Lawrence Marshall Dealership v. Ian Meltzer

• Court: Court of Appeals of Texas
• Decided: July 7, 2011
• Docket: 14-10-00189-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed July 7, 2011.

In The

Fourteenth Court of Appeals

___________________

NO. 14-10-00189-CV

Lawrence Marshall DealershipS, Appellant

V.

Ian Meltzer, Appellee

On Appeal from the County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 887188

MEMORANDUM OPINION

The trial court entered a take-nothing judgment against Lawrence Marshall Dealerships after a jury excused Ian Meltzer’s breach of contract because of mutual mistake.  On appeal, Lawrence Marshall argues the trial court erred in submitting the mutual-mistake question to the jury because there was no evidence that Meltzer offered to restore to Lawrence Marshall the consideration he received under the contract.  We affirm.

I

On January 20, 2007, Ian Meltzer purchased a GMC Yukon from Lawrence Marshall Dealerships, trading in the Lexus he leased from Hann Financial to reduce the purchase price of the Yukon.  The parties assigned the Lexus a $20,000 trade-in value.  Although the actual payoff amount of the Lexus was $23,222.62, an inexperienced Lawrence Marshall employee mistakenly calculated a payoff amount of $3,750.[1]  Both parties relied on the mistaken calculation to complete negotiations for the Yukon sale.[2]  Meltzer signed a payoff sheet authorizing Hann to accept $3,750 from Lawrence Marshall in exchange for the certificate of title to the Lexus.  This payoff sheet further provided that Meltzer was responsible for any difference in payoff amounts.[3]   

About three weeks later, John Bomberger, a general manager at Lawrence Marshall, called Meltzer and explained that the Lexus’s payoff amount was substantially more than originally calculated.  Relying on the payoff sheet, Bomberger said Meltzer was responsible for the difference and asked him to return to the dealership to resolve the situation.  Bomberger suggested the parties either refinance Meltzer’s payments to reflect the additional amount or rescind the contract.  Rescission would require Meltzer to return the Yukon and Lawrence Marshall to return the Lexus plus the amount Meltzer had already paid on the Yukon, less the $3,750 Lawrence Marshall paid Hann on Meltzer’s behalf.  Meltzer refused, asserting they had a deal and he did not owe Lawrence Marshall any more money.  At trial, Meltzer testified that he did not believe rescission had been an option because he had already bolted a car seat into the Yukon for his special-needs daughter and did not know what had become of the Lexus.  In July, Lawrence Marshall paid Hann the additional $19,818.08, received title to the Lexus, and sold it to a wholesaler for $20,000.

Lawrence Marshall sued Meltzer for breach of contract, and Meltzer asserted mutual mistake as an affirmative defense.  During the charge conference, Lawrence Marshall objected to Question No. 3, which asked whether Meltzer’s failure to comply with the sales contract was excused due to mutual mistake.  Question No. 3 was predicated upon findings by the jury that the parties had agreed Meltzer would be responsible for any excess payoff amount and that he failed to comply with that agreement.  Lawrence Marshall objected to Question No. 3 as follows: 

Your honor, we object to Question No. 3 because there is no evidence; and, also, there is insufficient evidence to support submission of this issue.  Also, this issue should not be submitted as a matter of law because excuse is not applicable to this case because there is no issue about formation of a contract as whether the parties were misled or under any sort of confusion about the contract and—question on Plaintiff’s Exhibit No. 2 has the agreement about being responsible for payoff.  Also, so, there was—there was no testimony whatsoever about a mutual mistake on the payoff being an issue and Plaintiff’s Exhibit No. 2 is the contract—or part of the contract that was issued in this case; and so, therefore, there is no evidence of any sort of mutual mistake concerning Plaintiff’s Exhibit 2.  And there was no evidence of any ignorance or misconception about Plaintiff’s Exhibit No. 2.

The trial court overruled Lawrence Marshall’s objection to Question No. 3.  The jury returned a verdict finding that Meltzer and Lawrence Marshall reached an agreement on the payoff, that Meltzer breached the agreement, but that mutual mistake excused the breach.  The jury also found Lawrence Marshall liable to Meltzer for negligent misrepresentation, but awarded no damages.  The trial court entered judgment that each party take nothing.  Then Lawrence Marshall filed this one-issue appeal.

II

Lawrence Marshall complains on appeal that there was no evidence Meltzer offered to restore to Lawrence Marshall the consideration he received from the Yukon sales contract, namely, the Yukon itself.  Lawrence Marshall contends such evidence was necessary because the result of a mutual mistake should be rescission and “[a] party seeking rescission must prove he has restored, or offered to restore, the other party to the status quo ante.”  Furnace v. Furnace, 783 S.W.2d 682, 686 (Tex. App.—Houston [14th Dist.] 1989, writ dismissed w.o.j.).  Without such evidence, Lawrence Marshall maintains, the trial court erred in submitting Question No. 3. 

                                                                             A

In response to Lawrence Marshall’s sole issue, Meltzer initially argues Lawrence Marshall failed to preserve error by failing to raise its objection with specificity during the charge conference.  We agree.

To preserve a charge-error complaint for appellate review, the objecting party must point out distinctly the objectionable matter and the grounds of the objection.  Tex. R. Civ. P. 274; Chambers v. Equity Bank, SSB, 319 S.W.3d 892, 898 (Tex. App.—Texarkana 2010, no pet.).  Any complaint as to a question or instruction on account of any defect is waived unless specifically included in the objections.  Tex. R. Civ. P. 274.  “The cardinal rule for preserving error is that an objection must be clear enough to give the trial court an opportunity to correct it.”  Arkoma Basin Exploration Co. v. FMF Assocs. 1990-A, Ltd., 249 S.W.3d 380, 387 (Tex. 2008).  Further, the complaints on appeal must comport with the arguments made in the trial court.  See In re A.V., 113 S.W.3d 355, 362 (Tex. 2003); see also Wackenhut Corrections Corp. v. De La Rosa, 305 S.W.3d 594, 616 (Tex. App.—Corpus Christi 2009, no pet.).  Accordingly, an objection made during trial which is different from the argument urged on appeal presents nothing for appellate review.  Chambers, 319 S.W.3d at 898.

During the charge conference, Lawrence Marshall objected to the mutual-mistake question because there was no evidence of any misconception about the payoff sheet.  On appeal, Lawrence Marshall complains that there was no evidence of any offer to restore to Lawrence Marshall the consideration Meltzer received under the contract, namely, the Yukon.  But Meltzer’s misconception about the payoff sheet and his offer to restore Lawrence Marshall to the status quo ante are distinct and separate issues.  The trial judge cannot be expected to glean from Lawrence Marshall’s charge-conference objection the complaint it now asserts on appeal.

Lawrence Marshall argues that its charge-conference objection preserved error because it urged both at trial and on appeal that the evidence was insufficient to support submission of the mutual-mistake question.  The necessary result of a mutual-mistake finding, Lawrence Marshall contends, is rescission of the contract.  And a prerequisite element of the equitable remedy of rescission, Lawrence Marshall asserts, is an offer to restore the other contracting party to the status quo ante.  Lawrence Marshall argues its charge-conference objection should be understood to challenge the sufficiency of the evidence of all elements necessary to establish mutual mistake, which would include an offer to rescind.  Requiring counsel to enumerate each element in its objection is impractical, Lawrence Marshall insists, because it “would mean the charge conference would suddenly take hours and hours.” 

We do not agree that, in this case, the length of the charge conference would drastically increase if counsel were required to specify that no evidence of rescission or an offer to rescind precludes submission of the mutual-mistake issue.  The trial court is sufficiently aware of the complaint if the objection clearly designates the alleged error and specifically explains the basis for the complaint such that a reviewing court may conclude the trial court understood the ground of the complaint and deliberately chose to overrule it.  Carousel’s Creamery, L.L.C. v. Marble Slab Creamery, Inc., 134 S.W.3d 385, 404–05 (Tex. App.—Houston [1st Dist.] 2004, pet. dism’d).  And we conclude counsel’s stated objection cannot be reasonably understood to include the separate issue of whether Meltzer offered to return Lawrence Marshall to the status quo ante.  Accordingly, Lawrence Marshall’s charge-conference objection was insufficient to preserve its error, and we overrule its sole issue.

B

Even if Lawrence Marshall had preserved error, its argument on the merits is unpersuasive.  Lawrence Marshall correctly states that when a party asserts mutual mistake as a ground for seeking rescission, he must prove he has restored, or offered to restore, the other party to the status quo ante.[4]  Furnace, 783 S.W.3d at 686.  In this case, however, neither party pleads for rescission.  Lawrence Marshall seeks monetary damages for breach of contract, and Meltzer asserts mutual mistake not as a desired remedy, but as a defense to breach.  Lawrence Marshall has not cited, and we have not found, any case requiring evidence of rescission or an offer to rescind before a party may assert mutual mistake as a defense to breach of contract.[5]

* * *

For the foregoing reasons, we affirm the trial court’s judgment.

                                                                        /s/        Jeffrey V. Brown

                                                                                    Justice

Panel consists of Justices Brown, Boyce, and Jamison.

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[1] The term “payoff” refers to the amount of money it would take to satisfy Hann, as the owner of the vehicle, to get title to the vehicle.  In Meltzer’s case, the payoff equaled the total amount due for the remaining lease payments, plus the amount of the purchase option per his lease agreement.  The Lawrence Marshall employee, unfamiliar with leased trade-ins, failed to include the purchase-option amount in his calculations.

[2] John Bomberger, a general manager at Lawrence Marshall, testified that he called Hann Financial when this issue arose and discovered that Meltzer called Hann before going to Lawrence Marshall and learned what his options were regarding the Lexus contract, including the payoff amount, suggesting Meltzer did not rely on the $3,750 amount in good faith.

[3] Lawrence Marshall could not verify the payoff amount at the time the contract was signed because the parties completed their negotiations on a Saturday, outside of Hann’s business hours.

[4] Lawrence Marshall cites four additional cases to support this position.  See Tex. Co. v. State, 281 S.W.2d 83, 91, 154 Tex. 494 (Tex. 1955) (“[I]t is necessary that a party seeking rescission should offer or tender a restoration to the other.”); Johnson v. Cherry, 726 S.W.2d 4, 8 (Tex. 1987) (“Restoration or an offer to restore consideration received by one seeking to cancel a deed is a condition precedent to maintaining a suit for cancellation of an instrument.”); Turner v. Houston Agr. Credit Corp., 601 S.W.2d 61, 65 (Tex. Civ. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.) (“As a general rule, one who seeks in equity to have a contract rescinded must offer to make restoration to the other party of that which was received by him under the contract.”); Raney v. Mack, 504 S.W.2d 527, 534 (Tex. Civ. App.—Texarkana 1973, no writ) (“Restoration, or offer to restore, consideration received.  Such is a condition precedent to the granting of relief by way of cancellation or recision [sic].  She who seeks equity must first do equity.”).  As Meltzer points out, however, none of these cases involves a defendant asserting mutual mistake as a defense. 

[5] Because we were not presented with it, we do not reach the question of whether mutual mistake is appropriately raised as a defense to a breach of contract.  At least one court of appeals has stated that “the doctrine of mutual mistake does not provide a defense to a breach[-]of[-]contract claim.”  Great Am. Ins. Co. v. N. Austin Mun. Util. Dist. No. 1, 902 S.W.2d 488, 500 (Tex. App.—Austin 1993), aff’d in part, rev’d in part on other grounds, 908 S.W.2d 415 (Tex. 1995).