Opinion issued December 30, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-00020-CV ——————————— PRIME INCOME ASSET MANAGEMENT, INC. AND PRIME INCOME ASSET MANAGEMENT, LLC, Appellants V. MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF TEXAS, INC., Appellee
On Appeal from the County Court at Law No. 3 Galveston County, Texas Trial Court Case No. CV0065437
MEMORANDUM OPINION
Appellants, Prime Income Asset Management, Inc. (“Prime, Inc.”) and
Prime Income Asset Management, LLC (“Prime, LLC”) (collectively “the Prime
Companies”), challenge the trial court’s amended final judgment, entered after a jury trial, in favor of appellee, Marcus & Millichap Real Estate Investment
Services of Texas, Inc. (“Marcus & Millichap”), in its suit against the Prime
Companies for breach of a broker’s fee contract in connection with the sale of real
property in Galveston County (the “Fee Agreement”). In five issues, the Prime
Companies challenge the legal sufficiency of the evidence supporting the jury’s
verdict, and the trial court’s award of attorney’s fees to Marcus & Millichap, denial
of attorney’s fees to Prime, LLC, and denial of the Prime Companies’ motion to
transfer venue. We affirm.
Background
Shortly after Hurricane Ike made landfall along the upper Texas Gulf Coast,
Jeffrey Fript, a licensed real estate agent with the brokerage firm of Marcus &
Millichap, received a telephone call from John Petricca, who Fript understood was
representing a company called “Odyssey Residential.” Petricca told Fript that he
was looking for apartments that had been damaged during the hurricane and
needed repair. After calling property owners he knew and searching industry
databases, Fript found three properties located in Galveston County that he thought
met the criteria, including the property at issue in this case, Marina Landing
Resort. Using these specialized databases, Fript identified “Prime Income Asset
Management” as the seller and Mark Nardizzi as the contact person for all three
properties.
2 Fript called Nardizzi, who confirmed that “Prime Income Asset
Management” owned all three properties. Fript told Nardizzi that he had another
party, who was represented by another broker and interested in possibly buying the
properties, if Nardizzi was interested in selling them. After Nardizzi confirmed that
the properties were damaged and for sale, Fript passed the relevant information
along to Petricca.
Fript also talked to Nardizzi about a fee for facilitating the deal. Nardizzi
offered a fee of one-half percent of the sales price, and although it was “extremely
low” compared to the commissions Fript normally received, he agreed to
Nardizzi’s offer because he understood that he would not have to do much more
than what he had already done—find the properties and put together the deal for
Nardizzi. Fript then drafted the Fee Agreement on Marcus & Millichap letterhead
and sent it to Nardizzi for his signature.
The Fee Agreement identified Marcus & Millichap as the “Buyer’s Broker”
and “Prime Income Asset Management” as the “Listing Broker.” Under the
express terms of the agreement, “Prime Income Asset Management” agreed that if
“Odyssey Residential and/or Assigns represented by John Petricca—Dallas, TX”
purchased the Marina Landing Resort, “Prime Income Asset Management” would
pay Marcus & Millichap a commission at closing equal to “.50% (One-Half
3 Percent) of Sales Price.” Nardizzi signed the Fee Agreement on behalf of “Listing
Broker: Prime Income Asset Management.”
At the time the Fee Agreement was executed, there were two separate legal
entities with “Prime Income Asset Management” as part of their name: Prime, Inc.
and Prime, LLC. Prime, LLC is a wholly-owned subsidiary of Prime, Inc. Fript
testified that when he searched for “Prime Income Asset Management” on the
Texas Real Estate Commission’s website, he learned that “Prime Income Asset
Management” was licensed as a “corporation broker.” During the trial, Steven
Shelley, a vice president of Prime, Inc. and Prime, LLC, confirmed that Prime, Inc.
was a licensed real estate broker and Prime, LLC was not.
The original purchase and sale contract for Marina Landing Resort, which
was admitted into evidence, identifies Marina Landing, LP, as the seller, and
“ORH Acquisitions II, LLC” as the purchaser, and references Fript and Marcus &
Millichap’s one-half percent commission. This agreement, however, was amended
numerous times before the sale closed a year and a half later. The final purchase
and sale agreement omitted any reference to Fript and Marcus & Millichap’s one-
half percent commission, and indicated that “ORH Acquisitions II, LLC” had
assigned the contract to “Chicory Court I, LP.” When asked if the reference to
“Odyssey Residential” in the Fee Agreement referred to “Odyssey Residential
Holdings, LP,” Fript testified that he did not remember but believed that it did
4 because he understood that there was only one “Odyssey Residential.” James
Fisher, formerly the Vice President of Development for Odyssey Residential
Holdings, LP, testified that “ORH Acquisitions II, LLC” is an affiliate that
Odyssey Residential Holdings, LP uses routinely to contract for and acquire
When the sale of the Marina Landing Resort closed and Marcus & Millichap
was not paid a commission, Marcus & Millichap filed suit against Prime, Inc. and
Prime, LLC in Galveston County for breach of the Fee Agreement. In addition to a
general denial, the Prime Companies asserted affirmative defenses, including the
statute of frauds in the Real Estate License Act (“RELA”). See TEX. OCC. CODE
§1101.806(c) (West 2012).1
After finding that Prime, Inc. (1) entered into the Fee Agreement with
Marcus & Millichap, and (2) “fail[ed] to comply with the Fee Agreement,” the jury
awarded damages to Marcus & Millichap in the amount of the commission due
under the Fee Agreement: $68,500. The jury also found that Prime, LLC was not a
party to the Fee Agreement. In accord with the jury’s verdict, the trial court signed
an amended final judgment for Marcus & Millichap against Prime, Inc. for $68,500
1 Marcus & Millichap moved for summary judgment, arguing that none of the affirmative defenses had any basis in law or in fact. The trial court granted Marcus & Millichap’s motion for summary judgment on the Prime Companies’ affirmative defense based on the statute of frauds and denied the Prime Companies’ motion to reconsider. 5 in damages, $17,060 in attorneys’ fees, plus appellate attorneys’ fees, post-
judgment interest and costs. The trial court also entered a take-nothing judgment in
favor of Prime, LLC, but denied it costs against Marcus & Millichap on the
grounds that Prime, LLC had unreasonably increased the costs of litigation in the
case.
Both Prime, Inc. and Prime, LLC appeal the trial court’s amended final
judgment. Specifically, Prime, Inc. argues that (1) Marcus & Millichap failed to
present legally sufficient evidence establishing that the Fee Agreement met the
statute of frauds requirements of RELA, (2) even if the Fee Agreement complied
with the statute of frauds, Marcus & Millichap failed to present legally sufficient
evidence establishing that the Fee Agreement’s conditions precedent had been
satisfied, and (3) because the award of attorney’s fees to Marcus & Millichap was
based solely on its breach of contract claim, that award should also be reversed.
Prime, LLC argues that the record does not support the trial court’s denial of costs
to Prime, LLC on the grounds that it unreasonably increased the costs of litigation
in this case. Finally, Prime, Inc. and Prime, LLC argue that the trial court erred in
denying their motion to transfer venue.
Statute of Frauds
Prime, Inc.’s first issue contends that the evidence is legally insufficient to
establish that the Fee Agreement meets RELA’s statute of frauds requirement as
6 set forth in section 11.01806(c). TEX. OCC. CODE ANN. § 1101.806(c).
Section 1101.806(c) prohibits a person from maintaining an action in Texas
to recover a commission for the sale or purchase of real estate “unless the promise
or agreement upon which the action is based, or a memorandum, is in writing and
signed by the party against whom the action is brought or by a person authorized
by that party to sign the document.” Id. Strict compliance with this provision is
required if a real estate broker or salesperson seeks a judicial recovery of fees.
Henry S. Miller Co. v. Treo Enters., 585 S.W.2d 674, 676 (Tex. 1979). The
purpose of the provision is to eliminate or reduce fraud that might be occasioned
on the public by unlicensed, unscrupulous, or unqualified persons. Id. at 675–76. A
broker must plead and prove that his or her claim for a commission for the sale of a
particular property is based on an instrument in writing within contemplation of
section 1101.806(c) even if the defendant does not specifically plead the statute of
frauds as an affirmative defense. See Bayer v. McDade, 610 S.W.2d 171, 172 (Tex.
Civ. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.) (stating “a broker seeking to
recover a commission under [RELA] must prove a valid written agreement
describing the land, even though the owner does not specifically plead the statute
of frauds as an affirmative defense”); see also TEX. OCC. CODE ANN.
§ 1101.806(c).
7 Whether a contract is barred by the statute of frauds is a question of law for
the court to decide. Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 555 (Tex.
App.—Eastland 2010, pet. denied); see, e.g., Pickett v. Bishop, 148 Tex. 207, 223
S.W.2d 222, 223 (Tex. 1949) (stating courts interpreting RELA’s statute of frauds
may looks to cases interpreting general statute of frauds for guidance). Courts
applying section 1101.806(c) have interpreted the requirements as follows:
To comply with [section 1101.806(c)], an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed.
Litton Loan Servicing, LP v. Manning, 366 S.W.3d 837 (Tex. App.—Dallas 2012,
pet. denied); Neary v. Mikob Prop., Inc., 340 S.W.3d 578, 584 (Tex. App.—Dallas
2011, no pet.). The essential elements of a commission agreement, including the
identity of the broker or salesperson attempting to recover the commission, cannot
be supplied by parol evidence. See Boyert v. Tauber, 834 S.W.2d 60, 61–62 (Tex.
1992) (holding that because broker’s name is essential element of real estate
commission agreement, parol evidence may not be admitted “to identify the broker
to whom a commission is owed in an action to recover a real estate commission”).
Relying on Boyert, Prime, Inc. contends that Marcus & Millichap cannot use
parol evidence to substitute Prime, Inc.’s name as the “listing broker” in the Fee
8 Agreement, because naming a “broker” is an essential element of a real estate sales
contract. See id. at 62–63. Boyert, however, is distinguishable. In that case, the
defendant-purchaser sent a letter to the seller confirming an offer to purchase
certain real estate and acknowledging that the defendant-purchaser was responsible
for paying a real estate commission to “outside brokers.” Id. at 63. The Texas
Supreme Court held that the term “outside brokers” did not “narrow the universe of
potential brokers” who were owed a commission under the agreement, and thus did
not identify the broker with reasonable certainty because the name of a particular
broker had to be supplied entirely by parol evidence. See id.
First, although Boyert states that naming a “broker” is an essential element
of a real estate sales contract, the “broker” in that case was the party attempting to
recover the commission, not the party responsible for paying the commission. The
parties have not directed us to—and we have not found—any cases extending that
principle to the party charged with paying the commission, even if that party is also
identified as a “broker.”
Second, even if Boyert requires a real estate agreement to “furnish within
itself the means or data by which [the party charged with paying the commission]
may be identified with reasonable certainty” as Prime, Inc. contends, the Fee
Agreement satisfies this requirement. In contrast to the written agreement in
Boyert that merely acknowledged that a real estate commission was to be paid to
9 “outside brokers,” the Fee Agreement’s identification of the party to be charged
with the commission as the “listing broker,” “Prime Income Asset Management,”
narrowed the universe of potential parties to Prime, Inc., because it was the only
entity named “Prime Income Asset Management” that was licensed as a
“corporation broker,” according to the Texas Real Estate Commission’s website.
See, e.g., TEX. OCC. CODE ANN. § 1101.351(a-1) (West 2012) (stating business
entity may not act as broker unless licensed as broker under RELA). As such, the
Fee Agreement furnished within itself “the means and data” to identify Prime, Inc.
as the “listing broker” with reasonable certainty. Assuming without deciding that3
Boyert requires such specificity with regard to the identification of the party
charged with paying the commission, we hold that the trial court did not err in
concluding that the Fee Agreement satisfied RELA’s statute of frauds.
We overrule Prime, Inc.’s first issue.
Breach of Contract
In its second issue Prime, Inc.’s argues that Marcus & Millichap failed to
present legally sufficient evidence establishing that the Fee Agreement’s
conditions precedent had been satisfied because there is no probative evidence in
the record that “Odyssey Residential and/or Assigns” purchased the Marina
Landing Resort and no probative evidence that the purchaser was “represented by
John Petricca – Dallas, TX,” as required in the Fee Agreement. We construe this as
10 a challenge to the legal sufficiency of the evidence supporting the jury’s implied
finding that the Fee Agreement’s conditions precedent were satisfied, and
therefore, Marcus & Millichap was entitled to be paid a commission when the
Marina Landing Resort sale finally closed.
When an appellant attacks the legal sufficiency of an adverse finding on an
issue for which it did not have the burden of proof, it must demonstrate that there is
no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d
55, 58 (Tex. 1983). Our review for legal sufficiency credits favorable evidence if a
reasonable juror could do so and disregards contrary evidence unless a reasonable
juror could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We
consider the evidence in the light most favorable to the finding under review and
indulge every reasonable inference that would support the finding. Id. at 822. We
sustain a no-evidence contention only if: (1) the record reveals a complete absence
of evidence of a vital fact; (2) the court is barred by rules of law or of evidence
from giving weight to the only evidence offered to prove a vital fact; (3) the
evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the
evidence conclusively establishes the opposite of the vital fact. Id. at 810.
When reviewing the evidence for legal sufficiency, we are mindful that the
jury is the sole judge of a witnesses’ credibility and may choose to believe one
witness over another, and a reviewing court may not impose its own opinion to the
11 contrary. Id. We are likewise required to view the evidence in the light favorable to
the jury’s findings, drawing reasonable inferences in their favor, and presuming
that the jury resolved any evidentiary conflicts in a manner supporting its findings.
See id. at 820.
When asked if the reference to “Odyssey Residential” in the Fee Agreement
referred to “Odyssey Residential Holdings, LP,” Fript testified that he did not
remember but believed that it did because he understood that there was only one
“Odyssey Residential.” The final purchase and sale agreement states that “ORH
Acquisitions II, LLC” had assigned the contract to “Chicory Court I, LP,” the
ultimate purchaser. Odyssey Residential Holdings, LP’s former vice president
testified that the company regularly uses one of its affiliates, ORH Acquisitions II,
LLC, to contract and acquire properties. Although he later recanted, Prime, Inc.’s
corporate representative admitted that “Odyssey Residential and/or Assigns
purchased the Marina Landing resort.” Fript also testified that “John Petricca” was
the buyer’s broker.
Contrary to Prime, Inc.’s position, there is some probative evidence that
“Odyssey Residential and/or Assigns” purchased the Marina Landing Resort and
that the purchaser was “represented by John Petricca – Dallas, TX,” as required in
the Fee Agreement. Although the evidence and testimony is conflicting and
inconsistent regarding “Odyssey Residential and/or Assigns” role with regard to
12 the ultimate sale of the Marina Landing Resort, it was within the province of the
jury to judge of the witnesses’ credibility, believe one witness over another, and
draw reasonable inferences from the evidence presented. Although Prime, Inc.
challenges Fript’s credibility with regard to his testimony that Petricca represented
the purchaser by arguing that Fript was not in a position to know this information,
it was ultimately within the jury’s province to evaluate his credibility and believe
this portion of his testimony.
The record reflects more than a scintilla of evidence, that “Odyssey
Residential and/or Assigns” purchased the Marina Landing Resort and that the
buyer was “represented by John Petricca – Dallas, TX.” As such, we conclude that
the evidence is legally sufficient to support the jury’s implicit finding that the Fee
Agreement’s conditions precedent were satisfied and, therefore, Marcus &
Millichap was entitled to its one-half percent commission upon the closing of the
Marina Landing Resort sale.
We overrule Prime, Inc.’s second issue.
Award of Attorney’s Fee to Marcus & Millichap
In its third issue, Prime, Inc. argues that Marcus & Millichap was awarded
attorney’s fees based solely on the fact that they prevailed at trial on their breach of
contract claim, and because there is legally insufficient evidence to support this
portion of the trial court’s judgment, the award of attorney’s fees should also be
13 reversed. Having overruled Prime, Inc.’s first and second issues challenging the
sufficiency of the evidence with regard to Marcus & Millichap’s breach of contract
claim against Prime, Inc., we also overrule Prime, Inc.’s third issue.
Denial of Costs to Prime, LLC
Prime, LLC argues that the trial court’s denial of costs on the grounds that
Prime, LLC unreasonably increased the costs of litigation in this case is not
supported by the record.
The Texas Rules of Civil Procedure provide that “[t]he successful party to a
suit shall recover of his adversary all costs incurred therein, except where
otherwise provided.” TEX. R. CIV. P. 131. Texas Rule of Civil Procedure 141,
however, permits a trial court, for good cause stated on the record, to “adjudge the
costs otherwise than as provided by law or [the Rules of Civil Procedure].” TEX. R.
CIV. P. 141. The allocation of court costs under Rule 141 is a matter for the trial
court’s discretion and will not be overturned on appeal unless the trial court abused
its discretion. See Furr’s Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 376 (Tex.
2001); Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex. 1985). Good
cause is determined on a case-by-case basis. Bethune, 53 S.W.3d at 376; Rogers,
686 S.W.2d 599, 601. When the prevailing party unnecessarily prolongs the
proceedings, unreasonably increases costs, or does something that should be
penalized, good cause may exist to “adjudge the costs otherwise” under rule 141.
14 See Bethune, 53 S.W.3d at 377. In reviewing rulings under rule 141, we evaluate
the record to determine whether it supports the trial court’s decision. Rogers, 686
S.W.2d at 601 (“The determination of a trial judge that a particular trial strategy
caused an unnecessary increase in costs should not be disturbed on appeal absent
an abuse of discretion.”).
In the present case, the amended final judgment states: “Good cause exists
such that Defendant Prime Income Asset Management, LLC shall not recover its
costs of court against Marcus & Millichap. Good cause exists because Defendant
Prime Income Asset Management, LLC unreasonably increased costs in this
litigation.” Although the amended final judgment does not reflect precisely how
Prime, LLC “unreasonably increased costs in this litigation,” the record reflects
that, among other things, Prime, LLC failed to produce any documents in response
to Marcus & Millichap’s requests for production, which in turn required Marcus &
Millichap to spend additional time and money securing documents and testimony
from third parties to obtain and authenticate many of the documents ultimately
introduced at trial. In light of the record before us, we cannot conclude that the
trial court’s decision to deny Prime, LLC its costs amounted to an abuse of
discretion.
We overrule Prime, LLC’s issue challenging the trial court’s denial of costs.
15 Venue
By their fifth issue, the Prime Companies contend that the trial court erred in
denying their motion to transfer venue because there was no evidence that
Galveston County was a proper venue to try Marcus & Millichap’s cause of action
for breach of contract and the case should have been transferred to Dallas County
where the Prime Companies have their principal offices.
When a trial court’s venue ruling is challenged on appeal after a trial on the
merits, an appellate court conducts an independent review of the entire record to
determine whether there is any probative evidence to support the trial court’s
venue ruling. TEX. CIV. PRAC. & REM. CODE §15.064(b); Wilson v. Texas Parks &
Wildlife Dep’t, 886 S.W.2d 259, 261 (Tex. 1994) (stating trial court’s denial of
motion to transfer venue is subject to de novo review).
Venue is proper “in the county in which all or a substantial part of the events
or omissions giving rise to the claim occurred.” TEX. CIV. PRAC. & REM. CODE
ANN. § 15.002(a)(1) (West 2013). To determine whether a “substantial part” of the
events or omissions giving rise to the claim occurred in Galveston County, we
examine the essential elements of Marcus & Millichap’s cause of action for breach
of contract. See Chiriboga v. State Farm Mut. Auto. Ins. Co., 96 S.W.3d 673, 681
(Tex. App.—Austin 2003, no pet.). The satisfaction of a contractual condition
precedent “logically forms a substantial part of the events giving rise to” a breach
16 of contract claim. See Southern Cnt’y Mut. Ins. Co. v. Ochoa, 19 S.W.3d 452, 460
(Tex. App.—Corpus Christi 2000, no pet.).
If there is any probative evidence in the record demonstrating that venue was
proper in the county where judgment was rendered, the appellate court must
uphold the trial court’s determination. Ruiz v. Conoco, Inc., 868 S.W.2d 752, 758
(Tex. 1993); Chiriboga, 96 S.W.3d at 681; see also Bonham State Bank v. Beadle,
907 S.W.2d 465, 471 (Tex. 1995) (stating that appellate court must uphold trial
court’s venue determination if record contains any probative evidence that venue
was proper, even if preponderance of evidence is to the contrary). Although we
view the record in the light most favorable to the trial court’s ruling, we do not
defer to the trial court’s application of the law. Ruiz, 868 S.W.2d at 758;
Chiriboga, 96 S.W.3d 677–78.
Marcus & Millichap contends that venue is proper in Galveston County
because it alleged that Prime, Inc. breached a contract for commission on the sale
of three Galveston County properties and that Fript visited the properties as part of
his performance of Marcus & Millichap’s obligations under the Fee Agreement.
The Prime Companies, on the other hand argue that venue is not proper in
Galveston because the lawsuit was not a suit regarding land, instead, it was a
breach of contract claim for payment of commissions, and contract claims
generally accrue in any county where the contract was formed, where it was to be
17 performed, or where it was breached. See Killeen v. Lighthouse Elec. Contractors,
LP, 248 S.W.3d 343, 348 (Tex. App.—San Antonio 2007, pet. denied). The Prime
Companies further contend that Fript’s visits to the apartment sites were not
material to the claim or done in support or advancement of the Fee Agreement (i.e.,
unrelated to Marcus & Millichap’s performance of the Fee Agreement).
Here, the obligation under the Fee Agreement to pay Marcus & Millichap
the contractual commission arose only when the Galveston County real estate was
sold. Although this is not a suit regarding land, the sale of property located in
Galveston County forms “a substantial part of the events giving rise to” this breach
of contract claim because the sale of the property was a condition precedent to the
obligation to pay a commission to Marcus & Millichap. See Ochoa, 19 S.W.3d at
460 (stating that satisfaction of contractual condition precedent “logically forms a
substantial part of the events giving rise to” breach of contract claim). Fript also
testified that he visited all three properties on a “couple” of occasions as part of his
role in the “sale of the three apartment complexes” in Galveston County. As such,
the record reflects that the real property at issue is located in Galveston County,
and that Fript visited the properties in Galveston County as part of his role as
facilitator of the property’s purchase and sale. In light of this evidence, we cannot
say that there is no probative evidence that venue was proper in Galveston County.
See Beadle, 907 S.W.2d at 471 (stating appellate court must uphold trial court’s
18 venue determination if record contains any probative evidence that venue was
proper).
We overrule the Prime Companies’ fifth issue.
Conclusion
We affirm the trial court’s judgment.
Jim Sharp Justice
Panel consists of Justices Keyes, Sharp, and Huddle.