Kathleen Hagan N/K/A Kathleen Horne v. David Pauszek

• Court: Court of Appeals of Texas
• Decided: March 31, 2005
• Docket: 03-04-00314-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-04-00314-CV

Kathleen Hagan n/k/a Kathleen Horne, Appellant

v.

David Pauszek, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. GN102404, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING

MEMORANDUM OPINION

David Pauszek sued his neighbor Kathleen Hagan to enforce an agreement that Hagan

made with David Pauszek’s now deceased mother, Shelley Pauszek, to grant an easement to run

drinking water lines across Hagan’s property. The trial court granted summary judgment in favor

of David Pauszek.1 Because we hold that a condition precedent to the obligation to perform under

the agreement did not occur, we reverse the summary judgment and remand the case for further

proceedings.

BACKGROUND

Hagan owned two homes on separate tracts of land prior to entering into the

agreement at issue. Both homes shared a water supply from a well located on one of the tracts. In

1 Hagan did not file a cross-motion for summary judgment. 1994 Shelley Pauszek purchased the tract of land with the well. In conjunction with this transaction,

the parties entered into a temporary water agreement governing the supply of water to both

properties. Shelley Pauszek conveyed her property to her son David Pauszek in June 1997. This

dispute between David Pauszek and Hagan concerns the rights and obligations of those parties under

the temporary water agreement between Hagan and Shelley Pauszek.

Temporary Water Agreement

As part of the agreement, Shelley Pauszek promised to continue providing water from

the well to Hagan for a specified period of time. During that time, a grant proposal was pending to

extend a water main to the two properties. The grant was for the benefit of low to middle income

residents. The agreement describes the grant proposal:

It is possible that the Hill Country Water Supply (“Water Company”) may be in a position to extend water utility services to the Hagan Property and Pauszek Property, and Hagan and Pauszek desire to set forth their agreement with respect to the supply of water by the Water Company as well as easements, water lines and water meters which may be required by the Water Company.

***

Hagan has advised Pauszek that a grant proposal (“Grant”) has been submitted to appropriate governmental authorities (“the Grant Authority”) which, if approved would pay the cost of the Water Company extending a water main to the property line of the Hagan Property or to a location within the Hagan Property. In addition, and as an inducement to Mrs. Pauszek to permit Mrs. Hagan to use the Water Well, Mrs. Hagan has advised Pauszek that if the Grant is approved, the Grant will run to the benefit of Mrs. Pauszek, and all costs (including all water company installations fees and tap fees) of extending a water line from the water main through the Hagan Property to the Pauszek Property shall be paid out of the Grant.

2 The agreement provides for two contingencies. If the Grant is not approved, Hagan must terminate

her use of the Pauszek well and find her own water supply. If the Grant is approved, Hagan must

grant Pauszek an easement across Hagan’s property to allow Pauszek to connect to the water main:

If the Grant is approved, then Hagan agrees to permit Pauszek, at no expense to Pauszek, to have an easement across the Hagan Property for the purposes of running a water line from the water main of the Water Company to the Pauszek Property. The location of the easement, size of the easement, size of the water lines, and other pertinent specifications for the easement shall be determined by the Water Company or the requirements of the Grant or both, as applicable. In the alternative, if the Water Company will permit Pauszek to have separate water lines routed to the Pauszek Property through property other than the Hagan Property, Pauszek may, if Pauszek so elects, use the alternative route for the water lines.

In the trial court, Hagan did not contest David Pauszek’s right as the present owner of the Pauszek

property to sue to enforce the agreement signed by his mother in the trial court.2 Instead, she

contended that the agreement may not be enforced.

David Pauszek’s Ineligibility for the Grant

Hagan presented evidence in opposition to summary judgment that, because David

Pauszek lived on and owned the property, the Grant would not pay to extend water lines to the

2 In an order dated December 3, 2004, we raised the issue of standing on our own motion and requested supplemental briefing. We now conclude that David Pauszek’s authority to enforce an agreement between Hagan and his mother raises a question regarding capacity, not standing. See Nootsie, Ltd. v. Williamson County Appraisal Dist., 926 S.W.2d 659, 661 (Tex. 1996) (“A plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy.”). A challenge to David Pauszek’s legal authority to enforce the agreement must be preserved through an objection at trial. See CHCA E. Houston, L.P. v. Henderson, D.D.S., 99 S.W.3d 630, 632-33 (Tex. App.—Houston [14th Dist.] 2003, no pet.).

3 Pauszek property. Hagan submitted the affidavit of Judy Langford, the president of the consulting

firm responsible for administering the Grant. Langford explained that the Grant was reserved for

households of low-to-moderate income. She stated that she read a December 1995 newspaper article

indicating that David Pauszek had pleaded guilty to illegally using his job with the Federal Deposit

Insurance Corporation to arrange for his mother’s purchase of the Pauszek property. The article

reported that David Pauszek agreed to pay restitution to the FDIC, and the government did not seek

forfeiture of the property.3 Langford then spoke with David Pauszek, who confirmed that

information provided on his mother’s grant application was false and that he—not his mother—was

living on the property. Based on that conversation, Langford dropped the Pauszek property from the

Grant proposal because David Pauszek was not of low-to-moderate income.

Water Connections

The Grant was eventually approved and a water main was extended to the Hagan

property. During that construction, Hagan contacted David Pauszek about granting him an easement

to connect the Pauszek property to the water main. Hagan suggested a route for the water lines that

ran through her property away from her home. David Pauszek obtained bids for running the lines

according to Hagan’s suggested route, determined that the $15,000 cost was too expensive, and

rejected the offer of an easement along the suggested route.

Hagan then allowed David Pauszek to use the existing water lines that previously

connected Hagan’s home to the well on the Pauszek property to connect to the water main. Hagan

3 The article also stated that David Pauszek had loaned his mother the money to purchase the property.

4 wrote a letter proposing an agreement with David Pauszek. The letter stated that the connection was

a temporary measure and that Hagan did not want to grant David Pauszek an easement along that

line. The proposed agreement noted that the existing line ran extremely close to Hagan’s home and

several massive trees and detailed how the lines must be maintained. The agreement also required

David Pauszek to promise not to sue. David Pauszek rejected the offer and brought suit to enforce

the original agreement by compelling Hagan to grant an easement along the existing water

connection.

Litigation

The trial court granted summary judgment in favor of David Pauszek, holding that

the temporary water agreement was enforceable and that Hagan was required under the agreement

to grant David Pauszek an easement, which she refused to grant along the established water

connection. David Pauszek then filed a “Motion for Final Summary Judgment” seeking a judgment

granting specific performance of this agreement. In February 2004, the trial court entered a final

judgment in favor of David Pauszek specifically ordering Hagan to grant an easement across her

property along the existing water lines.

DISCUSSION

Hagan raises five issues challenging the summary judgment granted in favor of David

Pauszek. She contends that David Pauszek failed to show the absence of a question of material fact

regarding (1) her duty to convey an easement under the contract, (2) whether David Pauszek

fraudulently induced Hagan to enter into the contract, (3) the location and scope of the easement

5 granted, (4) whether David Pauszek waived his right to an easement, and (5) whether David

Pauszek’s attorney’s fees were reasonable and necessary.

Summary Judgment Standard

Because the propriety of a summary judgment is a question of law, we review the trial

court’s decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Texas Dep’t

of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex. App.—Austin 1999, no pet.).

A party moving for summary judgment must conclusively establish the absence of any genuine

question of material fact and that he is entitled to judgment as a matter of law. Tex. R. Civ. P.

166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). Every reasonable

inference must be indulged in favor of the nonmovant and any doubts resolved in its favor.

American Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Nixon, 690 S.W.2d at 549.

We disregard all conflicts in the evidence and accept the evidence favoring the nonmovant as true.

Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965);

Domizio v. Progressive County Mut. Ins. Co., 54 S.W.3d 867, 871 (Tex. App.—Austin 2001, pet.

denied).

Duty to Convey an Easement

Hagan contends that the trial court erred by determining that she had a duty to convey

an easement to David Pauszek under the contract. She argues that the participation of the Pauszek

property in the Grant was a condition precedent to her obligation to perform under the agreement;

6 Shelley Pauszek could not be served by the grant because she did not reside on the property and

David Pauszek was ineligible to be served because of his income.

A condition precedent to an obligation to perform is an act or event that must occur

subsequent to the formation of a contract before there is a right to immediate performance and before

there is a breach of a contractual duty. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537

S.W.2d 1, 3 (Tex. 1976); II Deerfield Ltd. Partnership v. Henry Bldg., Inc., 41 S.W.3d 259, 264

(Tex. App.—San Antonio 2001, pet. denied). Hagan contends that the agreement contained a

condition precedent that the Grant be approved to extend water to the Pauszek property. David

Pauszek does not dispute that the approval of the Grant was a condition precedent but maintains that

the condition only requires that the Grant be approved to extend water to Hagan’s property.

We look to the agreement to ascertain and give effect to the parties’ intentions as

expressed in the document. Lopez v. Munoz, Hockema, & Reed, L.L.P, 22 S.W.3d 857, 861 (Tex.

2000). We examine and consider the entire writing in an effort to harmonize and give effect to all

the provisions of the contract so that none will be rendered meaningless. Coker v. Coker, 650

S.W.2d 391, 393 (Tex. 1983). “[C]ourts must be particularly wary of isolating from its surroundings

or considering apart from other provisions a single phrase, sentence, or section of a contract.” State

Farm Life Ins. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). If a contract is so worded that it can

be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and it can be

construed as a matter of law. Wal-mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 728 (Tex. 2001).

“Ambiguity does not arise simply because the parties advance conflicting interpretations of the

contract; for an ambiguity to exist, both interpretations must be reasonable.” Id. Whether a contract

7 is ambiguous is a question of law for the court to decide in light of the circumstances present at the

time the contract was executed. See National Union Fire Ins. Co. of Pittsburg, Pa. v. CBI Indus.,

Inc., 907 S.W.2d 517, 520 (Tex. 1995).

Considering the original agreement as a whole, we cannot conclude that the condition

precedent it contained is limited to the approval of the Grant to Hagan’s property. Although the first

sentence of the agreement states that the Grant will “pay the cost of the Water Company extending

a water main to the property line of the Hagan Property or to a location within the Hagan Property,”

the remainder of the agreement contains other descriptions of the Grant. The second sentence states

that the Grant will “run[] to the benefit of Mrs. Pauszek, and all costs . . . of extending the water line

from the water main through the Hagan Property to the Pauszek Property shall be paid out of the

Grant.” David Pauszek contends that only the first sentence describes the Grant. He characterizes

this second sentence as a promise by Hagan to convey an easement and to try to get the government

to pay for extending the water lines to the Pauszek property. But the conveyance of an easement is

not mentioned at all in the paragraph, and the language of the agreement assumes the Grant will pay,

not that Hagan will try to secure payment. See Beaston, 907 S.W.2d at 433 (we do not read a single

sentence in isolation).

Furthermore, other provisions of the agreement anticipate that the Grant Authority

will be directly involved in running water lines to the Pauszek property. The agreement states that

the Water Company or the Grant Authority will determine the specifications of the easement:

The location of the easement, size of the easement, size of the water lines, and other pertinent specifications for the easement shall be determined by the Water Company or the requirements of the Grant or both, as applicable.

8 Additionally, the agreement provides that if “the Water Company [will] permit [Shelley] Pauszek

to have separate water lines routed to the Pauszek Property through property other than the Hagan

Property,” Shelley Pauszek may elect whether to connect by that alternate route or by crossing

Hagan’s property. The agreement contains no alternative provision for who will pay to extend water

to the Pauszek property or how the location, size, and scope of the easement will be determined if

the Pauszek property is not approved to participate in the Grant.

The fact that the pertinent specifications for the easement were to be determined by

the Grant Authority or the Water Company removes any doubt that the approval of the Grant for the

benefit of both properties was a condition precedent for the agreement. It also removes any

specifications about the location of the easement that could be specifically enforced by the trial

court.4 Any other construction would render provisions of the agreement meaningless and leave

important aspects of the agreement undetermined. See Coker, 650 S.W.2d at 393 (construction of

contract should harmonize and give effect to all provisions of contract so none rendered

meaningless).

Reading the original agreement in its entirety, we determine as a matter of law that

the parties intended the participation of both the Hagan and Pauszek properties in the Grant as a

4 The trial court incorrectly held that the location, size, and scope of the easement was set by the connection of the Pauszek property to the water main through the existing water lines. See Houston Pipe Line Co. v. Dwyer, 374 S.W.2d 662, 666 (Tex. 1964) (when pipe laid with consent and acquiescence of grantor of indefinite easement, easement rights become fixed and certain). In Dwyer, the pipes were set with the consent and acquiescence of the grantor pursuant to the easement. See id. Here, Hagan clearly stated through her proposed agreement that she did not intend to grant an easement by allowing David Pauszek to connect to the water main through the existing lines. Thus, the existing water lines are irrelevant to determining the specification of the easement.

9 condition precedent to an obligation to perform under the contract. See Sturges, 52 S.W.3d at 728

(when contract is not ambiguous, certain or definite legal meaning or interpretation of contract is

determined as matter of law). That condition did not occur, and, therefore, Hagan was under no

obligation to grant an easement to David Pauszek. See Hohenberg Bros., 537 S.W.2d at 3.

CONCLUSION

Because we hold that David Pauszek may not enforce the temporary water agreement,

we need not address Hagan’s other issues. We reverse the trial court’s summary judgment in favor

of David Pauszek. Because Hagan did not seek summary judgment, we remand the case for further

proceedings consistent with this opinion.

Bea Ann Smith, Justice

Before Chief Justice Law, Justices B. A. Smith and Puryear

Reversed and Remanded

Filed: March 31, 2005