 1995, writ denied).

at 312–13. We hold that the contract contained the essential Those three essential elements are in the lease with option to purchase in the instant case. terms for a decree of specific performance and establishing a probable right to the relief sought. Rus–Ann's third issue is Rus–Ann contends that the only terms of the seller financing overruled. included in the option to purchase contract were the term of thirty years and the interest rate of six percent. It says that the other terms of the seller financing such as how, when, DISPOSITION where, how much, and to whom payments were to be made were not included. However, these terms were part of the Having overruled Rus–Ann's three issues, we affirm the trial provisions of the lease agreement. The court can look at both court's order granting a temporary injunction commanding the option to purchase and the lease in determining the terms Rus–Ann to refrain from prosecuting an action to evict ECGC of a contract to be enforced by specific performance. See from the property known as Echo Creek Country Club. Frost Nat'l Bank v. L & F Distributors, Ltd., 165 S.W.3d 310, 312–13 (Tex.2005).

All Citations

222 S.W.3d 921

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

[4] lost profits were not established with reasonable certainty.

KeyCite Yellow Flag - Negative Treatment Distinguished by Barton v. Fashion Glass and Mirror, Ltd., Tex.App.- Affirmed as modified. Hous. (14 Dist.), July 20, 2010

255 S.W.3d 690

Court of Appeals of Texas, West Headnotes (36)

Amarillo.

SOUTH PLAINS SWITCHING, LTD. CO. and [1] Set–Off and Counterclaim South Plains Lamesa Railroad, L.L.C., Appellants Effect of failure to assert or claim;

v. compulsory counterclaim BNSF RAILWAY COMPANY f/k/a The Burlington A counterclaim is a “compulsory counterclaim” Northern and Santa Fe Railway Company, Appellee. if: (1) it arises out of the transaction or occurrence that gives rise to the opposing party's No. 07–06–0165–CV. | April 17, 2008. claim; (2) it is mature and owned by the | Rehearing Overruled May 19, 2008. counterclaimant; (3) it is against an opposing party in the same capacity; (4) it does not require Synopsis third parties who cannot be brought into the suit; Background: Two shortline railroads with common (5) it is within the court's jurisdiction; and (6) ownership, as buyers of rail lines, brought action against it is not pending elsewhere. Vernon's Ann.Texas Class I railroad, as seller, for breach of asset sale agreement, Rules Civ.Proc., Rule 97(a). breach of duty of good faith and fair dealing with consequent exemplary damages, specific performance, and mandatory 1 Cases that cite this headnote injunctive relief. The 72nd District Court, Lubbock County, Ruben Reyes, J., granted partial summary judgment to [2] Set–Off and Counterclaim defendant, and at conclusion of evidence at trial granted Effect of failure to assert or claim;

directed verdict to defendant on claim of breach of duty compulsory counterclaim

of good faith and fair dealing, and after jury answered eight questions with findings of breach of contract, granted If a claim meets the elements of a compulsory judgment notwithstanding the verdict (JNOV) to defendant as counterclaim, it must be asserted in the initial to three jury findings, denied all of one plaintiff's equitable action and cannot be later raised. Vernon's requests and most of other plaintiff's equitable requests, and Ann.Texas Rules Civ.Proc., Rule 97(a). awarded attorney fees to one plaintiff. Plaintiffs appealed and Cases that cite this headnote defendant cross-appealed.

[3] Set–Off and Counterclaim Effect of failure to assert or claim;

Holdings: The Court of Appeals, John T. Boyd, J. (Retired), compulsory counterclaim

held that:

Under the transactional approach for [1] some claims asserted by plaintiffs had been compulsory determining whether compulsory counterclaim counterclaims in earlier action, though plaintiffs had non- rule is applicable in a given case, weight should suited those counterclaims in earlier action; be given to such considerations as whether facts are related in time, space, origin, or motivation, [2] defendant did not have duty of good faith and fair dealing; whether they form a convenient trial unit, and whether their treatment as a trial unit conforms to [3] plaintiffs were not entitled to specific performance or parties' expectations or business understanding mandatory injunction; and or usage. Vernon's Ann.Texas Rules Civ.Proc., Rule 97(a).

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

between shortline railroad and Class I railroad, Cases that cite this headnote in which action shortline railroad had asserted that pursuant to asset sale agreement, quitclaim [4] Set–Off and Counterclaim deed was prepared that purportedly assigned Effect of failure to assert or claim; to shortline railroad certain leases and rental compulsory counterclaim income, and had asserted that it was damaged because Class I railroad had failed to properly The “same transaction or occurrence”

assign those leases and rental income from requirement, for a compulsory counterclaim, is them. Vernon's Ann.Texas Rules Civ.Proc., Rule broadly construed. Vernon's Ann.Texas Rules 97(a).

Civ.Proc., Rule 97(a).

Cases that cite this headnote Cases that cite this headnote

[8] Judgment

[5] Set–Off and Counterclaim Voluntary dismissal or nonsuit in general Effect of failure to assert or claim;

compulsory counterclaim Judgment Matters for defense in former action as Where there is a legal relationship such as under cause of action in second a lease or contract, all the claims that arise from that relationship will arise from the same Judgment subject matter and be subject to the application What constitutes of the compulsory counterclaim rule in a proper Shortline railroad was precluded, under case. Vernon's Ann.Texas Rules Civ.Proc., Rule compulsory counterclaim rule, from bringing 97(a). claim that Class I railroad, which had sold rail lines to shortline railroad pursuant to asset 3 Cases that cite this headnote sale agreement, breached the agreement by failing to allow shortline railroad to service [6] Set–Off and Counterclaim customers along certain tracks which had been Effect of failure to assert or claim; included in quitclaim deed, where in earlier compulsory counterclaim action between those parties, both parties had asserted claims involving those tracks, i.e., Class Where a defendant's claim to affirmative relief I railroad had sought declaration that asset asserts a theory distinct from and independent of sale agreement did not include those tracks the issues raised in a plaintiff's claim, it is not because of mutual mistake, and shortline railroad a compulsory counterclaim. Vernon's Ann.Texas had counterclaimed that Class I railroad had Rules Civ.Proc., Rule 97(a).

breached the agreement by continuing to serve 2 Cases that cite this headnote certain feeders and tracks, but shortline railroad had non-suited the counterclaim when it had received adverse ruling on its damages; same [7] Judgment subject matter was involved in earlier and Matters for defense in former action as subsequent actions. Vernon's Ann.Texas Rules cause of action in second Civ.Proc., Rule 97(a).

Under compulsory counterclaim rule, shortline railroad was precluded, in subsequent action, Cases that cite this headnote from bringing claims that Class I railroad, which had sold rail lines to shortline railroad pursuant [9] Judgment

to asset sale agreement, failed to appropriately Voluntary dismissal or nonsuit in general deal with shortline railroad on certain real Judgment

estate claims relating to leases, where those same leases had been at issue in earlier action

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Matters for defense in former action as receiving unfavorable ruling on its damages cause of action in second evidence; claim in subsequent action was Judgment asserted in language identical to that used for What constitutes non-suited counterclaim in earlier action, and claim in subsequent action arose out of the same Under compulsory counterclaim rule, shortline agreement in dispute in earlier action. Vernon's railroad was precluded, in subsequent action, Ann.Texas Rules Civ.Proc., Rule 97(a).

from bringing damages claim asserting that Class I railroad, which had sold rail lines to shortline Cases that cite this headnote railroad pursuant to asset sale agreement in which Class I railroad had reserved the right to set through routes and rates for customers, [11] Judgment unreasonably withheld consent to request for Nature of Action or Other Proceeding surcharge on traffic, where in earlier action, both Judgment parties had asserted claims regarding request Matters for defense in former action as for surcharge and refusal to consent, i.e., Class cause of action in second I railroad had sought declaratory relief and Under compulsory counterclaim rule, shortline shortline railroad had sought damages for refusal railroad was precluded, in subsequent action, to consent but had non-suited its surcharge from bringing claim asserting that Class I counterclaim when its damages testimony was railroad, which had sold rail lines to shortline excluded; controversy in subsequent action arose railroad pursuant to asset sale agreement, out of same subject matter as that involved breached the agreement by paying it less in earlier action. Vernon's Ann.Texas Rules than that to which it was entitled under Civ.Proc., Rule 97(a). shortline railroad's interpretation of the meaning of “billing” for purposes of agreement's Cases that cite this headnote division-of-revenue provision, where in earlier action, both parties had disputed the meaning [10] Judgment of “billing” for purposes of division-of-

Voluntary dismissal or nonsuit in general revenue provision, and Class I railroad had Judgment received a favorable declaratory judgment as Matters for defense in former action as to its interpretation. Vernon's Ann.Texas Rules cause of action in second Civ.Proc., Rule 97(a). Shortline railroad was precluded, under Cases that cite this headnote compulsory counterclaim rule, from bringing claim that Class I railroad, which had sold rail lines to shortline railroad pursuant to asset [12] Trial sale agreement, breached the agreement by Insufficiency to support other verdict; failing to recognize shortline railroad's right to conclusive evidence dispatch trains on a certain track, where in earlier A plaintiff is entitled to a directed verdict when action between those parties, both parties had reasonable minds can draw only one conclusion asserted claims concerning operations on that from the evidence. track, i.e., Class I railroad had claimed that under the agreement it retained all rights to Cases that cite this headnote access and use the track and asked the court to so construe the agreement while shortline [13] Appeal and Error railroad had counterclaimed that Class I railroad Effect of evidence and inferences therefrom violated the agreement by refusing to recognize on direction of verdict its right to dispatch trains on the track but On review of granting of motion for directed had chosen to non-suit the counterclaim after verdict, task of reviewing court is to consider

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all the evidence in a light most favorable complainant and thus the transgressor should to party against whom verdict was instructed, be compelled to perform that which he had discarding all contrary evidence and inferences, promised in his contract. and determine whether there is any evidence of probative force to raise fact questions on material 3 Cases that cite this headnote questions presented.

[18] Specific Performance Cases that cite this headnote Inadequacy of remedy at law It is a fundamental rule of equity that specific [14] Railroads performance may not be granted unless it is Contracts for sale shown there is no adequate remedy at law.

Class I railroad did not have duty of good faith and fair dealing, as seller of tracks to two 1 Cases that cite this headnote shortline railroads under asset sale agreements that granted Class I railroad exclusive rate- [19] Specific Performance making authority and required shortline railroads Defenses or Objections to Relief to obtain dispatch authority from Class I railroad Specific Performance

as to when they might use the main track or Presumptions and burden of proof enter Class I railroad's two yards for interchange The burden of invoking the court's of trains to be spotted to customers; agreements equity jurisdiction, with respect to specific were result of arm's length dealing between performance, is on the party seeking it, and the parties and were not of a nature to demonstrate comparative advantages of the equitable remedy a special relationship sufficient to support a duty must be shown to outweigh those of the legal of good faith and fair dealing.

remedy.

1 Cases that cite this headnote Cases that cite this headnote

[15] Contracts [20] Specific Performance Terms implied as part of contract Defenses or Objections to Relief There is no general duty of good faith and Among the factors to be considered, when fair dealing in ordinary arm's length commercial court determines whether to exercise its equity transactions.

jurisdiction with respect to specific performance, 2 Cases that cite this headnote are whether long-continued supervision by the court will be required, whether complete relief can be rendered by the remedy sought, and [16] Specific Performance whether, if the remedy sought is granted, it can Nature and purpose in general be adequately enforced.

The purpose of specific performance is to compel a party who is violating a duty under a valid 2 Cases that cite this headnote contract to comply with his obligations.

1 Cases that cite this headnote [21] Specific Performance Contracts for continuous acts during long period

[17] Specific Performance A court generally will not decree, by specific Inadequacy of remedy at law performance, a party to perform a continuous The rationale for specific performance as a series of acts which extend through a long period remedy is that the recovery of monetary damages would be inadequate to compensate the

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of time and require constant supervision by the to set through routes and in which parties court. agreed to division of revenue, did not establish, with reasonable certainty, its lost profits from 2 Cases that cite this headnote alleged breach of contract by Class I railroad, in allegedly wrongfully diverting some trains and [22] Appeal and Error refusing to allow shortline railroad to service Injunction certain customers; while witness testified as to division of revenue that would be received by Appeal and Error shortline railroad on each train in issue and Refusing injunction

testified in considerable detail about amount When a trial court grants, or refuses, a permanent of fuel cost that would be used in handling injunction, the standard of review is whether it those trains, there was no testimony about other committed an abuse of discretion.

necessary expenses of doing business, such as Cases that cite this headnote depreciation, payroll expenses, administrative expenses, equipment expenses, and maintenance expenses.

[23] Injunction Railroads 2 Cases that cite this headnote Specific Performance Contracts for continuous acts during long [25] Judgment period Where directed verdict or binding Shortline railroad, as buyer of tracks from Class instructions would have been proper I railroad pursuant to asset sale agreement in Judgment which Class I railroad reserved the right to Where there is no evidence to sustain set through routes and rates for customers, verdict was not entitled to specific performance or A trial court may grant a judgment mandatory injunction, to require Class I railroad notwithstanding the verdict (JNOV) if there is to interchange to shortline railroad all trains no evidence to support one or more of the headed to customers on certain tracks owned jury's findings on issues necessary to liability, or by Class I railroad, to refrain from attempting conversely, if the evidence established an issue to relocate any of the business from customers as a matter of law.

on those tracks, and to refrain from charging discriminatory freight rates for trains headed Cases that cite this headnote to a certain destination; shortline railroad's request for specific performance, in essence, [26] Damages

was one seeking mandatory injunction, shortline Mode of estimating damages in general railroad had not suffered irreparable injury, it had adequate remedy at law in form of contract The measure of damages for the loss of profit, damages for breach of contract, and grant of as consequential damages for breach of contract, mandatory injunction would require continued is “net profits,” which means what remains in onerous judicial supervision. the conduct of a business after deducting from its total receipts all of the expenses incurred in 2 Cases that cite this headnote carrying on the business.

2 Cases that cite this headnote [24] Damages Loss of profits

[27] Damages

Shortline railroad, as buyer of tracks from Class Breach of contract

I railroad pursuant to asset sale agreement in which Class I railroad reserved the right Damages

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Loss of profits

1 Cases that cite this headnote Lost profits, as damages for breach of contract, need not be susceptible to exact calculation, and need only be shown to a reasonable certainty. [31] Deeds Operation of quitclaim deed 1 Cases that cite this headnote A quitclaim deed expresses upon its face doubts about a grantor's interest, and a buyer is [28] Damages necessarily put on notice as to those doubts.

Loss of profits

1 Cases that cite this headnote An award of damages for lost profits, in an action for breach of contract, may be based on estimates that are based upon objective facts, figures, or [32] Limitation of Actions data. Causes of action in general When the legislature employs the term 1 Cases that cite this headnote “accrues” in a statute of limitations, without an accompanying definition, it is the responsibility [29] Deeds of the courts to determine when the cause of Operation of quitclaim deed action accrues and thus when the statute of Railroads limitations begins to run.

Conveyances or release by railroad 1 Cases that cite this headnote company Class I railroad, which sold rail lines to shortline railroad pursuant to asset sale agreement [33] Limitation of Actions requiring Class I railroad to convey to shortline Breach of contract in general railroad, by quitclaim deem, land that was Limitation of Actions covered by lease, but which conveyed the land Contracts; warranties to third party by special warranty deed before An action for damages for breach of a written delivering quitclaim deed to shortline railroad contract accrues, for limitations purposes, when and before the closing of the asset sale, was the breach occurs or when the claimant has notice not required, under asset sale agreement, to of facts sufficient to place him on notice of the assign the lease or rents thereunder to shortline breach. V.T.C.A., Civil Practice & Remedies railroad after third party had reconveyed the Code § 16.051. land and lease to Class I railroad; quitclaim deed conveyed only whatever interest Class I 1 Cases that cite this headnote railroad had in the lease when quitclaim deed was delivered, and Class I railroad no longer had [34] Limitation of Actions an interest in the lease when quitclaim deed was Contracts; warranties

delivered.

Assuming that Class I railroad, as seller of rail Cases that cite this headnote lines to shortline railroad pursuant to asset sale agreement, was required under the agreement to assign leases to shortline railroad in some [30] Deeds way other than by quitclaim deed, shortline Operation of quitclaim deed railroad's claim for breach of contract accrued, While a warranty deed to land conveys property, for limitations purposes, when the asset sale a quitclaim deed conveys only the grantor's right transaction closed, which closing involved only in it, if any. quitclaim deed; at such time, shortline railroad must have had actual knowledge that no lease

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assignments had been made. V.T.C.A., Civil Practice & Remedies Code § 16.051.

History

Cases that cite this headnote Because of the convoluted and extensive history of these disputes, it is necessary to go into that history in some [35] Railroads detail. BNSF is a Class I railroad whose principal business Title, estate, or interest acquired is the transportation of freight in the western, midwestern, Easement allowing shortline railroad to operate and southwestern regions of the United States. SAW and on tracks crossing land owned by Class I railroad SLAL are known as “shortline” railroads that operate in did not entitle shortline railroad to receive any the vicinities of Lubbock and Slaton, Texas. They provide portion of rent payments received by Class I switching services to BNSF and its customers. railroad under a lease of the land; easement conveyed only a right of use, and not title to the In the early 1990s, major Class I railroads such as BNSF property. began selling off portions of their rail lines located near industrial centers or that served rural areas, and the sales 1 Cases that cite this headnote from which were known as “Shortline Sales.” In 1993, prior to its merger with the Burlington Northern Railway Company (Burlington Northern), the Santa Fe Railroad [36] Easements Company (Santa Fe) sold a portion of its line running Nature and elements of right generally southwest from Slaton to Lamesa, Texas, to SLAL.

An easement extends to certain persons or The agreement between those parties was memorialized in entities the right to use the land of another for the what is referred to here as the SLAL Asset Sale Agreement.

purpose or purposes specified in the easement, It provided that Santa Fe conveyed to SLAL rail freight and does not convey title to the property.

transportation business that it had formerly conducted on the 1 Cases that cite this headnote rail lines but it reserved the right to set through routes and rates for customers. SLAL was to be paid by a division of revenue by which SLAL would receive a certain amount of money per car that was handled by the parties on the line covered by the agreement.

Attorneys and Law Firms

*695 James L. Gorsuch, James L. Gorsuch, P.C., Lubbock, In 1999, after Santa Fe and Burlington Northern merged for Appellants. and became BNSF, the entity sold to SAW approximately fourteen miles of its track that served industrial customers in *696 D. Thomas Johnson, McWhorter, Cobb and Johnson, east Lubbock. This sale was memorialized in another Asset Lubbock, Chris S. Greer, Donald E. Herrmann, Kelly Hart & Sale Agreement. The SAW Asset Sale Agreement provided Hallman LLP, Michael E. Roper, Fort Worth, for Appellee. that for cars that were billed in units of 27 or more, the charge rate was to be $400 per car. SAW and SLAL share common Before CAMPBELL and PIRTLE, JJ., and BOYD, S.J. 1 ownership.

Opinion

BOYD, Senior Justice (Retired). The Fort Worth Suit

This case arises because of disputes between South Plains Soon after the SAW Asset Sale Agreement was finalized in Switching, Ltd. Co. (SAW), South Plains Lamesa Railroad, 1999, disputes arose between the parties which resulted in a L.L.C. (SLAL), and Burlington Northern Railway Company, declaratory judgment action brought by BNSF in Fort Worth formerly known as Burlington Northern and Santa Fe in 2002. In its suit, BNSF asked the court to declare that: Railway Company (BNSF). 1) SAW could not unilaterally impose a surcharge on traffic without its consent; 2) SAW was not entitled under the SAW Asset Sale Agreement to acquire further assets of BNSF; 3)

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the SAW Asset Sale Agreement did not limit or proscribe by BNSF to the Fort Worth Court of Appeals. The trial court BNSF from providing rail service to Vulcan Materials on judgment was affirmed with the exception that the appellate Track 9200 (which SAW contended had been sold to it court held that BNSF was entitled to use Track 9200 for other together with business to be conducted on it); 4) that a 1999 than storage purposes. See Burlington Northern & Santa Fe quitclaim deed delivered pursuant to the SAW Asset Sale Railway Co. v. South Plains Switching Ltd., Co., 174 S.W.3d Agreement included tracks referred to as the “Burris Tracks” 348 (Tex.App.-Fort Worth 2005, no pet.). by mistake and the deed should *697 be reformed; 5) that the term “billed” as used in the pertinent provision of the SAW Asset Sale Agreement meant “billed to the customer”

The Lubbock Suit

and did not mean “waybilled” for purposes of division of revenue; and 6) the SAW Asset Sale Agreement did not The suit directly underlying this appeal was filed in Lubbock impose liability on BNSF for what might be termed “wrongful on June 1, 2004. In it, SAW asserted that BNSF had breached deprivation of rent.” the Asset Sale Agreement and was liable because BNSF had: 1) unreasonably withheld consent to a surcharge; 2)

SAW and SLAL responded to the suit with counterclaims wrongfully provided rail service to Vulcan Materials on Track alleging various breaches by BNSF of the SAW Asset Sale 9200 and refused to allow SAW to serve Vulcan Materials Agreement including: 1) unreasonably withholding consent on the track; 3) improperly continued to serve customers on to SAW's proposed surcharge; 2) providing rail service to the Burris Tracks; 4) paid less than it should have under the Vulcan Materials on Track 9200; 3) continuing to serve division of revenue provisions of the Asset Sale Agreement; customers on the Burris Tracks; and 4) improperly paying and 5) failed to appropriately deal with SAW on certain real the division of revenue based on customer billing instead of estate claims. waybills. They also made claims that BNSF had improperly transferred properties described in the SAW Asset Sale Additionally, SAW and SLAL claimed that BNSF had Agreement to a property management company which had breached a duty of good faith and fair dealing warranting an then sold or disposed of the properties. award of exemplary damages. They also claimed they were entitled to specific performance and mandatory injunctive Prior to trial, BNSF successfully filed a motion to relief pursuant to the Asset Sale Agreement. Moreover, SLAL exclude SAW's and SLAL's damage testimony. SAW and claimed that BNSF had breached its Asset Sale Agreement SLAL then non-suited their counterclaims for breach of by diverting Vulcan Materials' trains or by refusing to allow contract and damages. The case then proceeded to trial on Vulcan Materials' trains to be routed to SLAL. BNSF's declaratory judgment claims that: 1) it did not act unreasonably by refusing to consent to SAW's surcharge on *698 Subsequently, BNSF filed a motion seeking a partial its customers of $40–$60 per car; 2) that under the SAW summary judgment dismissing all claims that had been Asset Sale Agreement, it had reserved the right to serve asserted by SAW and SLAL in the Fort Worth suit and Vulcan Materials on Track 9200; 3) that the Burris Tracks subsequently nonsuited on the basis that they were barred were included by mistake in the 1999 quitclaim deed executed under the compulsory counterclaim rule, Texas Rule of Civil by it in connection with the Asset Sale Agreement and the Procedure 97. This motion was granted by the Lubbock trial deed should be reformed to correct that error; and 4) the court. The effect of the granting of this motion was that issues term “billed” referred to in the agreement meant billed to regarding the surcharges and payment under the freight bill the customer and did not mean “waybilled” as contended by were eliminated from the Lubbock County trial and the claims SAW. relating to Vulcan Materials' trains, the Burris traffic and lease assignments were barred as to events occurring prior to the After a four-day jury trial, the jury found that SAW had the date of the filing of the Lubbock case on June 1, 2004. right to impose a surcharge upon its customers, that BNSF had access rights to Track 9200 for storage purposes only, that the At the conclusion of evidence, the trial court granted BNSF's division of revenue under the agreement was to be paid on a motion seeking dismissal of SAW and SLAL's quest for waybill basis and not on a freight bill basis, and that the Burris recovery because of breach of a duty of good faith and Tracks had been validly conveyed to SAW. Those findings fair dealing with consequent exemplary damages. At the were incorporated into a final judgment which was appealed conclusion of the trial, eight questions were submitted to

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

the jury. In its answers to questions 1 and 2, the jury found or, in the alternative, by the great weight and preponderance that BNSF had failed to comply with the SLAL Asset Sale of the evidence. Agreement by wrongfully diverting 18 Vulcan Materials trains to its yard in Slaton, Texas, and thereby caused damages *699 In their fourth issue, they posit that the trial court erred to SLAL in the amount of $70,500. In answers to questions in granting BNSF's motion for judgment n.o.v. and in denying 3 and 4, the jury found that BNSF failed to comply with the them damages for the wrongful diversion of Vulcan trains and SLAL Asset Sale Contract by refusing to direct or allow any the wrongful refusal of BNSF to allow SAW to service the of the Vulcan Materials trains described in SLAL's exhibit 12 Burris customers. to use Track 9200 or to use a SAW switching track which caused damages to SAW in the amount of $2,928.93. Summarized, this appeal is a challenge to the trial court's ruling on three BNSF motions, namely, its motion for partial In its answers to questions 5 and 6, the jury found BNSF summary judgment, in which it held that SAW could not refailed to comply with the SAW Asset Sale Agreement by litigate the contract claims that were initially brought in the refusing to allow SAW to serve traffic which damaged SAW Fort Worth suit but then non-suited; its motion for directed in the amount of $27,296.85. In its answers to questions 7 verdict in which the trial court held there was no factual and 8, the jury found that BNSF had failed to comply with basis to support the claims for breach of an alleged duty of the Asset Sale Agreement by failing to assign the West Texas good faith and fair dealing; and its motion for directed verdict Industries lease which caused damages to SAW in the amount in which the trial court held that appellants' “lost profits” of $12,600. calculations were improper.

Subsequent to the return of the jury verdict, BNSF filed a motion for judgment n.o.v. in which it contended that SAW BNSF Motion for Partial Summary Judgment and SLAL's lost profit calculations were improper as a matter of law. The trial court granted the motion in regard to the The standards by which summary judgments are reviewed jury findings in Questions 2, 4, and 6, but left intact the jury are by now axiomatic. When reviewing a summary judgment, findings in Questions 7 and 8. The trial court then entered the reviewing court takes as true all evidence favorable to judgment granting SAW relief on the real estate issues and for the nonmovant, and resolves any doubts and indulges any its attorney's fees but denied all of SLAL's equitable requests reasonable inferences in the nonmovant's favor. Provident and most of SAW's equitable requests. Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003); Science Spectrum, Inc. v. Martinez, 941 S.W.2d In pursuing their appeal, SAW and SLAL raise four issues 910, 911 (Tex.1997). The summary judgment is reviewed de for our discussion. In their first issue, they contend that novo, and, when the trial court's order does not specify the the trial court erred in granting BNSF's motion for partial ground or grounds relied upon for its ruling, it will be affirmed summary judgment excluding all of their claims prior to June on appeal if any of the theories advanced are meritorious. Dow 1, 2004, because the Fort Worth court's judgment is not res Chemical Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001). judicata to those claims and the claims were not compulsory counterclaims. BNSF's motion rested upon Texas Rule of Civil Procedure 97, the compulsory counterclaim rule. In relevant part, that In their second issue, relating to good faith and fair dealing rule provides: exemplary damages, they argue that the trial court erred in granting BNSF's motion for directed verdict because a. Compulsory Counterclaims. A the “special relationship” between the parties supports the pleading shall state as a counterclaim placing of such a duty and, thus, it follows that a claim for any claim within the jurisdiction of exemplary damages should also have been allowed. the court, not the subject of a pending action, which at the time of filing Their third issue concerns their injunctive relief/specific the pleading the pleader has against performance claims. They reason that the trial court erred in any opposing party, if it arises out granting judgment n.o.v. denying those claims because they of the transaction or occurrence that established their right to those claims either as a matter of law, is the subject matter of the opposing

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

party's claim and does not require Sanders v. Blockbuster, Inc., 127 S.W.3d 382, 386 (Tex.App.- for its adjudication the presence of Beaumont 2004, pet. denied); see also Weiman v. Addicks– third parties of whom the court cannot Fairbanks Road Sand Co., 846 S.W.2d 414, 419 (Tex.App.- acquire jurisdiction;.... Houston [14th Dist.] 1992, writ denied). However, where a defendant's claim to affirmative relief asserts a theory distinct As we have noted, in the Lubbock case, SAW contended from and independent of the issues raised in a plaintiff's that BNSF breached the Asset Sale Agreement and became claim, it is not a compulsory counterclaim. Astro Sign Co. v. liable for damages because: 1) BNSF unreasonably withheld Sullivan, 518 S.W.2d 420, 426 (Tex.Civ.App.-Corpus Christi consent to a disputed surcharge; 2) BNSF provided rail 1974, writ ref'd n.r.e.) service to Vulcan Materials on Track 9200 and failed to allow SAW to serve Vulcan Materials on that track; 3) BNSF In contending that Rule 97a is not applicable, SAW argues continued to serve customers on the Burris Tracks and would that BNSF's claims are too broad and posits that a party not allow SAW to do so; 4) under the SAW Asset Sale is not required to bring every claim based on a contract Agreement, BNSF paid less to SAW than it was required in a particular suit, particularly when it covers several to do; and 5) BNSF failed to properly deal with SAW on different matters which could involve different fact scenarios, “real estate claims.” Thus, SAW's affirmative relief claims different witnesses, and different theories of recovery. SAW replicated the counterclaims it had asserted, but non-suited, characterizes its real estate claims as involving the asserted in the Fort Worth case. failure of BNSF to assign leases to SAW, and, in addition, that BNSF did not assign “other income” (i.e. rent) that [1] [2] A counterclaim is compulsory if: 1) it arises was due it under the Asset Sale Agreement, as well as the out of the transaction or occurrence that gives rise to the purported fraudulent “transfer of some or all of the properties opposing party's claim; 2) it is mature and owned by the involved either before or after the signing of the Asset Sale counterclaimant; 3) it is against an opposing party in the same Agreement.” capacity; 4) it does not require third parties who cannot be brought into the suit; 5) it is within the court's jurisdiction; [7] However, in the Lubbock case, SAW asserted that and 6) it is not pending elsewhere. Tex.R. Civ. P. 97(a); Wyatt pursuant to the Asset Sale Agreement, a quitclaim deed was v. Shaw Plumbing Co., 760 S.W.2d 245, 247 (Tex.1988). If a prepared that purportedly assigned it certain leases and rental claim meets those elements, it must be asserted in the initial income and claimed it was damaged because BNSF had failed action and cannot be later raised. Id. to properly assign those leases and the rental income from them. The record shows that those were the same leases at *700 [3] [4] [5] [6] Our Supreme Court hasissue in the Fort Worth case. That being so, the compulsory adopted a transactional approach in determining whether the counterclaim rule would be applicable and would prevent the compulsory counterclaim rule is applicable in a given case. relitigation of those real estate claims in the Lubbock case. It has instructed that in determining whether a transaction Sanders v. Blockbuster, Inc., 127 S.W.3d at 386. is within the purview of the rule, weight should be given to “such considerations as whether the facts are related [8] With regard to the Burris Tracks, both parties asserted in time, space, origin, or motivation, whether they form claims involving them in the Fort Worth case. BNSF sought a convenient trial unit, and whether their treatment as a a declaration that the Asset Sale Agreement did not include trial unit conforms to the parties' expectations or business the Burris Tracks because of a mutual mistake, and SAW understanding or usage.” Barr v. Resolution Trust Corp., counterclaimed that BNSF had breached the agreement by 837 S.W.2d 627, 631 (Tex.1992), citing Restatement of “continuing to serve Lubbock Feeders subsequent to May 3, Judgments, §§ 24(1) & 24(2). This court has noted that the 1999” and by “continuing to serve Jarvis Metals on Tracks 7 Rule 97a “same transaction or occurrence” requirement has and 12 at Burris....” SAW chose to non-suit its Burris Track been broadly construed. See Lesbrookton, Inc. v. Jackson, claims in the Fort Worth case when it received an adverse 796 S.W.2d 276, 281 (Tex.App.-Amarillo 1990, writ denied). ruling on its damages. Additionally, where as here, there is a legal relationship such as under a lease or contract, all the claims that arise from In the Lubbock case, SAW again alleged that the failure that relationship will arise from the same subject matter and of BNSF to allow it to service customers along the Burris be subject to the application of the rule in a proper case. Tracks constituted a breach of the Asset Sale Agreement.

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

Those Burris Track claims *701 involved the same subject Because that issue was litigated in the Tarrant County trial, it matter as the Fort Worth case. If the compulsory counterclaim is subject to the compulsory counterclaim rule and cannot be rule was applicable, and we think it was, the trial court's relitigated in the Lubbock County case. We have considered summary judgment in that regard was proper. See Compass SAW's argument that the compulsory counterclaim rule Exploration, Inc. v. B–E Drilling Co., 60 S.W.3d 273, 278– only applies to issues that were specifically submitted as 79 (Tex.App.-Waco 2001, no pet.). jury issues in the prior case and that its right to non-

suit counterclaims in the Fort Worth suit was unqualified [9] Both parties had claims in the Fort Worth case and absolute. However, we believe that the compulsory concerning SAW's request for a surcharge and BNSF's counterclaim rule is broader than the doctrine of res judicata, refusal to give consent. BNSF sought declaratory relief and, in a case such as this one, is applicable. See Weiman v. and SAW sought damages. When its damage testimony Addicks–Fairbanks Road Sand Co., 846 S.W.2d at 421. The was excluded, SAW non-suited its surcharge counterclaim. first point is overruled. BNSF's surcharge claim was submitted to the jury and it received a favorable answer. In the Lubbock case, SAW again asserted its surcharge claim that BNSF unreasonably withheld BNSF Motion for Directed Verdict consent to a surcharge and sought damages for its refusal to give consent. Once more, this controversy arose out of the [12] [13] In their second point, SAW and SLAL contend same subject matter as that involved in the Fort Worth case the trial court erred in granting BNSF's motion for directed and thus was subject to the compulsory counterclaim rule. See verdict on their quest for exemplary damages because the id. terms of the Asset Sale Agreements, the relationship between the parties, and the superior bargaining position of BNSF [10] Both BNSF and SAW asserted claims in the Fort Worth gave rise to a duty of good faith and fair dealing between case concerning operations on Track 9200. BNSF claimed them and BNSF. In considering this point, we recognize that under the Asset Sale Agreement, it retained all rights *702 the established rule that a plaintiff is entitled to a to access and utilize Track 9200 and asked the court to so directed verdict when reasonable minds can draw only one construe the agreement. SAW counterclaimed that BNSF conclusion from the evidence. The task of a reviewing court violated the Asset Sale Agreement by refusing to recognize is to consider all the evidence in a light most favorable to its right to dispatch trains on Track 9200. After it received an the party against whom the verdict was instructed, discarding unfavorable ruling on its damages evidence, SAW chose to all contrary evidence and inferences, and determine whether nonsuit its Track 9200 claim. there is any evidence of probative force to raise fact questions on the material questions presented. Collora v. Navarro, 574 In the Lubbock case, SAW again asserted that BNSF failed S.W.2d 65, 68 (Tex.1978). to comply with its right to dispatch traffic on Track 9200 and thereby prevented it from providing direct rail service to its In support of their point, appellants place considerable weight customers. This was done in language identical to that used upon the decision in the seminal case of Arnold v. National by it in its non-suited counterclaim in the Fort Worth case. It County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex.1987). In arose out of the same Asset Sale Agreement in dispute in the that case, the court found there is a duty on the part of Fort Worth case. Relitigation of the question was thus barred insurers to deal fairly and in good faith with their insured. by the compulsory counterclaim rule. See id. Id. at 167. In doing so, the court noted that it had declined to impose an implied covenant of good faith and fair dealing [11] Again, in the Fort Worth case, SAW contended that in every contract but, “a duty of good faith and fair dealing a dispute existed between BNSF and SAW concerning the may arise as a result of a special relationship between the meaning of “billed” as used in the division of revenue parties governed or created by a contract.” Id. In the course provision in the Asset Sale Agreement and that BNSF of its discussion and in the context of insurance contracts, breached the agreement by paying it less than that to which it the court specifically noted that an insurance company had was entitled. BNSF asked for a declaratory order construing exclusive control over the evaluation and processing and that provision of the agreement and received a favorable denial of claims and that in such instances, the nature of result. insurance contracts gave rise to unequal bargaining power “which would allow unscrupulous insurers to take advantage

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

of their insureds' misfortunes in bargaining for settlement or implied covenant of good faith and fair dealing. In refusing resolution of claims.” Id. to accept such a concept, the Court cautioned that to do so, would “let each case be decided upon what might seem ‘fair [14] [15] Appellants contend that provisions in the and in good faith’ by each fact finder,” which the Court was agreements concerning such matters as their grant to BNSF unwilling to do. Id. at 522. of exclusive rate-making authority and the necessity for them to obtain dispatch authority from BNSF as to when they Suffice it to say, this record is sufficient to support the might use the main track or enter BNSF's two yards for trial court's evident conclusion that the agreements were interchange of trains to be spotted to customers is sufficient the result of arm's length dealing between the parties and evidence of unequal bargaining power between the parties were not of a nature to demonstrate a “special relationship” similar to that existing between insurance companies and sufficient to support a tort duty of good faith and fair their insureds. They argue that BNSF's control of rate making dealing. As appellants recognize, under the Punitive Damages authority and use of its track together with its sole dispatch Act, the term “malice” is defined as a specific intent authority over its main line is so similar to an insurance to cause substantial injury or harm to a plaintiff. See company's control of its claim process as to give rise to a Tex. Civ. Prac. & Rem.Code Ann. § 41.001(7) (Vernon duty of good faith and fair dealing similar to that imposed Supp.2007). Additionally, the trial court did not reversibly upon insurance companies by the Arnold court. However, err in concluding the evidence insufficient to support the our Supreme Court has recognized that there is no general submission of exemplary damages to the jury. Appellants' duty of good faith and fair dealing in ordinary arm's length second issue is overruled. commercial transactions. See Formosa Plastics Corp. USA v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 52 (Tex.1998); see also Wil–Roye Inv. II v. Washington Mut.

Specific Performance and Injunctive Relief Banks, F.A., 142 S.W.3d 393, 410 (Tex.App.-El Paso 2004, no pet.) (the duty of good faith and fair dealing does not arise [16] [17] [18] [19] [20] [21] In their third issue, in ordinary commercial transactions). In Lovell v. Western appellants contend that the trial court erred in denying their Nat'l Life Ins. Co., 754 S.W.2d 298 (Tex.App.-Amarillo 1988, request for specific performance and injunctive relief. The writ denied), this court noted the explication in the Arnold purpose of specific performance is to compel a party who is case as holding that the duty of good faith and fair dealing violating a duty under a valid contract to comply with his does not exist in Texas unless intentionally created by express obligations. The rationale for that remedy is that the recovery language in a contract or unless a special relationship of trust of monetary damages would be inadequate to compensate the and confidence exists between the parties to the contract. Id. complainant and thus the transgressor should be compelled to at 302–03. perform that which he had promised in his contract. Estate of Griffin v. Sumner, 604 S.W.2d 221, 225 (Tex.Civ.App.-San Indeed, in Farah v. Mafrige & Kormanik, 927 S.W.2d Antonio 1980, writ ref'd n.r.e.). It is a fundamental rule of 663 (Tex.App.-Houston [1st Dist.] 1996, no writ), cited by equity that specific performance may not be granted unless appellants, the court explicated that “[t]he fact that one it is shown there is no adequate remedy at law. American businessman trusts another and relies upon another to perform Housing Resources, Inc. v. Slaughter, 597 S.W.2d 13, 15 a contract does not rise to a confidential relationship.” Id. at (Tex.Civ.App.-Dallas 1980, writ ref'd n.r.e.). The burden of 675–76. In Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477 invoking the court's equity jurisdiction is on the party seeking (Tex.App.-Corpus Christi 1989, writ denied), although the it and the comparative advantages of the equitable remedy court recognized the rule that certain types of contracts might must be shown to outweigh those of the legal remedy. Among lead to the finding *703 of a special relationship of such the factors to be considered are whether long-continued a nature as to give rise to a cause of action in tort, the court supervision by the court will be required, whether complete cautioned that the special relationship cause of action did not relief can be rendered by the remedy sought, and whether, if extend to ordinary commercial relationships. Id. at 481. the remedy sought is granted, it can be adequately enforced.

Id. A court generally will not decree a party to perform a In English v. Fischer, 660 S.W.2d 521 (Tex.1983), also cited continuous series of acts which extend through a long period by appellants, the Court had occasion to discuss a theory of time and require constant supervision by the court. Canteen prevalent in California law that in every contract there was an

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

Corp. v. Republic of Texas Properties, Inc., 773 S.W.2d 398, shows that they did not specify or demonstrate the amount of 401 (Tex.App.-Dallas 1989, no writ). business they may have lost because of such rates or that they lost Vulcan Materials or any other entity as a customer. Those [22] In this case, appellant's quest for specific performance, losses would have been susceptible of determination. Thus, in its essence, was one seeking a mandatory injunction. When under this record, they did not make the showings of a lack a trial court grants, or refuses, a permanent injunction, the of an adequate remedy at law or irreparable injury requisite standard of review is whether it committed an abuse of to support the equitable relief they sought. discretion. The test for determining whether a trial court abused its discretion is whether it acted without reference Additionally, the Asset Sale Agreement specifically provided to any guiding rules or principles. Downer v. Aquamarine that BNSF “shall have authority to establish through routes Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985). and offer through freight rates via through routes involving both [appellants] and [BNSF] with interchange between [23] SAW asked that BNSF be ordered to: [appellants] and [BNSF]....” The Agreements also stated that appellants “automatically concur in all such through rates *704 1) Interchange to SAW all trains headed to established by [BNSF] ... so long as [appellants] receive customers on the Burris Tracks owned by BNSF, not for transporting the traffic [their] division of revenues....” to attempt to relocate any business from customers on There are no provisions in the Asset Sale Agreement the Burris Tracks owned by BNSF, and refrain from preventing BNSF from charging different through rates for attempting to relocate any of the business from customers traffic interchanged with appellants, and we find no evidence on the Burris Tracks. produced at trial that the parties intended otherwise. In sum, the trial court could reasonably conclude that the specific 2) Interchange all Vulcan Materials' trains headed to performance sought by appellants in this regard would have Lubbock, Texas to SAW for unloading on Track 9200 and compelled conduct inconsistent with the agreements.

refrain from requiring Vulcan Materials to lease or use any BNSF track in the Lubbock area for unloading operations Likewise, the record does not show evidence that appellants on trains routed to SAW; and suffered imminent irreparable injury with no remedy at law 3) Refrain from charging two different discriminatory because of BNSF's practices in handling Vulcan Materials' freight rates for trains destined to Lubbock, Texas. trains. Indeed, appellants sought and received from the trial jury money damages tied to BNSF's diversion of Vulcan Examination of the Asset Sale Agreement reveals that Materials' trains and its refusal to allow Vulcan Materials to although it gave SAW title to the Burris Tracks, it made use Track 9200. no specific provision for its operation on BNSF's mainline to get there. The record supports the trial judge's evident Moreover, even though SAW argues that BNSF had locked conclusion that SAW had not suffered an irreparable injury the switch to Track 9200 which had the effect of denying it the and that it did have an adequate remedy at law in the *705 ability to serve Vulcan Materials on that track, SAW form of contract damages if a breach of the contract had acknowledged at trial that it still had access to Track 9200 occurred. Additionally, the record would support the court when the switch was locked, and that on the trial date, the in concluding that the grant of a mandatory injunction in a switch was no longer locked. Thus, the record does not show situation such as was presented to it would require continued the requisite irreparable injury related to BNSF's conduct but onerous judicial supervision. In sum, this record does not does demonstrate that there was an adequate remedy at law in show that the court erred in concluding that SAW did not meet the form of contract damages. the prerequisite requirements to justify the equitable remedy it sought in connection with the Burris Tracks. Appellants also contend that BNSF assigned the Vulcan Materials business in the Asset Sale Agreements. However, Appellants also sought a judicial prohibition preventing perusal of the agreements demonstrates there are no BNSF from quoting different freight rates for trains destined provisions restraining BNSF from serving customers such as to Lubbock and Slaton, Texas. In doing so, they argued that Vulcan Materials on its own rail line. Thus, appellants did they had lost business from Vulcan Materials because BNSF not show any entitlement to specific performance. In sum, had established different through rates. However, the record appellants' third issue is overruled.

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

Appellants assert the testimony of Larry Wisener is sufficient to establish their lost profits. Wisener testified as to the division of revenue that would be received by appellants Damages

on each train in issue and in considerable detail about [24] In their fourth issue, appellants contend the trial court the amount of fuel cost that would be used in handling reversibly erred in granting BNSF's motion for judgment those trains. However, there was no testimony about n.o.v. regarding appellants' recovery of damages for the other necessary expenses of *706 doing business such wrongful diversion of Vulcan trains and the refusal of BNSF as depreciation, payroll expenses, administrative expenses, to allow SAW to service the Burris customers. equipment expenses, and maintenance expenses. In sum, Wisener's testimony falls short of fulfilling the requirement [25] A trial court may grant a judgment n.o.v. if there is that lost profits be shown with reasonable certainty. See Atlas no evidence to support one or more of the jury's findings on Copco Tools, Inc. v. Air Power Tool & Hoist, Inc., 131 issues necessary to liability or, conversely, if the evidence S.W.3d 203, 209 (Tex.App.-Fort Worth 2004, pet. denied). established an issue as a matter of law. Brown v. Bank of Thus, the trial court did not reversibly err in disregarding the Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998); John jury's answers to questions 2, 4, and 6. Appellants' fourth issue Masek Corp. v. Davis, 848 S.W.2d 170, 173 (Tex.App.- is overruled. Houston [1st Dist.] 1992, writ denied).

In responding to appellants' fourth issue, BNSF argues that BNSF'S Cross–Appeal although appellants now argue that they were entitled to “benefit of the bargain” damages, in their pleadings, they [29] In presenting its cross-appeal, BNSF presents three only claimed damages based upon “lost profits” and/or lost issues for our decision. First, it asserts the evidence is legally revenue. Moreover, during the course of the trial, appellants and factually insufficient to support the jury's answers to continued to argue that they had lost profits and revenues questions 7 and 8. In question 7, the jury was queried whether because of BNSF's breaches of the Asset Sale Agreements. BNSF failed to comply with the Asset Sale Agreement by They did offer a trial amendment after the close of evidence failing to assign the West Texas Industries lease or rent to seeking recovery of benefit of the bargain damages but SAW. Question 8 was predicated on an affirmative answer the trial judge refused to let them do so. Thus, under this to question 7 and inquired as to what sum of money would record, they were not entitled to submission of that theory compensate SAW for its damages, if any, resulting from the and we are relegated to the task of determining whether the failure to assign the West Texas Industries lease. In arriving testimony they produced was sufficient to support a “lost at its answer, it was instructed that it might only consider the profits” recovery. “amount of rent under the lease from West Texas Industries, Inc. paid to BNSF after May 1, 2004.” The answer was [26] [27] [28] In a breach of contract action such as this $12,600. one, the measure of damages is just compensation for the loss or damage actually sustained. Stewart v. Basey, 150 Tex. It is not disputed in the record that: 1) the property covered 666, 245 S.W.2d 484, 486 (1952). The measure of damages by the West Texas Industries lease was within the property for the loss of profit as consequential damages means net description of the land to be conveyed to SAW by quitclaim profits. Net profits means what remains in the conduct of deed under the SAW Asset Sale Agreement and that the Asset a business after deducting from its total receipts all of the Sale Agreement was signed on May 3, 1999; 2) the property expenses incurred in carrying on the business. The lost profits covered by that lease was conveyed by BNSF to a third party need not be susceptible to exact calculation, but must only be by a special warranty deed on June 29, 1999; 3) the quitclaim shown to a reasonable certainty. An award of damages may be deed was executed by BNSF on June 29, 1999, but was not based on estimates that are based upon objective facts, figures delivered on that date and was held by BNSF pending closing. or data. Interceramic, Inc. v. South Orient R.R. Co., Ltd., 999 The Asset Sale Agreement closed, and the quitclaim deed was S.W.2d 920, 929 (Tex.App.-Texarkana 1999, pet. denied); delivered to SAW on July 2, 1999. It is undisputed that the Turner v. PV Intern. Corp., 765 S.W.2d 455, 465 (Tex.App.- lease was reconveyed to BNSF by the third party on October Dallas 1988, writ denied). 25, 2002.

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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

SAW argues that BNSF was obligated to assign it either the the quitclaim deed was delivered subsequent to the time that West Texas Industries lease or the rent generated from the BNSF had no title to the lease. Consequently, it could not be lease. In support of that position, it relies upon section 1(e) liable for, and there is no evidence to support the jury answers which provides: to questions 7 and 8.

Seller [BNSF] shall assign to Buyer [32] [33] [34] Additionally, the statute of limitations [SAW] on the day of closing, subject for a breach of contract is four years. Tex. Civ. Prac. & to all terms and conditions set forth Rem.Code Ann. § 16.051 (Vernon 1997). The limitations in this agreement, or in any agreement period begins to run when the cause of action accrues. assigned by Seller to Buyer in When the legislature employs the term “accrues” without accordance with the terms of this an accompanying definition, it is the responsibility of the agreement, all assignable rights and courts to determine when the cause of action accrues and obligations of Seller to the extent that thus when the statute of limitations begins to run. Moreno they are related to the rail line and are v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex.1990). An set forth in any agreement identified in action for damages for breach of a written contract accrues Exhibit D which is attached hereto.... when the breach occurs or when the claimant has notice of If any contract is related to the rail facts sufficient to place him on notice of the breach. Rose v. line and inadvertently not identified in Baker & Botts, 816 S.W.2d 805, 810 (Tex.App.-Houston [1st Exhibit D, it is the intent of Seller and Dist.] 1991, writ denied). Assuming, arguendo, that BNSF Buyer that such contract be deemed had breached the Asset Sale Agreement by failing to assign to have been assigned by Seller to the West Texas Industries lease, that breach occurred on July Buyer in whole or part as appropriate 2, 1999. If BNSF was required to assign leases in some way effective the date of closing. other than by quitclaim deed, on July 2, 1999, when the deal was closed, SAW must have actual knowledge that there were It also relies upon section 12 of the agreement which provides:

no lease assignments made. However, SAW did not make its Prepaid rentals, utilities and other breach of contract claim until June 1, 2004, some five years income or fees attributable to the later. The claim is barred by limitations. contracts related to the rail line that are being assigned under ¶ 1 of this Likewise, SAW's claims relating to the Furr's Cafeteria and agreement, shall be prorated between Brite Trucking leases accrued on the date of the closing of the Buyer and Seller in such a manner Asset Sale Agreement, and, like the other claims, SAW did as to allocate to Seller all income not make its breach of contract claim in that regard until June received and all expenses incurred, on 1, 2004, some five years later. Those claims are also barred or prior to the date of closing, and to by limitations. allocate to Buyer all income received, and expenses incurred after the date of [35] [36] SAW additionally contends that it is entitled to closing. receive one-half of all of the rent payments received by BNSF from the B & R Auto lease. However, it is undisputed that the land leased to B & R Auto was not included in the description [30] [31] SAW contends that under the contract BNSF's of land to be covered by quitclaim deed as provided in the obligation was continuing *707 and that when the property Asset Sale Agreement. All that SAW received on that tract was deeded back to BNSF, it had an obligation to transfer was an easement to operate on tracks crossing the land. It the lease back to SAW. However, BNSF's obligation under is SAW's contention that a landowner is obligated to share the contract was only to deliver a quitclaim deed. While a rent proceeds with those holding easements on the land. We warranty deed to land conveys property, a quitclaim deed disagree. An easement extends to certain persons or entities conveys only the grantor's right in it, if any. Geodyne Energy the right to use the land of another for the purpose or purposes Income Prod. P'ship I–E v. Newton Corp., 161 S.W.3d 482, specified in the easement and does not convey title to the 486 (Tex.2005). A quitclaim deed conveys upon its face property. Magnolia Petroleum Co. v. Caswell, 1 S.W.2d 597, doubts about a grantor's interest and a buyer is necessarily 600 (Tex. Comm'n App.1928, judgm't adopted); Long Island put on notice as to those doubts. The record demonstrates that

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15

South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)

the judgment *708 awarding injunctive relief and specific Owner's Ass'n v. Davidson, 965 S.W.2d 674, 684 (Tex.App.-

performance to SAW, to delete that portion of the judgment Corpus Christi 1998, pet. denied). That being so, SAW would awarding attorney's fees to SAW, and to provide that SAW not be entitled to any portion of rentals owed by B & R Auto take nothing on those claims. As modified, the judgment is for the use of the property.

affirmed. Tex.R.App. P. 43.2.

For the reasons we have expressed, the judgment of the trial court is modified to delete those portions of the judgment All Citations

awarding $12,600 in damages to SAW with respect to the West Texas Industries lease, to delete that portion of 255 S.W.3d 690

Footnotes 1 John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment. Tex. Gov't Code Ann. § 75.002(a)

(1) (Vernon Supp.2007).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)

5 Cases that cite this headnote 164 S.W.2d 197

Court of Civil Appeals of Texas, San Antonio.

[3] Vendor and Purchaser SAN ANTONIO JOINT STOCK LAND BANK Exercise v. Where option to purchase realty does not contain MALCHER. provisions to the contrary, all that is required by optionee is that he notify optionor, prior to date No. 11180. | July 22, 1942. of expiration of option, of his decision to exercise | Rehearing Denied Aug. 19, 1942. the option, and he thereafter has a reasonable time within which to complete the deal.

Appeal from District Court, Atascosa County; S. B. Carr, Judge. 8 Cases that cite this headnote

Suit by August Malcher against the San Antonio Joint Stock Land Bank of San Antonio and Edwin Seay to set aside a [4] Vendor and Purchaser trustee's deed, and, in the alternative, for judgment decreeing Exercise specific performance of an alleged agreement to convey Optionee, who tendered money to optionor for realty, together with an injunction prohibiting the bank from the purchase of realty 18 days after date when he interfering with plaintiff's possession of the realty, and, was to exercise the option, tendered the money further, in the alternative, for a money judgment against the within a “reasonable time”. bank, wherein the bank filed a cross-action. From an adverse 7 Cases that cite this headnote judgment, the bank appeals.

Judgment amended, and, as amended, affirmed. [5] Specific Performance Options

Where optionee tendered money to optionor West Headnotes (7) for purchase of realty within a reasonable time after date when option was to be exercised, but optionor refused to accept the tender, optionee [1] Landlord and Tenant was entitled to specific performance of option Time contract.

Where rental contract provided that lessor gave lessee the right to purchase realty for certain 7 Cases that cite this headnote amount, and that option, if not exercised, expired on certain date, and lessee notified lessor before [6] Appeal and Error such date of his intention to exercise the option, Total omission of findings; delay lessee had a reasonable time after such date to Where trial judge, when notified of his failure pay the money and otherwise complete the deal. to file findings of fact requested by appellant, at once began such preparation, but because 1 Cases that cite this headnote appellant's attorneys had some of the exhibits in their possession, he was delayed in such [2] Vendor and Purchaser preparation, and findings were not filed within Exercise time required by rule of civil procedure, and Where an option to purchase realty is in writing there was a complete statement of facts filed by and is signed by both parties, it may be orally appellant after appellant knew of delay in filing accepted. the findings, and appellant secured an extension of time to file such statement of facts, and appellant did not show that it was prejudiced by

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San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)

delay, delay did not constitute reversible error. Malcher's possession of the 221.4 acres of land. The trial Rules of Civil Procedure, rule 297. judge made elaborate findings of fact resolving all fact issues against the Land Bank.

3 Cases that cite this headnote From this judgment the San Antonio Joint Stock Land Bank alone has prosecuted this appeal.

[7] Appeal and Error To verdict, findings, or judgment Appellant presents its first three points together, and they are Where appellant made several points challenging as follows: findings of fact made by trial court as not being supported by the evidence, but those points were “First Point. The court erred in rendering judgment for not briefed, they were “waived”. Rules of Civil Appellee, Malcher, herein, for the relief prayed for by him Procedure, rule 418. and in rendering judgment against Appellant upon its cross-

action, because, under the undisputed evidence, Appellee, 15 Cases that cite this headnote Malcher, was not entitled to recover herein and Appellant *199 was entitled to judgment on its cross-action.

“Second Point. The court erred in granting Appellee Malcher's prayer for specific performance of his alleged Attorneys and Law Firms contract to repurchase the land in suit, because the undisputed *198 Kelso, Locke & King and Wm. F. Koch, all of San evidence shows that appellee never offered to perform his Antonio, for appellant. alleged option contract, to repurchase said land until the time allowed him to exercise such option had expired.

O. F. Burney, of Floresville, for appellee.

“Third Point. The court erred in granting Appellee Malcher's Opinion prayer for specific performance of his alleged agreement to repurchase the land in controversy because the undisputed MURRAY, Justice.

evidence shows that Appellee never at any time prior to the This suit was instituted by August Malcher in the District filing of this suit made a valid tender of performance of his Court of Atascosa County against San Antonio Joint Stock option to purchase.” Land Bank of San Antonio, a corporation, and Edwin Seay On August 19, 1929, August Malcher and wife executed a seeking to set aside a certain trustee's deed conveying deed of trust to William B. Lupe, Trustee, upon the 221.4 221.4 acres of land out of the J. T. Eubanks Survey No.

acres of land involved herein, to secure the Land Bank in the 506, in Atascosa County, Texas, to the above named Land payment of a deed of trust note in the sum of $4,500.

Bank and, in the alternative for judgment decreeing specific performance of an alleged agreement on the part of the Land On June 4, 1940, a trustee's sale of the land was had and the Bank to convey said 221.4 acres of land to Malcher, together Land Bank bid it in for the sum of $2,250, leaving a balance with an injunction prohibiting the Land Bank from in any way due on the note of $2,254.47. interfering with Malcher's possession of said 221.4 acres of land, and, further, in the alternative, for a money judgment On June 7, 1940, Malcher went to San Antonio and had a against the Land Bank in the sum of $1,863.94. conversation with William B. Lupe, Jr., a vice-president of the Land Bank. Malcher paid Lupe the sum of $1,500 and The trial was to the court without the intervention of a jury and understood that he would be permitted to redeem the land by resulted in judgment in Malcher's favor requiring the Land paying in full the amount due on the note. The Land Bank, Bank to execute and deliver to the Clerk of the District Court, through its officers and attorney, wrote Malcher several letters for August Malcher, a deed conveying to August Malcher all thereafter urging him to come in and complete the deal, but the right, title and interest to said 221.4 acres of land that the Malcher neglected to answer these letters. Land Bank has in said property, and also that Edwin Seay has in said land, upon the payment by Malcher to said District Malcher never went back to see Mr. Lupe until about October, Clerk for the Land Bank of the sum of $3,262; and further 1940, at which time he agreed to pay the taxes upon the land. enjoining the Land Bank from in any way interfering with

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San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)

After the taxes were paid he received the following letter from “Mr. August Malcher Mr. Lupe, which is self-explanatory, to-wit: “November 8th, 1940 “Poth, Texas

“Dear Sir: In re: Loan 3008 notified the Bank of his intention to exercise the option, he “Confirming our conversation of October 10, 1940, in regard would have a reasonable time after September 30th to pay the to re-purchasing your farm, the Bank agreed that if you would money and otherwise complete the deal. We conclude that he pay up all taxes by the 15th of October, that we would give would have such reasonable time. It will be borne in mind you an option until December 1, 1940, to re-purchase the farm that the contract does not require that the option be accepted at the amount of investment the Bank has in the farm as of in writing not later than September 30, 1941, neither does it December 1, 1940. require in express terms that the money be paid or tendered not later than that date; nor does it require that the money be “Since you have paid the taxes as per your agreement, this tendered in cash. It simply provides that the “option, if not is to confirm our agreement that you have the option to re- exercised, expires September 30, 1941.” purchase up to December 1, 1940, and the figure will be $4,639.30 less $1,500.00 or $3,139.30. *200 [2] Where an option to purchase real estate is in “Yours very truly, writing and signed by both parties it may be orally accepted.

Haskell v. Merrill, Tex.Civ.App., 242 S.W. 331; 43 Tex.Jur.

“Wm. B. Lupe, Jr. 100; 66 C.J. 499; Killough v. Lee, 2 Tex.Civ.App. 260, 21 S.W. 970.

“Vice-President.”

In Anderson v. Tinsley, 28 S.W. 121, 122, Justice Fly, Malcher did not re-purchase the land under this option, but in speaking for this court, said: “* * * The 10-days limit does June, 1941, he entered into a rental contract with the Bank, not, and evidently was not intended to, apply to the passing of whereby he rented the land from the Bank for the year 1941. the deed. ‘The offer to remain in force for ten days from this This rental contract was signed by both Malcher and the date,’ upon a fair construction, means that the 10-days limit proper officer of the Bank and contained the following option: is given in which to accept the offer. It was accepted within the 10 days. The contract was then in a condition that it could “The Lessor hereby gives Lessee (August Malcher) the be enforced by either party.”

right to purchase the above described tract of land for a [3] Where an option does not contain provisions to the consideration of $3,009.70, plus 6% interest from June 7, contrary all that is required by the optionee is that he notify 1940, to date of purchase. This option, if not exercised, the optionor, prior to the date of expiration, of his decision expires September 30, 1941, is not transferrable, and is to exercise the option and he thereafter has a reasonable time subject to right of sale by Lessor prior to September 30, within which to complete the deal. 66 C.J. 500; Horgan v.

1941.”

Russell, 24 N.D. 490, 140 N.W. 99, 43 L.R.A.,N.S., 1150;

August Malcher testified to facts which support the trial Killough v. Lee, supra. court's finding to the effect that he notified the Land Bank, in August, 1941, that he was exercising his option to purchase, [4] [5] The trial court held upon sufficient evidence that however, he did not tender the money or secure a deed to Malcher tendered the money to the Land Bank within a the property prior to September 30, 1941. He did tender the reasonable time after September 30th, and such tender was money to the Bank on October 18, 1941, which tender was not accepted by the Bank. This being true Malcher is entitled not accepted by the Bank. to specific performance of his option contract. [1] This brings us to a consideration of the all-important question in the case, which is, whether under the option [6] As we have previously stated, the trial court filed Malcher was required to pay or tender the purchase money to elaborate findings of fact sufficient to support the judgment the Bank on or before September 30, 1941, or whether, having rendered. Appellant contends we should not consider these

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San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)

[7] Appellant has made several points challenging certain findings, but should reverse the judgment because such findings of fact made by the trial court as not being supported findings were not filed within the time required by Rule No.

by the evidence, but these points have not been briefed and 297, Rules of Civil Procedure. The findings of fact should are therefore waived. Rule No. 418, Rules of Civil Procedure;

have been filed not later than January 18, 1942, but were not 3 Tex.Jur. 901; Lov Vorn v. Wilkinson, Tex.Civ.App., 112 filed until January 23, 1942. The trial judge, in explaining S.W.2d 749; Alamo Downs, Inc., v. Briggs, Tex.Civ.App., the delay in filing his findings, shows that he did not have 106 S.W.2d 733.

actual knowledge of the written request of appellant for such findings. When he was notified of his failure to file such findings he at once began such preparation, but due to the The judgment will be amended so as to provide that if Malcher fact that attorneys for appellant had some of the exhibits in should fail to pay to the Clerk of the District Court of Atascosa their possession he was delayed in such preparation. There is a County the sums of money provided for in the judgment, complete statement of facts in the case, filed by appellant after within the time provided therein, then and in that event he it knew of the delay in filing the findings of fact. Appellant should lose all rights under his option contract and under the secured an extension of time so that it might be enabled to file judgment, and, further, in such event the injunction will be such statement of facts. Appellant has not shown that it was in dissolved. any way prejudiced by the delay in filing the findings. Under such circumstances such delay on the part of the trial judge Amended and affirmed. in filing his findings of fact does not constitute reversible error. Barry v. Barry, Tex.Civ.App., 162 S.W.2d 440; Grant All Citations v. Pendley, Tex.Civ.App., 88 S.W.2d 132; McNabb v. Cruze, 164 S.W.2d 197

Tex.Civ.App., 101 S.W.2d 902.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

The test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts 283 S.W.3d 537

present an appropriate case for the trial court's Court of Appeals of Texas, action, but whether the court acted without Dallas.

reference to any guiding rules and principles; the Benjie SMITH d/b/a Oak Cliff Metals, Appellant, trial court's ruling should be reversed only if it v. was arbitrary or unreasonable.

DASS, INC., Appellee.

1 Cases that cite this headnote No. 05–07–01023–CV. | May 8, 2009.

[3] Specific Performance Synopsis Nature and Grounds of Duty of Plaintiff Background: Commercial tenant brought action against The equitable remedy of specific performance landlord and equipment lessor for breach of contract, may be awarded upon a showing of breach reformation of sales document and a declaration that reformed of contract; however, a party seeking specific sales document would be valid and enforceable. The 160th performance must plead and prove (1)

Judicial District Court, Dallas County, Jim Jordan, J., entered compliance with the contract including tender of judgment for tenant on jury verdict for money damages and performance unless excused by the defendant's denied all other requested relief. Tenant appealed.

breach or repudiation and (2) the readiness, willingness, and ability to perform at relevant times.

Holdings: The Court of Appeals, Lang, J., held that:

Cases that cite this headnote [1] landlord did not waive any purported complaint regarding the lack of a jury charge and jury finding on issue of whether [4] Jury lessee complied with provisions of sales agreement, and Issues of Fact in Equitable Actions When contested fact issues must be resolved [2] evidence was insufficient to support award of specific before a court can determine the expediency, performance.

necessity, or propriety of the equitable relief, a party is entitled to have a jury resolve the Affirmed. disputed fact issues.

Cases that cite this headnote

West Headnotes (11) [5] Estates in Property Nature and Incidents in General [1] Specific Performance Property Discretion of Court Nature of Right of Property and Acquisition Specific Performance in General Form of Remedy “Equitable title” is the present right to compel Specific performance is an equitable remedy legal title. committed to the trial court's discretion.

3 Cases that cite this headnote 1 Cases that cite this headnote [6] Appeal and Error

[2] Appeal and Error Necessity of Presentation in General Abuse of Discretion

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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

As a general rule, a party is required to present a complaint to the trial judge before being allowed Cases that cite this headnote to raise an issue on appeal.

[10] Specific Performance Cases that cite this headnote Presumptions and Burden of Proof Commercial tenant seeking specific performance [7] Specific Performance of sales contract with landlord had burden of Appeal proving that he had worked out title details Landlord did not waive any purported complaint required by the contract and was ready, willing, regarding the lack of a jury charge question and and able to perform as to such details. jury finding on issue of whether commercial tenant complied with sale agreement pursuant Cases that cite this headnote to rule providing failure to submit a question shall not be deemed a ground for reversal of [11] Vendor and Purchaser judgment unless it had been requested in writing Effect of Executory Contract on Title to and tendered by party complaining of judgment, Property in tenant's action for specific performance of the Commercial tenant's failure to plead and prove agreement; landlord did not assert a failure to that he complied with sales contract provision submit a question as a ground for reversal of that required details of title be worked out with judgment and did not object when tenant did not the Environmental Protection Agency (EPA), submit jury question on issue as to which he precluded award of equitable title in real had burden of proof. Vernon's Ann.Texas Rules property; there was no finding of fact by jury Civ.Proc., Rule 278.

that tenant performed his obligations under sale Cases that cite this headnote document regarding title details, thus there was no jury finding showing tenant's entitlement to equitable title in real property. Vernon's [8] Specific Performance Ann.Texas Rules Civ.Proc., Rule 54.

Performance, Good Faith, and Diligence of Plaintiff Cases that cite this headnote Commercial tenant's equivocal testimony as to whether he complied with sales contract provision that required details of title be worked out with the Environmental Protection Agency Attorneys and Law Firms (EPA) before he could purchase leased property from landlord was insufficient to support award *539 Shawn M. McCaskill, Goodwin Ronquillo, L.L.P., of specific performance of contract in his action Dallas, TX, for Appellant. against landlord. Vernon's Ann.Texas Rules Michael H. Myers, John Thomas Wilson, Myers Wilson P.C., Civ.Proc., Rule 54.

Dallas, TX, for Appellee.

Cases that cite this headnote Before Justices BRIDGES, O'NEILL and LANG.

[9] Jury Issues of Fact in Equitable Actions OPINION ON AMENDED When contested fact issues must be resolved MOTION FOR REHEARING before a court can determine the expediency, Opinion by Justice LANG.

necessity, or propriety of equitable relief, a party is entitled to have a jury resolve the disputed fact On March 12, 2009, this Court issued an opinion affirming issues. the trial court's judgment. Appellant Benjie Smith d/b/a Oak

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2

Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

For the reasons below, we decide Smith's first and second Cliff Metals (“Smith”) filed a motion for rehearing on April issues against him. We need not reach Smith's third issue. The 9, 2009. On April 29, 2009, with his April 9, 2009 motion still trial court's judgment is affirmed.

pending, Smith filed a motion for leave to file an amended motion for rehearing, to which he attached his amended motion for rehearing. By separate order, we have granted Smith's motion for leave to file an amended motion for I. FACTUAL AND PROCEDURAL BACKGROUND rehearing. We deny Smith's amended motion for rehearing. In addition, we withdraw our March 12, 2009 opinion and In 1999, Falcon Transit, Inc., a corporation owned by Benjie vacate the judgment of that date. This is now the opinion of Smith, leased real property located at 523 Pontiac Avenue the Court. in Dallas from DASS, the owner of the real property, for the operation of a scrap metal business called Oak Cliff This case involves a dispute over an agreement to purchase Metals. The written commercial lease agreement provided for a parcel of real property. The trial court signed a judgment a thirty-month term commencing February 1, 1999, with a in favor of Smith awarding damages against appellee DASS, monthly lease payment of $2000. In addition, Smith agreed Inc. (“DASS”) for breach of that agreement. However, to pay property taxes and utilities. DASS's director, Steve appellant contends the trial court erred when it refused to sign McFalls, signed the commercial lease agreement on behalf a judgment granting specific performance or a declaratory of DASS. Under a separate written lease agreement, Smith judgment awarding equitable title. In his three issues on leased equipment on the premises for the same term from appeal, Smith specifically contends (1) the trial court abused Texas Industrial Recycling Company (“TIRC”), a company its discretion by denying his election of the remedy of specific owned by McFalls, for a monthly lease payment of $3000. performance of the agreement to purchase, (2) the trial court McFalls signed the equipment lease agreement on behalf of erred by denying his request for the alternative remedy of TIRC. a declaratory judgment awarding him equitable title to the real property, and (3) the trial court's purported reasons for Smith contends the parties executed a document dated denying the relief requested by him are erroneous and without August 31, 2001, titled “Pending Sale of Land” (the “Sale merit. document”). The Sale document read as follows:

Pending Sale of Land

8/31/01

From: To:

Texas Industrial Recycling Benjie L. Smith

Scrap yard located at 523 Pontiac Avenu, Dallas, Texas, * $100,000.

known as Oak Cliff Metals

* To be paid $1500 plus property taxes per month until details on title are worked out between Benjie Smith's attorney and EPA.

Smith. McFalls denies signing the Sale document or the bills *540 The Sale document was purportedly signed by Smith, of sale.

as “Buyer,” and McFalls, as “Seller.” In addition, Smith contends two August 31, 2001 bills of sale were signed by In a letter dated October 26, 2005, DASS and TIRC purported McFalls regarding sale of the leased equipment from TIRC to to provide Falcon Transit, Inc. with notice of termination of the commercial lease agreement and equipment lease

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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

agreement. According to the notice of termination letter, upon the [Sale document].” The remaining questions and answers expiration of the thirty-month lease term on August 1, 2001, in the charge are not pertinent to this appeal. Falcon Transit, Inc. became a month-to month tenant of the premises at 523 Pontiac Avenue and maintained a month-to- Smith filed a “Motion for Entry of Judgment.” In that motion, month lease of the equipment. The notice of termination letter Smith requested the trial court in relevant part (1) render and ordered Falcon Transit, Inc. to vacate the leased premises sign a judgment in favor of Smith in accordance with the jury's and return possession of the leased equipment no later than verdict and (2) reform the Sale document and order specific December 1, 2005. Smith responded by filing suit. performance of that document, as reformed, by DASS. In defendants' response to Smith's motion for entry of judgment, In his third amended petition, the pleading upon which the they asserted in part Smith “is not entitled to the equitable parties went to trial, Smith asserted several claims. 1 First, remedy of specific performance because there is no evidence he pleaded a breach of contract claim, but alleged a mistake [he] has satisfied his obligations under the [Sale document].” in the Sale document in naming TIRC as the seller, rather The record does not contain a record of a hearing on Smith's than DASS. Next, Smith requested (1) reformation of the Sale motion for entry of judgment or show a ruling on that motion. document to “reflect the actual agreement of the parties,” and (2) a declaratory judgment that the Sale document, The final judgment stated it was “[b]ased upon the jury's as reformed, was valid and enforceable, that he obtained verdict” and awarded Smith money damages in the amount equitable title to the real property at issue “on the date of of $137,755, attorney's fees, prejudgment interest, post payment of the last monies owed for the Property under the judgment interest, and taxable costs of court. Further, the final contract,” and that he was entitled to “an adequate conveyance judgment denied “[a]ll other relief requested by any party to of the Property, including a transfer to Plaintiff of legal title.” this case.”

Finally, Smith pleaded for specific performance of the Sale In his “Motion to Modify, Correct or Reform the Judgment,” document, asserting in relevant part, “Plaintiff has performed Smith requested the trial court, in relevant part, (1) reform all obligations imposed on Plaintiff by the [Sale document]. the Sale document and order specific performance of the Plaintiff has fully paid Defendant the agreed purchase price.” reformed document on the part of DASS and conveyance of Smith requested defendants be required to comply with “the legal title to the real property, or (2) in the alternative, render terms of the contract, as reformed, specifically that they be a declaratory judgment Smith has equitable title in the real required to execute and deliver to Plaintiff an adequate and property “based on the jury's findings as to the existence of sufficient conveyance of title to the Property to Plaintiff.” the agreement and Benjie Smith's compliance therewith” by “making the full and final payment (as found by the jury).” Following a hearing, the trial court denied Smith's motion to The jury found 2 in answer to question 1 of the charge of the court that McFalls signed the Sale document. In answer modify, correct, or reform the judgment. 3 This appeal timely to question 2 of the charge, the jury found before the Sale followed. document was prepared *541 and signed, DASS and Smith orally agreed to the terms set forth in that document, but in the preparation of that document TIRC was erroneously written II. REQUIRED JURY FINDINGS into the document instead of DASS as a result of a mutual mistake of the parties. The jury found in answer to question In his first and second issues on appeal, Smith contends, in 3 of the charge that DASS failed to comply with the Sale essence, (1) the trial court abused its discretion by denying document. In answer to question 4 of the charge, the jury his election of the remedy of specific performance of the awarded Smith $137,755 in damages for DASS's “failure to agreement in the Sale document and (2) the trial court erred by comply with the [Sale document].” Those damages included denying his request for the alternative remedy of a declaratory (1) $100,000 for “[m]oney paid by or on behalf of [Smith] judgment awarding him equitable title as to the real property. pursuant to the [Sale document]”; (2) $15,314 for “[m]oney DASS contends, in relevant part, Smith is not entitled to paid by or on behalf of [Smith] in excess of the amount specific performance or equitable title because the facts required under the [Sale document]”; and (3) $22,441 for required to support those remedies were not found by the jury. “[p]roperty taxes paid on or behalf [sic] of [Smith] pursuant to With respect to DASS's argument regarding required jury findings, we address Smith's first and second issues together.

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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

findings, “Johnson had paid the purchase price and fully performed his obligations under the contract.” Id. at 148. Upon such performance, the court held, Johnson became *542 A. Standard of Review and Applicable Law vested with equitable title in the property. Id.; see also Cullins v. Foster, 171 S.W.3d 521, 533 (Tex.App.-Houston [14th 1. Specific Performance Dist.] 2005, pet. denied) (“Equitable title may be shown when the plaintiff proves that he has paid the purchase price and [1] [2] Specific performance is an equitable remedy fully performed the obligations under the contract.”); White committed to the trial court's discretion. Stafford v. S. Vanity v. Hughs, 867 S.W.2d 846, 849 (Tex.App.-Texarkana 1993, Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007, no writ) (same). pet. denied). The test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court's action, but “whether the court acted without reference to any guiding rules and B. Application of Law to Facts principles.” Cire v. Cummings, 134 S.W.3d 835, 838–39 With respect to specific performance, DASS argues in part (Tex.2004) (citing Downer v. Aquamarine Operators, Inc., in its brief before this Court that Smith did not submit 701 S.W.2d 238, 241–42 (Tex.1985)). The trial court's ruling appropriate jury questions relating to his performance of the should be reversed only if it was arbitrary or unreasonable.

material terms of the Sale document. Specifically, DASS Id. at 839.

contends

[3] [4] The equitable remedy of specific performance The [Sale document] states that the consideration for the may be awarded upon a showing of breach of contract. purchase was to be paid “$1,500 plus property taxes per Stafford, 231 S.W.3d at 535. However, a party seeking month until details on title are worked out between Benjie specific performance must plead and prove (1) compliance Smith's attorney and the EPA.” Smith testified that the with the contract including tender of performance unless details on the title haven't been worked out as of the date excused by the defendant's breach or repudiation and (2) of the trial proceedings. Moreover, Smith did not submit the readiness, willingness, and ability to perform at relevant questions to the jury evidencing whether he *543 was times. DiGiuseppe v. Lawler, 269 S.W.3d 588, 593–94, 601 ready, willing, or able to work out the details on title with (Tex.2008); see also 17090 Parkway, Ltd. v. McDavid, 80 the EPA. S.W.3d 252, 258 (Tex.App.-Dallas 2002, pet. denied). When contested fact issues must be resolved before a court can (citations to record omitted). Therefore, DASS asserts, Smith determine the expediency, necessity, or propriety of equitable is not entitled to the equitable relief of specific performance. relief, a party is entitled to have a jury resolve the disputed fact issues. DiGiuseppe, 269 S.W.3d at 596; Stafford, 231 Similarly, with respect to equitable title, DASS asserts in S.W.3d at 536 (citing Burrow v. Arce, 997 S.W.2d 229, 245 relevant part, “Smith failed to submit questions to the jury (Tex.1999)). providing evidence of his complete performance of the [Sale document], and therefore, cannot demonstrate that he is entitled to equitable title of the real property.” In particular, DASS alleges, there was no finding of fact Smith performed 2. Equitable Title

“his obligations related to the EPA.”

[5] Equitable title is the present right to compel legal title. See Travis Cent. Appraisal Dist. v. Signature Flight Support Smith asserts submission of any such questions to the jury Corp., 140 S.W.3d 833, 840 (Tex.App.-Austin 2004, no pet.). was unnecessary. He states in his brief to this Court, “The jury In Johnson v. Wood, 138 Tex. 106, 157 S.W.2d 146, 148 correctly found in Question 4 that Smith had fully performed (1941), the parties entered into a written contract to convey and complied with the [Sale document], and that Smith paid certain real property by warranty deed upon payment of the $15,314,00 in excess of the amount required under the [Sale agreed purchase price. Id. at 147. The jury found “Johnson document] to purchase the real property.” Further, Smith made payment of all the monthly installments due under asserts, he was entitled to a declaratory judgment awarding the contract.” Id. The court concluded, based on the jury's him equitable title in the real property “upon making the full

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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)

and final payment under the [Sale document], whereby such equitable title vested by operation of law.”

1. Waiver Under Rule 278

[6] In his reply brief before this Court, Smith argues DASS's Rule 278 of the Texas Rules of Civil Procedure addresses claim he failed to submit a question to the jury regarding submission of jury questions, definitions, and instructions. his performance of the terms of the Sale document and See TEX.R. CIV. P. 278. Pursuant to rule 278, Smith asserts therefore failed to “plead and prove that he complied with “DASS cannot complain for the first time on appeal that a the terms” is “legally and factually without merit.” Smith separate issue on Smith's compliance with the reformed [Sale asserts he pleaded in his third amended petition (1) he fully document] was not submitted to the jury.” The portion of rule performed all his obligations under the contracts, (2) he had 278 cited by Smith provides already made all of the requisite lump sum and monthly payments to McFalls and DASS to complete the purchase Failure to submit a question shall not of the real property pursuant to the Sale document, and be deemed a ground for reversal of (3) “[a]ll conditions precedent to Plaintiff's recovery have the judgment, unless its submission, been performed, have occurred, or have been waived.” 4 In in substantially correct wording, has addition, Smith contends he testified at trial the payments been requested in writing and tendered required under the Sale document had been made to McFalls by the party complaining of the and DASS. Further, Smith argues “[i]t is not necessary for a judgment; provided, however, that party requesting specific performance of a contract to plead objection to such failure shall suffice and prove both (1) full performance and compliance with the in such respect if the question is one contract and (2) being ready, willing, and able to perform and relied upon by the opposing party. comply with that same contract.”

Id. Here, DASS is not asserting “[f]ailure to submit a question” as “a ground for reversal of the judgment.” See [7] Also in his reply brief, Smith asserts that, pursuant to id. Moreover, Smith does not explain how defendants were rule 278 of the Texas Rules of Civil Procedure, obligated to object when Smith did not submit a jury question *544 DASS waived any purported on issues as to which he had the burden of proof. See complaint ... regarding the lack of jury DiGiuseppe, 269 S.W.3d at 596; Cullins, 171 S.W.3d at 533. charge question and jury finding on We cannot agree with Smith that DASS has “waived any the specific issue of whether Smith purported complaint ... regarding the lack of jury charge complied with the [Sale document] by question and jury finding on the specific issue of whether failing to (1) object to the omission Smith complied with the [Sale document]” pursuant to rule of such a question or (2) request 278. the submission of such a question in substantially correct wording during the jury charge conference before the 2. Specific Performance trial court.

[8] “[A] plaintiff seeking specific performance must plead Accordingly, Smith contends, DASS cannot complain for and prove (1) compliance with the contract including tender the first time on appeal that a separate issue on Smith's of performance unless excused by the defendant's breach or compliance with the reformed Sale document was not repudiation, and (2) the readiness, willingness, and ability to submitted to the jury. perform at relevant times.” DiGiuseppe, 269 S.W.3d at 601.

The record shows the Sale document, on its face, stated the Finally, Smith argues in his reply brief that, given the jury's purchase price was “[t]o be paid $1500 plus property taxes findings and answers as to the damages to him resulting from per month until details on title are worked out between Benjie DASS's failure to comply with the reformed Sale document, Smith's attorney and EPA.” Even assuming, without deciding, the omission of a jury charge question on the issue of whether that the jury's answer to question 4 of the charge of the court he complied with the Sale document was “immaterial and found payment by Smith of the full amount of money required harmless error, if error at all.” under the Sale document, such a finding does not address

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Smith's performance or compliance as to any obligations to Smith. Stafford does not address the precise issue presented work out title “details” with the EPA. here. See id. As noted above, the Texas Supreme Court has stated a plaintiff seeking specific performance must plead The testimony in the record regarding Smith's performance or and prove (1) compliance with the contract including tender compliance as to obligations to work out title details with the of performance unless excused by the defendant's breach or EPA is limited to the following testimony of Smith on cross- repudiation, and (2) the readiness, willingness, and ability to examination: perform at relevant times. See DiGiuseppe, 269 S.W.3d at 593–94, 601.

Q. Would you agree with me that if we're here today details on title haven't been worked out? [9] [10] When contested fact issues must be resolved before a court can determine the expediency, necessity, or *545 A. Not specifically, no.

propriety of equitable relief, a party is entitled to have a jury resolve the disputed fact issues. See id. at 596. Defendants In its brief on appeal, DASS asserts, “Smith testified that the did not concede or stipulate in the trial court Smith performed details on the title haven't been worked out as of the date of the regarding working out title details or that he was ready, trial proceedings.” Smith did not address that characterization willing, and able to perform as to such details. See id. at of his testimony in his reply brief on appeal or in his post-

601. No jury questions were requested regarding Smith's submission supplemental brief. In his amended motion for performance or compliance as to title details or whether he rehearing, Smith cites the testimony set forth above and was ready, willing, and able to perform. See id. at 593–94, asserts counsel for DASS “asked Smith on cross-examination 601. Also, there was no objection to the omission of such if Smith would agree that the details on title had not been questions. See id. at 595. Those issues were ones on which worked out between Smith's attorney and the EPA as of the Smith, as the party seeking specific performance, had the date of trial, and Smith answered ‘no’ he would not agree.”

burden of proof at trial. Id. at 596. Because there are no jury However, the record shows that, rather than answering “no,”

findings on elements of specific performance as to which the Smith answered, “Not specifically, no.” It is not clear from facts were disputed and on which Smith had the burden of the record whether Smith's answer addressed (1) whether he proof, we conclude the trial court's denial of Smith's request agreed with his questioner, or not, or (2) whether the details for specific performance was not an abuse of discretion. We on title had been worked out. Accordingly, the testimony is decide against Smith on his first issue.

equivocal. We are cited to no other evidence in the record, nor can we find any, that addresses Smith's performance or compliance as to “details on title” having been “worked out.” On this record, Smith did not conclusively establish *546 3. Equitable Title the fact at issue. See Gifford Hill Am., Inc. v. Whittington, 899 S.W.2d 760, 764 (Tex.App.-Amarillo 1995, no writ) [11] As stated above, the jury's findings in question 4 of (equivocal testimony did not conclusively establish fact and the charge of the court do not address Smith's performance submission to jury was therefore required). as to obligations under the Sale document to work out title “details” with the EPA. Further, as discussed above, there Additionally, Smith argues in his reply brief on appeal “[i]t was no finding of fact by the jury that Smith performed his is not necessary for a party requesting specific performance obligations under the Sale document regarding title “details.” of a contract to plead and prove both (1) full performance Therefore, the record shows no jury finding Smith fully and compliance with the contract and (2) being ready, willing, performed his obligations under the Sale document in order to and able to perform and comply with that same contract.” show entitlement to equitable title. See Johnson, 157 S.W.2d According to Smith, given that he “pleaded and proved full at 148; see also Cullins, 171 S.W.3d at 533 (“Equitable title performance and compliance with the [Sale document],” it may be shown when the plaintiff proves that he has paid would have been “inconsistent and unnecessary for [him] to the purchase price and fully performed the obligations under likewise plead and prove that he was ready, willing, and able the contract.”). Accordingly, we conclude the trial court did to perform.” In support of that argument, Smith cites Stafford not err in denying Smith's request for a declaratory judgment for the proposition “a party seeking specific performance awarding Smith equitable title in the real property. Smith's must have either performed or tendered performance.” See second issue is decided against him. Stafford, 231 S.W.3d at 535. However, we disagree with

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Therefore, regardless of whether the “purported reasons”

III. “PURPORTED REASONS” FOR speculated by Smith in his third issue as the bases for the DENIAL OF EQUITABLE RELIEF trial court's denial of that relief are, as contended by Smith, In his third issue, Smith asserts the trial court's “purported “erroneous and without merit,” Smith would not be entitled reasons” for denying the relief requested by him are erroneous to the equitable relief he has requested. We need not address and without merit. Specifically, Smith contends (1) because Smith's third issue. DASS did not plead a statute of frauds defense, the trial court was not limited to the Sale document in determining the sufficiency of the description of the real property to IV. CONCLUSION

be conveyed; (2) the issue of whether the Sale document was ambiguous was not pleaded by DASS, thus precluding We conclude the trial court's denial of Smith's request for the issue from being submitted to the jury; (3) because the specific performance was not an abuse of discretion because evidence and testimony provided an undisputed description of there are no jury findings on elements of specific performance the real property to be conveyed, that issue was not required as to which the facts were disputed and on which Smith had to be submitted to the jury; (4) the parties intended for DASS the burden of proof. Further, because the record shows no jury to convey its title to the real property to Smith, and Smith finding Smith fully performed his obligations under the Sale is entitled to whatever title DASS holds in the property; document, we conclude the trial court did not err in denying (5) Smith properly filed breach of contract and declaratory Smith's request for the alternative remedy of a declaratory judgment actions, rather than a trespass to try title action; and judgment awarding Smith equitable title in the real property. (6) DASS waived any complaint as to “the lack of a trespass to try title action.” Smith's first and second issues are decided against him.

We need not address Smith's third issue. The trial court's We concluded above the trial court did not err in denying judgment is affirmed. Smith's requests for specific performance and declaratory judgment awarding him equitable title because the record does not show the jury findings required for such relief. All Citations

283 S.W.3d 537

Footnotes 1 Causes of action asserted by Smith in his third amended petition, but not relevant to this appeal, included violations of the Texas Deceptive Trade Practices and Consumer Protection Act, common law fraud, and statutory fraud.

2 Smith's brief before this Court states the following, which is not disputed by DASS:

The Charge of the Court signed by the trial court judge and the jury's answers thereto and verdict were lost or destroyed, and the parties did not have any copies of the signed Charge of the Court or the jury's verdict. The unsigned Charge of the Court contained in the trial court's file and the Clerk's Record constitutes a true, correct, and accurate copy of the Charge of the Court signed by the trial court judge and submitted to the jury upon which the jury returned its verdict. TEX.R.APP. P. 34.5(e). (citations to record omitted). The trial court judge recited the jury's verdict into the reporter's record, and the facts herein regarding the jury's verdict are based on that record.

3 Additionally, Smith filed a request for findings of fact and conclusions of law with respect to the trial court's denial of specific performance, reformation, and declaratory relief. The record does not show findings of fact and conclusions of law were issued by the trial court.

4 In a post-submission letter brief, Smith argues, inter alia, that pursuant to rule 54 of the Texas Rules of Civil Procedure, he had no burden to prove performance or compliance with the Sale document or obtain a jury finding on that issue. See TEX.R. CIV. P. 54 (party pleading performance of conditions precedent is required to prove only those specifically denied by opposite party). However, Smith's pre-submission briefs before this Court do not cite rule 54 or present that argument. Therefore, Smith's post-submission argument regarding his lack of burden pursuant to rule 54 presents nothing for this Court's review. See Tex. Med. Ass'n v. Tex. Workers Comp. Comm'n, 137 S.W.3d 342, 351 (Tex.App.-Austin 2004, no pet.) (argument waived where asserted during oral argument and in post-submission brief, but not in pre-submission briefs); see also City of Houston v. Precast Structures, Inc., 60 S.W.3d 331, 340 n. 4 (Tex.App.-Houston [14th Dist.] 2001,

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pet. denied) (argument waived where raised in letter brief filed after oral argument); TEX.R.APP. P. 38.1(f) (appellant's brief must state concisely all issues or points presented for review). Moreover, as a general rule, a party is required to present a complaint to the trial judge before being allowed to raise an issue on appeal. See Ochoa v. Craig, 262 S.W.3d 29, 32–33 (Tex.App.-Dallas 2008, pet. denied); TEX.R.APP. P. 33.1. The record shows testimony at trial from both sides regarding Smith's performance or compliance with the Sale document. However, the record shows no objection or complaint by Smith in the trial court regarding his alleged lack of burden to prove that issue.

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

[4] there was no evidence that corporation did not intend to transfer stock to contractor at time of agreement, precluding KeyCite Yellow Flag - Negative Treatment contractor's fraud claim.

Distinguished by Smith v. Dass, Inc., Tex.App.-Dallas, May 8, 2009

231 S.W.3d 530

Affirmed.

Court of Appeals of Texas, Dallas.

Kelly STAFFORD, Appellant/Cross–Appellee West Headnotes (21)

v.

SOUTHERN VANITY MAGAZINE, [1] Specific Performance INC., Appellee/Cross–Appellant Prayer for Relief

and

Perry Hollingsworth and Allison Independent contractor's pleadings were sufficient to put closely-held corporation on Hollingsworth, Appellees.

notice that contractor was seeking specific No. 05–06–00545–CV. | Aug. 14, 2007. performance of stock transfer agreement;

contractor pleaded a cause of action for breach Synopsis of contract, asserted that she did not have an Background: Independent contractor brought action against adequate remedy at law, and, in her prayer for a closely-held corporation asserting a fraud claim and relief, sought a 20% ownership share in the a breach of contract claim regarding contract by which corporation, or in the alternative, the value of a corporation allegedly promised to convey 20% of corporate 20% share in the corporation. stock to contractor. The County Court at Law No. 3, Dallas County, Sally Montgomery, J., entered judgment on jury 1 Cases that cite this headnote verdict finding in favor of contractor on the contract claim, but against contractor on the fraud claim. Contractor's motion [2] Pleading for a new trial on the fraud claim was denied, but motion Sufficiency of Allegations in General for specific performance of contract was granted. Contractor Texas follows a “fair notice” standard for appealed, and corporation cross-appealed.

pleading, which tests whether the opposing party can ascertain from the pleading the nature and basic issues of the controversy and what Holdings: The Court of Appeals, Carolyn Wright, J., held evidence might be relevant. that:

Cases that cite this headnote [1] contractor's pleadings were sufficient to put closely-held corporation on notice that contractor was seeking specific [3] Pleading performance of stock transfer agreement; Statement of Cause of Action in General Under the “fair notice” standard of pleading, a [2] contractor performed obligations under stock transfer petition is sufficient if it gives fair and adequate agreement and had no adequate remedy at law, allowing notice of the facts upon which the pleader bases specific performance;

his claim.

[3] there were no disputed issues of fact to submit to jury as 2 Cases that cite this headnote would preclude the trial court's grant of specific performance; and [4] Pleading

Sufficiency of Allegations in General Pleading

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

Statement of Cause of Action in General Specific performance of a contract is an equitable The purpose of the “fair notice” standard remedy committed to the trial court's discretion. of pleading is to give the opposing party 11 Cases that cite this headnote information sufficient to enable him to prepare a defense.

[9] Specific Performance 2 Cases that cite this headnote Nature and Grounds of Duty of Plaintiff A party seeking specific performance of a [5] Specific Performance contract must demonstrate that they have Nature and Purpose in General performed, or tendered performance, of their Specific Performance obligations under the contract.

Form of Remedy

1 Cases that cite this headnote “Specific performance” of a contract is an equitable remedy that may be awarded upon a showing of breach of contract. [10] Specific Performance Inadequacy of Remedy at Law 21 Cases that cite this headnote Specific Performance Contracts Relating to Personal Property [6] Specific Performance A contract will not be specifically enforced if Inadequacy of Remedy at Law there is an adequate remedy at law; however, “Specific performance” of a contract is not specific performance may be awarded when the a separate cause of action, but rather it is personal property has a special, peculiar, or an equitable remedy used as a substitute for unique value or character. monetary damages when such damages would 1 Cases that cite this headnote not be adequate.

18 Cases that cite this headnote [11] Specific Performance Corporate Stock or Securities [7] Specific Performance A party may seek specific performance to Sufficiency of Performance by Plaintiff in enforce a stock purchase agreement when General a closely-held corporation's stock has no Independent contractor performed her ascertainable value. obligations under contract with closely-held Cases that cite this headnote corporation, as required in order for contractor to seek specific performance of the contract, in which corporation promised to convey 20% of [12] Specific Performance its stock to contractor if contractor continued to Corporate Stock or Securities work for the corporation; contractor returned to Independent contractor had no adequate remedy work after receiving the stock offer. at law, enabling her to seek specific performance of contract with closely-held corporation, under Cases that cite this headnote which corporation had agreed to convey 20% of its stock to contractor, where the stock had no [8] Specific Performance ascertainable value.

Discretion of Court

Cases that cite this headnote Specific Performance Form of Remedy

[13] Equity

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

He Who Comes Into Equity Must Come party which, by its voluntary act, created the with Clean Hands impossibility. The doctrine of unclean hands did not preclude 1 Cases that cite this headnote independent contractor from seeking specific performance of stock transfer agreement that contractor had with closely-held corporation, [18] Appeal and Error absent any allegation from the corporation that it Refusal of New Trial was harmed by contractor's illegal or inequitable The Court of Appeals reviews the trial court's conduct. denial of a motion for new trial for an abuse of discretion.

2 Cases that cite this headnote 2 Cases that cite this headnote [14] Equity He Who Comes Into Equity Must Come [19] New Trial with Clean Hands Time of Discovery The doctrine of unclean hands operates as a bar Evidence that closely-held corporation had to the equitable relief of specific performance. issued all its stock to one stockholder, making it impossible for the corporation to transfer any 3 Cases that cite this headnote stock to independent contractor as promised in stock transfer agreement, was not “newly [15] Specific Performance discovered” evidence entitling contractor to Trial or Hearing a new trial on her fraud claim against the There were no disputed issues of fact to submit corporation, where the stockholder owned 100% to jury as would preclude trial court from of the corporation's stock at all times relevant to granting specific performance to independent contractor's action. contractor in contractor's breach of contract Cases that cite this headnote action against closely-held corporation; the jury had determined the existence of a valid contract and also determined that contractor performed [20] New Trial her obligations under the contract. Power and Duty of Court in General A party who seeks a new trial on the ground 1 Cases that cite this headnote of newly discovered evidence must show the trial court: (1) the evidence came to the party's [16] Jury knowledge after trial; (2) it was not owing to the Issues of Fact in Equitable Actions want of due diligence that it did not come sooner;

When contested fact issues must be resolved (3) it is not cumulative; and (4) it is so material before equitable relief can be determined, a party that it would probably produce a difference result is entitled to have a jury resolve the fact dispute. if a new trial were granted.

1 Cases that cite this headnote 1 Cases that cite this headnote

[17] Specific Performance [21] Fraud Performance Impossible Existing Facts or Expectations or Promises Regarding an award of specific performance There was no evidence that closely-held in a breach of contract action, impossibility of corporation did not intend to transfer stock performance is not available as a defense to a to independent contractor at the time it formed stock transfer agreement with contractor, precluding contractor's fraud claim against the

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

corporation; the corporation believed that the the magazine in return for a twenty percent commission. stock transfer was contingent on the corporation Shortly after appellant began working for Southern Vanity, becoming profitable. Allison and Applewhite had a business dispute. Allison and Perry removed Southern *534 Vanity's property from Cases that cite this headnote the magazine's offices and considered shutting down the magazine. For a period of several weeks, the magazine was in “limbo” and appellant did no work for Southern Vanity. Allison and Perry ultimately decided to continue with the Attorneys and Law Firms magazine and asked appellant to return to work. Southern Vanity could not pay appellant a salary, but on June 26, *533 Kurt C. Banowsky, Banowsky & Levine, P.C., Dallas, 2003, Allison sent the following e-mail to appellant and for appellant. Donana Galloway, another independent contractor selling advertisements for Southern Vanity:

Kendra Karlock, David R. Weiner, Glast, Phillips & Murray, P.C., Dallas, for appellee.

Steve (Southern Vanity att.) is working day and night on legal issues with Lisa Applewhite Brandt, so he will start Before Justices WRIGHT, RICHTER, and SMITH. 1 working on the following documents next week. Of course I have put numerous amounts of time and money into the magazine and wound up with a disgruntled, out of control OPINION associate. I never want this to happen again!

Opinion by Justice WRIGHT. I appreciate both of you and all of your hard work getting Southern Vanity back on track. There is much more to do Kelly Stafford sued Southern Vanity Magazine, Inc.

(sales, sales, sales)! I regret salaries and benefits are not an (Southern Vanity), Perry Hollingsworth, and Allsion option as of yet, but will be in the future. Because of your Hollingsworth for breach of contract and fraud based on help and continued support in building Southern Vanity Southern Vanity's failure to transfer twenty percent of the Magazine, I would like to offer each of you stock and 20% stock of the corporation to appellant. 2 The jury determined of the company. Perry and I expect our investments back Southern Vanity breached its agreement to convey the stock, from the company as each of you expect to be reimbursed but found for appellees on the fraud claim. In two issues, for your expenses as Southern Vanity profits. appellant contends the trial court erred by denying her motion for new trial. In two cross-issues, Southern Vanity contends Following this e-mail, appellant continued to work at (1) the trial court erred by awarding specific performance Southern Vanity, received the title of Principal/Director of to appellant, and (2) consequently, the award of attorney's Marketing, and took on additional duties. Southern Vanity fees should be reversed. We overrule appellant's issues and did not transfer the stock to appellant. In September 2003, Southern Vanity's cross-issues, and affirm the trial court's appellant left Southern Vanity. 3 judgment.

Appellant sued Southern Vanity, Perry, and Allison based on Southern Vanity's failure to transfer the stock. At trial, Background appellant contended she was entitled to receive the stock as of June 26, 2003. Appellees argued Southern Vanity was Southern Vanity was formed in late 2002 by Perry not required to transfer the stock until it became profitable Hollingsworth, Allison Hollingsworth, and Lisa Applewhite and appellant contributed to its success. The jury determined to publish a magazine. Allison and Perry both testified that, Southern Vanity breached its agreement to convey the stock, at all relevant times, Perry owned one hundred percent of the but found for appellees on the fraud claim. Appellant moved stock of Southern Vanity. Southern Vanity published its first for specific performance of the contract. Southern Vanity issue in February 2003. filed an affidavit executed by Allison stating it was impossible for Southern Vanity to convey any stock to appellant because Appellant began working for the magazine in April 2003 all stock had been issued to Perry. as an independent contractor selling advertisements in

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

Appellant then filed a motion for new trial on her fraud cause (Tex.App.-Dallas 1987, writ denied). Specific performance of action, contending the fact the stock had been issued to is not a separate cause of action, but rather it is an equitable Perry was newly discovered evidence that entitled her to a remedy used as a substitute for monetary damages when new trial and that the jury's adverse finding on the fraud such damages would not be adequate. See Scott v. Sebree, claim was against the great weight of the evidence. The trial 986 S.W.2d 364, 368 (Tex.App.-Austin 1999, pet. denied). court granted appellant's request for specific performance. Here, appellant pleaded a cause of action for breach of Appellant's motion for new trial was overruled by operation contract. In the punitive damages portion of her pleading, of law. Both appellant and Southern Vanity appealed. appellant asserted she did not have an adequate remedy at law.

And, in her prayer for relief, she sought “a 20% ownership share in the corporations, or in the alternative, the value of the 20% share in the corporations.” Southern Vanity did Specific Performance

not specially except to appellant's pleading. Construing the Because appellant's issues both pertain to the motion for pleadings liberally in appellant's favor, we conclude they are new trial, we begin our analysis with Southern Vanity's sufficient to put Southern Vanity on notice that appellant cross-issue alleging the trial court erred in awarding specific was seeking, among other things, specific performance for performance. Southern Vanity maintains we must reverse the Southern Vanity's breach of contract. trial court's judgment because appellant did not (1) plead for specific performance, (2) offer any evidence on the [7] [8] [9] [10] [11] Southern Vanity next contends essential elements of specific performance, or (3) request there is “no evidence that would support an award of specific jury questions on the elements of specific performance. performance.” Specific performance is an equitable remedy Additionally, Southern Vanity claims specific performance committed to the trial court's discretion. Bell v. Rudd, 144 is impossible *535 in this case because all of the stock is Tex. 491, 191 S.W.2d 841, 843 (1946); Roundville Partners, owned by Perry, making it impossible for Southern Vanity to L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex.App.-Austin 2003, transfer stock to appellant. We will address each of Southern pet. denied); Scott, 986 S.W.2d at 368 (Tex.App.-Austin Vanity's contentions in turn. 1999, pet. denied). A party seeking specific performance must demonstrate that they have performed, or tendered [1] [2] [3] [4] Southern Vanity first contends specificperformance, of their obligations under the contract. Am. performance is a separate cause of action that appellant failed Apparel Prods., Inc. v. Brabs, Inc., 880 S.W.2d 267, 269 to plead. After reviewing the pleadings, we disagree. Texas (Tex.App.-Houston [14th Dist.] 1994, no writ). A contract follows a “fair notice” standard for pleading, which tests will not be specifically enforced if there is an adequate whether the opposing party can ascertain from the pleading remedy at law. Id. However, specific performance may be the nature and basic issues of the controversy and what awarded when the personal property has a “special, peculiar, evidence might be relevant. Low v. Henry, 221 S.W.3d 609, or unique value or character.” Madariaga v. Morris, 639 612 (Tex.2007); Emerson Elec. Co. v. Am. Permanent Ware S.W.2d 709, 711 (Tex.App.-Tyler 1982, writ ref'd n.r.e.). Co., 201 S.W.3d 301, 309 (Tex.App.-Dallas 2006, no pet.). Further, when a closely-held corporation's stock has no Under this standard, “[a] petition is sufficient if it gives fair ascertainable value, the party may seek specific performance and adequate notice of the facts upon which the pleader to enforce a stock purchase agreement. Miga v. Jensen, 96 bases his claim.” Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 207, 217 (Tex.2002) (citing Bendalin v. Delgado, 406 S.W.3d 887, 897 (Tex.2000). The rule's purpose is to give the S.W.2d 897, 900 (Tex.1966) (plaintiff could seek specific opposing party information sufficient to enable him to prepare performance to enforce stock purchase agreement *536 a defense. Id. When, as here, a party fails to specially except, where corporation was closely held and stock had no market we construe the pleadings liberally in favor of the pleader. value)). Horizon/CMS Healthcare Corp., 34 S.W.3d at 897; Emerson Elec. Co., 201 S.W.3d at 309. With respect to whether appellant complied with the terms of the contract, the record shows that on June 26, 2003, [5] [6] Specific performance is an equitable remedy that Southern Vanity offered appellant twenty percent of the stock may be awarded upon a showing of breach of contract. Kress in the corporation if appellant continued to work for Southern v. Soules, 152 Tex. 595, 597, 261 S.W.2d 703, 704 (1953); Vanity. At trial, appellant maintained she was entitled to Living Christ Church, Inc. v. Jones, 734 S.W.2d 417, 419 receive the stock at the point she agreed to continue, and

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

did continue, to work for the magazine. Although Southern Southern Vanity breached its contract to convey stock to Vanity argued appellant was not entitled to receive the stock appellant, necessarily finding a contract existed as of June until the magazine became profitable, the jury decided the 26, 2003 when Southern Vanity offered stock in exchange issue adversely to Southern Vanity by finding it failed to for appellant continuing to work at the magazine. It is comply with the agreement to transfer stock. It is undisputed undisputed appellant continued to work at the magazine after appellant returned to work at the magazine after receiving June 26, 2003 and, therefore, performed under the contract. the stock offer. Thus, we cannot conclude the trial court Thus, appellant was not required to obtain a jury finding on abused is discretion by determining appellant demonstrated whether she was ready, willing, and able to perform under she performed her obligations under the contract. the contract. Chilton Ins. Co. v. Pate & Pate Enters., 930 S.W.2d 877, 886 (Tex.App.-San Antonio 1996, writ denied)

[12] [13] [14] As to whether appellant had an adequate (no jury question necessary if evidence conclusively proves remedy at law, the record does not contain evidence the fact). As to whether appellant had unclean hands or an Southern Vanity stock had any ascertainable value. Rather, adequate remedy at law, these questions “present legal policy Southern Vanity lost money from its inception and was still issues well beyond the jury's province of judging credibility losing money at the time of trial. Allison testified the value of and resolving factual disputes.” Burrow, 997 S.W.2d at the stock was “zero or worse,” and Perry testified he could not 245 (adequacy of other remedies); Hudson, 162 S.W.3d at sell Southern Vanity due to the amount of debt the company 688 (equitable considerations such as whether plaintiff had had incurred. Thus, the record shows Southern Vanity's stock unclean hands and whether, and how much, equitable relief had no ascertainable value, and appellant could seek specific should be awarded must be determined by trial court rather performance to enforce the stock transfer agreement. See than jury). Accordingly, there were no additional disputed 4 issues of fact in support of appellant's claim for specific Miga, 96 S.W.3d at 217; Bendalin, 406 S.W.2d at 900.

performance that needed to be submitted to the jury.

[15] We next turn to Southern Vanity's complaint regarding jury questions. Relying on Lawler v. Digiuseppe, No. 05– Again relying on Lawler, Southern Vanity next argues 03–00468–CV, 2004 WL 1209569 (Tex.App.-Dallas June 3, the submission of the breach of contract question was 2004, pet. granted) (memo. op. on reh'g), Southern Vanity not necessarily referable to appellant's claim for specific contends appellant is not entitled to specific performance performance and did not put it on notice appellant was seeking because she “did not request any jury questions on the specific performance. In Lawler, we concluded jury questions essential elements of specific performance.” In Lawler, asking whether the seller or one of the purchasers breached the purchasers sued for breach of a contract to sell real the contract, standing alone, were not necessarily referable to estate. The jury found the seller breached the contract a claim for specific performance. Lawler, 2004 WL 1209569, and awarded $295,696.93 in damages. However, on the at *2. Therefore, the questions did not put the seller on notice purchasers' motion, the trial court entered final judgment the purchasers were seeking specific performance so the seller granting specific performance. The seller appealed, arguing could object to the omission of a jury question on whether the trial court erred in granting specific performance because the purchasers were ready, willing, and able to perform the the purchasers failed to obtain a jury finding that the contract. Id. purchasers were ready, willing, and able to perform the contract. We concluded the issue of whether the purchasers However, in this case, we have concluded appellant pleaded were ready, willing, and able to perform was disputed at trial for specific performance. Appellant's counsel also raised and, therefore, had to be resolved before equitable relief could the issue of specific performance in argument before the be awarded. Id. at *1–2. trial court. And, the trial court did not submit a damages question relating to Southern Vanity's breach of contract, [16] When contested fact issues must be resolved before putting Southern Vanity on notice damages were not an equitable relief can be determined, a party is entitled to have a available remedy. Finally, there were no additional issues jury resolve the fact dispute. Burrow v. Arce, 997 S.W.2d 229, of fact that needed to be submitted to the jury in this case. 245 (Tex.1999); *537 Hudson v. Cooper, 162 S.W.3d 685, Accordingly, unlike Lawler, Southern Vanity not only was on 688 (Tex.App.-Houston [14th Dist.] 2005, no pet.). However, notice appellant was seeking specific performance, but there Southern Vanity has not pointed to a disputed issue of fact that was no basis for Southern Vanity to object to the omission of should have been submitted to the jury. The jury determined any issue.

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 [17] Southern Vanity's final complaint regarding the award (Tex.1985); El Dorado Motors, Inc., 168 S.W.3d at 368. of specific performance is that specific performance of the contract by Southern Vanity is impossible. Specifically, [19] [20] In her first issue, appellant contends the trial court Southern Vanity maintains that because it has issued one erred by denying her motion for new trial on the fraud issues hundred percent of its stock to Perry, it is impossible because Allison's affidavit asserting Southern Vanity has no for it to transfer any stock to appellant. Impossibility of stock to transfer to appellant is newly discovered evidence performance is not available as a defense to a party which that entitled her to a new trial. A party who seeks a new trial on by its voluntary act created the impossibility. Solomon v. the ground of newly discovered evidence must show the trial Greenblatt, 812 S.W.2d 7, 18 (Tex.App.-Dallas 1991, no court (1) the evidence came to her knowledge after trial; (2) it writ) (citing Martin v. Star Publishing Co., 126 A.2d 238, was not owing to the want of due diligence that it did not come 242 (Del.1956) and 6 S. WILLISTON: A TREATISE ON sooner; (3) it is not cumulative; and (4) it is so material that it THE LAW OF CONTRACTS § 1960). Here, the transfer of would probably produce a difference result if a new trial were stock from Southern Vanity to Perry is a situation voluntarily granted. Johnson v. Legacy Bank of Texas, 167 S.W.3d 643, created by Southern Vanity and Perry. Thus, Southern Vanity 645–46 (Tex.App.-Dallas 2005, no pet.). Appellant contends may not rely on *538 impossibility of performance as a the newly discovered evidence is that Southern Vanity has defense in this case. See Solomon, 812 S.W.2d at 18. issued all its stock to Perry, making it impossible for Southern Vanity to transfer any stock to appellant. Regardless of when Having determined appellant's pleadings were adequate to the stock was issued to Perry, it was undisputed at trial that put Southern Vanity on notice of her request for specific Perry owned one hundred percent of the stock of Southern performance, the evidence is legally sufficient to support Vanity at all relevant times. 5 Thus, any stock transferred to the trial court's award of specific performance, no additional appellant would necessarily come from Perry. Appellant has jury questions were necessary in this case, and that the failed to show the fact Southern Vanity issued the stock to defense of impossibility is not available in this case, we Perry is newly discovered evidence. We overrule appellant's conclude the trial court did not abuse its discretion in first issue. awarding appellant specific performance. Therefore, we overrule Southern Vanity's first cross-issue. Due to our *539 [21] In her second issue, appellant contends the trial disposition of Southern Vanity's first cross-issue, we need court erred by overruling her motion for new trial because the not address its second cross-issue challenging the award of jury's finding that appellees did not commit fraud is against attorney's fees and costs. the great weight of the evidence. When a party attacks the factual sufficiency of an adverse finding on which she had the burden of proof, she must demonstrate on appeal that the Motion for New Trial adverse finding is against the great weight and preponderance of the evidence. Dow Chem. Co. v. Francis, 46 S.W.3d 237, [18] We now turn to appellant's two issues contending the 242 (Tex.2001) (per curiam). When reviewing a finding for trial court erred in denying her motion for new trial on her factual sufficiency, we consider all of the evidence and will fraud claim. According to appellant, the trial court should set aside a finding only if the evidence is so weak or if the have granted her motion because (1) Allison's affidavit filed finding is so against the great weight and preponderance of after trial asserting Southern Vanity has no stock to transfer to the evidence that it is clearly wrong and unjust. Id. appellant is newly discovered evidence that entitled appellant to a new trial, and (2) the jury's finding is against the great Appellant argues the evidence is factually insufficient weight of the evidence. We review the trial court's denial of to support the jury's finding because the “evidence at a motion for new trial for an abuse of discretion. In re R.R., trial, when considered in conjunction with the evidence 209 S.W.3d 112, 114 (Tex.2006) (per curiam); El Dorado discovered post-trial, establishes that [appellees] committed Motors, Inc. v. Koch, 168 S.W.3d 360, 368 (Tex.App.- fraud by promising stock they did not intend to transfer” Dallas 2005, no pet.). The trial court abuses its discretion to appellant. However, the evidence supports the parties' only if it acted unreasonably or in an arbitrary manner, different interpretations of when the stock was to be without reference to guiding rules or principles. Downer transferred to appellant. Both Perry and Allison testified they believed Southern Vanity was not obligated to transfer stock

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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)

conclude the jury's finding appellees did not commit fraud to appellant until Southern Vanity became profitable. Perry in making the stock offer to appellant is against the great testified he agreed to the offer of stock to appellant and weight and preponderance of the evidence. Consequently, “when the company became profitable and we was [sic]

we cannot conclude the trial court abused its discretion by paid back our investment for the money I had put into denying appellant's motion for new trial on that basis. We the company, then they would receive their shares equal at overrule appellant's second issue.

20 percent a piece.” Allison testified Perry was willing to release the stock after Southern Vanity became profitable.

Accordingly, we affirm the trial court's judgment.

But, appellant testified she believed she was entitled to the stock without the profitability condition, and the jury agreed with her. There was no evidence Perry or Southern Vanity All Citations

did not intend to transfer the stock when Southern Vanity entered into the stock transfer agreement. Thus, we cannot 231 S.W.3d 530

Footnotes 1 The Honorable Bea Ann Smith, Justice, Court of Appeals, Third District of Texas at Austin, Retired, sitting by assignment. 2 Appellant also asserted claims for breach of contract and unjust enrichment due to Southern Vanity's failure to reimburse appellant for certain expenses and breach of contract and tortious interference with contract due to Southern Vanity's failure to assume appellant's apartment lease. These claims are not at issue in this appeal.

3 The evidence was disputed over whether appellant was terminated or resigned. 4 To the extent Southern Vanity suggests specific performance was improper because appellant failed to put on evidence showing she had clean hands, again we disagree. The doctrine of unclean hands operates as a bar to the equitable relief of specific performance. Lazy M Ranch, Ltd. v. TXI Operations LP, 978 S.W.2d 678, 683 (Tex.App.-Austin 1998, pet. denied). As the party claiming appellant had unclean hands, it is Southern Vanity's burden to show it was injured by appellant's unlawful or inequitable conduct. Willis v. Donnelly, 118 S.W.3d 10, 38 (Tex.App.-Houston [14th Dist.] 2003), aff'd in part and rev'd in part on other grounds, 199 S.W.3d 262, 278–79 (Tex.2006). Southern Vanity has neither argued nor shown it was harmed by any illegal or inequitable conduct by appellant relating to the stock transfer agreement. Thus, we cannot conclude the award of specific performance was improper on that basis.

5 As noted, it was undisputed at trial that Perry owned one hundred percent of the stock in Southern Vanity. Indeed, Southern Vanity's counsel represented to the trial court that:

Southern Vanity had no stock to give. Perry Hollingsworth owned a hundred percent of the stock. If some of that stock was going to go somewhere, it was going to come from [Perry].... [T]hey weren't going to issue new stock. [Perry] owned the stock and he was going to transfer it to her pursuant to this agreement.... Southern Vanity had no stock to give. It had been-it was all held by [Perry]. Neither appellant nor Southern Vanity have cited to any authority that the actual issuance of stock to Perry affected this agreement.

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

On appeal from amended summary judgment, Court of Appeals would take judicial notice 218 S.W.3d 109

of record for appeal from original summary Court of Appeals of Texas, judgment.

Houston (14th Dist.).

9 Cases that cite this headnote Pablo TELLO, Appellant

v.

BANK ONE, N.A. and Banc One [2] Judgment Acceptance Corp., Appellees. Effect of Counterclaim Judgment

No. 14–04–00888–CV. | Jan. 9, 2007. Presumptions and Burden of Proof

Synopsis For a plaintiff to prevail on a motion for summary Background: Lessor and lienholder filed claim against lessee judgment when the defendant has asserted a for breach of vehicle lease agreement. Lessee counterclaimed counterclaim, the plaintiff must prove, as a for Deceptive Trade Practices Act (DTPA) violations, matter of law, each element of its cause of action common-law fraud, and breach of contract. The County Civil and show it is entitled to summary judgment Court at Law No. 2, Harris County, Gary Michael Block, J., on the counterclaim. Vernon's Ann.Texas Rules granted summary judgment for lessor and lienholder. Lessee Civ.Proc., Rule 166a(c). appealed.

2 Cases that cite this headnote

[3] Judgment

Holdings: The Court of Appeals, Seymore, J., held that:

Motion or Other Application Although plaintiffs used language applicable [1] lessee waived challenge to ruling on lessor's breach of to both traditional summary judgment motion contract claim;

and no-evidence summary judgment motion in opposing defendant's counterclaims, language [2] lessee waived challenge to ruling on counterclaims of would be construed as traditional motion, since common-law fraud and breach of contract;

motion did not unambiguously state it was filed under no-evidence rule, and did not strictly [3] lessee failed to raise fact question that would preclude comply with rule. Vernon's Ann.Texas Rules summary judgment on DTPA claim;

Civ.Proc., Rule 166a(c), (i).

[4] lessee waived affirmative defense of failure of 1 Cases that cite this headnote consideration; and

[5] lessee waived offset claim. [4] Judgment Weight and Sufficiency

If the non-movant relies on an affirmative Affirmed. defense to oppose a summary judgment motion, he must provide sufficient summary judgment Frost, J., filed dissenting opinion. evidence to create a fact issue on each element of the defense. Vernon's Ann.Texas Rules Civ.Proc., Rule 166a(c).

West Headnotes (20)

5 Cases that cite this headnote

[1] Evidence [5] Judgment Records or Decisions in Same Case

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

Weight and Sufficiency time of execution of lease, that lienholder had The non-movant is not required to prove an no representative present at time of transaction, affirmative defense, raised to oppose a summary that lienholder was purely a financial institution judgment motion, as a matter of law; raising which purchased vehicle and lease from lessor, a fact issue on each element of the defense is and that lessor was not agent of lienholder or sufficient to defeat summary judgment. Vernon's authorized by it to make any representations Ann.Texas Rules Civ.Proc., Rule 166a(c). to lessee. V.T.C.A., Bus. & C. §§ 17.45(5), 17.46(b)(12), 17.50(a)(1)(A), (a)(1)(3); Rules 5 Cases that cite this headnote App.Proc., Rule 38.1(h); Vernon's Ann.Texas Rules Civ.Proc., Rule 166a(c).

[6] Appeal and Error Cases that cite this headnote Insufficient Discussion of Objections Lessee waived his challenge on appeal to [9] Appeal and Error

grant of summary judgment that lienholder Nature and Grounds of Right failed to prove elements of breach of vehicle lease agreement claim, where lessee only made Appeal and Error bare assertion that genuine issue of material Points and Arguments fact existed on claim, and never asserted The Court of Appeals must construe the Rules of in its argument on appeal that lienholder Appellate Procedure reasonably, yet liberally, so failed to prove elements of its claim. Rules that the right to appeal is not lost by imposing App.Proc., Rule 38.1(h); Vernon's Ann.Texas requirements not absolutely necessary to effect Rules Civ.Proc., Rule 166a(c). the purpose of a rule; however, no authority obligates the court to become advocates for Cases that cite this headnote a particular litigant through performing their research and developing their argument for them.

[7] Appeal and Error Rules App.Proc., Rule 38.9.

Insufficient Discussion of Objections 10 Cases that cite this headnote Lessee waived any challenge to grant of summary judgment for counterclaims of common-law fraud and breach of vehicle lease [10] Appeal and Error agreement, where lessee presented no issue or Asserting Invalidity of Contract or Other argument on appeal. Vernon's Ann.Texas Rules Instrument Civ.Proc., Rule 166a(c); Rules App.Proc., Rule Appeal and Error 38.1(h). Ratification, Estoppel, Waiver, and Res Judicata

Cases that cite this headnote If Court of Appeals were to craft, on appellant's behalf, an argument for his affirmative defenses [8] Judgment of fraudulent inducement and equitable estoppel Evidence and Affidavits in Particular Cases that he had not made in response to motion On its motion for summary judgment on for summary judgment, the court would vehicle lessee's Deceptive Trade Practices improperly become his advocate and improperly Act (DTPA) counterclaim, lienholder negated consider issues not expressly presented to trial lessee's assertion that former lessor's salesperson court. Rules App.Proc., Rule 38.1(h); Vernon's misrepresented the lease as a purchase, thus Ann.Texas Rules Civ.Proc., Rule 166a(c). shifting burden to lessee to raise issue of Cases that cite this headnote fact, by presenting affidavit of lienholder's representative, averring that lienholder made no representations to lessee before, during, or at [11] Appeal and Error

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

To Verdict, Findings, or Judgment 11 Cases that cite this headnote Lessee waived claim that evidence raised a genuine issue of material fact on affirmative defense of failure of consideration for vehicle [15] Appeal and Error lease agreement sufficient to defeat summary Defects, Objections, and Amendments judgment, where he presented no issue or Issues are not expressly presented on appeal argument on appeal addressing this defense. of summary judgment by the non-movant's Vernon's Ann.Texas Rules Civ.Proc., Rule mere reference to summary judgment evidence. 166a(c); Rules App.Proc., Rule 38.1(h). Vernon's Ann.Texas Rules Civ.Proc., Rule 166a(c).

1 Cases that cite this headnote Cases that cite this headnote [12] Appeal and Error Insufficient Discussion of Objections [16] Judgment Lessee waived claims on appeal of summary Motion or Other Application judgment that he might be entitled to avoid Judgment liability with current lessor and lienholder or Effect of Failure to File Affidavit to offset damages by return of leased vehicle Summary judgments must stand or fall on their to former lessor; lessee failed on appeal to own merits, and the non-movant's failure to cite any authority, offer any argument, point to answer or respond cannot supply by default the any evidence, make any substantive analysis, summary judgment proof necessary to establish or identify elements of lessor's claim on the movant's right. Vernon's Ann.Texas Rules which return of vehicle allegedly raised fact Civ.Proc., Rule 166a(c).

issue. Rules App.Proc., Rule 38.1(h); Vernon's Ann.Texas Rules Civ.Proc., Rule 166a(c). 1 Cases that cite this headnote

2 Cases that cite this headnote [17] Appeal and Error

Nature or Subject-Matter in General [13] Judgment Judgment

Motion or Other Application Motion or Other Application The non-movant must expressly present to the Judgment

trial court, by written answer or response, any Effect of Failure to File Affidavit issues defeating the movant's entitlement to summary judgment. Vernon's Ann.Texas Rules If a non-movant fails to present any issues in its Civ.Proc., Rule 166a(c). response or answer to summary judgment, the movant's right is not established and the movant 15 Cases that cite this headnote must still establish its entitlement to summary judgment; the effect of such a failure is that the [14] Judgment non-movant is limited on appeal to arguing the Motion or Other Application legal sufficiency of the grounds presented by the movant. Vernon's Ann.Texas Rules Civ.Proc., The requirement that issues be expressly Rule 166a(c).

presented on appeal of summary judgment by the non-movant's written answer or response 4 Cases that cite this headnote refers to an answer or response to the motion for summary judgment, not to the pleadings.

[18] Appeal and Error

Vernon's Ann.Texas Rules Civ.Proc., Rule Sufficiency of Presentation of Questions 166a(c).

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

The Court of Appeals could not construe lessee's single reference to general standard applicable Panel consists of Justices HUDSON, FROST, and to every summary judgment motion, without any SEYMORE. argument concerning, or reference to, evidence of lessor and lienholder as an adequate argument challenging sufficiency of their motion for MAJORITY OPINION summary judgment and evidence to support CHARLES W. SEYMORE, Justice.

damages awarded. Vernon's Ann.Texas Rules Civ.Proc., Rule 166a(c); Rules App.Proc., Rule Appellant, Pablo Tello, appeals a summary judgment in favor 38.1(h).

of appellees, Bank One, N.A. and Bank One Acceptance Corp., on their claim against Tello for breach of a vehicle Cases that cite this headnote lease agreement and on Tello's counterclaims for DTPA violations, common-law fraud, and breach of contract. We [19] Appeal and Error affirm.

Nature or Subject-Matter in General For issue to have been “expressly” presented in response to motion for summary judgment, as I. BACKGROUND

required for issue to be considered on appeal as grounds for reversal, written answer or response Tello entered into a written agreement to lease a truck from to motion must fairly apprise movant and court Randall Reed Ford. The lease shows Randall Reed Ford as of issues non-movant contends should defeat the lessor and Tello as lessee. In the same agreement, Randall motion. Vernon's Ann.Texas Rules Civ.Proc., Reed Ford assigned the lease and the vehicle to Banc One Rule 166a(c). Texas Leasing Corp. Subsequently, Banc One Texas Leasing Corp. merged with Banc One Acceptance Corp. By virtue of 18 Cases that cite this headnote this merger, Banc One Acceptance Corp. became the owner/ lessor of the vehicle. The title to the vehicle shows Bank One [20] Appeal and Error Texas N.A. as lienholder. Bank One Texas N.A. subsequently Sufficiency of Presentation of Questions merged with Bank One, N.A. By virtue of this merger, Bank The requirement that the non-movant “fairly One, N.A. became lienholder. apprise” the trial court of the issues allegedly defeating summary judgment clearly Bank One, N.A. and Banc One Texas Leasing Corp. contemplates that the trial court is not required eventually sued Tello, alleging he defaulted on the lease to guess why a non-movant presents certain by failing to make some monthly payments. 1 In his evidence or consider every possible reason answer, Tello raised the affirmative defenses of failure of the evidence might defeat summary judgment. consideration, fraudulent inducement, and equitable estoppel. Vernon's Ann.Texas Rules Civ.Proc., Rule He also asserted counterclaims for DTPA violations, 166a(c). common-law fraud, and breach of contract, seeking to recover his own alleged damages and offset any recovery by the Bank 2 Cases that cite this headnote on its breach of contract claim. His affirmative defenses and counterclaims *113 were all based on his allegation that he does not read or write English and the Randall Reed Ford salesperson induced him to sign the lease by misrepresenting Attorneys and Law Firms it was an agreement to purchase the vehicle.

*112 William Peter Capasso, Houston, for appellants. [1] Bank One, N.A. and Banc One Acceptance Corp.

moved for summary judgment on their claim against Tello George M. McDonald, Richardson, for appellees.

and on his counterclaims. The trial court signed a “First Amended Summary Judgment” on July 27, 2004, granting

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

summary judgment in favor of Bank One, N.A. and Banc Houston [1st Dist.] 2006, pet. denied). The non-movant is not One Acceptance Corp. on their claim against Tello and on his required to prove the affirmative defense as a matter of law; counterclaims. 2 The trial court awarded the Bank $29,366.24 raising a fact issue is sufficient to defeat summary judgment. in damages, $13,933.86 for attorney's fees and costs, and See Brownlee, 665 S.W.2d at 112; Anglo–Dutch Petroleum, 193 S.W.3d at 95.

post-judgment interest. 3 The trial court also ordered Tello to surrender the vehicle to the Bank. 4 We review a summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). We take all evidence favorable to the nonmovant as true and indulge II. DISCUSSION every reasonable inference and resolve any doubts in favor of the nonmovant. Id.

In six issues, Tello contends the trial court erred by (1) granting the Bank's motion for summary judgment on its breach of contract claim; (2) granting the Bank's motion A. The Bank's Breach of Contract Claim for summary judgment on Tello's affirmative defense of [6] In his first stated issue, Tello contends the trial court fraudulent inducement; (3) granting the Bank's motion erred by granting the Bank's motion for summary judgment for summary judgment on Tello's affirmative defense of on its breach of contract claim. Tello makes one argument, equitable estoppel; (4) granting the Bank's motion for consisting of two-and-a-half-page pages, to support all his summary judgment on Tello's DTPA counterclaim; (5) issues challenging the summary judgment with respect to his generally granting the Bank's motion for summary judgment; liability to the Bank and with respect to his counterclaim. and (6) granting the Bank's motion for summary judgment on At the outset of this argument, he makes a bare assertion its claim for damages. that a genuine issue of material fact existed on the Bank's breach of contract claim. However, in the argument that [2] [3] For a plaintiff to prevail on a motion for summary follows, he never asserts that the Bank failed to prove the judgment when, as here, the defendant has asserted a elements of its breach of contract claim. Instead, in what counterclaim, the plaintiff must prove, as a matter of law, little argument he does advance, he mentions only the factual each element of its cause of action and show it is entitled allegations which form the basis of his counterclaim and to summary judgment on the counterclaim. See First State affirmative defenses. Therefore, to the extent, he contends the Bank of Athens, Mabank Branch v. Purina AG Capitol Corp., Bank failed to prove the elements of its breach of contract 113 S.W.3d 1, 4 (Tex.App.-Tyler 1999, no pet.); see also claim, he has waived any such contention by failing to include Rush v. Barrios, 56 S.W.3d 88, 97 (Tex.App.-Houston [14th any argument. 6 See TEX.R.APP. P. 38.1(h) (providing that Dist.] 2001, pet. denied). A plaintiff asserting a traditional appellant's brief must contain a clear and concise argument for motion for summary judgment in opposition to a defendant's the contentions made, with appropriate citations to authorities counterclaim must disprove at least one essential element of and the record); Sunnyside Feedyard, L.C. v. Metropolitan 5 *115 Life Ins. Co., 106 S.W.3d 169, 173 (Tex.App.-

the counterclaim as a matter of law. See *114 TEX.R. CIV. P. 166a(c); First State Bank, 113 S.W.3d at 4; Rush, Amarillo 2003, no pet.) (recognizing failure to either cite 56 S.W.3d at 97; Taylor v. GWR Operating Co., 820 S.W.2d authority or advance substantive analysis waives an issue on 908, 910 (Tex.App.-Houston [1st Dist.] 1991, writ denied). appeal). We overrule his first issue. If the movant establishes a right to summary judgment, the burden shifts to the non-movant to present evidence raising B. Tello's DTPA Counterclaim a material fact issue. See Centeq Realty, Inc. v. Siegler, 899 [7] We will next address Tello's fourth issue, in which S.W.2d 195, 197 (Tex.1995).

he challenges the summary judgment on his DTPA

[4] [5] If, as here, the non-movant relies on an affirmative counterclaim. 7 At the outset of his argument, he generally defense to oppose the summary judgment motion, he must contends that a genuine issue of material fact existed on his provide sufficient summary judgment evidence to create a DTPA counterclaim and refers to the DTPA as 17.46(b) of fact issue on each element of the defense. See Brownlee v. the Texas Business and Commerce Code. However, he does Brownlee, 665 S.W.2d 111, 112 (Tex.1984); Anglo–Dutch not thereafter mention the DTPA again, cite the elements Petroleum Int'l, Inc. v. Haskell, 193 S.W.3d 87, 95 (Tex.App.- of a DTPA claim, or specify which acts prohibited by the

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

DTPA were allegedly committed by the Bank. See Proctor to show that the Bank entities who are the current lessor and v. White, 155 S.W.3d 438, 441 (Tex.App.-El Paso 2004, pet. lienholder may be liable under the DTPA for the Randall Reed denied) (finding appellants waived challenge to summary Ford salesperson's alleged misrepresentation. judgment on several claims because their argument consisted of several pages referring to evidence in support of factual [9] We recognize that we must “construe the Rules of allegations without a single reference to a relevant case or Appellate Procedure reasonably, yet liberally, so that the legal principle). right to appeal is not lost by imposing requirements not absolutely necessary to effect the purpose of a rule.” Republic Nonetheless, in his pleading, Tello alleged that the Bank Underwriters Ins. Co. v. Mex–Tex, Inc., 150 S.W.3d 423, violated the DTPA by: (1) representing “that an agreement 427 (Tex.2004); see TEX.R.APP. P. 38.9. However, “we confers or involves rights, remedies, or obligations which know of no authority obligating us to become advocates for it does not have or involve, or which are prohibited by a particular litigant through performing their research and law,” see TEX. BUS. & COM.CODE ANN. § 17.46(b)(12) developing their argument for them.” See Jordan v. Jefferson (Vernon Supp.2006); TEX. BUS. & COM.CODE ANN. § County, 153 S.W.3d 670, 676 (Tex.App.-Amarillo 2004, pet. 17.50(a)(1)(A) (Vernon Supp.2006); and (2) engaging in denied). We would improperly become an advocate for Tello an “unconscionable action or course of action” by taking if we were to develop an argument for imposition of liability “advantage of the lack of knowledge, ability, experience, or on the Bank entities who are the current lessor and lienholder capacity of [Tello] to a grossly unfair degree.” See TEX. BUS. because of the Randall Reed Ford salesperson's alleged & COM.CODE ANN. § 17.50(a)(3) (Vernon Supp.2006); misrepresentations. In addition, we may not consider grounds TEX. BUS. & COM.CODE ANN. § 17.45(5) (Vernon 2002). for reversal of a summary judgment that were not expressly presented to the trial court by written response to the motion.

[8] Although Tello asserted that the Bank violated these See TEX.R. CIV. P. 166a(c); see McConnell v. Southside provisions, the factual allegation he pleaded was that the Indep. School Dist., 858 S.W.2d 337, 343 (Tex.1993) Randall Reed Ford salesperson misrepresented the lease was (plurality op.). Accordingly, Tello has not demonstrated that a purchase agreement. In support of its motion for summary there was a genuine issue of material fact on his DTPA judgment, the Bank presented an affidavit of its representative counterclaim against the Bank. We overrule his fourth issue. who averred as follows: the Bank made no representations to Tello before, during, or at the time of execution of the lease; the Bank had no representative present at the time of C. Tello's Affirmative Defenses the transaction; the Bank was purely a financial institution [10] [11] In his second and third issues, Tello contends he which purchased the vehicle and the lease from Randall Reed raised a fact issue on his affirmative defenses of fraudulent Ford; and Randall Reed Ford was not an agent of the Bank inducement and equitable estoppel sufficient to defeat the or authorized by the Bank to make any representations to Bank's motion for summary *117 judgment. 11 Tello Tello. 8 Therefore, the Bank negated the assertion that it made generally refers to his affidavit, but other than the general any misrepresentations to Tello as alleged in his counterclaim summary judgment standards, he cites no authority. He and shifted the burden *116 to Tello to raise a fact issue on does not cite the elements of the doctrines of fraudulent inducement and equitable estoppel, much less argue why that claim. 9 See Centeq Realty, 899 S.W.2d at 197.

his affidavit raised a fact issue on each element of these defenses. See Sunnyside Feedyard, 106 S.W.3d at 173 In response to the motion for summary judgment and on (holding appellant waived contention that fact issue existed appeal, Tello merely referred to the contents of his affidavit on legal doctrines sufficient to defeat summary judgment attached to his response. 10 In the affidavit, he averred that by referring to well-developed doctrines without citing basic he does not speak or write English and an unnamed Randall authority as to their elements or any analysis to show a fact Reed Ford salesperson led him to believe the lease was a issue existed on these doctrines). purchase agreement. Therefore, despite the Bank's evidence, Tello continued to rely solely on the Randall Reed Ford Nevertheless, in response to the motion for summary salesperson's alleged misrepresentation to purportedly create judgment and on appeal, Tello relied solely on the a fact issue on his DTPA counterclaim against the Bank. Randall Reed Ford salesperson's alleged misrepresentation to However, in response to the motion for summary judgment purportedly raise a fact issue on his affirmative defenses to and on appeal, Tello offered no argument, authority, or theory

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

the Bank's breach of contract claim. However, Tello offered do not know the basis for his allegation that he was entitled to no argument, authority, or theory to show that the Bank avoid liability or offset the damages by returning the vehicle. entities who are the current lessor and lienholder should Based on his scant argument, we cannot determine whether be bound by the Randall Reed Ford salesperson's alleged he is relying on a provision of the lease, some legal principle, misrepresentation or otherwise subject to any defenses Tello or both. may have had against Randall Reed Ford. Again, if we were to craft such an argument on Tello's behalf, we would More particularly, Tello does not cite any authority, offer improperly become his advocate and improperly consider an any argument, or point to any evidence showing why he issue not expressly presented to the trial court in his summary might be entitled to avoid liability or offset the damages judgment response. Accordingly, Tello has not demonstrated awarded the Bank entity, who is the current owner and lessor, that he raised a genuine issue of material fact issue on his based on his return of the vehicle to Randall Reed Ford, affirmative defenses. We overrule his second and third issues. the former owner and lessor. Consequently, by failing to make any substantive analysis whatsoever, Tello has waived In his fifth issue, Tello generally states that the trial court his contention that his return of the vehicle raised a fact erred by granting the Bank's motion for summary judgment. issue sufficient to defeat the Bank's claim for damages or Because we have addressed all the arguments purportedly offset its damages. See TEX.R.APP. P. 38.1(h); Sunnyside raised in his first five issues with respect to his liability on Feedyard, 106 S.W.3d at 173; see also Nguyen v. Kosnoski, the Bank's breach of contract claim and with respect to his 93 S.W.3d 186, 188 (Tex.App.-Houston [14th Dist.] 2002, counterclaim, we overrule his fifth issue. no pet.) (finding appellant waived issue on appeal by failing to support argument with legal authority or references to the record); cf. Mex–Tex, Inc., 150 S.W.3d at 427 (holding D. The Bank's Damages appellant did not waive argument by citing only one statute in In his sixth issue, Tello asserts that the trial court erred by its brief considering it was clear appellant was relying solely entering summary judgment because there is a genuine issue on this statute and no other authority was necessary). 12 of material fact regarding the Bank's claim for damages. With respect to this issue, Tello primarily refers to his affidavit, [13] [14] [15] [16] [17] Moreover, in response to in which he averred that, approximately three years after he the motion for summary judgment, Tello did not raise executed the agreement, he called the Bank to inquire about his contention that his return of the vehicle should offset his balance and was informed the agreement was a lease—not the Bank's damages or otherwise defeat its entitlement to a purchase agreement. Within about a month, he returned the summary judgment. The non-movant must expressly present vehicle to Randall Reed Ford. Other than reciting the general to the trial court, by written answer or response, any issues summary judgment standards, Tello's argument regarding the defeating the movant's entitlement to summary judgment.

effect of this averment consists solely of the following:

McConnell, 858 S.W.2d at 343 (citing City of Houston v.

Had the trial court taken into account Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979)); [Tello's] claim that he returned Dubose v. Worker's Medical, P.A., 117 S.W.3d at 916, 920 the vehicle, the damages would be (Tex.App.-Houston [14th Dist.] 2003, no pet.); see TEX.R. significantly decreased. The affidavit CIV. P. 166a(c). “Issues not expressly presented to the trial filed by [Tello] clearly raises a genuine court by written motion, answer or other response shall not issue of material fact, which is an issue be considered on appeal as grounds for reversal.” TEX.R. for a judge and jury to decide. CIV. P. 166a(c); see McConnell, 858 S.W.2d at 343; Dubose, 117 S.W.3d at 920. Issues are not expressly presented by mere reference to summary judgment evidence. McConnell, [12] It is not clear whether Tello seeks to avoid liability on 858 S.W.2d at 341; see Dubose, 117 S.W.3d at 920; D.M.

the lease based on his return of the vehicle or merely offset Diamond Corp. v. Dunbar Armored, Inc., 124 S.W.3d 655, the amount of the Bank's damages, although his assertion suggests the latter. Nevertheless, Tello does not cite any 659–60 (Tex.App.-Houston [14th Dist.] 2003, no pet.). 13 authority, offer any argument, or point to any evidence However, summary judgments must stand or fall on their generally showing why he might be entitled to avoid liability own merits, and *119 the non-movant's failure to answer on the lease or offset the Bank's damages based on his *118 or respond cannot supply by default the summary judgment return of the vehicle. Even liberally construing his brief, we proof necessary to establish the movant's right. McConnell,

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

858 S.W.2d at 343 (citing Clear Creek, 589 S.W.2d at 678). contract claim on which his return of the vehicle allegedly If a non-movant fails to present any issues in its response or raised a fact issue or suggest *120 why it raised a fact issue answer, the movant's right is not established and the movant on any particular element[s]. must still establish its entitlement to summary judgment. Id. “The effect of such a failure is that the non-movant is [20] The requirement that the non-movant “fairly apprise” limited on appeal to arguing the legal sufficiency of the the trial court of the issues allegedly defeating summary grounds presented by the movant.” Id. (citing Clear Creek, judgment clearly contemplates that the trial court is not 589 S.W.2d at 678). required to guess why a non-movant presents certain evidence or consider every possible reason the evidence might defeat [18] Tello's suggestion on appeal that he may offset the summary judgment. In short, Tello's bare assertion in his Bank's damages or otherwise avoid liability on the lease based affidavit that he returned the vehicle did not “fairly apprise” on his return of the vehicle is an issue by which he seeks the trial court what, if anything, he wanted the trial court to to defeat the Bank's entitlement to summary judgment—not do with that information. Cf. Engel, 713 S.W.2d at 771–72 a challenge to the legal sufficiency of the Bank's summary (holding affidavit of attorney filed by non-movant in response judgment grounds. To prove its breach of contract claim, the to motion for summary judgment requesting recovery of Bank presented portions of the lease and its representative's movant's attorneys' fees fairly apprised trial court of issue affidavit purportedly showing Tello failed to make certain allegedly defeating the motion by stating the fees were payments as agreed and setting forth the balance due. Tello “excessive and unreasonable.”). does not contend that this evidence is insufficient to prove the amount of the damages awarded by the trial court. 14 In sum, trial court could not have erred by refusing to consider Rather, what little argument Tello does advance suggests he the effect, if any, of Tello's return of the vehicle on the Bank's should offset the Bank's damages or otherwise avoid liability, entitlement to summary judgment when Tello never requested notwithstanding the Bank's proof, because he returned the that it be considered. Accordingly, because Tello failed to vehicle to Randall Reed Ford. Consequently, he was required “expressly” present his issue that his return of the vehicle to “expressly” present this issue to the trial court in response should offset the Bank's damages or otherwise defeat its to the motion for summary judgment. See TEX.R. CIV. P. entitlement to summary judgment in response to the motion 166a(c); McConnell, 858 S.W.2d at 343; Dubose, 117 S.W.3d for summary judgment, we may not consider it as grounds at 920. for reversal. 15 See Querner Truck Lines, Inc. v. Alta Verde Indus., Inc., 747 S.W.2d 464, 469 (Tex.App.-San Antonio [19] To “expressly” present issues pursuant to Rule 166a(c), 1988, no writ) (finding non-movant waived argument on “[t]he written answer or response to the motion must fairly appeal that it was entitled to additional offset against movant's apprise the movant and the court of the issues the non- damages than offset allowed by trial court because non- movant contends should defeat the motion.” Clear Creek, 589 movant did not raise issue of additional offset in its summary S.W.2d at 678; see Engel v. Pettit, 713 S.W.2d 770, 771– judgment response). We overrule his sixth issue. 72 (Tex.App.-Houston [14th Dist.] 1986, no pet.). The extent of Tello's summary judgment response with respect to the Accordingly, the judgment of the trial court is affirmed. Bank's breach of contract claim was his general statement that a genuine issue of material fact existed on the claim and his reference to his attached evidence and his pleading. Tello FROST, J., dissenting.

made a bare averment in his attached affidavit that he returned the vehicle during a particular time period. However, he made no statement in his affidavit or response regarding the KEM THOMPSON FROST, Justice, dissenting. effect of this averment on the Bank's entitlement to summary Appellees Bank One, N.A. (“Lienholder”) and Banc One judgment. Specifically, he did not mention that his return of Acceptance Corporation (“Assignee”) filed suit against the vehicle should offset the Bank's damages or otherwise appellant Pablo Tello to recover sums they claim were owing defeat summary judgment, as he now suggests on appeal, under the lease agreement; however, they attached only part much less mention why his return of the vehicle should offset of the lease agreement to their pleadings, and when they the damages or otherwise defeat summary judgment. He did moved for summary judgment in the trial court, they made the not even identify the element[s] of the Bank's breach of same mistake. Consequently, our appellate record contains

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

only part of the contract upon which the trial court's summary claim or defense). There is no valid basis to find waiver for judgment is based. As explained in more detail below, this failure to preserve error in the trial court. omission is significant because to *121 recover damages for breach of a contract as a matter of law, the movant must The court also holds that Tello waived this point through establish the amount of damages flowing from the breach. inadequate briefing. This analysis, though a somewhat In this case, the part of the lease agreement omitted from subjective call, is contrary to the standards the Texas our record contains terms regarding early termination of the Supreme Court has articulated for disposing of parties' lease, any security interest in the vehicle, and default charges appellate rights without reaching the merits of their appellate —parts that would show how much Tello would owe if he points. Under both the Texas Rules of Appellate Procedure terminated the lease before the end of its term and how much and Texas Supreme Court precedent, this court must the Lienholder and the Assignee (hereinafter collectively construe the briefing rules reasonably, yet liberally. See “Bank One Entities”) would be entitled to recover for breach TEX.R.APP. P. 38.1(h), 38.9; Republic Underwriters Ins. of the lease agreement. Moreover, because the Assignee does Co. v. Mex–Tex, Inc., 150 S.W.3d 423, 427 (Tex.2004). not have the vehicle and has no way of knowing the amount Substantial compliance with the briefing rules may be of mileage on the vehicle, it is not possible to calculate sufficient, and this court is not required to insist on unerring any applicable mileage penalty, a data point necessary to compliance with them. Bufkin v. State, 179 S.W.3d 166, determine the amount ostensibly due under the lease. Based 174 (Tex.App.-Houston [14th Dist.] 2005), aff'd, 207 S.W.3d on the portions of the lease that are in the summary-judgment 779 (Tex.Crim.App., 2006). Texas courts have embraced this evidence, Tello owes only a fraction of the amount the trial liberal briefing standard largely because the proper objective court awarded in actual damages. of a reviewing court is to reach a just, fair, and equitable adjudication of the rights of litigants under established In his appellate brief, Tello asserts that the trial court erred principles of substantive law. *122 While well-organized in granting summary judgment as to the amount of contract and sharply focused writing is always appreciated, that is damages for which he is liable. Construing Tello's brief not the standard by which we determine the legal adequacy liberally, as this court must, Tello argues that the traditional of appellate briefs. The Texas Supreme Court has set a far summary-judgment motion and attached evidence did not more forgiving standard, one that requires appellate courts to prove the lack of a genuine issue of fact and that the Bank construe arguments liberally so that parties' poor presentation One Entities are entitled to judgment as a matter of law for of their appellate points does not result in a forfeiture of the the damages awarded on their contract claim. This assertion opportunity for a merits review. is correct and should be sustained, but rather than reaching the merits of Tello's winning argument, the court erroneously Ideally, an appellant's brief should contain a clear and concise concludes that Tello should lose based on a failure to preserve argument for the contentions made, with appropriate citations error. to authorities and to the record. TEX.R.APP. P. 38.1(h). We must interpret this requirement reasonably and liberally. See According to the majority, Tello did not expressly present TEX.R.APP. P. 38.1(h), 38.9; Mex–Tex, Inc., 150 S.W.3d at his sixth issue to the trial court, thereby waiving this issue. 427; see also Tribble & Stephens Co. v. RGM Constructors, This analysis is based on the majority's conclusion that Tello's L.P., 154 S.W.3d 639, 675 (Tex.App.-Houston [14th Dist.] argument is not an attack on the sufficiency of the summary- 2004, pet. denied) (plurality op.) (construing appellate brief judgment motion, a point that need not be raised in the trial liberally as asserting that contract was ambiguous even court to be asserted on appeal. This conclusion is incorrect though brief did not state that contract was ambiguous). because, under a liberal construction, Tello's argument under Applying these standards in construing Tello's appellate his sixth issue challenges the sufficiency of the Bank One brief, this court should discern, at a minimum, an argument Entities' motion and proof of their entitlement to summary challenging the trial court's summary judgment in favor of the judgment on their contract claim. Therefore, contrary to the movants, the Bank One Entities, on their contract claim. majority's assertion, this argument did not have to be raised in the trial court. See M.D. Anderson Hosp. and Tumor Inst. Under the applicable standard of review, we must take as v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (stating that, as to true all evidence favorable to Tello and make all reasonable traditional motions for summary judgment, nonmovant has no inferences in his favor. See Dolcefino v. Randolph, 19 S.W.3d duty to respond unless the movant conclusively establishes its 906, 916 (Tex.App.-Houston [14th Dist.] 2000, pet. denied).

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

Thus, in evaluating the propriety of summary judgment, then answering) the wrong question. The inquiry is not we must consider the following facts and all reasonable whether Tello defeated the Bank One Entities' traditional inferences therefrom: summary-judgment motion but whether the Bank One Entities, as movants, established their entitlement to the Tello, who speaks Spanish but does not read or speak English, amount of damages awarded as a matter of law. The majority went to Randall Reed Ford in May 1999, to buy a truck. He erroneously frames the issue as one of Tello failing to signed a contract, written in English, which he believed to be establish an offset when it is actually a failure by the Bank an agreement to purchase the vehicle, based on conversations One Entities to carry their summary-judgment burden—or he had with the Spanish-speaking salesman. However, the even to present a prima facie case to recover the amount contract he signed was a lease agreement and he unknowingly of damages awarded under the lease. Instead of faulting the had agreed to lease—not buy—the truck. The lease identified movants (the Bank One Entities) for failing to show from their an assignee, Bank One Texas Leasing Corporation, to whom own summary-judgment proof how they arrived at the amount monthly payments were to be made. Tello made monthly awarded, the majority criticizes the non-movant (Tello) for payments on the truck for the next three years. Then one day failing to “cite any authority or evidence to inform us why he called to find out the outstanding balance and was told that he was allegedly entitled to offset the Bank's damages or he had not bought the truck but had leased it instead. While otherwise defeat summary judgment.” 1 The problem with still current in his payments, in July 2002, Tello returned the the summary judgment is not what Tello failed to do in truck to Randall Reed Ford, and continued to make payments attacking it, but what the Bank One Entities failed to do in the on it through September 2002. first instance to prove their damages as a matter of law.

In his sixth issue, Tello asserts that the trial court erred in Recovery under a lease agreement is not automatic nor is there granting summary judgment because, under the applicable a universal measure of damages for breach. “The ultimate standard of review, Tello's affidavit raised a genuine issue of goal in measuring damages for a breach-of-contract claim is material fact regarding the amount of contract damages for to provide just compensation for any loss or damage actually which he is liable to the Bank One Entities. Tello points to sustained as a result of the breach.” Mays v. Pierce, 203 his testimony that, after he learned the agreement he signed S.W.3d 564, 577 (Tex.App.-Houston[14th Dist.] 2006, pet. was a lease and not a sales contract, he returned the vehicle to filed); Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d Randall Reed Ford. Tello then asserts that (1) “[t]he motion 303, 328 (Tex.App.-Houston [14th Dist.] 2003, pet. denied). for summary judgment and its supporting evidence must show Typically, the measure of damages in a breach-of-contract there is no genuine issue of a material fact and that the case is the benefit-of-the-bargain measure, the purpose of movant is entitled to judgment as a matter of law”; and (2) which is to restore the injured party to the economic position “[h]ad the trial court taken into account appellant's claim that it would have been in had the contract been performed. Mays, he returned the vehicle, the damages would be significantly 203 S.W.3d at 577; SAVA gumarska in kemijska industria decreased.” (citations omitted). Read liberally, Tello's brief d.d. v. Advanced Polymer Scis., Inc., 128 S.W.3d 304, 317 contains the argument that, based on his return of the truck n. 6 (Tex.App.-Dallas 2004, no pet.). Because the movants three years after signing the contract and three months before failed to show what the contract provides as the measure of he stopped making payments, the trial court erred in granting their recovery (or to show from the terms of the contract summary judgment on the Bank One Entities' contract claim that the damage calculations would not be impacted by the because their motion and supporting evidence did not *123 missing portions of the contract), the Bank One Entities failed show that they are entitled to judgment as a matter of law for to establish a prima facie case for the damages awarded, let the amount of damages awarded—more than $29,000, before alone establish their entitlement to damages as a matter of attorney's fees. Tello points to his summary-judgment proof law. that he returned the vehicle to Randall Reed Ford in July 2002, and asserts that, if this evidence is true (and we must presume This is not a suit on a sworn account in which the plaintiff's that it is), then the damages would be significantly decreased. sworn and unrefuted assertion of the amount allegedly owed itself will constitute prima facie evidence of damages; rather, The majority reaches the wrong conclusion—that the Bank this is a breach-of-contract case in which the movants One Entities are entitled to summary judgment on their are required to prove their entitlement to damages by claim for contract damages—partly because it is asking (and establishing the amount of those damages under the terms

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

of the contract. See e.g. Park v. Swartz, 110 Tex. 564, that cannot be resolved by turning to the summary-judgment 222 S.W. 156 (1920) (holding that plaintiff “prima facie proof before this court. was entitled to as damages the amount which under the contract he would, presumably, have earned ...”)(emphasis Because the part of the lease contained in the record does not added); Consol. Petroleum Partners, I, LLC v. Tindle, 168 address early termination, default, credits, or what happens if S.W.3d 894, 900 (Tex.App.-Tyler 2005, no pet.) (determining Tello returns the vehicle before expiration of the lease term, it *124 damages based on “the amount of money to which provides no basis for determining the amounts owing, if any, [plaintiff] was entitled as reimbursement pursuant to the under the lease. The Bank One Entities' summary-judgment agreement” ) (emphasis added); Garza v. Allied Fin. Co., affidavit states the following: 566 S.W.2d 57, 62 (Tex.Civ.App.-Corpus Christi 1978, no writ)(holding that summary-judgment evidence consisting of ● Tello missed at least six payments starting in October “the manager's affidavit and copy of the note and security 2002. agreement present evidence establishing a prima facie case ● After all offsets, payments, and credits were allowed and in a suit on a promissory note ...”) (emphasis added); Hagar applied, the outstanding balance on the lease including v. Texas Distrib., Inc., 560 S.W.2d 773, 775 (Tex.Civ.App.-

principal and interest was $25,693.46 as of January 14, Tyler 1977, writ ref'd n.r.e.)(holding summary-judgment 2003.

proof sufficient in promissory note case after looking to the “face of the note” and determining the amount that was due ● Prejudgment interest has been accruing at the rate of six thereon). The Bank One Entities not only failed to prove percent per annum, which equates to $4.22 per day. the terms of the lease agreement that would entitle them to the sums awarded, they omitted portions of it that are However, there is no summary-judgment evidence addressing germane to their dispute with Tello and the proper calculation how credits are applied under the lease agreement or of damages flowing from his alleged failure to perform. As addressing the effect, if any, of Tello's return of the vehicle the movants, the Bank One Entities had to present evidence in July 2002, on Tello's liability *125 for various sums to support the damages they sought under the contract. They allegedly owing under the lease. The Bank One Entities failed to satisfy this burden. It is simply not possible to tell asserted that they did not have the vehicle and that Tello had from the Bank One Entities' summary-judgment proof how concealed it and refused to surrender possession of it to them. much (if any) is owing under the lease. According to the Nothing in their summary-judgment evidence shows that the Bank One Entities' affidavit, the first payment Tello failed Bank One Entities had knowledge of the truck's whereabouts to make under the lease was the payment due in October or its odometer reading. Therefore, the Bank One Entities 2002, three months after Tello returned the vehicle to Randall have no way of knowing the amount of mileage on the truck Reed Ford. While Randall Reed Ford is an entity distinct from to calculate any applicable mileage penalty. Based on the the Bank One Entities, the lease agreement contains defined summary-judgment evidence and the parts of the lease the terms which include Randall Reed Ford and any party to Bank One Entities did attach to their motion, Tello would whom the lease is assigned in its definition of “we,” “us,” owe only $9,870 (21 monthly payments of $470) plus a $350 and “our” as used in the lease. Furthermore, the lease states at return fee. Nonetheless, the trial court awarded the Assignee least three times that there are additional terms and conditions in excess of $29,000 in actual damages, even though this on the reverse side of the pages of the lease, none of which amount is not supported by the part of the contract contained are in our record. The lease portion that is in the record in the summary-judgment evidence and even though the unambiguously states that the back of the lease document missing parts of the lease (like certain parts of it that are in contains “additional information on early termination, ... the record) may use the term “we” or “us” for the person to late and default charges, ... and any security interest, if whom the truck may be returned, which terms would include applicable.” 2 Because our record does not contain a copy of Randall Reed Ford. the reverse sides of these pages, this court is not aware—and presumably the trial court was not aware—of all of the terms Though an affidavit containing a statement of balance due of the lease, any one of which could undermine the damage can in some instances suffice to satisfy a movant's summarycalculation proffered by the Bank One Entities. The absence judgment burden, when, as in this case, the summaryof the contract or other proof of its terms creates an ambiguity judgment affidavit itself creates a fact question that cannot be resolved by turning to the summary-judgment proof, a

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

judgment because Tello raised a fact issue as to the proper material fact issue as to the measure of damages arises amount of damages based on his affidavit demonstrating he and precludes summary judgment. General Specialties, Inc.

returned the leased vehicle and received no credit for it.

v. Charter Nat'l Bank–Houston, 687 S.W.2d 772, 774 Summary judgment is not proper because Tello raised a fact (Tex.App.-Houston [14th Dist.] 1985, no writ) (ambiguous issue that had the Bank One Entities calculated the sums they lump sum figure in suit for collection on note, that is claim are owing in accordance with the lease agreement, the unexplained by other summary-judgment proof raises fact amount of damages awarded would have been less. In Tello's issue precluding summary judgment); FFP Mktg. Co., Inc.

words, “[h]ad the trial court taken into account appellant's v. Long Lane Master Trust IV, 169 S.W.3d 402, 411–12 claim that he returned the vehicle, the damages would be (Tex.App.-Fort Worth 2005, no pet.). Because the Bank One Entities did not prove up all of the terms of the lease on which significantly decreased.” 3 (citations omitted). they sought and obtained summary judgment, this court has no way of knowing the appropriate amount of damages for For these reasons, the Bank One Entities did not prove their breach of the agreement or whether Tello's return of the entitlement to summary judgment on their contract claim as a vehicle affected the calculation of damages under the Bank matter of law. See *126 McCulley Fine Arts Gallery, Inc. v. One Entities' contract claim. These ambiguities cannot be “X” Partners, 860 S.W.2d 473, 478 (Tex.App.-El Paso 1993, resolved by turning to their summary-judgment proof. Thus, no writ) (reversing summary judgment based on failure to on a merits review, the summary-judgment evidence does prove contract claim as a matter of law). This court should not support the amount of damages the Bank One Entities sustain Tello's sixth issue, reverse the summary judgment as sought and the trial court awarded. Therefore, even if Tello to the Bank One Entities' contract claim against Tello, sever, had not responded at all, it would not have been proper to and remand for further proceedings. Because it does not, I grant summary judgment on the Bank One Entities' breach- respectfully dissent. of-contract claim.

All Citations

Moreover, even if the Bank One Entities had not failed in the first instance, they still would not be entitled to summary 218 S.W.3d 109

Footnotes 1 Despite the previous merger of Banc One Texas Leasing Corp. into Banc One Acceptance Corp., the petition showed Banc One Texas Leasing Corp. as one of the plaintiffs. The trial court later allowed Banc One Acceptance Corp. to be substituted for Banc One Texas Leasing Corp.

2 An original motion for summary judgment was filed by Bank One, N.A. and Bank One Texas Leasing Corp., although Bank One Texas Leasing Corp. had merged into Banc One Acceptance Corp. On May 14, 2003, the trial court entered an order granting summary judgment. Tello appealed the summary judgment to this court under case number 14–03–00644–CV. We dismissed the appeal on the ground the summary judgment was not final because it did not dispose of Bank One Texas Leasing Corp.'s claims. See Tello v. Bank One, N.A., 138 S.W.3d 533 (Tex.App.-Houston [14th Dist.] 2004, no pet.). Bank One, N.A. and Banc One Acceptance Corp. then filed a supplemental petition and supplemental motion for summary judgment to clarify the issues concerning their identities. They presented proof that Banc One Acceptance Corp. is the current lessor/owner by virtue of its merger with Bank One Texas Leasing Corp. In the First Amended Summary Judgment, the trial court allowed Banc One Acceptance Corp. to be substituted for Banc One Texas Leasing Corp. and then granted summary judgment in favor of Bank One, N.A. and Banc One Acceptance Corp.

3 Now that we have clarified the correct names of the Bank entities who are parties to this suit, we will refer to the appellees, Bank One, N.A. and Banc One Acceptance Corp., collectively as “the Bank,” except where necessary to refer to them separately.

4 Pertinent pleadings, including the original motion for summary judgment and Tello's response, are not included in the appellate record for this cause number. However, they are included in the record for the appeal from original summary judgment. Accordingly, we have taken judicial notice of that record.

5 The Bank did not specify whether the part of its motion opposing Tello's counterclaims was a traditional motion or a “no-evidence” motion. Compare TEX.R. CIV. P. 166a(c) with TEX.R. CIV. P. 166a(i). At times, the Bank used language applicable to a traditional motion; but at other times, the Bank generally asserted that Tello has “no evidence” to support his various claims or factual allegations. However, the motion did not “state the elements as to which there is no evidence”

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

as required by Rule 166a(i). See TEX.R. CIV. P. 166a(i). Because the motion did not unambiguously state it was filed under Rule 166a(i) and did not strictly comply with that rule, we construe it as a traditional motion. See Adams v. Reynolds Tile & Flooring, Inc., 120 S.W.3d 417, 420 (Tex.App.-Houston [14th Dist.] 2003, no pet.).

6 We note that the evidence indicates that only one of the Bank entities, Banc One Acceptance Corp., is the lessor of the vehicle. The evidence shows Bank One, N.A. is a lienholder on the vehicle, but does not show this lien secures the indebtedness that is the subject of the lease at issue or how being a lienholder entitled Bank One, N.A. to recover under the lease. Nevertheless, on appeal, Tello does not argue that both Bank entities failed to prove the initial elements of their breach of contract claim.

7 Tello also pleaded counterclaims for common-law fraud and breach of contract. However, on appeal, he presents no issue or argument challenging the summary judgment on those counterclaims. Therefore, he has waived any challenge to the summary judgment on those counterclaims. See Jacobs v. Satterwhite, 65 S.W.3d 653, 655–56 (Tex.2001) (recognizing appellate court may not reverse summary judgment on a particular claim when appellant fails to challenge summary judgment on that claim).

8 The Bank representative made these averments with respect to Bank One, N.A. and Banc One Texas Leasing Corp., although Banc One Texas Leasing Corp. had already merged with Banc One Acceptance Corp. However, the Bank entities presented proof in their supplemental motion for summary judgment that Banc One Acceptance Corp. became the lessor and owner of the vehicle by virtue of its merger with Banc One Texas Leasing Corp. Therefore, the averments concerning Banc One Texas Leasing Corp. necessarily apply equally to Banc One Acceptance Corp.

9 The Bank's motion did not specifically address the DTPA counterclaim, although it addressed the factual allegation forming the basis of the counterclaim. See Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex.1990) (stating defendant moving for summary judgment on ground there is no genuine issue of material fact on essential element of plaintiff's claim must identify or address the claim and its elements). However, on appeal, Tello does not challenge the summary judgment on his DTPA counterclaim on the ground that the Bank's motion was deficient or the trial court granted more relief than requested. See Beathard Joint Venture v. W. Houston Airport Corp., 72 S.W.3d 426, 436 (Tex.App.- Texarkana 2002, no pet.) (recognizing appellant must raise an issue on appeal that excess relief was improperly granted in summary judgment order); Toonen v. United Servs. Auto. Ass'n., 935 S.W.2d 937, 942 (Tex.App.-San Antonio 1996, no writ) (same). Instead, he suggests there was a fact issue on the counterclaim.

10 In his response to the motion for summary judgment, Tello repeated the same general statement to address each counterclaim (as well as each affirmative defense). He merely stated that “a genuine issue of material fact exists as to [counterclaim/affirmative defense]” and referred to his attached evidence and pleadings.

11 Tello also pleaded the affirmative defense of failure of consideration. However, in his appellate brief, he presents no issue or argument addressing this defense. Therefore, he has waived any contention that the evidence raised a genuine issue of material fact on this defense sufficient to defeat summary judgment. See Jacobs, 65 S.W.3d at 655–56.

12 Contrary to our dissenting colleague's suggestion, the inadequacy in Tello's brief with respect to this issue is not just a lack of “well-organized and sharply focused writing,” but a failure to advance any substantive analysis and cite any authority or evidence to inform us why he was allegedly entitled to offset the Bank's damages or otherwise defeat the summary judgment based on his return of the vehicle to Randall Reed Ford. Moreover, the dissent would reverse the summary judgment because the Bank omitted the back of the lease from its summary judgment evidence and a missing provision may address the effect of Tello's return of the vehicle to Randall Reed Ford on his liability to the Bank or the amount of its damages. However, Tello does not complain that the back of the lease was omitted, much less assert that any missing provisions may address his return of the vehicle. The fact that the dissent advocates reversal on this basis, when Tello makes no such argument, merely accentuates that his contention is inadequately briefed.

13 In addition, the requirement that issues be expressly presented by written answer or response refers to an answer or response to the motion for summary judgment, not to the pleadings. See Wheeler v. Security State Bank, N.A., 159 S.W.3d 754, 756 n. 2 (Tex.App.-Texarkana 2005, no pet.) (citing Clear Creek, 589 S.W.2d at 673).

14 Our dissenting colleague advocates reversal because the Bank's own evidence is insufficient to support the damages awarded, and the dissent then calculates the damages purportedly supported by its evidence. However, Tello makes no such argument challenging the sufficiency of the Bank's motion and evidence. The dissent seems to interpret the following statement in Tello's brief as raising this argument: “The motion for summary judgment and its supporting evidence must show there is no genuine issue of a material fact and that the movant is entitled to judgment as a matter of law.” We cannot construe this single reference to the general standard applicable to every summary judgment motion, without any argument concerning, or reference to, the Bank's evidence in this case, as an adequate argument challenging the sufficiency of the Bank's motion and evidence to support the damages awarded.

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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)

15 The dissent also asserts that Tello was not required to raise the issue regarding his return of the vehicle in his summary judgment response because he is attacking the conclusiveness of the Bank's motion and evidence. As we have noted, Tello has not adequately presented an argument attacking the conclusiveness of the Bank's motion and evidence. But, even if he had, that would be a separate issue than his contention he should nonetheless defeat summary judgment based on his own affidavit showing he returned the vehicle. The fact that the dissent (and Tello) must refer to Tello's own evidence attached to his response when urging reversal based on his return of the vehicle shows that his contention is not an attack on the conclusiveness of the Bank's motion and evidence. Finally, we disagree with the dissent's suggestion that, because an omitted provision on the back of the lease may address the effect of Tello's return of the vehicle, his contention is merely an attack on the conclusiveness of the Bank's motion and evidence. Even if the Bank had attached all the provisions and a missing provision addressed the effect, if any, of Tello's return of the vehicle, such provision would have been inconsequential unless Tello “expressly” presented to the trial court his contention that return of the vehicle should affect the Bank's entitlement to summary judgment.

1 See majority opinion, at 118. 2 Emphasis added. 3 Emphasis added.

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

Reasons for Decision

400 S.W.3d 139 If an appellant fails to challenge one of the Court of Appeals of Texas, grounds for summary judgment, an appellate Dallas. court may affirm the summary judgment on that ground alone.

TREVINO & ASSOCIATES MECHANICAL, L.P., and Mike Trevino, Sr., Appellants 6 Cases that cite this headnote v.

The FROST NATIONAL BANK, Appellee. [3] Appeal and Error On motion for judgment

No. 05–11–00650–CV. | April 9, 2013.

The issues determined on a motion for partial Synopsis summary judgment are final, even though the Background: Commercial lender brought action against judgment is interlocutory. Vernon's Ann.Texas borrower and its principal for breach of contract. Borrower Rules Civ.Proc., Rule 166a(e). brought counterclaim for fraud, breach of fiduciary duty, and 1 Cases that cite this headnote promissory estoppel, among other claims. The 14th District Court, Dallas County, Eric Moye, J., entered partial summary judgment in favor of lender for approximately $1.76 million [4] Judgment and ordered that borrower take nothing on the counterclaims. Construction and operation Borrower appealed. After an interlocutory, partial summary judgment is granted, the issues it decides cannot be litigated further, unless the trial court sets the partial summary judgment aside or the summary Holdings: The Court of Appeals, Lang, J., held that:

judgment is reversed on appeal.

[1] partial no evidence summary judgment in favor of lender 2 Cases that cite this headnote was warranted on borrower's breach of contract counterclaim, and [5] Judgment

[2] borrower failed to establish detrimental reliance element Construction and operation of promissory estoppel claim against lender. The issues decided by an interlocutory, partial summary judgment cannot be relitigated further, unless the trial court sets that order aside.

Affirmed.

1 Cases that cite this headnote

West Headnotes (18) [6] Judgment Partial summary judgment

Partial no evidence summary judgment in [1] Appeal and Error favor of commercial lender was warranted Reasons for Decision

on borrower's breach of contract counterclaim, An appellant must attack every ground relied on where borrower failed to challenge every for which summary judgment could have been possible ground for the summary judgment. granted in order to obtain a reversal.

Cases that cite this headnote 6 Cases that cite this headnote

[7] Fraud

[2] Appeal and Error

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

Effect of existence of remedy by action on Future events; promissory estoppel contract To show detrimental reliance as required for A plaintiff seeks to recover for negligent promissory estoppel claim, the plaintiff must misrepresentation and fraud what it would have demonstrate that he materially changed his gained had the alleged oral agreement been position in reliance on the promise. performed; the gist of the cause of action is the breach of the alleged oral promise. 2 Cases that cite this headnote

Cases that cite this headnote [13] Estoppel

Future events; promissory estoppel [8] Judgment Commercial borrower failed to establish Partial summary judgment detrimental reliance element of promissory Partial no evidence summary judgment in estoppel claim against lender, although borrower favor of commercial lender was warranted claimed that lender orally renewed and extended on borrower's counterclaim for negligent the business loan for three months and, thus, misrepresentation and fraud, where borrower it continued to deposit money in its operating failed to challenge every possible ground for the account, which was also with lender; continuing summary judgment. to deposit money in the account did not amount to a material change in borrower's position as a Cases that cite this headnote result of lender's promise.

Cases that cite this headnote [9] Estoppel Future events; promissory estoppel Generally, promissory estoppel is a viable [14] Conversion and Civil Theft alternative to breach of contract. In general; nature and elements To establish a claim for conversion, a plaintiff 1 Cases that cite this headnote must prove that: (1) plaintiff owned or had possession of the property or entitlement to [10] Estoppel possession; (2) the defendant unlawfully and Future events; promissory estoppel without authorization assumed and exercised control over the property to the exclusion of, Promissory estoppel is not applicable to a or inconsistent with, the plaintiff's rights as an promise covered by a valid contract between the owner; (3) the plaintiff demanded return of the parties; however, promissory estoppel will apply property; and (4) the defendant refused to return to a promise outside a contract.

the property.

4 Cases that cite this headnote Cases that cite this headnote

[11] Estoppel [15] Banks and Banking

Future events; promissory estoppel Relation between bank and depositor in The elements of a promissory estoppel claim general

are: (1) a promise, (2) foreseeability of reliance The relationship of a bank to a general depositor thereon by the promisor, and (3) substantial is contractual, that of debtor-creditor arising detrimental reliance by the promisee.

from the depository contract.

4 Cases that cite this headnote 1 Cases that cite this headnote

[12] Estoppel [16] Banks and Banking

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

Application of Deposits to Debts Due Bank appeal, claiming the trial court erred when it (1) granted Frost or Set-Off by Bank Bank's motion for partial no-evidence summary judgment The nature of the relationship of a bank to a on its counterclaims for breach of contract, promissory general depositor authorizes a bank to offset estoppel, negligent misrepresentation, fraud, conversion, and deposits against a debt of equal amount owed wrongful setoff; and (2) granted Frost Bank's motion for the bank by that depositor, assuming proof of the partial traditional summary judgment on its counterclaims as amount of the debt owed. to damages. Trevino did not file a brief in this appeal.

1 Cases that cite this headnote We affirm the trial court's final judgment as to Trevino because he did not file a brief on appeal. We conclude the trial court did not err when it granted Frost Bank's [17] Banks and Banking motion for partial no-evidence summary judgment on TAM's Applying deposits to debts not matured counterclaims. Based on this conclusion, we need not address A bank is not authorized to offset deposits, unless TAM's claim that the trial court erred when it granted Frost there is a mature or past-due debt owed by the Bank's motion for partial traditional summary judgment on depositor to the bank.

TAM's counterclaims. The trial court's final judgment is Cases that cite this headnote affirmed.

[18] Banks and Banking Actions by Depositors or Others for I. FACTUAL AND PROCEDURAL BACKGROUND Deposits TAM is a mechanical contractor that provides plumbing, A bank depositor's remedy for the wrongful heating, air conditioning, piping, and duct work. Frost Bank offset of a general account is an action for return provided TAM with a line of credit to allow it to complete of the funds for breach of the depository contract. its construction projects and expand its business. In 2006, TAM and Frost Bank signed a business loan agreement for a 1 Cases that cite this headnote $3.5 million line of credit that was secured by a commercial security agreement. The business loan agreement matured in 2008, but was renewed and extended to April 30, 2009. On May 12, 2009, Frost Bank sent TAM a notice stating that its Attorneys and Law Firms line of credit had matured and the amount due was stated. That sum was $2,309,749.89.

*141 Kevin Bernard Wiggins, White & Wiggins, L.L.P., Eric Donald Walker, Carlos Morales, R. Jeronimo Valdez, J., On June 4, 2009, Trevino met with representatives of Frost Dallas, TX, for Appellants.

Bank. At the conclusion of the meeting, Trevino believed Michael J. Quilling, Quilling Selander Lownds Winslett & that Frost Bank had orally renewed and extended the business Moser, PC, Michael D. Clark, Dallas, TX, for Appellee. loan agreement for three months or until July 30, 2009, and he had until June 30, 2009, to provide Frost Bank with a Before Justices BRIDGES, LANG and RICHTER. 1 business plan. No written renewal and extension or other written agreement was signed by the parties at that time.

OPINION Subsequent to the above meeting, Frost Bank sent TAM a written notice dated June 19, 2009, stating the maturity Opinion by Justice LANG. date of the loan as June 30, 2009 and that TAM's line of credit was due on that date. Also, on June 19, 2009, Frost Trevino & Associates Mechanical, L.P., (TAM) and Mike Bank setoff from TAM's account at Frost Bank $660,089.17, Trevino, Sr., a/k/a Miguel Trevino, Sr., appeal the trial court's which constituted all of the funds in TAM's *142 operating final judgment dismissing all of its counterclaims against The account. Frost Bank sent TAM written notice of the setoff Frost National Bank (Frost Bank). TAM raises two issues on on June 22, 2009. That notice listed the maturity date of the

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

loan as April 30, 2009. According to TAM, Frost Bank's in the record on appeal. The trial court granted that motion actions caused TAM to lay off its employees and resulted in and ordered that TAM and Trevino take-nothing on those its inability to complete eight ongoing construction projects. counterclaims. Liberty Mutual was surety for those projects and incurred the cost of completion. As a result, Liberty Mutual sued TAM Second, Frost Bank filed a motion for partial traditional and and obtained a judgment against it for $6,198,186.00 plus pre- no-evidence summary judgment on all of Trevino's remaining and post-judgment interest. counterclaims. There is no response to this motion by Trevino in the record on appeal. The trial court granted that motion Frost Bank sued TAM for breach of contract respecting and ordered that Trevino take-nothing on his counterclaims. the loan and Trevino on his personal guaranty. Frost Bank claimed it was owed $1,741,469.88, and sought pre- and Third, Frost Bank filed a motion for partial traditional and post-judgment interest and its attorney's fees. It alleged no-evidence summary judgment on TAM's counterclaims for that the loan agreement with TAM matured by its own fraud, fraudulent inducement, negligent misrepresentation, terms on April 30, 2009, at which time the outstanding breach of contract, promissory estoppel, conversion, and principal and interest became due and payable. TAM and wrongful setoff. This motion for partial traditional summary Trevino answered the lawsuit generally denying the claims judgment asserted that TAM's counterclaims lacked merit, as and asserting the affirmative defenses of estoppel, laches, a matter of law, because Frost Bank did not cause TAM's accord and satisfaction, failure of consideration, waiver, alleged damages since *143 the evidence shows that TAM's failure to satisfy all conditions precedent to recovery, liabilities exceeded its assets before Frost Bank setoff TAM's failure to mitigate damages, ratification, and payment and operating account. release. They also alleged counterclaims sounding in fraud, fraudulent inducement, negligent misrepresentation, breach TAM filed a response to Frost Bank's final motion for partial of fiduciary duty, special relationship, breach of contract, traditional and no-evidence summary judgment, claiming promissory estoppel, conversion, and wrongful setoff, and that in its response it raised an issue of material fact sought damages and attorney's fees. All of the counterclaims as to its counterclaims for negligent misrepresentation, were based on the allegation that Frost Bank orally renewed fraud, breach of contract, promissory estoppel, conversion, and extended the note. wrongful setoff, and damages. TAM did not respond to Frost Bank's motion for partial no-evidence summary judgment on Frost Bank moved for partial traditional summary judgment its counterclaim for fraudulent inducement. Also, TAM did on its breach of contract claim against TAM and Trevino not file a motion asking the trial court to reconsider the prior arguing the loan agreement with TAM and Trevino expired partial traditional summary judgment rendered in favor of by its own terms. The record contains no response by TAM Frost Bank on its breach of contract claim. However, TAM and Trevino to that motion. The trial court granted partial filed a motion to strike the affidavit of Frost Bank's senior vice summary judgment on Frost Bank's breach of contract claim president, which was filed in support of its motions for partial and awarded it $1,758,322.48 in damages, pre-judgment traditional and no-evidence summary judgment on TAM's interest, and attorney's fees. See TEX.R. CIV. P. 166a(e). counterclaims. There is no ruling in the record on that motion.

Frost Bank answered the counterclaims of TAM and Frost Bank filed a reply to TAM's summary judgment Trevinio, generally denying the counterclaims, asserting the response that included an objection to some of TAM's affirmative defense of failure of consideration, and seeking summary judgment evidence. Specifically, Frost Bank an offset and reduction of any amount awarded to TAM from objected to the judgment, original petition, and motion for the amount already awarded to Frost Bank on its breach of summary judgment filed in the suit by Liberty Mutual against contract claim. Then, Frost Bank filed a series of motions for TAM as being unauthenticated hearsay. The record does not partial summary judgment, both traditional and no-evidence. show the trial court ruled on Frost Bank's objection. In the trial court's final judgment, rendered in favor of Frost Bank, First, Frost Bank filed a motion for partial traditional and the trial court stated it granted Frost Bank's motion for partial no-evidence summary judgment on TAM and Trevino's traditional and no-evidence summary judgment on TAM's counterclaims for breach of fiduciary duty and special counterclaims and incorporated its previous, partial summary relationship. There is no response by either TAM or Trevino judgment orders.

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

performed or was excused from performing under the alleged In its brief on appeal, TAM specifically challenges only the oral contract because it admits that it never submitted the portion of the trial court's final judgment that granted Frost required business plan. Bank's motion for partial no-evidence summary judgment on TAM's counterclaims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, conversion, and 1. Standard of Review

wrongful setoff, and partial traditional motion for summary judgment as to damages. TAM does not challenge the trial [1] [2] An appellant must attack every ground relied court's partial traditional summary judgment on Frost Bank's on for which summary judgment could have been granted breach of contract claim or on TAM's counterclaims for in order to obtain a reversal. See Malooly Bros., Inc. v. breach of fiduciary duty, special relationship, and fraudulent Napier, 461 S.W.2d 119, 121 (Tex.1970); Worldwide Asset inducement. Purchasing, LLC v. Rent–A–Center E., Inc., 290 S.W.3d 554, 569 (Tex.App.-Dallas 2009, no pet.). If an appellant fails to challenge one of the grounds for summary judgment, an II. JUDGMENT AGAINST TREVINO appellate court may affirm the summary judgment on that ground alone. See Worldwide Asset, 290 S.W.3d at 569.

TAM and Trevino filed a joint notice of appeal of the trial court's final judgment. However, Trevino did not file a brief on appeal and TAM's brief does not state or otherwise indicate 2. Applicable Law

that it was filed on behalf of Trevino. Accordingly, we affirm the trial court's final judgment as to Trevino. [3] [4] The issues determined on a motion for partial summary judgment are final, even though the judgment is interlocutory. Martin v. First Republic Bank, Fort Worth, III. SUMMARY JUDGMENT N.S., 799 S.W.2d 482, 488 (Tex.App.-Fort Worth 1990, writ ON TAM'S COUNTERCLAIMS denied); Linder v. Valero Transmission Co., 736 S.W.2d 807, 810 (Tex.App.-Corpus Christi 1987, writ ref'd n.r.e.)

In issue one, TAM argues the trial court erred when it (clear purpose of former version of Texas Rule of Civil granted Frost Bank's motion for partial no-evidence summary Procedure 166a(e) 2 is to make issues determined in motion judgment on its counterclaims for breach of contract, for summary judgment final); Tex. United Ins. Co. v. negligent misrepresentation, fraud, promissory estoppel, Burt Ford Enters., Inc., 703 S.W.2d 828, 833 (Tex.App.- conversion, and wrongful setoff. Tyler 1986, no writ) (discussing former version of rule 166a(e)); Cunningham v. Eastham, 465 S.W.2d 189, 192 (Tex.Civ.App.-Houston [1st Dist.] 1971, writ ref'd n.r.e.)

A. Breach of Contract (same); City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427, 430 (Tex.Civ.App.-Houston [1st Dist.] 1967, TAM argues on appeal that its counterclaim for breach of writ ref'd n.r.e.) (same). 3 After an interlocutory, partial contract was supported by summary judgment evidence that summary judgment is granted, the issues it decides cannot be shows Frost Bank orally renewed and extended the loan litigated further, unless the trial court sets the partial summary agreement, agreed not to setoff TAM's operating account, judgment aside or the summary judgment is reversed on and agreed to negotiate in good faith while TAM prepared appeal. Martin, 799 S.W.2d at 488–89; Linder, 736 S.W.2d its business plan. In its appellate brief, Frost Bank asserts at 810 (issues decided cannot be further litigated unless “[TAM] does not challenge the contract documents or the interlocutory summary judgment set aside by trial court or money judgment in favor *144 of [Frost Bank]. The express reversed on appeal); Cunningham, 465 S.W.2d at 192 (same); language of those uncontested contracts controls the issues Socony, 421 S.W.2d at 430 (same). 4 on [TAM's] counterclaims and is dispositive of all issues in the case.” Further, Frost Bank responds that TAM cannot show an oral contract was formed at the June 4, 2009 meeting and therefore, there is no breach. Also, Frost Bank argues 3. Application of the Law to the Facts that TAM failed to produce any evidence demonstrating it

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

[5] At this juncture, we review whether TAM has challenged appellant did not raise as error the trial court's interlocutory, all grounds that could support the trial court's final judgment partial summary judgment, the propriety of that partial that granted partial no-evidence *145 summary judgment summary judgment is not considered on appeal). Applying on TAM's breach of contract counterclaim. As indicated the appropriate standard of review, we must conclude the trial above, Frost Bank moved for partial traditional summary court did not err when it granted Frost Bank's motion for judgment on its breach of contract claim against TAM arguing partial no-evidence summary judgment on TAM's breach of it was an “undisputed” material fact that “the loan agreement contract counterclaim because TAM has not challenged every matured by its own terms on April 30, 2009, at which possible ground for the trial court's summary judgment. See time all outstanding principal and interest became fully due Malooly, 461 S.W.2d at 121; Worldwide Asset, 290 S.W.3d and payable.” The record contains no response by TAM at 569. and Trevino to that motion. The trial court granted partial traditional summary judgment on Frost Bank's breach of contract claim and awarded it $1,758,322.48 in damages. The B. Negligent Misrepresentation and Fraud partial traditional summary judgment expressly found, inter alia, both Trevino and TAM were “jointly and severally” [7] [8] Where, as here, a plaintiff seeks “to recover [for liable for damages awarded and Frost Bank's “lien interest negligent misrepresentation and fraud] what [it] would have in [TAM's] business equipment and accounts receivable are gained had the [alleged oral agreement] been performed, the hereby foreclosed.” As a matter of law, the partial traditional gist of [the] cause of action is the breach of the alleged summary judgment on Frost Bank's breach of contract claim oral promise.” See 1001 McKinney Ltd. v. Credit Suisse fixed TAM's liability. See Tex. United, 703 S.W.2d at 833; First Boston Mortg. Capital, 192 S.W.3d 20, 29 (Tex.App.- Socony, 421 S.W.2d at 430. The issues decided by an Houston [14th Dist.] 2005, pet. denied). Because TAM's interlocutory, partial summary judgment cannot be relitigated negligent *146 misrepresentation and fraud counterclaims further, unless the trial court sets that order aside. See arise from the alleged oral agreement to extend the loan, based Martin, 799 S.W.2d at 488–89; Linder, 736 S.W.2d at 810; on our resolution of TAM's breach of contract counterclaim, Cunningham, 465 S.W.2d at 192; Socony, 421 S.W.2d at 430. we conclude the trial court did not err when it granted Frost Bank's motion for partial no-evidence summary judgment on Then, Frost Bank sought partial no-evidence summary those counterclaims. See 1001 McKinney, 192 S.W.3d at 29. judgment on TAM's remaining counterclaims, including its counterclaim for breach of contract. In an attempt to revisit the facts that were established, as a matter of law, by the trial court's partial summary judgment order on Frost Bank's C. Promissory Estoppel breach of contract claim, TAM responded to the motion TAM argues that its counterclaim for promissory estoppel for partial no-evidence summary judgment on its breach was supported by summary judgment evidence. Frost Bank of contract counterclaim by attaching evidence it claimed does not specifically respond on appeal to TAM's argument demonstrated the loan agreement was orally renewed and relating to the partial no-evidence summary judgment on its extended. TAM did not file a motion to reconsider, modify, promissory estoppel counterclaim. However, in its motion for or set aside the partial traditional summary judgment on Frost partial no-evidence summary judgment, Frost Bank argued Bank's breach of contract claim. There is nothing in the that TAM could produce no evidence supporting any element record indicating the trial court set aside the partial traditional of its promissory estoppel counterclaim. In its reply to TAM's summary judgment order on Frost Bank's breach of contract response to its motion for partial no-evidence summary claim. Further, the trial court granted Frost Bank's motion judgment, Frost Bank argued TAM failed to raise any for partial no-evidence summary judgment on TAM's breach evidence showing that it made any representation on which of contract counterclaim. That is consistent with the trial TAM justifiably relied or prove causation.

court's earlier partial traditional summary judgment rendered on Frost Bank's breach of contract claim.

[6] On appeal, TAM does not challenge the trial court's 1. Applicable Law partial traditional summary judgment on Frost Bank's breach [9] [10] [11] [12] Generally, promissory estoppel is a of contract claim. See, e.g., Socony, 421 S.W.2d at 430 (when viable alternative to breach of contract. Allied Vista, Inc. v.

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

Holt, 987 S.W.2d 138, 141 (Tex.App.-Houston [14th Dist.] operations. In addition, Frost [Bank's] 1999, pet. denied). Promissory estoppel is not applicable representations prevented TAM from to a promise covered by a valid contract between the seeking additional funding *147 parties. However, promissory estoppel will apply to a promise from another source to avoid being put outside a contract. See Richter v. Wagner Oil Co., 90 out of business. S.W.3d 890, 899 (Tex.App.-San Antonio 2002, no pet.). The elements of a promissory estoppel claim are (1) a promise, (Citations omitted). In support of its argument that it (2) foreseeability of reliance thereon by the promisor, and deposited money into its operating account in June 2009, (3) substantial detrimental reliance by the promisee. See TAM referred the trial court to Trevino's affidavit, which English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983); Fretz states, “[TAM] further provided assurances to Frost [Bank] Constr. Co. v. S. Nat'l Bank of Houston, 626 S.W.2d 478, that its credit balance would be paid down from its accounts 480 (Tex.1981). To show detrimental reliance, the plaintiff receivables and outstanding retainage and that TAM would must demonstrate that he materially changed his position in continue its banking relationship with Frost [Bank],” and a reliance on the promise. See English, 660 S.W.2d at 524 bank statement for TAM's operating account showing that (finding no promissory estoppel when plaintiff could not TAM made several deposits in June 2009. TAM did not show he would not have taken his detrimental actions if cite any summary judgment testimony or evidence to support defendant had not made promise); Sandel v. ATP Oil & Gas its claim that Frost Bank's promises prevented TAM from Corp., 243 S.W.3d 749, 753 (Tex.App.-Houston [14th Dist.] seeking funding from another source or that he continued to 2007, no pet.) (demonstrating failure to seek another job was make deposits at Frost Bank in June 2009 because of the insufficient to show detrimental reliance, employee required alleged oral representation. to show that but for stock option letter, he would have stopped working for employer). In TAM's brief on appeal, TAM argued it raised evidence of a fact issue on its promissory estoppel counterclaim as to the element of reliance, claiming:

2. Application of the Law to the Facts The record revealed that Trevino testified by deposition and affidavit In TAM's second amended original answer and that because of Frost [Bank's] counterclaims, TAM alleged it “reasonably and substantially promises, TAM continued its banking relied, to its detriment, on Frost [Bank's] promises—which is relationship with Frost [Bank] and evidenced by TAM's substantial cash deposit made in June continued to deposit money into 2009. Because of the nature of Frost [Bank's] promise, TAM's its Frost [Bank] operating account. reliance was both reasonable and substantial.” In its response Acting in good faith, TAM was to Frost Bank's motion for partial no-evidence summary preparing its business proposal, but judgment, TAM argued it reasonably and substantially relied before it had a chance to present it on Frost Bank's promise to its detriment as follows: to Frost [Bank], Frost [Bank] setoff its account. There was no evidence in Because of Frost [Bank's] promises, the record to suggest TAM should not TAM continued its banking have relied on the promises. Instead, relationship with Frost [Bank] and the parties' prior actions lent credibility continued to deposit money into to Frost [Bank's] words at that time.

its Frost [Bank] operating account. Acting in good faith, TAM was (Record citations omitted). To support this argument, TAM preparing its business proposal, but cites to its summary judgment evidence of a bank statement before it had a chance to present for TAM's operating account that shows TAM made several it to Frost [Bank], Frost [Bank] deposits in June 2009. setoff its account. As a result, TAM never received the retainage it planned [13] In summary, TAM contends that it detrimentally relied to use to pay down its line of on Frost Bank's promise to renew and extend the loan credit and it was forced to cease agreement by continuing to deposit money in its operating

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

account, which was also with Frost Bank. However, even precluding partial no-evidence summary judgment on its had we concluded Frost Bank did orally promise to renew counterclaim for conversion. and extend the loan agreement, TAM falls short of its burden because it offered no evidence of detrimental reliance. Continuing to deposit money in its operating account does E. Wrongful Setoff

not amount to a material change in TAM's position as a result of Frost Bank's promise. See English, 660 S.W.2d at Finally, TAM contends the trial court erred when it 524 (finding no promissory estoppel when plaintiff could granted Frost Bank's motion for partial no-evidence summary not show he would not have taken his detrimental actions if judgment on its counterclaim for wrongful setoff because it defendant had not made promise); Sandel, 243 S.W.3d at 753 produced evidence raising a fact issue. Specifically, TAM (demonstrating failure to seek another job was insufficient to claims its summary judgment evidence shows that Frost Bank show detrimental reliance, employee required to show that setoff its account before the loan agreement matured and it but for stock option letter, he would have stopped working did not give TAM contemporaneous notice of the setoff. for employer). Also, TAM argues “There was no evidence in the record to suggest TAM should not have relied on [15] [16] [17] [18] The relationship of a bank to a the promises.” However, to preclude a no-evidence summary general depositor is contractual, that of debtor-creditor arising judgment, it was TAM's burden to produce evidence raising from the depository contract. See Upper Valley Aviation v. a fact issue as to each element of each claim in which no- Mercantile Nat'l Bank, 656 S.W.2d 952, 955 (Tex.App.- evidence summary judgment was sought. See TEX.R. CIV. Dallas 1983, writ ref'd n.r.e.); Am. Bank of Waco v. Waco P. 166a(i); Tex. Integrated Conveyor Sys., Inc. v. Innovative Airmotive, Inc., 818 S.W.2d 163, 170 (Tex.App.-Waco 1991, Conveyor Concepts, Inc., 300 S.W.3d 348, 375 (Tex.App.- writ denied). The nature of the relationship authorizes a bank Dallas 2009, pet. denied); RTLC AG Prods., Inc. v. Treatment to offset deposits against a debt of equal amount owed the Equip. Co., 195 S.W.3d 824, 833 (Tex.App.-Dallas 2006, bank by that depositor, assuming proof of the amount of the no pet.). We conclude that TAM did not meet its burden debt owed. See Am. Bank of Waco, 818 S.W.2d at 170. An to preclude a partial no-evidence summary judgment on its offset is not authorized unless there is a mature or past-due promissory estoppel counterclaim. debt owed by the depositor to the bank. See Am. Bank of Waco, 818 S.W.2d at 170; see also Bandy v. First State Bank, Overton, Tex., 835 S.W.2d 609, 619 (Tex.1992) (discussing D. Conversion claim for wrongful setoff in equity). A depositor's remedy for the wrongful offset of a general account is an action for return [14] Next, TAM argues the trial court erred when it of the funds for breach of the depository contract. See Upper granted Frost Bank's motion *148 for partial no-evidence Valley Aviation, 656 S.W.2d at 955; Am. Bank of Waco, 818 summary judgment on TAM's counterclaim for conversion. S.W.2d at 170. Specifically, TAM claims that Frost Bank's setoff of the funds in TAM's operating account constituted conversion. To TAM does not dispute that Frost Bank had a contractual establish a claim for conversion, a plaintiff must prove that: right of setoff. However, TAM's claim for wrongful setoff is (1) the plaintiff owned or had possession of the property or premised on the viability of one of its other counterclaims. entitlement to possession; (2) the defendant unlawfully and Based on our resolution of the no-evidence motion for partial without authorization assumed and exercised control over summary judgment as to TAM's counterclaims for breach of the property to the exclusion of, or inconsistent with, the contract, negligent misrepresentation, fraud, and promissory plaintiff's rights as an owner; (3) the plaintiff demanded estoppel, we need not address TAM's argument that it raised return of the property; and (4) the defendant refused to an issue of fact precluding no-evidence summary judgment return the property. Tex. Integrated, 300 S.W.3d at 365– on its counterclaim for wrongful setoff. 66. TAM's claim for conversion is premised on one of its other counterclaims surviving Frost Bank's motion for partial no-evidence summary judgment. Based on our resolution F. No–Evidence Summary Judgment Conclusion of TAM's counterclaims for breach of contract, negligent misrepresentation, fraud, and promissory estoppel, we need We conclude the trial court did not err when it granted Frost not address TAM's argument that it raised an issue of fact Bank's motion for partial no-evidence summary judgment

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Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)

The trial court's final judgment is affirmed as to Trevino on TAM's counterclaims for breach of contract, negligent because he did not file a brief on appeal. Also, the trial misrepresentation, fraud, promissory estoppel, conversion, court did not err when it granted partial no-evidence summary and wrongful setoff. Issue one is decided against TAM.

judgment on TAM's counterclaims. Based on this conclusion, we need not address TAM's claim that the trial court erred when it granted frost Bank's motion for partial traditional *149 IV. TRADITIONAL SUMMARY summary judgment. JUDGMENT ON TAM'S COUNTERCLAIMS The trial court's final judgment is affirmed as to TAM.

In issue two, TAM argues the trial court erred when it granted Frost Bank's motion for partial traditional summary judgment as to damages. Based on our resolution of issue one, we need All Citations not address this issue.

400 S.W.3d 139

V. CONCLUSIONS

Footnotes 1 The Hon. Martin E. Richter, retired Justice, sitting by assignment. 2 Effective September 1, 1997, rule 166a(e) was amended by “making minor changes in the wording of that subsection.

This change was intended simply as a clarification of the existing rule.” Timothy Patton, Summary Judgments in Texas: Practice Procedure and Review § 3.03[1] (3d ed. 2012).

3 See also Timothy Patton, Summary Judgments in Texas: Practice Procedure and Review § 3.03[2] (issues determined by partial summary judgment are final even though judgment is interlocutory) (3d ed. 2012); 3 Roy W. McDonald & Elaine A. Grafton Carlson, Texas Civil Practice § 18:4 (2d ed. 2000) (“A summary judgment order that does not purport to dispose of all parties and all issues is interlocutory even though [ ] rule [166a(e) ] anticipates that ordinarily a ruling made under it shall be conclusive at the trial with respect to the facts that it specifies.”).

4 See also Patton, § 3.03[2]; 3 McDonald & Carlson, § 18:4 (2d ed. Supp.2012).

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

493 S.W.2d 882 West Headnotes (12)

Court of Civil Appeals of Texas, Fort Worth.

[1] Specific Performance UNITED COIN METER Discretion of court COMPANY, INC. et al., Appellants, Specific performance of a contract by a court of v. equity is not a matter of absolute right in the JOHNSON-CAMPBELL LUMBER parties demanding it, and applications for such COMPANY et al., Appellees. relief are addressed to the sound discretion of the court.

No. 17394. | April 6, 1973.

Cases that cite this headnote Lessees filed suit for specific performance by lessors of two written contracts relating to right of lessees to maintain coin-

[2] Specific Performance operated laundry equipment in two apartment complexes Existence of other remedy owned by lessors and for a mandatory injunction requiring lessors to reinstall lessees' laundry equipment which had In order to get specific performance of a contract, been removed. The District Court, Tarrant County, Ardell party seeking it must show that he has no M. Young, J., rendered judgment for lessors, and lessees adequate remedy at law by way of an action appealed. The Court of Civil Appeals, Brewster, J., held that for damages for breach of contract, and if an where lessees who had been engaged in performing contracts adequate remedy at law is available, then specific for maintenance of coin-operated laundry equipment in performance will not be granted. lessors' apartment complexes for more than five years 5 Cases that cite this headnote possessed all data needed for proving damages they would sustain by reason of lessors' breach of contracts, lessees' president who had many years of experience in business was [3] Specific Performance bound to have known amount of expenses and depreciation Contracts Relating to Real Property incurred by lessees in performing their obligations under Where a period of several years remained contracts, amount of damages lessees sustained from breach before end of term of one of contracts giving of contracts could be readily proven and only benefit lessees lessees the right to maintain coin-operated could get from a performance of contracts for rest of their laundry equipment in apartment complexes terms was amount of net profit they would realize from owned by lessors and contract called for complete performance of contracts, plaintiffs had adequate performance by parties or their representatives legal remedy at law by way of an action for damages and of numerous additional, yet unperformed acts, were not entitled to specific performance of contracts. The during that period so that a decree for Court further held that where term of one of the contracts specific performance of contracts would require giving lessees right to install and maintain coin-operated considerable supervision, contracts possessed laundry equipment in apartment complex owned by lessors features which influenced discretion of court so had expired while lessees' action for specific performance of that rule requiring specific performance of a contracts was on appeal, controversy relating to that contract contract involving real estate was not applicable was moot. to such contracts.

Affirmed in part and reversed in part. Cases that cite this headnote

[4] Specific Performance Inadequacy of remedy at law Where lessees who had been engaged in performing contracts for the maintenance of

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

coin-operated laundry equipment in lessors' in controversy by a decree capable of present apartment complexes for more than five years performance; it will not decree a party to possessed all data needed for proving damages perform a continuous series of acts extending they would sustain by reason of lessors' breach through a long period of time, requiring constant of contracts, lessees' president who had many supervision by the court. years of experience in business was bound to have known amount of expense and depreciation 2 Cases that cite this headnote incurred by lessees in performing their obligations under contracts, amount of damages [8] Specific Performance lessees sustained from breach of contracts could Contracts for continuous acts during long be readily proven and only benefit lessees could period get from specific performance of contracts for Where contracts giving lessees the right to rest of their terms was amount of net profit maintain coin-operated laundry equipment in they would realize from complete performance apartment complexes owned by lessors were of contracts, lessees had adequate legal remedy in part executory at time of trial and required at law by way of an action for damages and were lessees to install, maintain and repair laundry not entitled to specific performance of contracts.

machines during remainder of contract terms 1 Cases that cite this headnote and required lessees monthly, throughout the terms, to go to machines, collect money and give apartment owners their part of proceeds [5] Injunction and where one of contracts had several years Recovery of damages yet to run, court could not render a decree for When application for injunctive relief has same specific performance of contracts capable of effect as an application for specific performance, being presently performed that would dispose injunctive relief will not be granted where an of entire controversy; thus, refusal to decree action for damages affords an adequate legal specific performance of contracts was not error. remedy.

Cases that cite this headnote 2 Cases that cite this headnote

[9] Specific Performance [6] Landlord and Tenant Sufficiency in general Actions Evidence, in lessees' action for specific Where lessees were not entitled to specific performance of contracts giving them the right performance of contracts giving them the right to maintain coin-operated laundry equipment in to maintain coin-operated laundry equipment in apartment complexes, supported finding that for lessors' apartment complexes because lessees arrangement to be successful and financially had adequate remedy at law by way of an action profitable it was essential that cooperation, for damages, lessees were not entitled to an goodwill and mutual trust and confidence exist injunction ordering lessors to re-install lessees' between lessors and lessees. laundry equipment that had been removed.

Cases that cite this headnote Cases that cite this headnote

[10] Specific Performance [7] Specific Performance Subject-matter and terms of contract Contracts for continuous acts during long Evidence, in lessees' action for specific period performance of contract giving them the right A court of equity will ordinarily decree specific to install and maintain coin-operated laundry performance only when it can dispose of matter equipment in apartment complexes, supported

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

finding that leases required that corporate lessees presently owned by the defendants. Plaintiffs also sought a perform substantial personal services throughout mandatory injunction against defendants ordering defendants remaining terms of contracts. to remove the laundry equipment that is presently on the premises involved and to reinstall on such property the Cases that cite this headnote laundry equipment belonging to plaintiffs that had been removed. The plaintiffs did not seek in this case to recover [11] Specific Performance damages.

Requisites and validity in general The defendant, Johnson-Campbell Lumber Company, is a Where terms provided for in a contract have partnership, and the defendant, Ralph Campbell, is the come to an end, court can no longer order managing partner. specific performance of contract.

At the time of trial defendants were the owners of a 42-unit Cases that cite this headnote apartment complex located at 2231 Capri Drive in Fort Worth and of another apartment complex located in Euless, Texas, [12] Appeal and Error at 1450 Sagebrush Trail.

Review of specific questions in general On February 11, 1966, a former owner of the apartment Where term of one of two contracts giving units located on Capri Drive entered into a written contract lessees right to install and maintain coinwith United Coin Meter Company wherein the owner was operated laundry equipment in apartment referred to as lessor and the Coin Company was referred complex owned by lessors had expired while to as lessee. The agreement provided that lessee hires from lessees' action for specific performance of lessor the laundry room on the premises described therein contracts was on appeal, controversy relating to for a term of five years from date. Lessee was thereby given that contract was moot.

*885 the right of exclusive installation and operation of 1 Cases that cite this headnote coin-operated laundry equipment on the apartment premises for which lessee agreed to pay lessor of the gross receipts taken from the equipment on a monthly basis 30% Thereof as the total lease fee.

Attorneys and Law Firms The agreement required lessee to maintain public liability insurance without expense to lessor.

*884 Abney, Burleson, Bondies, Conner & Mills and Phil Burleson, Dallas, for appellants. The agreement provided that lessor shall furnish gas, water and electricity and shall clean and maintain the premises Loe & Warren and H. J. Loe, Fort Worth, for appellees.

without expense to lessee. Under the agreement lessee was obligated to service, maintain and repair the equipment that it installs without expense to lessor.

OPINION

Lessee was given the right of ingress and egress during the BREWSTER, Justice. term provided for. The agreement provided that it would be binding on the parties and their heirs and assigns.

The trial court rendered judgment for the defendants, Johnson-Campbell Lumber Company, a partnership, and This agreement further provided that it would be Ralph G. Campbell, to the effect that plaintiffs take nothing by automatically renewed for the same period of time (5 years) their suit and the plaintiffs, United Coin Meter Company, Inc., unless cancelled by either party in writing 30 days prior to its and United Coin Meter Company have brought this appeal. expiration. The plaintiffs sued for specific performance by the defendants On December 14, 1965, a prior owner of the apartments on of two separate and distinct written contract relating to the Sagebrush Trail in Euless, executed a similar agreement with right of plaintiffs to put and keep coin-operated laundry United Coin Meter Company. equipment in two different apartment complexes that are

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

and confidence exist *886 between the parties; that the It provided that owner leased to Coin Company all laundry agreements require Coin Company to perform substantial space in this apartment project for the purpose of installing, services; that plaintiffs did not seek to recover damages and maintaining and servicing a special washing, drying and offered no evidence trying to prove their damages. laundry equipment system for a term of five years, ending December 13, 1970. The trial court concluded that defendants breached the agreement; that plaintiffs failed to show that they had This lease provided that it would continue in force for an no adequate remedy at law; plaintiffs failed to show that additional Two years unless notice of cancellation in writing irreparable injury would result if they were denied specific by owner was given to Coin Company not less than 60 days performance and a mandatory injunction; and that the trial before the end of the original term of the agreement. court concludes, in the exercise of its discretion, that the relief plaintiffs sought should not be granted.

By the agreement the Coin Company was obliged to furnish the investment necessary to equip the laundry room with Plaintiffs had not breached the agreement at the time washing machines and drying equipment and to service the defendant took over the laundry rooms. equipment and keep it in repair during term of the contract and to pay owner 35% Of the gross income from the equipment The evidence showed that defendants acquired the Capri monthly. Coin Company also agreed to furnish at its expense Drive apartments in 1967 and acquired the Sagebrush Trail public liability insurance protecting from suits arising from apartments in 1968. On those dates the Coin Company operating the equipment. Coin Company also agreed to equipment was already located in the laundry rooms of both furnish necessary advertising and to demonstrate and instruct apartment units under the terms of these agreements. tenants in the use of the equipment.

The evidence shows that United Coin Meter Company The apartment owner agreed to permit Coin Company dissolved in April, 1969, at the time that Raymond Johnson employees ingress and egress during reasonable hours bought out the interests of people named Ford. A successor for purpose of making installations, inspections, servicing corporation, which was the other plaintiff, was formed and equipment and removing coins. The owner agreed not to all the assets of the original Coin Company, including its install or let others install similar equipment on the apartment interests in the two contracts here involved, were transferred premises. Owner agreed to promptly report to Coin Company to this new corporation which is now United Coin Meter the need for service and to keep the laundry space clean. Company, Inc.

It will be noted that the five year term of this last agreement The basic contentions, as we understand them, in plaintiffs' ended on December 13, 1970, and that the agreement only first four points are: the two written instruments that plaintiffs provided for one renewal term and that was for Two years. seek to specifically enforce are actually leases of real estate; This two year renewal term expired on December 13, 1972, since defendants breached the leases, plaintiffs are entitled while this case was on appeal. to have them specifically enforced as a matter of right and as a matter of law under the proof made; that since the The agreement relating to the apartments on Capri Drive was written contracts were leases of realty, and since defendants for a term of five years and it provided for a renewal of breached them, it was not necessary in this case, to be one five year term. That renewal term will not expire until entitled to have the leases specifically enforced and to get the February 11, 1976. mandatory injunction sought, that plaintiffs prove that they have no adequate remedy at law and that they will suffer This was a non-jury trial. The court's findings of fact provided irreparable injury; and that the question of whether or not in substance that: while both agreements were in full force on specific performance and a mandatory injunction should be May 14, 1971, the defendants, owners, took possession of the granted by the trial court was not under the facts of this laundry rooms in both apartment units; the machines involved case a matter that lay within the discretion of the trial court are coin-operated and under the agreement Coin Company and that plaintiffs, on proving that defendants breached the employees are required to come on the premises, open the agreements, were entitled to such relief as a matter of law and cash boxes, count the receipts and to account to lessor for his as a matter of right.

share of gross receipts; that for the operation to be profitable it was necessary that cooperation, good will, mutual trust We overrule plaintiffs' first four points.

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

We hold that the plaintiffs were not entitled to specific “. . . Whenever a contract concerning real property is in performance as a matter of right and that we are required its nature and incidents entirely unobjectionable,—When it to affirm the case regardless of whether or not the written possesses none of those features which, in ordinary language, contracts involved here are leases of real estate. influence the discretion of the court,—it is as much a ' [1] As a general rule, the specific performance of a contract matter of course for a court of equity to decree its specific by a court of equity is not a matter of absolute right in performance as it is for a court of law to give damages for its the parties demanding it, . . . and applications for such breach.” (Emphasis ours.) relief are addressed to the sound discretion of the court.' See 81 C.J.S. Specific Performance s 9, p. 417; Steves v. The same rule is stated in 52 Tex.Jur.2d 638, Specific United Services Automobile Association, 459 S.W.2d 930 Performance, Sec. 92. The rule relied on by plaintiffs, as (Beaumont Civ.App., 1970, ref., n.r.e.); Ferguson v. von stated there, also makes it clear that such rule does not apply Seggern, 434 S.W.2d 380 (Dallas Civ.App., 1968, ref., n.r.e.); in instances where the contract is objectionable in any of the and W. K. Ewing Co. v. Krueger, 152 S.W.2d 488 (San features that address themselves to the court's discretion. Antonio Civ.App., 1941, ref., w.o.m.). [3] We are convinced that the contracts that are involved here do possess features which influence the discretion of the [2] It is also a settled rule that in order to get specific court. performance of a contract the party seeking it must show that he has no adequate remedy at law by way of an action for One such feature is the fact that there remained after the trial damages for breach of contract, and if an adequate remedy a period of several years before the term covered by at least at law is available, then specific performance will not be one of the contracts came to an end and the contracts called granted. See 52 Tex.Jur.2d 542, Specific Performance, Sec.

for the performance by the parties or their representatives 22; 81 C.J.S. Specific Performance s 6, p . 414; and Lone Star of numerous additional, yet unperformed acts, during that Salt Co. v. Texas Short Line Ry. Co., 99 Tex. 434, 90 S.W.

future period. A specific performance decree under those 863 (1906).

circumstances would require considerable supervision. See Edelen v. W. B. Samuels & Co., 126 Ky . 295, 103 S.W.

*887 The plaintiffs contend that the first general rule above 360 (1907) and 81 C.J.S. Specific Performance s 9, page 421, mentioned does not apply in this case, because the contracts wherein it is pointed out that a court must use discretion in involved here are actually leases of real estate and that a determining if a legal remedy is adequate and that a discretion different rule applies in such cases. They contend that in this is involved in determining if the remedy lacks mutuality. case they did not have to offer proof that they had no adequate These are additional features of these contracts that influence remedy at law because since the contracts involved real estate, the discretion of the court. it will be presumed that an action for damages is an inadequate In Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703 (1953)

remedy.

the Supreme Court stated in substance that although specific The rule relied on by plaintiffs is stated in the case of performance of a contract for the sale of realty will ordinarily Bennett v. Copeland, 149 Tex. 474, 235 S.W.2d 605 (1951) be granted, it is not a remedy that exists as a matter of as follows: right. Whether plaintiff seeking specific performance has an adequate remedy at law is an important factor to be considered “. . . a contract for the sale of land will be enforced as a in such cases. matter of right, regardless of its wisdom or folly, if fairly and understandingly made. . . . courts cannot arbitrarily For the reasons stated we are convinced that the rule relied refuse specific performance of a contract, because they deem upon by plaintiffs is not applicable to the facts of this case. it unwise, or because subsequent events disclose that it Since it is not, the trial court correctly held that a disposition will result in a loss to defendant; but to justify the refusal of this case was governed by the general rules relating to of this relief it must appear that the defendant had been specific performance that we have hereinabove stated. In misled and overreached to such an extent that the contract is other words the trial court's discretion was properly involved unconscionable.' . . . in determining whether or not to grant specific performance and we are convinced that that court did not abuse its

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

discretion in refusing to grant specific performance under the facts of this case. [6] The plaintiffs here did not prove themselves entitled to specific performance. The court, therefore, properly refused Since the disposition of this case was governed by the to grant the injunctions sought in view of the rule just stated. general rules that we have hereinabove stated, it was also necessary, *888 before plaintiffs would be entitled to a decree of specific performance that they prove that they had Plaintiffs were not entitled to a decree of specific performance no adequate remedy at law. This they did not do. in this case for other reasons. [4] It is obvious that since the plaintiffs had been engaged ' [7] It is a settled principle that a court of equity will in the performance of each of these contracts for more than ordinarily decree specific performance only when it can 5 years that all data needed for proving the damages they dispose of the matter in controversy by a decree capable of would sustain by reason of defendants' breach of the contract present performance; it will not decree a party to perform a is readily available to them. The defendants offered into continuous series of acts extending through a long period of evidence the checks that plaintiffs had paid to them covering time, requiring constant supervision by the court, . . ..' 81 their proportionate part of the income from the machines C.J.S. Specific Performance s 75, page 584. This is the law in involved. It could easily be determined how much plaintiffs Texas. See Beckham v. Munger Oil & Cotton Co., 185 S.W. had grossed from the contracts. Plaintiffs' president had many 991, supra. years of experience in the business and is bound to have known the amount of expense and depreciation plaintiffs had incurred in performing their obligations under the contracts The following is from Williston on Contracts, Revised during the part of the term that had already expired. It appears Edition, Vol . 5, Sec. 1430, ‘Completeness of relief’: ‘At least obvious to us that the amount of damages plaintiffs sustained in the enforcement of affirmative promises a court of equity from a breach of the contracts could be readily proven. Since deems it neither wise nor just to enforce one or more of such the only benefit plaintiffs could get from a performance of promises in a contract unless it can enforce all of the contract the contracts for the rest of their terms is the amount of net outstanding at the time of the suit, including the promises of profit they would realize from a complete performance of the the plaintiff as well as those of the defendant.’ contracts, a judgment awarding plaintiffs a recovery of that *889 [8] The contracts that are here involved were in part sum would be an adequate remedy. See Lone Star Salt Co. v. executory at the time of the trial and the contracts required Texas Short Line Ry. Co., 99 Tex. 434, 90 S.W. 863 (1906). the plaintiffs to install the laundry machines, maintain them, service them and keep them repaired during the remainder of the contract term. In addition, the plaintiffs were required Since a disposition of this case is governed by the general monthly, throughout the terms of the contracts, to go to the rules above announced, the trial court properly denied machines, collect the money from them, count it and to give plaintiffs' prayer for specific performance for the reason that the apartment owners their part of the proceeds. One of the plaintiffs failed to establish that they had no adequate remedy contracts had several years yet to run. at law. The evidence showed that plaintiffs did have an adequate legal remedy at law by way of an action for damages. [5] The plaintiffs' application for an injunction is in effect The facts here were such that the court could not render the same as an application for specific performance because a specific performance decree capable of being presently the effect of granting the injunctive relief would be to performed that would dispose of the entire controversy and compel the carrying out of the contract. When this is true this was an additional reason why the court did not err in the application for injunctive relief will not be granted where refusing to decree specific performance of the contracts. an action for damages affords an adequate legal remedy.

An examination of the contracts involved makes it apparent See Beckham v. Munger Oil & Cotton Co., 185 S.W. 991 that many of the things that the plaintiffs were thereby (Dallas Civ.App., 1916, no writ hist.) wherein the following required to do during the remaining terms of the contracts rule is set out at page 992: “Whether a court of equity will were incapable of being enforced in behalf of defendants grant an injunction the effect of which is to compel the by specific performance. Many cases hold that the remedy specific performance of a contract, depends, of course, upon of specific performance is a mutual one between the parties the same principles as govern a direct decree for specific to a contract and that before such a decree will be granted performance. . . .”

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United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

mutuality of remedy must exist. E. M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (San Antonio Civ.App., 1932, affirmed The contracts required the apartment owners to keep the in 125 Tex. 212, 82 S.W.2d 632, 1935). It does not exist here. laundry room clean. Other courts hold that even though mutuality of remedy does Mr. Johnson had been working for one of the plaintiffs since not deprive a court of jurisdiction to specifically enforce a 1961. He testified that: cleanliness of a laundry room has a contract, it is addressed to the court's discretion and is an definite bearing on its income; apartment management can do element to be considered in determining whether the court almost anything to a laundry room; they can promote it, help should grant specific performance. See 81 C.J.S. Specific the income to be substantial, or they can let it ride and not Performance s 11, p. 425.

report machines that are out of order, thus preventing them Another case that supports our holding here is the case of from being kept in good repair, which will bring the income Galbreath v. Farrell, 249 S.W. 277 (Dallas Civ.App., 1923, down; management has a lot to do with it; they can make or no writ hist.). There the two plaintiffs and defendant agreed break you in the laundry room. that defendant would furnish the money with which to buy [10] The sixth and last point of error is that the court erred a tract of land and the plaintiffs would over a period of time in finding as a fact that the leases required that lessee perform in the future do a number of different things. The three were substantial personal services in performing the agreements. to be equal owners of the land. The defendant repudiated the contract and plaintiffs sought specific performance. The court We hold that no reversible error was committed in connection said at page 280:

with this finding and therefore overrule the point.

'. . . before a court of equity will enforce affirmative promises made by defendant in behalf of the plaintiff, it must also be It is true that the services that the contracts obligated the able to enforce the affirmative promises made by plaintiff in plaintiffs to perform in the future over an extended period behalf of the defendant. Such court never deems it wise or just of time are not ‘personal’ services in the sense that they to enforce one or more of the promises in a contract until it will be performed personally by the plaintiffs. This would be can enforce all of the contract outstanding at the time of the impossible because the plaintiffs are corporations. And they suit, including the promises of the plaintiff as well as those are not ‘personal’ services in the sense that there is a personal of the defendant. . . . relationship involved as exists between an employer and his employee, and in which case the employee personally does '. . . It is not sufficient to the ends of justice that appellants the work. It is true that the word ‘personal’ was probably not simply declare their willingness and ability to perform their the best word to be used in that finding .

part of the contract; there must be the ability of the court to enter a decree that compels such performance on their But a reading of the record and the statement of facts part. . . .' makes it apparent that the court was saying by this finding [9] Plaintiffs' fifth point of error is that the court erred in that the contracts involved provide that plaintiffs will be making its finding of fact No. 9, which was: ‘. . . for the required, in performing their part of the agreement, to arrangement to be successful and financially profitable, it furnish in the future, throughout the remaining terms of the is essential that cooperation, goodwill and mutual trust and contracts, substantial services. The evidence establishing this confidence exist as between lessor and lessee.’ fact finding is undisputed .

If the court chose the wrong word in calling the services The attack on the finding is based on the contentions that there Personal services, then such action is immaterial because it is is no evidence to support it and the finding is against the great obvious what services he was talking about. weight and preponderance of the evidence.

An attempt by a court to decree specific performance of We overrule the point. the services that plaintiffs did agree to perform in the future throughout a period of over two years, even though *890 The finding was obviously based on the testimony they are not technically ‘personal’ services, would require of Raymond Johnson, President of one of the plaintiff considerable supervision by the court for a long period after corporations.

the rendition of the decree. This is the type of thing that

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7

United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)

[11] It is obvious that since the terms provided for in the influences the discretion of a court in determining whether or contracts have come to an end, that a court can no longer order not to grant a specific performance decree.

specific performance of that contract.

The only relief sought in this suit was specific performance of two separate and distinct contracts and mandatory injunctions We would have affirmed the entire judgment had not part of the effect of which would be to cause specific performance the case become moot.

of the contracts.

The courts hold that when a case becomes moot while it is The original five year term of the contract relating to the Capri on appeal it is the duty of the appellate court to reverse the Drive Apartments expired on February 11, 1971. The contract trial court's judgment and to dismiss the case. Texas & N.O.R.

was renewed for another five year term which will not expire Co. v. Priddie, 127 Tex. 629, 95 S.W.2d 1290 (1936). For until February 11, 1976.

other cases see 4 Tex.Jur.2d 207, Appeal and Error—Civil, The original five year term of the contract relating to the Sec. 703. Sagebrush Trail Apartments ended on December 13, 1970. [12] It is therefore ordered that the trial court's judgment This lease did not provide for a renewal term of five years, in so far as it relates to that part of plaintiffs' action seeking but it did provide for one renewal term of two years. This injunctive relief and specific performance of the December contract was renewed by the parties for the two year term and 14, 1965, contract that covers the Sagebrush Trail Apartments this renewal term expired on December 13, 1972. is hereby reversed and that part of plaintiffs' case is hereby dismissed without prejudice.

The courts hold that: ‘A cause becomes moot when one ‘seeks judgment upon some matter which, when rendered, for any reason, *891 cannot have any practical legal effect upon a That part of the trial court's judgment in so far as it relates then existing controversy.‘‘ Bevil v. Wilfert, 241 S.W.2d 195 to the part of plaintiffs' action seeking injunctive relief and (Beaumont Civ.App., 1951, no writ hist.). See also McNeill specific performance of the February 11, 1966, contract that v. Hubert, 119 Tex. 18, 23 S.W.2d 331 (1930). covers the apartments located on Capri Drive in Fort Worth is affirmed.

This case, in so far as the controversy relates to the contract covering the apartments on Sagebrush Trail, has become The costs are taxed against appellants. moot while the case has been on appeal. It was not moot when the trial started in February, 1972. All Citations

493 S.W.2d 882

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§ 38.001. Recovery of Attorney's Fees, TX CIV PRAC & REM § 38.001

KeyCite Yellow Flag - Negative Treatment Proposed Legislation

Vernon's Texas Statutes and Codes Annotated Civil Practice and Remedies Code (Refs & Annos)

Title 2. Trial, Judgment, and Appeal Subtitle C. Judgments Chapter 38. Attorney's Fees (Refs & Annos)

V.T.C.A., Civil Practice & Remedies Code § 38.001

§ 38.001. Recovery of Attorney's Fees

Currentness

A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for:

(1) rendered services;

(2) performed labor;

(3) furnished material;

(4) freight or express overcharges;

(5) lost or damaged freight or express;

(6) killed or injured stock;

(7) a sworn account; or

(8) an oral or written contract.

Credits Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985.

Notes of Decisions (1441)

V. T. C. A., Civil Practice & Remedies Code § 38.001, TX CIV PRAC & REM § 38.001

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§ 38.001. Recovery of Attorney's Fees, TX CIV PRAC & REM § 38.001

Current through the end of the 2015 Regular Session of the 84th Legislature

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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38.1. Appellant's Brief, TX R APP Rule 38.1

Vernon's Texas Rules Annotated Texas Rules of Appellate Procedure Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)

Rule 38. Requisites of Briefs (Refs & Annos)

TX Rules App.Proc., Rule 38.1

38.1. Appellant's Brief

Currentness

The appellant's brief must, under appropriate headings and in the order here indicated, contain the following:

(a) Identity of Parties and Counsel. The brief must give a complete list of all parties to the trial court's judgment or order appealed from, and the names and addresses of all trial and appellate counsel, except as otherwise provided in Rule 9.8.

(b) Table of Contents. The brief must have a table of contents with references to the pages of the brief. The table of contents must indicate the subject matter of each issue or point, or group of issues or points.

(c) Index of Authorities. The brief must have an index of authorities arranged alphabetically and indicating the pages of the brief where the authorities are cited.

(d) Statement of the Case. The brief must state concisely the nature of the case (e.g., whether it is a suit for damages, on a note, or involving a murder prosecution), the course of proceedings, and the trial court's disposition of the case. The statement should be supported by record references, should seldom exceed one-half page, and should not discuss the facts.

(e) Any Statement Regarding Oral Argument. The brief may include a statement explaining why oral argument should or should not be permitted. Any such statement must not exceed one page and should address how the court's decisional process would, or would not, be aided by oral argument. As required by Rule 39.7, any party requesting oral argument must note that request on the front cover of the party's brief.

(f) Issues Presented. The brief must state concisely all issues or points presented for review. The statement of an issue or point will be treated as covering every subsidiary question that is fairly included.

(g) Statement of Facts. The brief must state concisely and without argument the facts pertinent to the issues or points presented. In a civil case, the court will accept as true the facts stated unless another party contradicts them. The statement must be supported by record references.

(h) Summary of the Argument. The brief must contain a succinct, clear, and accurate statement of the arguments made in the body of the brief. This summary must not merely repeat the issues or points presented for review.

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38.1. Appellant's Brief, TX R APP Rule 38.1

(i) Argument. The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.

(j) Prayer. The brief must contain a short conclusion that clearly states the nature of the relief sought.

(k) Appendix in Civil Cases.

(1) Necessary Contents. Unless voluminous or impracticable, the appendix must contain a copy of:

(A) the trial court's judgment or other appealable order from which relief is sought;

(B) the jury charge and verdict, if any, or the trial court's findings of fact and conclusions of law, if any; and

(C) the text of any rule, regulation, ordinance, statute, constitutional provision, or other law (excluding case law) on which the argument is based, and the text of any contract or other document that is central to the argument.

(2) Optional Contents. The appendix may contain any other item pertinent to the issues or points presented for review, including copies or excerpts of relevant court opinions, laws, documents on which the suit was based, pleadings, excerpts from the reporter's record, and similar material. Items should not be included in the appendix to attempt to avoid the page limits for the brief.

Credits Eff. Sept. 1, 1997. Amended by Supreme Court March 10, 2008, and Aug. 20, 2008, eff. Sept. 1, 2008. Approved by Court of Criminal Appeals Sept. 30, 2008, eff. Sept. 30, 2008.

Notes of Decisions (937)

Rules App. Proc., Rule 38.1, TX R APP Rule 38.1 Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current with rules verified through June 1, 2015.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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39.1. Right to Oral Argument, TX R APP Rule 39.1

Vernon's Texas Rules Annotated Texas Rules of Appellate Procedure Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)

Rule 39. Oral Argument; Decision Without Argument (Refs & Annos)

TX Rules App.Proc., Rule 39.1

39.1. Right to Oral Argument

Currentness

A party who has filed a brief and who has timely requested oral argument may argue the case to the court unless the court, after examining the briefs, decides that oral argument is unnecessary for any of the following reasons:

(a) the appeal is frivolous;

(b) the dispositive issue or issues have been authoritatively decided;

(c) the facts and legal arguments are adequately presented in the briefs and record; or

(d) the decisional process would not be significantly aided by oral argument.

Credits Eff. Sept. 1, 1997. Amended by Supreme Court March 10, 2008, and Aug. 20, 2008, eff. Sept. 1, 2008. Approved by Court of Criminal Appeals Sept. 30, 2008, eff. Sept. 30, 2008.

Editors' Notes

NOTES AND COMMENTS

Comment to 2008 change: Subdivision 39.1 is amended to provide for oral argument unless the court determines it is unnecessary and to set out the reasons why argument may be unnecessary. The appellate court must evaluate these reasons in view of the traditional importance of oral argument. The court need not agree on, and generally should not announce, a specific reason or reasons for declining oral argument.

Rules App. Proc., Rule 39.1, TX R APP Rule 39.1 Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current with rules verified through June 1, 2015.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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43.4. Judgment for Costs in Civil Cases, TX R APP Rule 43.4

Vernon's Texas Rules Annotated Texas Rules of Appellate Procedure Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)

Rule 43. Judgment of the Court of Appeals (Refs & Annos)

TX Rules App.Proc., Rule 43.4

43.4. Judgment for Costs in Civil Cases

Currentness

In a civil case, the court of appeal's judgment should award to the prevailing party the appellate costs--including preparation costs for the clerk's record and the reporter's record--that were incurred by that party. But the court of appeals may tax costs otherwise as required by law or for good cause.

Credits Eff. Sept. 1, 1997.

Notes of Decisions (17)

Rules App. Proc., Rule 43.4, TX R APP Rule 43.4 Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current with rules verified through June 1, 2015.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Rule 139. On Appeal and Certiorari, TX R RCP Rule 139

Vernon's Texas Rules Annotated Texas Rules of Civil Procedure Part II. Rules of Practice in District and County Courts Section 6. Costs and Security Therefor

TX Rules of Civil Procedure, Rule 139

Rule 139. On Appeal and Certiorari

Currentness

When a case is appealed, if the judgment of the higher court be against the appellant, but for less amount than the original judgment, such party shall recover the costs of the higher court but shall be adjudged to pay the costs of the court below; if the judgment be against him for the same or a greater amount than in the court below, the adverse party shall recover the costs of both courts. If the judgment of the court above be in favor of the party appealing and for more than the original judgment, such party shall recover the costs of both courts; if the judgment be in his favor, but for the same or a less amount than in the court below, he shall recover the costs of the court below, and pay the costs of the court above.

Credits Oct. 29, 1940, eff. Sept. 1, 1941.

Notes of Decisions (99)

Vernon's Ann. Texas Rules Civ. Proc., Rule 139, TX R RCP Rule 139 Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current with rules verified through June 1, 2015.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1