Lovett v. Lovett

283 S.W.3d 391, 2008 Tex. App. LEXIS 5042, 2008 WL 2629407

• Court: Court of Appeals of Texas
• Decided: July 2, 2008
• Docket: 10-06-00410-CV
• Status: Published

Opinions

OPINION ON REHEARING

FELIPE REYNA, Justice.

Louis Lovett filed suit against Peter Lo-vett for fraudulent inducement, alleging that Peter and he had an oral agreement under which Louis would pay two-thirds of the monthly mortgage payments for a 26-acre tract, Peter would pay one-third, and title to the property would be divided so that Louis held title to one-half of the acreage along with a house located on the property and Peter would hold title to the other half of the acreage. The trial court granted Peter’s summary-judgment motion premised on the statute of frauds. Louis contends in three issues that: (1) the trial court applied an incorrect standard; (2) a genuine issue of material fact remains “due to conflicting affidavits of the Parties”; and (3) a genuine issue of material fact remains on each element of the counter-defense of partial performance, which Peter relies on as an exception to the statute of frauds. We will reverse and remand.

Background

Although the parties disagree about the origins of their dispute, when viewed in the light most favorable to Louis, the evidence reflects that Louis and his wife moved to Navarro County from Arizona in 1993. Before moving to Texas, Louis and Peter reached an oral agreement concerning the property in dispute. Louis paid Peter $4,200 for the down payment, $500 for the appraisal, and began making monthly pay-merits of $210 to Peter in March 1993. Louis and his wife moved into the house in June. They made these monthly payments through November 2001 and “paid taxes on the entire property for a period of at least three years.” Louis states in his affidavit that the “total amount I have paid pursuant to our agreement for the shared purchase and for maintenance and repair costs and taxes exceeds $25,000.00.”

According to Peter, his wife Cheryl and he purchased the property at issue (the “first farm”) in February 1993. Louis and he negotiated regarding the formation of a joint venture to purchase “another farm” but “never reached a formal agreement” and never purchased “the second farm.” Peter allowed Louis to move into the house and pay “a portion of the note on the property and closing expenses” in lieu of rent.

Peter filed a forcible detainer action in July 2004, seeking to evict Louis from the property, but that proceeding was dismissed. Louis filed this suit in October 2004. Peter contends in his summary-judgment motion that Louis’s suit is barred by the statute of frauds. Louis responded that the oral agreement is enforceable under the partial performance exception to the statute of frauds.

Standard of Review

We conduct a de novo review of a summary judgment. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). “[W]e take as true all competent evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.” Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex.2005).

To prevail on a traditional summary-judgment motion, the movant must demonstrate that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law. Id. When a defendant is the movant and relies on an affirmative defense, the defendant must conclusively establish each element of that affirmative defense to prevail. Walker v. Harris, 924 S.W.2d 375, 377 (Tex.1996); Moon v. Lesikar, 230 S.W.3d 800, 802-03 (Tex.App.-Houston [14th Dist.] 2007, pet. denied); Johnson v. Baylor Univ., 188 S.W.3d 296, 300 (Tex.App.-Waco 2006, pet. denied). If the defendant/movant does so, the burden shifts to the plaintiff/nonmov-ant to produce evidence raising a fact issue concerning any applicable counter-defense, in this case, partial performance. See ‘Moore’ Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex.1972); Sonnichsen v. Baylor Univ., 47 S.W.3d 122, 124 (Tex.App.-Waco 2001, no pet.); Ford v. City State Bank of Palacios, 44 S.W.3d 121, 139 (Tex.App.-Corpus Christi 2001, no pet.); see also Huckabee v. Time Warner Entm’t Co., 19 S.W.3d 413, 420 (Tex.2000). The plaintiff/nonmovant has to present only some evidence of each element of the counter-defense to avoid summary judgment. See ‘Moore’ Burger, 492 S.W.2d at 937; Sonnichsen, 47 S.W.3d at 124; Ford, 44 S.W.3d at 139.

Partial Performance

Louis contends in his third issue that he presented sufficient evidence to raise a genuine issue of material fact on each element of the counter-defense of partial performance.¹

To establish partial performance, a party must show: (1) payment of consideration; (2) possession of the property by the buyer; and (3) permanent and valuable improvements by the buyer with the consent of the seller or other facts demonstrating that the buyer² would be defrauded if the agreement were not enforced. Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114, 1115 (1921); Gnerer v. Johnson, 227 S.W.3d 385, 391 (Tex.App.-Texarkana 2007, no pet.); Maddox v. Cosper, 25 S.W.3d 767, 772 (Tex.App.-Waco 2000, no pet.).

Peter does not dispute that Louis established the first two elements of partial performance. Therefore, the only issue to be determined is whether Louis presented some evidence that he made permanent and valuable improvements with Peter’s consent or that he would be defrauded if the oral agreement is not enforced. Id.

There are several Supreme Court decisions and subsequent cases addressing the kind of fraud necessary to meet the third element of a claim of partial performance, assuming there is no evidence that the seller made the requisite improvements to the property.

In Texas Co. v. Burkett, 117 Tex. 16, 296 S.W. 273 (1927), the Court provided several statements regarding the requisite fraud.

The doctrine is well established that, where either party, in reliance upon the verbal promise of the other, has been induced to do or to forbear to do any act, and thereby his position has been so changed for the worse that he would be defrauded by a failure to carry out the contract, equity will enforce a performance.

Id. at 280 (quoting Morris v. Gaines, 82 Tex. 255, 17 S.W. 538, 539 (1891)).

The ground upon which such verbal sales are enforced, notwithstanding the statute, is the prevention of fraud. The rule is thus by Justice Clifford in a recent case: “Where one of the two contracting parties has been induced or allowed to alter his position on the faith of such contract to such an extent that it would be fraud on the part of the other party to set up its invalidity, courts of equity hold that the clear proof of the contract and of the acts of part performance will take the case out of the operation of the statute, if the acts of part performance were already such as to show that they are properly referable to the parol agreement.”

Id. (quoting Ponce v. McWhorter, 50 Tex. 562, 572 (1879)) (other citation omitted).³

In Cowden v. Bell, 157 Tex. 44, 300 S.W.2d 286 (1957), the Court stated,

[The third] requirement ... is another matter. If we assume it may be satisfied by some “equivalent” of valuable and permanent improvements, we must yet look to the underlying purpose of the requirement in order to evaluate the particular “equivalent” suggested. The significance of the requirement is in part that of a “corroborative fact”, but also, and more importantly, that of a serious change of position in reliance upon the oral contract over and above the payment of the consideration. In the latter connection, there is no sufficient “fraud” involved unless the parol vendee will suffer an additional and substantial out-of-pocket loss should the vendor be allowed to avoid the contract by invoking the statute.

Id. at 290.

Thus, these and similar decision decisions establish that the third element of a claim of partial performance may be satisfied with evidence that the buyer made “a serious change of position in reliance upon the oral contract,” which requires something more than the mere payment of consideration such that the buyer “will suffer an additional and substantial out-of-pocket loss” if the seller is permitted to avoid the contract. Id.

Here, Louis’s summary-judgment evidence reflects that he paid a $4,200 down payment, $500 for an appraisal, monthly payments of $210 for more than eight years (more than $21,000), ad valorem taxes for “at least three years,” and additional sums for maintenance and repairs to the property.⁴ Louis states in particular that he paid more than $25,000 pursuant to the parties’ oral agreement.

Viewed in the light most favorable to Louis, he presented “some evidence” that he did something more than the mere payment of consideration in reliance on the parties’ oral contract. See In re Tex. Ass’n of School Bds., Inc., 169 S.W.3d 653, 657 n. 15 (Tex.2005) (orig.proceeding) (the “fundamental and generally accepted idea of consideration” is “the exchange or price requested and received by the promisor for his promise”) (quoting 3 Samuel Willi-ston & RiohaRD A. Lord, A Treatise on the Law of Contracts § 7:2 (4th ed.1992)). In particular, Louis presented summary-judgment evidence that his wife and he moved from Arizona to Texas in reliance on the agreement and that he paid ad valorem taxes for “at least three years” in reliance on the agreement.

Accordingly, we hold that a genuine issue of material fact remains on each element of Louis’s counter-defense of partial performance. Thus, we sustain Louis’s third issue.

Conclusion

In view of our disposition of Louis’s third issue, we need not address his first and second issues. See Tex.R.Ajpp. P. 47.1. We reverse the judgment and remand this cause to the trial court for further proceedings consistent with this opinion.

Chief Justice GRAY dissenting.

1 . Peter conclusively established that the parties do not have a written agreement which satisfies the statute of frauds.

2 . In Maddox, this Court erroneously stated the third element as requiring a showing that the seller would be defrauded if the agreement were not enforced. See Maddox v. Cosper, 25 S.W.3d 767, 772 (Tex.App.-Waco 2000, no pet.). As stated by the Supreme Court in Hooks, the relevant inquiry is whether there are "such facts as would make the transaction a fraud upon the purchaser if it were not enforced.” Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114, 1115 (1921) (emphasis added).

3 . The internal quotation is from United States Supreme Court Justice Nathan Clifford's opinion in Williams v. Morris, 95 U.S. 444, 457, 24 L.Ed. 360 (1877).

4 . Peter filed written objections to Louis’s summary-judgment evidence and urged these objections during the summary-judgment hearing. However, the court did not make any written rulings on Peter’s objections, neither at the hearing nor in its judgment. The trial court’s summary judgment does not, standing alone, constitute an implicit ruling on Peter's objections. See Stewart v. Sanmina Tex. L.P., 156 S.W.3d 198, 206-07 (Tex.App.Dallas 2005, no pet.); Allen ex rel. B.A. v. Albin, 97 S.W.3d 655, 663 (Tex.App.-Waco 2002, no pet.).