Gil Ramirez Homes, Inc. v. Pablo Renteria and Pilar Cruz

• Court: Court of Appeals of Texas
• Decided: November 18, 2004
• Docket: 01-03-01077-CV
• Status: Published

Opinion

Opinion issued November 18, 2004

In The

Court of Appeals

For The

First District of Texas

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NO. 01-03-01077-CV

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GIL RAMIREZ HOMES, INC., Appellant

V.

PABLO RENTERIA AND PILAR CRUZ, Appellees

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On Appeal from the 157th District Court

Harris County, Texas

Trial Court Cause No. 2002-06392

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MEMORANDUM OPINION

          Gil Ramirez Homes, Inc. appeals the judgment entered against it by the trial court in a nonjury trial. The trial court found appellant liable for breaching its contract with appellees, Pablo Renteria and Pilar Cruz, and ordered appellant to refund the earnest money deposit and other sums paid by appellees in the total amount of $7,875. In three issues on appeal, appellant contends that the evidence was legally and factually insufficient to support a finding that (1) appellant breached its contract with appellees, (2) appellees were not given notice of appellant’s termination of the contract; and (3) appellees were not approved for “an industry standard loan.” We affirm.

BACKGROUND

          Appellant is a corporation in the business of constructing and selling residential homes. Appellees are a married couple who entered into a residential earnest money contract (the “contract”) with appellant on September 25, 1999 to purchase a home that appellant would construct. The contract recited only partial purchase terms, stating that appellees would make a $1,000 earnest money deposit to be held by appellant and the purchase price would be $159,900. The contract was contingent on appellees obtaining approval for a mortgage loan, but the contract did not define the term “loan” or provide any loan terms. One of the missing terms was the amount of the purchase price that was to be financed, although the form contract the parties used did contain a blank space in which they could recite how the purchase price would be paid. The parties did not fill out any information in that space.

          The contract, in paragraph 4, stated that appellees were to apply for “the Loan amount specified” within three days and “diligently seek to qualify for the Loan.” If appellees did not qualify for “the Loan after a good faith effort,” the earnest money was to be refunded after appellant was notified, either orally or in writing, by the lender. Appellees applied, through a mortgage broker, for a first mortgage loan equal to 80% of the purchase price (the “80% first”) and a purchase-money second mortgage loan equal to 10% of the purchase price (the “10% second”).

          On October 7, 1999, a document entitled “Price Build-Up,” which listed certain upgrades requested by appellees and referenced the contract, was executed by appellant’s sales representative and one of the appellees. Appellees paid appellant $6,875 for the upgrades, as the contract required. Appellant began construction of the home with the requested upgrades included. Regarding the pre-payment for upgrades, paragraph 5 of the contract stated that “any such funds paid, including the Earnest Money, are not refundable under any circumstances (except as expressly provided in Paragraph 4).” The contract, in paragraph 4, stated that the earnest money would be refunded if appellees, after good faith effort, did not qualify for “the Loan” and appellant was notified by the Lender.

          At some point after this, appellees were approved for the 80% first but were denied approval for the 10% second. It is uncontested that appellant was notified that appellees were denied approval for the 10% second. Appellees testified that this denial left them without sufficient cash to close, but that Gil Ramirez, appellant’s president, orally promised to loan them $7,000 so they could close. Ramirez testified that he made no such promise.

          After appellees were denied approval on the 10% second, construction of the home was substantially completed and, according to Ramirez’s testimony, a closing was to take place at appellant’s office on January 5, 2000. Ramirez testified that a representative of a title company handling the closing was at appellant’s office that day to conduct the closing. Ramirez stated that appellees refused to close on their purchase of the home and that he terminated their contract orally. The contract, in paragraph 10, allowed appellant, at its option, to retain the earnest money deposit if appellees refused to close on their purchase. Appellees testified that they went to appellant’s office as instructed for “the closing” but that no title company representative was present when they were there. Both appellees testified that Ramirez told them at “the closing” that he had changed his mind about loaning them the $7,000 and that appellant was terminating the contract.

          Appellant retained the $1,000 earnest money deposit and the additional $6,875 appellees had paid for upgrades. Appellees demanded that appellant refund them the $7,875 but appellant refused. Appellees filed suit against appellant and Ramirez individually, pleading causes of action for breach of contract and deceptive trade practices. The trial court dismissed the deceptive trade practices claim and found that Ramirez was not individually liable, but found appellant had breached the contract by failing to return the $7,875 to appellees.

DISCUSSION

Breach of Contract

          In its first issue, appellant asserts that the evidence was not legally or factually sufficient to support a finding that appellant breached the contract. As there were no findings of fact filed in this case, we must imply all the necessary findings to support the judgment. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990); Terry v. Terry, 920 S.W.2d 423, 426 (Tex. App.—Houston [1st Dist.] 1996, no pet.). If there is evidence to support the implied finding of fact, we must uphold the judgment on any theory of law applicable to the case. In Interest of W.E.R., 669 S.W.2d 716, 717 (Tex. 1984); Terry, 920 S.W.2d at 426.

          In reviewing a “no evidence” point, we consider only the evidence and inferences that tend to support the finding, disregarding all evidence and inferences to the contrary. Vannerson v. Vannerson, 857 S.W.2d 659, 666 (Tex. App.—Houston [1st Dist.] 1993, writ denied). If there is any evidence of probative force to support the finding, i.e., more than a mere scintilla, we will overrule the point. Id. When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983); Seideneck v. Cal Bayreuther Assocs., 451 S.W.2d 752, 755 (Tex. 1970). However, if the evidence supplies some reasonable basis for differing conclusions by reasonable minds as to the existence of a vital fact, then there is some evidence. Kindred, 650 S.W.2d at 63.

          In reviewing factual sufficiency points of error, we must examine all of the evidence in the record, including any evidence contrary to the judgment to determine if the challenged finding is so against the great weight and preponderance of the evidence as to be clearly wrong or unjust. Plas-Tex. Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989).  The contract required appellant to return the earnest money if appellees failed to qualify for a loan. The contract did not specify the loan amount appellees were to seek. Mr. Renteria, one of the appellees, testified that Mr. Ramirez, appellant’s president, agreed to take care of “the financing and everything himself” and that “Mr. Ramirez told me there was going to be a down payment of [$]15,000.” The uncontested evidence at trial was that appellees attempted to finance their home purchase with an 80% first and a 10% second. It is also uncontested that appellees were denied approval on the 10% second.

          Appellant’s sole argument in its motion for new trial was that appellees were approved for the 80% first; thus, they had a duty to close, which they breached, and appellant had the right to retain the $7,875 under paragraph 10 of the contract. Appellees argument at trial was that they were denied the 10% second and that appellant was notified of that denial; thus, appellees had no duty to close and had the right to a refund of the $7,875 under paragraphs 4 and 5 of the contract.

          Purchasers are required to apply for the loan reflected in the earnest money contract. Herbage v. Snoddy, 864 S.W.2d 695, 697 (Tex. App.—Houston [1st Dist.] 1993, pet. denied). Where the purchasers’ contractual right to recover an earnest money deposit is conditioned upon their inability to secure financing on the stated terms, the purchasers’ failure to apply for a loan on those terms does not satisfy the contractual condition for return of the earnest money. Id. Whether a purchaser used reasonable efforts to secure the financing required in an earnest money contract is usually a question of fact for the jury. Fingold v. Cook, 902 S.W.2d 579, 582 (Tex. App.—Houston [1st Dist.] 1995, pet. denied).

          As there was no definition provided in the contract, the trial court properly allowed parol evidence to inform the court as to what the parties meant by the term “the Loan,” including the loan amount. See Bleeker v. Morrision, 458 S.W.2d 709, 711 (Tex. Civ. App.—Eastland 1970, no pet.) (noting that earnest money contract did “not set out the details of the manner of payment of the total consideration but this is not necessary to comply with the statute [of frauds]”). The method of paying the consideration for a contract can be changed orally without violating the statute of frauds. Garcia v. Karam, 276 S.W.2d 255, 257 (Tex. 1955).

          The trial court implicitly found that the parties entered into a valid parol agreement to modify the mode of payment of the consideration by agreeing that “the Loan” was to consist of the 80% first and 10% second. Appellees, because they did not qualify for the 10% second, did not qualify for “the Loan” and did not have a duty to close. Because appellees did not breach by refusing to close, appellant could not exercise its remedy, under paragraph 10, to cancel the contract and retain the sums paid by appellees. The trial court implicitly found that appellees demanded, and were entitled to, a return of the monies in question pursuant to paragraphs 4 and 5 of the contract.  There was sufficient evidence presented at trial that “the Loan” was to be a combination of an 80% first and a 10% second. Appellees testified that appellant’s president, Mr. Ramirez, was handling the financing for them and that the down payment was to be $15,000. Appellant’s president did not testify as to what amount or percentage the parties had agreed would be financed, asserting only that an 80% loan was “the industry standard” for self-employed persons like appellees, and that “everything was done to try to help” appellees obtain the higher 90% financing.           There was legally and factually sufficient evidence to support the finding that appellant breached the contract by refusing to refund the $7,875 to appellees. We overrule appellant’s first issue.

Remaining issues.

          In its two remaining issues appellant complains of implied findings allegedly made by the trial court that appellees were not given notice of appellant’s termination of the contract, and that appellees were not approved for “an industry standard loan.” The alleged findings appellant complains of were not necessary for the judgment rendered by the trial court, and we will not imply them.

          We overrule appellant’s second and third issues.

                                                     CONCLUSION

          We affirm the judgment of the trial court. 

                                                             Sam Nuchia

                                                             Justice

Panel consists of Justices Nuchia, Higley, and Hanks.

Do Not Publish. Tex. R. App. P. 47.2(b).