J.H. (Buster) Reedy and Debbie L. Reedy v. Gene Scott

• Court: Court of Appeals of Texas
• Decided: March 24, 2005
• Docket: 07-03-00051-CV
• Status: Published

Opinion

NO. 07-03-0051-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL A

MARCH 24, 2005

______________________________

J. H. (BUSTER) REEDY AND DEBBIE L. REEDY, APPELLANT

V.

GENE SCOTT, APPELLEE

_________________________________

FROM THE 31ST DISTRICT COURT OF WHEELER COUNTY;

NO. 9875; HONORABLE H. BRYAN POFF, JUDGE

_______________________________

Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.

MEMORANDUM OPINION

Appellants, J.H. (Buster) Reedy and his wife Debbie Reedy, bring this appeal

challenging a summary judgment in favor of Gene Scott on Scott’s claim for breach of an

earnest money contract for the sale of property by the Reedys. We overrule appellants’

three points of error and affirm the judgment of the trial court. The events giving rise to this litigation began in May 1991 when the Reedys

executed a written lease to Diane Powell1 for a house on a seventeen-acre tract in Wheeler

County. The lease term began June 1, 1991, and was to run for thirty-six months. At the

same time the Reedys executed a hand-written agreement to sell the property to Powell

“upon said lease dated May 23, 1991.” The agreement provided the Reedys would not sell

the property to anyone else unless Powell breached the lease agreement. Disputes arose

between the Reedys and Powell concerning the property, resulting in litigation.

The Reedys offered the property for sale and Scott made an offer of $55,000 in

January 1993. Scott would later allege the Reedys told him of Powell’s lease and that she

was occupying the property, but told him Powell was in default for failure to pay rent and

would be removed. The Reedys accepted Scott’s offer, leading to execution of an earnest

money contract dated January 26, 1993. That contract required the Reedys to provide title

insurance subject only to eight listed exclusions and a warranty deed subject to the same

exclusions. Powell’s lease and contract were not listed in the exclusions. On February 26,

1993 the Reedys executed and delivered a deed conveying the property to Scott in

exchange for cash and Scott’s assumption of the outstanding mortgage.

On March 16, 1993, Powell filed her May 1991 lease and the hand-written

agreement for record in the Wheeler County property records. Scott filed his deed for

record on April 2, 1993. A new commitment for title insurance dated the same day listed

the lease and agreement recorded by Powell as additional exceptions to title insurance

1 Powell also uses the name Dayna Dawn’yel and both names appear in documents in the record. There is no question both names refer to the same person.

-2- coverage. Scott filed suit against the Reedys on September 15, 1993, for breach of the

earnest money contract and breach of warranty. He sought specific performance and

damages. His suit also asserted claims against Powell for trespass to try title and to

remove the cloud on his title. Powell filed counterclaims against Scott. See Powell v.

Scott, No. 07-97-0241-CV (Tex.App.–Amarillo July 14, 1998, no pet) (unpublished opinion).

The record indicates the claims between Scott and Powell were settled in June 1999,

resulting in Powell’s release of her claims under the May 1991 agreement.2

Scott sold the property for $35,000 in April 2000. In May 2001 he moved for

summary judgment on the basis his summary judgment evidence conclusively established

the Reedys’ breach of the earnest money contract. The motion alleged he was “precluded

from selling the property because of the encumbrances created by” the lease and

agreement filed by Powell. Scott’s motion also sought recovery of liquidated damages,

including attorney’s fees.

The Reedys filed a response May 22, 2001, in which they objected to Scott’s

summary judgment affidavit on the basis it was conclusory, and asserted that a factual

dispute existed concerning Scott’s actual notice of Powell’s claim to the property and his

“failure to timely record the deed [from the Reedys].” The Reedys offered the affidavit of

J.H. Reedy in support, which asserted Scott “was aware of litigation between [Reedy] and

[Powell] regarding this real estate in the justice and county courts of Wheeler County,

2 The lease terminated by its own terms in June 1994. The earlier, separate suit between the Reedys and Powell was dismissed in January 1995.

-3- Texas when [he] purchased said property[.]” The trial court heard the summary judgment

motion the same day but took no immediate action on it.

The Reedys then filed a third amended answer, adding their allegations that Scott

was aware of the litigation over the property at the time of his purchase. Scott

subsequently objected to J.H. Reedy’s affidavit asserting it sought to establish an

affirmative defense which was never plead. In a brief filed in support of his motion Scott

conceded actual knowledge of Powell’s interest would bar his claim, but reiterated his

position that the absence of a pleading to support the defense prevented consideration of

the evidence. He also argued the court should not permit the filing of the Reedys’ amended

answer because they failed to obtain leave of court to file the amendment less than seven

days before the hearing on his motion. See Tex. R. Civ. P. 63; Goswami v. Metropolitan

Sav. & Loan Ass'n, 751 S.W.2d 487, 490 (Tex. 1988) (applying Rule 63 to amendments

before summary judgment hearing).

The trial court later held a second hearing at which it denied the Reedys’ motion for

leave to file their third amended answer but sustained a challenge to a portion of Scott’s

attorney’s fees. It granted Scott’s motion and rendered a final summary judgment in his

favor, awarding damages of $51,964.02, prejudgment interest of $28,607.19, and

attorney’s fees of $8,880.17. The Reedys requested findings of fact and conclusions of law

and timely perfected appeal.

The Reedys present three points of error on appeal. They contend the trial court

erred in (1) failing to file properly requested findings of fact and conclusions of law; (2)

-4- granting the motion for summary judgment because the pleadings and evidence raise a

genuine question on Scott’s actual knowledge “of that which [Scott] claims as a cloud on

his title”; and (3) granting the motion for summary judgment because the pleadings and

evidence raised an issue on Scott’s constructive notice of the cloud on the title.

The Reedys cite Rule of Civil Procedure 296, Tenery v. Tenery, 932 S.W.2d 29 (Tex.

1996), and Cherne Industries, Inc. v. Magallanes, 763 S.W.2d 768 (Tex. 1989), for the

proposition that a trial court’s failure to file findings of fact on a proper request is presumed

harmful. Their reliance on those authorities is misplaced. The Texas Supreme Court has

consistently held requests for findings of fact and conclusions of law “have no place in a

summary judgment proceeding.” IKB Industries Ltd. v. Pro-Line Corp., 938 S.W.2d 440,

441 (Tex. 1997); Linwood v. NCNB Texas, 885 S.W.2d 102, 103 (Tex. 1994). This is so

because for summary judgment to be rendered, there cannot be a genuine issue as to any

material fact, Tex. R. Civ. P. 166a(c), and the legal grounds are limited to those stated in

the motion and response. 938 S.W.2d at 441. We overrule the Reedys’ first point.

In their two remaining points the Reedys argue the pleadings and summary

judgment evidence raised a fact issue on Scott’s actual or constructive notice of Powell’s

claim to the property and such notice, if proven, would defeat Scott’s claim. On appeal,

Scott continues to characterize the Reedys’ contention that his notice of Powell’s claim

defeats his breach of contract action as an affirmative defense, and asserts their failure to

plead the defense prevents their reliance on it. The Reedys’ brief does not directly address

the trial court’s ruling denying leave to file their third amended petition, by which they

attempted to plead Scott’s knowledge of Powell’s claims. At oral argument, the Reedys

-5- advanced the contention their response to the motion for summary judgment may be

considered a pleading for this purpose. By supplemental brief, Scott contests that

contention, arguing Roark v. Stallworth Oil & Gas, 813 S.W.2d 492, 494 (Tex. 1991),

supports the conclusion the Reedys could not raise the affirmative defense of Scott’s notice

for the first time in their summary judgment response in the face of his objection in the trial

court to their failure to plead the affirmative defense. For resolution of the narrow issues

presented on appeal, we do not find it necessary to address the sufficiency of the Reedys’

pleadings or whether the issues they raised in opposition to Scott’s motion for summary

judgment are properly characterized as affirmative defenses.

The Reedys second and third points of error are based on the premise that Scott’s

entitlement to recovery on his breach of contract claim is dependent on his status as a

bona fide purchaser. This court has said a bona fide purchaser is one who acquires

apparent legal title to property in good faith for a valuable consideration and without actual

or constructive notice of an outstanding equity or an adverse interest or title. Newman v.

Coker, 310 S.W.2d 354 (Tex.Civ.App.–Amarillo 1958, no writ). See generally 4 Leopold

and Lange, Texas Practice: Texas Land Titles & Title Examination §§ 881-885, 883 n.3

(1992). A bona fide purchaser takes title to the property unburdened by such interests as

those based on unrecorded instruments. See, e.g., Madison v. Gordon, 39 S.W.3d 604,

606 (Tex. 2001) (per curiam). See also Tex. Prop. Code Ann. §13.001 (Vernon 2003).

Contending in support of their second issue that Scott’s actual knowledge of Powell’s

claim to the property “prevented [Scott] from being a bona fide purchaser without notice of

such claim and prevented [Scott] from prevailing against [the Reedys] on his claim

-6- therefore,” the Reedys cite Lefevere v. Sears, 629 S.W.2d 768 (Tex.Civ.App.--El Paso

1981, no writ), Cornish v. Yarbrough, 558 S.W.2d 28 (Tex.Civ.App.–Waco 1977, no writ),

and Foster v. Buchele, 213 S.W.2d 738 (Tex.Civ.App.–Fort Worth 1948, writ ref’d n.r.e.).

Contending constructive notice similarly prevented Scott from attaining the status of a bona

fide purchaser, they also cite Langley v. Norris, 173 S.W.2d 454 (Tex. 1943). The cases

cited state the rule that actual or constructive notice of a claimed interest in real property

prevents a buyer from avoiding the interest as a bona fide purchaser.3 Scott denies that

his breach of contract claim against the Reedys required him to prove he was a bona fide

purchaser.

To be entitled to summary judgment a plaintiff must conclusively establish all the

essential elements of his cause of action as a matter of law. MMP, Ltd. v. Jones, 710

S.W.2d 59, 60 (Tex. 1986) (per curiam); City of Houston v. Clear Creek Basin Authority,

589 S.W.2d 671, 678 (Tex. 1979). See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223

(Tex. 1999). In his motion for summary judgment, Scott set out the elements of his cause

of action for breach of contract as requiring proof there was a binding earnest money

contract between him and the Reedys containing obligations to be performed by both sides;

that he performed his obligations as specified in the contract; that the Reedys failed to

perform all the obligations required of them by the contract; and that he incurred damages

3 In accordance with the standard of review of a summary judgment, we take the statements in J. H. Reedy’s affidavit favorable to his position as true, and indulge every reasonable inference in the Reedys’ favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985).

-7- as a result of their breach.4 Neither his motion nor his summary judgment evidence refers

to proof he lacked knowledge of Powell’s claims or that he was entitled to bona fide

purchaser status with respect to his purchase of the property from the Reedys. We see no

basis for a contention that Scott’s status as a bona fide purchaser was an element of the

breach of contract cause of action on which summary judgment was granted. The cases

the Reedys cite do not support such a contention. Nor do we see any reason why Scott’s

knowledge of Powell’s purported interest necessarily would constitute a defense to the

breach of contract claim. We must conclude the evidence of Scott’s knowledge of Powell’s

claims was not material to the claim on which he sought summary judgment. A dispute on

a fact which is not material does not prevent disposition by summary judgment. See Howell

v. Murray Mortgage Co., 890 S.W.2d 78, 84 (Tex.App.–Amarillo 1994, writ denied); Borg-

Warner Acceptance Corp. v. C.I.T. Corp., 679

S.W.2d 140, 144 (Tex.App.–Amarillo 1984, writ ref’d n.r.e.). Accordingly, we overrule

appellants’ second and third points and affirm the trial court’s judgment.

4 The essential elements of an action for breach of contract are: (1) the existence of a valid contract; (2) that the plaintiff performed or tendered performance; (3) that the defendant breached the contract; and (4) that the plaintiff was damaged as a result of the breach. Hussong v. Schwan’s Sales Enterprises, Inc., 896 S.W.2d 320, 326 (Tex.App.–Houston [1st Dist.] 1995, no writ). This appeal does not present a general issue challenging the grant of summary judgment, see, e.g., Friedman v. Atlantic Funding Corp., 936 S.W.2d 38, 40 n.1 (Tex.App.–San Antonio 1996, no writ), or a contention that the grounds alleged in Scott’s motion were insufficient to support summary judgment, see McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993); Clear Creek Basin Authority, 589 S.W.2d at 678.

-8- James T. Campbell Justice

Johnson, C.J., not participating.

-9-