                                                                                              ACCEPTED
                                                                                          03-15-00293-CV
                                                                                                  8312780
                                                                               THIRD COURT OF APPEALS
                                                                                          AUSTIN, TEXAS
                                                                                    12/18/2015 5:38:37 PM
                                                                                        JEFFREY D. KYLE
                                                                                                   CLERK
            ________________________________________________

                           NO. 03-15-00293-CV               FILED IN
                                                      3rd COURT OF APPEALS
           _________________________________________________
                                                                   AUSTIN, TEXAS
                                                               12/18/2015 5:38:37 PM
                            In the Court of Appeals
                                                                  JEFFREY D. KYLE
                    For the Third Judicial District of Texas            Clerk
                                 Austin, Texas
          ____________________________________________________

                               BOB E. WOODY,
                               Plaintiff-Appellant,

                                        v.

               J. BLACK’S, LP and J. BLACK’S, GP, LLC,
                         Defendants-Appellees.
 __________________________________________________________________

On Appeal from Cause No. D-1-GN-09-001436, In the 345th Judicial District Court of
        Travis County, Texas, The Honorable Steven Yelenosky Presiding


                           BRIEF FOR APPELLEES


                                             Eric Taube
                                             State Bar No. 19679350
                                             etaube@taubesummers.com
                                             Andrew Vickers
                                             State Bar No. 24084021
                                             avickers@taubesummers.com
                                             Taube Summers Harrison Taylor
                                             Meinzer Brown LLP
                                             100 Congress Avenue, Suite 1800
                                             Austin, Texas 78701
                                             Telephone: (512) 472-5997
                                             Telecopier: (512) 472-5248

                                             ATTORNEYS FOR APPELLEES

                      ORAL ARGUMENT REQUESTED
                                      TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................... i

INDEX OF AUTHORITIES......................................................................................v

ABBREVIATIONS ................................................................................................. ix

STATEMENT OF THE CASE ................................................................................ xi

REQUEST FOR ORAL ARGUMENT ................................................................. xiv

ISSUES PRESENTED.............................................................................................xv

STATEMENT OF FACTS ........................................................................................1

        I.       THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE
                 SUBLEASE, UNDER WHICH J. BLACK’S WAS READY, WILLING AND
                 ABLE TO PERFORM. ..............................................................................1

                 A.       The Parties Entered a Sublease Agreement in August 2006
                          for a Three-Year Term with Four Extension Options. .........1

                 B.       J. Black’s Properly Exercised its First Extension Option,
                          Woody Improperly Rejected J. Black’s Exercise of the
                          Extension Option and thereby Breached the Sublease. ........2

                 C.       Woody Improperly Accused J. Black’s of default and
                          disregarded the default terms of the Sublease. ......................4

                 D.       J. Black’s was Ready, Willing, and Able to perform each
                          and every one of its Obligations under the Lease. .................5

        II.      THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS
                 PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS
                 ATTORNEY’S FEES. ...............................................................................6

                 A.       The Parties Counter-Sued against Each Other: Woody
                          Sought to Remove J. Black’s as the Tenant, and J. Black’s
                          Sought to Remain in the Subleased Space. .............................6

                 B.       J. Black’s First Motion for Partial Summary Judgment was
                          Granted, Holding that J. Black’s Properly Exercised its
                          Extension Option and that Woody Breached the Sublease. .7

                                                        i
                  C.       Three Sanctions Orders were Granted in J. Black’s Favor .8

                  D.       J. Black’s Second Motion for Partial Summary Judgment
                           was Granted, Dismissing all of Woody’s Claims. ..................9

                  E.       J. Black’s Third Motion for Summary Judgment was
                           Granted, Resulting in a Final Judgment, which was then
                           Partially Vacated. ......................................................................9

                  F.       Woody’s Motion for Summary Judgment was Denied—and
                           a Fourth Sanctions Order was Granted in J. Black’s
                           Favor—because the Court had Already Conclusively
                           Determined that J. Black’s Properly Exercised its Extension
                           Option and that Woody was in Breach of the Sublease. .....11

                  G.       J. Black’s Motion for Entry of a Final Judgment was
                           Granted, and a Final Judgment was Entered in J. Black’s
                           Favor.........................................................................................12

                  H.       Appeal and Remand by Amarillo Court of Appeals ...........13

                  I.       Grant of J. Black’s Final Summary Judgment and Entry of
                           Final Judgment ........................................................................14
SUMMARY OF THE ARGUMENT ......................................................................15

ARGUMENT ...........................................................................................................21

         I.       WOODY BREACHED THE SUBLEASE ...................................................21

                  A.       Woody’s Breach was established by the District Court ......21

                  B.       Woody’s Breach affirmed by the Amarillo Court of Appeals
                           ...................................................................................................23

                  C.       Woody’s new defense that he did not actually “breach” the
                           Sublease, but merely “repudiated” his obligations
                           thereunder, is untimely and unsupported by legal authority
                           or the facts of this case ............................................................24

         II.      THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT
                  AWARDING SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO
                  J. BLACK’S ON THE BASIS OF WOODY’S BREACH. ............................27


                                                             ii
       A.     J. Black’s is entitled to specific performance of the Sublease
              and its extensions because it was ready, willing and able to
              perform its own obligations under the Sublease at all
              relevant times...........................................................................28
              1.       J. Black’s was Ready, Willing and Able to perform its
                       Obligations under the Sublease ......................................29

              2.       J. Black’s Remedies at Law are inadequate ...................31

       B.     Woody’s arguments against the availability of the award of
              specific performance are a school of red herrings. ..............33

              1.       Woody’s “Three-Way Characterization” finds no support
                       in the record, or in the authority .....................................34

              2.       Woody’s claim that the decree of specific performance
                       lacks a “mutuality of remedy” is incorrect .....................35

              3.       The grant of specific performance does not require
                       “continuous supervision” of the parties. .........................37

              4.       The decree of specific performance does not deprive
                       Woody of rights under the Sublease ...............................38

III.   WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED
       SUMMARY JUDGMENT EVIDENCE AND THE EXCLUSION OF A
       PORTION OF HIS OWN AFFIDAVIT IS SPURIOUS ..................................39

       A.     The District Court Correctly Overruled Woody’s
              Objections to J. Black’s Summary Judgment Evidence .....40

       B.     The District Court correctly excluded the February 4, 2015
              Affidavit of Bob E. Woody, and its exclusion was not
              material to the award of specific performance in this Case41

IV.    J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER
       ATTORNEY’S FEES AS THE PREVAILING PARTY IN A BREACH OF
       CONTRACT CASE UNDER CPRC § 38.001. .........................................43

       A.     The Law permits the award of fees under Chapter 38 upon
              the award of specific performance ........................................43



                                            iii
PRAYER ..................................................................................................................44

CERTIFICATE OF COMPLIANCE .......................................................................45

CERTIFICATE OF SERVICE ................................................................................46




                                                            iv
                                    INDEX OF AUTHORITIES

Cases
Albataineh v. Eshtehardi,
      01-12-00671-CV, 2013 WL 1858864 (Tex. App.—Houston [1st Dist.]
      May 2, 2013, no pet.) .....................................................................................43

Allstate Ins. Co. v. Hallman,
       159 S.W.3d 640 (Tex. 2005) .................................................................. 14, 17

Azad v. Aaron Rents, Inc.,
      No. 14-07-01087-CV, 2009 WL 4842761,
      (Tex. App.—Houston [14th Dist.] 2009, no pet.)...........................................34

Bd. of Trustees of Fire and Police Retiree Health Fund v.
       Towers, Perrin, Forster & Crosby, Inc.,
       191 S.W.3d 185 (Tex.App.–San Antonio 2005, pet. denied) .......................39

Burford v. Pounders,
      145 Tex. 460, 199 S.W.2d 141 (1947) ..........................................................30

City of Houston v. Socony Mobil Oil Co.,
       421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967),
       writ refused NRE (Apr. 10, 1968) .......................................................... 13, 24

DiGiuseppe v. Lawler,
     269 S.W.3d 588 (Tex.2008) ..........................................................................29

Downer v. Aquamarine Operators, Inc.,
    701 S.W.2d 238 (Tex.1985) ..........................................................................40

E.M. Goodwin, Inc. v. Stuart,
      52 S.W.2d 311 (Tex. Civ. App.—San Antonio 1932), writ granted
      (Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632 (Comm'n App. 1935) 36

Edwards v. Mid-Continent Office Distribs., L.P.,
     252 S.W.3d 833 (Tex. App.—Dallas 2008, pet. denied) ..............................28

First State Bank of Bishop v. Grebe,
       162 S.W.2d 165 (Tex. Civ. App.—San Antonio1942, writ ref’d w.o.m.) ....24




                                                        v
Fitzsimmons v. Anthony,
      716 S.W.2d 719 (Tex. App.—Corpus Christi 1986, no writ) .......................28

Frank v. Kuhnreich,
      546 S.W.2d 844 (Tex. App.—San Antonio 1977, writ ref’d n.r.e.) ....... 28, 32

Garner v. Fidelity Bank, N.A.,
     244 S.W.3d 855 (Tex.App.–Dallas 2008, no pet.) ........................................39

Hayes v. E.TS. Enterprises, Inc.,
     809 S.W.2d 652 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991) .....41

Henry S. Miller Co. v. Stephens,
     587 S.W.2d 491 (Tex.Civ.App.-Dallas 1979, writ ref’d n.r.e.) ....................29

Hudson v. Wakefield,
     711 S.W.2d 628 (Tex. 1986) .........................................................................24

Humble Oil & Refining Co. v. Westside Inv. Corp.,
    428 S.W.2d 92 (Tex. 1968) ...........................................................................35

In re Hecht,
       213 S.W.3d 547 (Tex. Spec. Ct. Rev. 2006) .................................................31

Jarvis v. Peltier,
       No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, 2013 WL 1755797
       (Tex.App.-Tyler Apr. 24, 2013, n.p.h.) .................................................. 30, 41

Jones v. Kelley,
      614 S.W.2d 95 (Tex. 1981) ...........................................................................43

Jones v. Pesak Bros. Const.. Inc.,
      416 S.W.3d 618 (Tex. App.—Houston [1st Dist.] 2013, no pet.) .................42

Miller v. Compton,
      185 S.W.2d 754 (Tex. Civ. App.—Eastland 1945, no writ) .........................36

Norra v. Harris County,
      No. 14-05-01211-CV, 2008 WL 564061,
      (Tex. App.—Houston [14th Dist.] 2008, no pet.)...........................................34

Paciwest, Inc. v. Warner Alan Properties, LLC,
     266 S.W.3d 559 (Tex. App.—Fort Worth 2008, pet. denied) .......................40


                                                     vi
Parson v. Wolfe,
     676 S.W.2d 689 (Tex. App.—Amarillo 1984, no writ) ................................36

Perez v. Williams,
      01-14-00504-CV, 2015 WL 5076294
      (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.) .............................42

Rasmusson v. LBC PetroUnited, Inc.,
     124 S.W.3d 283 (Tex. App.—Houston [14th District] 2003, pet. denied) ....44

Redwine v. Hudman,
     104 Tex. 21, 133 S.W. 426 (1911) ................................................................38

Roundville Partners, L.L.C. v. Jones,
     118 S.W.3d 73 (Tex. App.—Austin 2003, pet. denied) ................................28

Rus-Ann Dev., Inc. v. ECGC, Inc.,
     222 S.W.3d 921 (Tex. App.—Tyler 2007, no pet.) .......................................31

S. Plains Switching, Ltd. v. BNSF Ry.,
       255 S.W.3d 690 (Tex.App.-Amarillo 2008, pet. denied) ..............................37

San Antonio Joint Stock Land Bank v. Malcher,
     164 S.W.2d 197 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) ...36

Smith v. Dass, Inc.,
      283 S.W.3d 537 (Tex. App.—Dallas 2009, no pet.) .....................................28

Stafford v. S. Vanity Magazine, Inc.,
       231 S.W.3d 530 (Tex. App.—Dallas 2007, pet. denied) ..............................28

Tello v. Bank One, N.A.,
       218 S.W.3d 109 (Tex. App.—Houston [14th Dist.] 2007, no pet.) ...............34

Trevino & Associates Mech., L.P. v. Frost Nat. Bank,
      400 S.W.3d 139 (Tex. App.—Dallas 2013, no pet.) .............................. 13, 23

United Coin Meter Co. v. Johnson-Campbell Lumber Co.,
      493 S.W.2d 882 (Tex.Civ.App.--Fort Worth 1973, no writ) ........................16




                                                  vii
Statutes
Tex. Civ. Prac. & Rem. Code § 38.001(8)...............................................................43

Tex. R. App. P. 38.1 ............................................................................................... xiv

Tex. R. App. P. 39.1 ............................................................................................... xiv

Tex. R. App. P. 43.4 .................................................................................................45

Tex. R. Civ. P. 139 ...................................................................................................45




                                                          viii
                                ABBREVIATIONS
      For ease of reference, Appellees employ the following abbreviated

references to the record and the parties herein:

Abbreviation              Reference

Woody                     Appellants/Plaintiffs and Counter-Defendants,
                                Bob E. Woody and The Ranch, LLC
                                (collectively, unless otherwise noted)

Cárdenas                  Plaintiffs’ Trial Counsel,
                                 Hector H. Cárdenas, Jr.

J. Black’s                Appellees/Defendants and Counter-Plaintiffs,
                                J. Black’s, L.P. and J. Black’s, G.P., L.L.C.
                                (collectively, unless otherwise noted)

11CR                      Original Clerk’s Record, pgs. 1-959, filed 5/17/12

12CR                      Supplemental Clerk’s Record “B,” pgs. 1-1361, filed
                          5/31/12

15CR                      Clerk’s Record, pgs.1–1751, filed 7/20/ 15.
1 RR                      Reporter’s Record from Hearing on Woody’s
                          Application for Temporary Restraining Order, 5/6/09

2 RR Vol. I-III           Reporter’s Record from Hearing on Woody’s Motion for
                          Temporary Injunction, 5/14/09;
                                Vol. I: Master Index
                                Vol. II: Transcript
                                Vol. III: Exhibits

3 RR                      Reporter’s Record from Hearing on J. Black’s
                          Third/Final Motion for Summary Judgment, 12/20/10




                                          ix
Abbreviation      Reference

4 RR Vol. I-III   Reporter’s Record from Hearing on J. Black’s Motion
                  for Entry of Final Judgment, 1/5/12;
                         Vol. I: Master Index
                         Vol. II: Transcript
                         Vol. III: Exhibits

5 RR              Reporter’s Record from Trial on issue of Attorney’s
                  Fees, 3/25/15




                                 x
                      STATEMENT OF THE CASE

 Nature of      Appellant Bob Woody (as Sublessor) and The Ranch (Woody’s
 the Case       business entity) filed suit against Appellees J. Black’s L.P. (as
                Sublessee) and J. Black’s G.P., L.L.C. (its general partner),
                regarding various disputes over their commercial sublease
                agreement. (11CR 8-15). J. Black’s counter-sued to establish
                that it had properly exercised its unilateral option to extend the
                term of the Sublease and that Woody breached the Sublease by
                falsely accusing J. Black’s of default, rejecting the proper
                exercise of J. Black’s option, and demanding that J. Black’s
                vacate the premises or pay holdover rent. (11CR 99-93).

  Course of     The trial court granted J. Black’s First Motion for Partial
Interlocutory   Summary Judgment, holding that J. Black’s had properly
 Proceedings    exercised its option while in good standing under the Sublease,
                and Woody breached the Sublease by his improper rejection of
                that exercise. (11CR 491-492).

                The trial court granted three sanctions orders in J. Black’s
                favor based on Woody’s abuse of discovery. (11CR 493-494;
                12CR 1068-1069). Woody and The Ranch did not appeal those
                orders.

                The trial court granted J. Black’s Second Motion for Partial
                Summary Judgment, dismissing all of Woody’s and The
                Ranch’s claims because J. Black’s was not in default of (had
                not breached) the Sublease and was not liable for conversion,
                theft, or trespass. (11CR 710-711, 949). Woody and The
                Ranch do not appeal this order.

                The trial court granted J. Black’s Third Motion for Summary
                Judgment, and issued a Final Judgment that affirmed the status
                of the pleadings and the conclusive legal determinations about
                Woody’s liability and J. Black’s non-liability, and awarded
                affirmative relief to J. Black’s on that basis. (11CR 946-948).
                The trial court later vacated only the portion of this order
                awarding relief to J. Black’s, reserving that issue for
                subsequent trial. (12CR 618). Woody and The Ranch did not
                appeal these orders.


                                       xi
                 The trial court denied Woody’s Motion for Summary
                 Judgment because all of the arguments made therein had been
                 conclusively decided against them in the previous orders.
                 (11CR 1080-1081).

                 The trial court granted J. Black’s Fourth Motion for
                 Sanctions on the basis that Woody’s Motion for Summary
                 Judgment was frivolous and filed for purposes of delay and
                 harassment. (11CR 1080-1081).

                 The parties signed a Stipulation regarding the reasonable and
                 necessary amount of attorney’s fees incurred by J. Black’s.
                 (11CR 1164-1165).

Original Trial Upon a hearing before the Honorable Steven Yelenosky of the
   Court       345th District Court of Travis County on J. Black’s Motion for
 Disposition   Entry of a Final Judgment, the trial court granted a Final
               Judgment, which incorporated the prior orders and the parties’
               Stipulation and awarded J. Black’s specific performance,
               attorney’s fees, and interest based on Woody’s breach of the
               Sublease. (12CR 1302-1304).

                 Woody and The Ranch appealed (1) the orders granting
                 J. Black’s First Partial Motion for Summary Judgment and
                 denying Woody’s Motion for Summary Judgment, (2) the
                 award of specific performance and attorney’s fees in the Final
                 Judgment, and joined by their counsel Hector Cárdenas, (3) the
                 fourth award of sanctions.

Disposition by   The Amarillo Court of Appeals overruled Woody’s first,
 7th Circuit     second and third issues on appeal and determined that Woody
   Court of      breached the sublease, finding Woody’s contentions to the
   Appeals       contrary “meritless.” The Court of Appeals reversed the trial
                 court on the issue of J. Black’s failure to prove it was “ready,
                 willing and able” to perform its obligations under the Sublease,
                 and on the sanctions levied against Woody and Cardenas.
                 After determining the issue was not moot, the Court of Appeals
                 remanded the case for further proceedings consistent with its
                 opinion. (15CR 881–898; 15 CR 900).




                                       xii
Subsequent    After a hearing on the parties’ cross-motions for summary
Trial Court   judgment before the Honorable Judge Yelenosky of the 345th
Disposition   District Court of Travis County, the Court granted in part
              J. Black’s Motion for Final Summary Judgment, excluding
              only the amount of attorney’s fees, and denied the Motion for
              Summary Judgment of Counter-Defendants Bob E. Woody and
              the Ranch. (15CR 1639–1640).

              Pursuant to the parties’ March 19, 2015 stipulation as to
              reasonable and necessary attorney’s fees (15CR 1645–1646),
              on March 31 2015, the Trial Court entered Final Judgment in
              this Cause, ordering Woody to specifically perform the entirety
              of his obligations under the Sublease Agreement dated
              August 21, 2006 as it has been extended and modified, finding
              that J. Black’s was entitled to recover its attorney’s fees under
              Tex. Civ. Prac. & Rem. Code §38.001, and awarding J. Black’s
              $173,438.85 in attorney’s fees (as well as an additional $40,000
              in appellate fees conditioned on successfully prevailing on
              appeal). (15CR 1653–1654).

              On May 6, 2015, Judge Yelenosky denied Woody’s Motion for
              New Trial and Alternative Motion to Modify Judgment. (15CR
              1707). On May 13, 2015, Woody timely noticed his appeal.
              (15CR 1708 – 1709).




                                    xiii
                     REQUEST FOR ORAL ARGUMENT
      Appellees J. Black’s L.P. and J. Black’s G.P., L.L.C. respectfully request

that this Court grant oral argument to aid in the Court’s decisional process.

Appellants have raised multiple issues on appeal that must be construed in light of

the arguments presented and legal rulings made through a series of interlocutory

proceedings, covering five years in the trial court, which ultimately resulted in a

Final Judgment.     Oral argument will assist the Court in synthesizing the

substantive merits and procedural status of Appellants’ issues on appeal. Tex. R.

App. P. 38.1(e), 39.1.




                                        xiv
                              ISSUES PRESENTED
      Appellants have asserted three multifaceted issues, many of which complain

about the same decision and/or legal conclusion of the trial court. In response,

J. Black’s simplifies and restates the operative issues on appeal as follows:


ISSUE 1      Summary Judgment Rulings on Liability and Award of Specific
             Performance of Sublease:

             Did the trial court err in granting summary judgment for J. Black’s
             and not for Woody on J. Black’s request for specific performance?

             Responsive to Appellants’ Issues 1, 2, and 3.


ISSUE 2      Trial Court’s discretion in excluding and considering of evidence:

             Did the trial court abuse its discretion and commit harmful error in
             excluding certain of Woody’s summary judgment evidence and failing
             to exclude certain of J. Black’s summary judgment evidence?

             Responsive to Appellants’ Issue 2.


ISSUE 3      Award of fees, interest and costs:

             Did the trial court err in awarding J. Black’s attorney’s fees, interest,
             and costs?

             Responsive to Appellants’ Issue 1–3.




                                         xv
                            STATEMENT OF FACTS

I.    THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE SUBLEASE,
      UNDER WHICH J. BLACK’S WAS READY, WILLING AND ABLE TO PERFORM.
      The key dispute in this appeal –– framed by the prior appellate court

decision issued by the Amarillo Court of Appeals on October 23, 2013. and the

otherwise-undisturbed Orders granting J. Black’s various Motions for partial

Summary Judgment –– is whether the evidence shows J. Black’s was ready,

willing, and able to perform its obligations under the Sublease after Woody had

breached the Sublease and J. Black’s had given timely notice of the intent to

exercise the extension of the terms of the Sublease. As shown by the record, Judge

Yelenosky correctly decided this issue in J. Black’s favor based on the plain

language of the Sublease, the evidence of preparedness and actual performance of

the Sublease by J. Black’s, and the well-established law of this State.

      A.     The Parties Entered a Sublease Agreement in August 2006 for a
             Three-Year Term with Four Extension Options.

      On August 21, 2006, Bob Woody (sublessor) and J. Black’s, LP (sublessee)

entered a sublease agreement (“the Sublease”) to allow J. Black’s to sublet the

ground floor of a two-story commercial building for the purpose of operating a

restaurant and bar in the popular “West 6th Street” entertainment district of Austin,

Texas. (11CR 19-52, 621). Woody leased the building (under a Master Lease with

Montwalk Holdings, Ltd.). (11CR 19). He used a portion of the building to

operate a bar and rooftop patio (called “The Ranch”) on the top floor and in part of

                                          1
the ground floor adjacent to the space subleased by J. Black’s. (12CR 33–48).1

The interest in real property at this location contains intrinsic and intangible value

to J. Black’s business. (15CR 1199, at ¶ 2).

       The original term of the Sublease was for 36 months (three years), from

September 1, 2006, to August 31, 2009. (11CR 21). Thereafter, J. Black’s was

given a unilateral option to extend the Sublease term for four successive periods of

36 months each (the four “Option Periods”), for a total of 144 additional months

(twelve additional years, through August 31, 2021). (11CR 21-22).

       To exercise its extension option, J. Black’s had to be in good standing (i.e.,

not in default) under the Sublease, and had to send notice to Woody of its intent to

exercise the option at least 180 days prior to the expiration of the existing term.

(11CR 21, Sublease § 3.01, Term).

       B.     J. Black’s Properly Exercised its First Extension Option, Woody
              Improperly Rejected J. Black’s Exercise of the Extension Option
              and thereby Breached the Sublease.
       In compliance with the Sublease, J. Black’s sent written notice to Woody,

stating its intention to exercise the first extension option on February 23, 2009,




1
  Although originally named as a Plaintiff in this lawsuit, The Ranch, L.L.C. was not a party to
either the Sublease or the Master Lease. (11CR 19, 33). And although the Sublease named
J. Black’s, L.P. as the Sublessor, the Sublease was executed by Sean Fric, Manager of J. Black’s,
G.P., L.L.C., on behalf of J. Black’s L.P. (12CR 30, 108).


                                               2
which was more than 180-days before the expiration of the original sublease term.

(11CR 21-22, 162, 164). 2

       Although Woody acknowledged that J. Black’s properly and timely mailed

its notice of extension to his stated address, Woody unconvincingly contended that

the notice did not extend the Sublease term because he claims to have not actually

“received” it. Based on this contention, Woody rejected J. Black’s timely exercise

of its extension option and, instead, demanded that J. Black’s vacate the premises

and/or pay holdover rent. (11CR 158–159, 171-173). Woody has never repudiated

the demand for holdover rent or notice to vacate.

       The trial court granted J. Black’s November 20, 2009 Motion for Partial

Summary Judgment in full on its counterclaim for breach of contract related to the

rejection of the extension. (15CR 81–84, 95, 478, 769–771). The Amarillo Court

of Appeals affirmed the conclusion that the extension notice was properly and

timely sent to Woody in full compliance with the Sublease agreement, and did not

in any way disturb or reverse the trial Court’s December 17, 2009 Order granting

summary judgment on the counterclaim for breach of contract. (15CR 887–889).




2
  The original term was set to expire on September 1, 2009, meaning that J. Black’s 180-day
advance deadline to exercise its option was on March 4, 2009. (11CR 184, ¶ 13). J. Black’s sent
the required notice more than a week ahead of the deadline.


                                              3
      C.     Woody Improperly Accused J. Black’s of default and disregarded
             the default terms of the Sublease.

      In furtherance of his efforts to eject J. Black’s from the subleased premises,

nine days after J. Black’s sent its extension notice, Woody for the first time

claimed that J. Black’s was in default under the Sublease. (11CR 108, 144–145).

Specifically, Woody manufactured claims that J. Black’s had “defaulted” by

providing “substandard food service” to The Ranch’s customers and by installing

an “offensive neon sign” outside the premises. (11CR 144). Woody later claimed

that J. Black’s was in default based on its installation of three gas heaters. (11CR

146-147). None of these actions were “defaults” contemplated by the Sublease’s

specific provisions and Woody’s “notices” were therefore also outside of the

parties’ agreement.

      The trial court determined that the Sublease contained no requirements

regarding the type, quality, or quantity of food service by J. Black’s (other than to

state that “the only food sold or provided [at The Ranch] will be provided by

[J. Black’s]”), and J. Black’s had worked diligently to provide such service and

that J. Black’s fully complied with the Sublease when it installed a basic marquee

sign (11CR 28-29, 502–503, 511-515, 613-614, 616-623). The trial court also

determined that J. Black’s installation of the heaters did not violate the Sublease

but, even if it did, J. Black’s promptly cured the issue by removing the heaters and




                                         4
paying Woody for any increased gas expenditure upon notice. (11CR 500-502,

505-510, 614-615; 15CR 636).

      All of these facts were the subject of J. Black’s Second Motion for Partial

Summary Judgment, which was decided in J. Black’s favor, concluding as a matter

of law that J. Black’s was not in default of the Sublease, and dismissing all of

Woody’s claims on that basis. (11CR 497, 517, 949; 15CR 636). Woody did not

appeal from this Order.   Hence, the record is conclusive that J. Black’s was not in

default (i.e., was in good standing) when it exercised its extension option by

sending written notice to Woody, and that it was Woody who in fact was in breach

of the Sublease.

      D.     J. Black’s was Ready, Willing, and Able to perform each and
             every one of its Obligations under the Lease.
      Although Woody makes this the focus of his argument, on appeal there is no

serious dispute that J. Black’s was not at all times relevant to this dispute ready,

willing and able to perform its obligations under the lease, and did in fact perform

its obligations under the Lease. No evidence controverts J. Black’s clear testimony

–– from Mr. Sean Fric, a manager of J. Black’s with full knowledge of J. Black’s

ability to meet the entirety of its Sublease obligations at all relevant times –– of

J. Black’s readiness, willingness and ability to perform, and Woody’s only

challenge to such evidence comes through spurious legal objections to the affidavit

of Mr. Fric that were properly denied by the trial court.


                                          5
II.     THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS
        PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS ATTORNEY’S
        FEES.
        On appeal, Woody seeks reversal of the relief awarded to J. Black’s (specific

performance and attorney’s fees).        The record fully supports these awards,

however, and they should be affirmed.

        A.    The Parties Counter-Sued against Each Other: Woody Sought to
              Remove J. Black’s as the Tenant, and J. Black’s Sought to
              Remain in the Subleased Space.
        Woody filed his Original Petition in May 2009 alleging causes of action

against J. Black’s for conversion, breach of contract (based upon alleged

contractual provisions that did not even exist), trespass and theft, and seeking

injunctive relief, damages, and attorney’s fees. (15CR 6–13; see also 12CR 921-

929).    Woody complained about J. Black’s refusal to surrender the subleased

premises. (15CR 8). His goal was to terminate the Sublease and eject J. Black’s.

        J. Black’s timely answered and counterclaimed, asserting claims for breach

of contract and fraud. (11CR 88-93; see also 12CR 495-49, 1138-1143). In its

answer and counterclaim, J. Black’s explained why none of its actions constituted

a default and that it had properly extended the Sublease term. (11CR 89-91).

J. Black’s further pled that, by refusing to acknowledge the extension of the

Sublease term and by improperly accusing J. Black’s of defaults under terms that

did not exist, and seeking a judicial determination that the Sublease was



                                          6
terminated, Woody had breached the Sublease.                  (11CR 91).       On this basis,

J. Black’s sought specific performance, damages, and attorney’s fees. (11CR 91-

92). By its pleadings, J. Black’s sought to maintain its successful business in the

subleased premises and compel Woody’s performance of the entirety of his

obligations under the Lease.

       Following an evidentiary hearing, Woody and The Ranch’s request for a

temporary injunction was denied. (11CR 95; 1 RR Vol. 2, p. 99).

       B.     J. Black’s First Motion for Partial Summary Judgment was
              Granted, Holding that J. Black’s Properly Exercised its Extension
              Option and that Woody Breached the Sublease.
       J. Black’s filed its first Motion for Partial Summary Judgment seeking an

affirmative finding on its counterclaim that Woody was liable for breaching the

Sublease.    The crux of J. Black’s argument was that — because it had fully

complied with the Sublease’s extension notice provisions while in good standing

— Woody’s refusal to acknowledge the extension and his demand for holdover

rent constituted a material breach. (15CR 92-197). Woody filed a response, and

both parties filed additional replies. (15CR 163–477). 3




3
   Woody filed a Cross-Motion for Partial Summary Judgment, contained within the same
document as his Response. (11CR 174). J. Black’s objected to the Cross-Motion because it had
been filed just seven days prior to the hearing. (11CR 475). The trial court correctly refused to
hear the Cross-Motion, and Appellants have never asserted any error on that basis. Two years
later, Woody filed another Motion for Summary Judgment (11 CR 624-645), which was properly
denied. (12CR 948).


                                               7
      A hearing was conducted, and the district court granted J. Black’s Motion

“in full” on December 17, 2009. (15CR 478). The impact of this order was to

determine, as a matter of law, that because J. Black’s had properly exercised its

extension option while in good standing, Woody was liable for breach of contract

based on his refusal to acknowledge this extension, while reserving all relief to be

awarded on that breach for a later date. (15CR 478).

      C.    Three Sanctions Orders were Granted in J. Black’s Favor
      Thereafter, Woody engaged in discovery abuse, requiring J. Black’s to file

multiple motions for relief between June-August 2010. First, Woody refused to

appear for his properly-noticed deposition. (12CR 21-26). The district court

granted J. Black’s Motion to Compel the deposition, and awarded J. Black’s

$1,500.00 as sanctions. (11CR 493). Woody failed to appear as ordered by the

court, so J. Black’s filed a Motion for Contempt and for Sanctions. (12CR 55-57).

The district court also granted that motion, awarding J. Black’s an additional

$3,000.00 as sanctions against Woody. (12CR 494). Finally, the court awarded

J. Black’s an additional $1,000.00 in sanctions based on Woody’s improper motion

to compel discovery from J. Black’s on matters that had already been dismissed by

the prior summary-judgment ruling. (12CR 230-237, 1068-1069).




                                         8
        D.    J. Black’s Second Motion for Partial Summary Judgment was
              Granted, Dismissing all of Woody’s Claims.

        J. Black’s filed its Second Motion for Partial Summary Judgment in

August 2010. (15CR 481-631). That motion requested, on both traditional and no-

evidence grounds, that all of Woody’s claims be dismissed, including Woody’s

claim that J. Black’s had breached the Sublease. (15CR 501; see also 11CR 699-

701).    Woody failed to respond to J. Black’s Second Motion for Summary

Judgment. (15CR 636; see also 11CR 700, 949).

        Following a hearing, the Second Motion for Summary Judgment was

originally granted in October 2010, but the order was then twice amended. (15CR

636; 11CR 949). Ultimately, the order held that Woody and The Ranch shall “take

nothing by their claims that [J. Black’s] defaulted under the Sublease agreement”

and “for conversion, trespass to personal property, and theft.” (11CR 949). The

order also expressly reserved J. Black’s ability to seek affirmative relief on its

counterclaims at a later date. (11CR 949; 4 RR Vol. II, p. 13). 4 The Plaintiffs did

not appeal from this October 13, 2010 Order.

        E.    J. Black’s Third Motion for Summary Judgment was Granted,
              Resulting in a Final Judgment, which was then Partially Vacated.
        Having successfully obtained the first summary judgment holding that

J. Black’s had properly extended the Sublease term and that Woody was in breach
4
 Woody and The Ranch attempted an interlocutory appeal of this order. The Third Court of
Appeals dismissed that appeal for want of jurisdiction. See Woody v. J. Black’s LP, No. 03-11-
00024-CV (Tex. App.—Austin June 28, 2011, no pet.) (unpublished mem. op.) (12 CR 1073).


                                              9
of the Sublease and a second summary judgment dismissing all of Woody’s and

The Ranch’s claims, J. Black’s then sought a third, final summary judgment

awarding it specific performance and attorney’s fees. (15CR 637-647). This

Motion was granted, resulting in entry of a “final” judgment in January 2011.

(15CR 769–771).         The judgment held, as a matter of law, that (1) J. Black’s

counterclaims, as set forth in its Original Answer and Counterclaim (including the

ability to obtain affirmative relief thereon) remained pending before the court; 5

(2) Woody and The Ranch shall take nothing by their claims; (3) Woody breached

the Sublease; (4) J. Black’s did not breach the Sublease; (5) J. Black’s properly

exercised its extension option, resulting in the Sublease continuing in full force and

effect; and (6) J. Black’s was entitled to specific performance, attorney’s fees, and

interest as sought in its third and final motion for summary judgment. (15CR 769–

771).

        Woody filed a Motion to Modify/Motion for New Trial (15CR 772-849),

which was “granted only with respect to Defendant’s Motion for Final Summary

Judgment” in April 2011. (15CR 850). The basis of the court’s ruling was that the

attorney’s fee claim presented fact issues not appropriate for summary disposition.

(12 CR 1145; 4 RR Vol. II, p. 17). Hence, the order retained all portions of the
5
  The district court determined that Woody had tried J. Black’s counterclaims by consent and that
J. Black’s original counterclaim remained in force and effect, and would be accepted as a trial
amendment. Additionally, the court granted J. Black’s permission to file an amended
counterclaim as a trial amendment, which J. Black’s did. (11CR 947-948; 12CR 1138-1143).
Appellees have not asserted any error relating to these procedural facts on appeal.


                                               10
January 2011 judgment except for the affirmative relief (specific performance,

attorney’s fees, and interest) that had been awarded pursuant to J. Black’s final

motion. (See 4 RR Vol. II, p. 15-16, 18-19). Thus, as of April 2011, the final issue

pending for decision by the court was the relief to be awarded to J. Black’s based

on Woody’s breach.

      F.    Woody’s Motion for Summary Judgment was Denied—and a
            Fourth Sanctions Order was Granted in J. Black’s Favor—
            because the Court had Already Conclusively Determined that
            J. Black’s Properly Exercised its Extension Option and that
            Woody was in Breach of the Sublease.
      Despite the fact that the district court had already conclusively ruled that

(1) J. Black’s properly exercised its extension option and was not in breach, and

that (2) Woody breached the Sublease by refusing to acknowledge J. Black’s

extension and demanding holdover rent, Woody moved for summary judgment in

October 2011 asking the court to again decide these same issues, but in the

opposite manner. (12CR 625-645).        J. Black’s responded to this motion and

requested sanctions against Woody and Cárdenas based on their filing of a

harassing and frivolous motion, which asserted legal arguments that had already

been rejected at least three times. (12CR 930-948).

      The district court denied Woody’s Motion for Summary Judgment and

granted J. Black’s Fourth Motion for Sanctions on November 21, 2011, awarding




                                        11
an additional $6,958.00 as sanctions against Woody and Cárdenas. (12CR 1080-

1081).

      G.     J. Black’s Motion for Entry of a Final Judgment was Granted,
             and a Final Judgment was Entered in J. Black’s Favor.
      J. Black’s filed a Motion for Entry of Final Judgment on December 21,

2011. (12CR 1144-1163). This motion incorporated all of the prior, interlocutory

rulings (which determined as a matter of law that J. Black’s had properly exercised

its option to extend the Sublease, that J. Black’s had not breached the Sublease and

was not liable for any other claim asserted by Woody, and that Woody had

breached the Sublease), and the parties’ stipulation on J. Black’s attorney’s fees

(which confirmed the reasonable and necessary amount of fees to be awarded to

J. Black’s). (12CR 1144-1163). Based on these prior orders and the stipulation,

there were no remaining fact issues, and the only step remaining was for the court

to exercise its discretion to award J. Black’s the legal equitable relief to which it

had shown itself entitled (specific performance, attorney’s fees, and interest).

(12CR 1146; 4 RR Vol. II, p. 21, 35-36).

      The district court granted J. Black’s motion and entered a Final Judgment on

January 13, 2012. (15CR 868–870; 4 RR Vol. II, p. 41-45). The Final Judgment

specifically incorporated the prior summary-judgment and sanctions orders and

awarded J. Black’s specific performance, attorney’s fees in the exact amounts




                                         12
stipulated by the parties, and post-judgment interest. (15CR 868–870). 6 Woody,

The Ranch, and Cardenas appealed. (12CR 1350).

       H.     Appeal and Remand by Amarillo Court of Appeals

       In its decision issued October 18, 2013, the Amarillo Court of Appeals

overruled Woody’s first three points of error and thereby affirmed this Court’s

finding that the Sublease was validly extended and that Woody was in breach

thereunder. 7 (15CR 887, 889). Although Woody’s procedural (and sanctioned)

gamesmanship had lasted throughout nearly the entirety of the First Extension

Period, the Court of Appeals also raised and disposed of the argument that the

issue of whether J. Black’s was entitled to attorney’s fees might be moot because

“before briefing was completed on appeal, the first option period had expired.”

(15CR 889–890, at note 3). The Court of Appeals specifically held, sua sponte,

6
  Woody filed a Motion to Modify/Motion for New Trial (12 CR 1216-1238), which was denied
following a response by J. Black’s (12CR 1329-1343).
7
   Specifically, Woody sought by its Issues number 1-3 that this Court’s grant of J. Black’s
original Motion for Partial Summary Judgment (and the denial of Woody’s First Motion for
Summary Judgment), were improper. J. Black’s first Motion for Partial Summary Judgment was
granted on the explicit grounds that Woody had breached the Sublease. The Court of Appeals,
by overruling the Appellants issues number 1-3 and thereafter addressing the issue of whether
Specific Performance was appropriately granted as a remedy for Woody’s breach, therefore
upheld the Order granting the first Motion for Partial Summary Judgment and the grounds upon
which this Court granted the same. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank,
400 S.W.3d 139, 144 (Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial
summary judgment is granted, the issues it decides cannot be litigated further, unless the trial
court sets the partial summary judgment aside or the summary judgment is reversed on appeal”);
City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (Tex. Civ. App. – Houston [1st Dist.]
1967), writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an
interlocutory summary judgment has been merged, presents an opportunity for an appeal from
the summary judgment. If the appeal results in a reversal on points not involved in the summary
judgment, that portion of the case decided on summary judgment will not be remanded for a new
trial”).


                                              13
that “[t]he issue whether the trial court’s decree of specific performance was

correct might thus be moot…But, because J. Black’s award of attorney’s fees is

contested on appeal, and depends on the viability of the trial court’s decree of

specific performance, the issue is not moot.”        (15 CR 889–890, at note 3)

(emphasis added), citing Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642–43

(Tex.2005) (appellee’s remaining issue in recovering attorney’s fees precluded

application of mootness doctrine).

      On April 29, 2014, the Amarillo Court of Appeals then issued its mandate to

the trial court stating “it is ordered, adjudged and decreed that the judgment of the

trial court regarding J. Black’s timely notice of its intention to carry the sublease

into the first option period is affirmed. Otherwise the judgment is reversed and

remanded for further proceedings consistent with the opinion.” (15CR 900).

      I.     Grant of J. Black’s Final Summary Judgment and Entry of Final
             Judgment
      The parties filed dueling motions for summary judgment heard before the

Court on March 5, 2015. (15CR 911–1271). In addition, the parties filed a variety

of objections to the summary judgment evidence that was heard on that same day.

(15 CR 1272–1291; 1570–1602; 1610–1616).           On March 11, 2015, the Court

issued its Order on Motions for Summary Judgment, Objections and Attendant

Motions, thereby sustaining objections to the affidavit of Sean Fric to the extent it

offers a legal opinion (and otherwise overruling such objections) and the affidavit


                                         14
regarding attorney’s fees of the undersigned counsel, granting in part J. Black’s

Motion for Summary Judgment (excluding only the amount of attorney’s fees) and

denying Woody’s Motion for Summary Judgment. (15CR 1639-1670). On

March 25, 2015, the parties appeared for trial on the issue of attorney’s fees, at

which time the Court accepted into evidence the stipulation of the parties as to the

amount of attorney’s fees accrued by J. Black’s. (RR. 3.25.15 4–26); 15CR 1644–

1646).

      On March 31, 2015, the Court again entered Final Judgment in this suit.

(15CR 1652–1654). In the Final Judgment, the Court rendered judgment in favor

of J. Black’s and decreed that “Woody shall specifically perform the entirety of his

obligations under that certain Sublease Agreement dated August 21, 2006 as it has

been extended and modified and that J. Black’s was entitled to recovery of

attorney’s fees under Tex. Civ. Prac. & Rem. Code §38.001 in the amounts set

forth therein. (15CR 1652–1654). The Court then denied Woody’s Motion for

New Trial and Alternative Motion to Modify Judgment (15CR1658–1667; 1707).

On May 13, 2015, Woody noticed this appeal. (15 CR 1708–1710).

                      SUMMARY OF THE ARGUMENT
      Throughout the history of this long and tortured case, J. Black’s has

prevailed on four separate summary-judgment motions (and successfully defeated

two others filed by Woody), in front of at least four separate district judges. In



                                        15
ruling on those various summary judgment motions, both the trial courts and the

Amarillo Court of Appeals determined that J. Black’s had prevailed by proving

liability for its counterclaim that Plaintiff Bob Woody had breached the parties’

sublease agreement, and the Courts have disposed of all of Plaintiffs’ claims for

breach.

       After upholding the trial court’s determination that J. Black’s had given

timely notice of the intent to exercise the extension of the terms of the Sublease,

the Amarillo Court of Appeals remanded to the Trial Court for the presentment of

evidence related to whether J. Black’s was ready, willing and able to perform its

obligations under the Sublease in order to be eligible for the remedy of specific

performance and be entitled to the recovery of attorneys’ fees. Although the

Court of Appeals noted at the time that it rendered its decision the “1st Extension”

period of the sublease had expired, it nevertheless specifically refused to hold the

claims made by J. Black’s had thereby been rendered moot, and instead instructed

the District Court to consider proof of whether the decree of specific performance

would be proper. 8 The controversy is no less alive and true now that Woody’s


8
   Woody appears to have retreated from his “mootness” argument in this appeal, however,
J. Black’s would note that the Amarillo Court of Appeals specifically stated: “The nub of the
question concerns extending the sublease into the first option period, that is from August 31,
2009, through August 31, 2012. But before briefing was completed on appeal, the first option
period had expired. The issue whether the trial court's decree of specific performance was correct
might thus be moot. See United Coin Meter Co. v. Johnson-Campbell Lumber Co., 493 S.W.2d
882, 890-91 (Tex.Civ.App.--Fort Worth 1973, no writ) (appellate challenge of trial court's
refusal to order specific performance of lease dismissed as moot because secondary term of lease


                                               16
procedural maneuvering has brought the parties through the Second and into the

Third Extension period, because the continuing viability of the Sublease depend

on the parties’ performance of all obligations throughout the original and all

extension terms of the Lease.

       Mr. Woody has never repudiated or retracted his rejection of the 1st

Extension Option or his demand for holdover rent. To the contrary, and through

the first appeal, Woody has consistently asserted that the first extension was non-

compliant and ineffective, that J. Black’s ability to continue to operate in the

leased premises had expired, and that J. Black’s was subject to the holdover rent

provisions of the Sublease. While Woody would have this Court believe that his

failure to file a forcible entry and detainer action to exclude J. Black’s from the

property is significant and somehow insulates him from his breach, Woody

maintained throughout the pendency of the district court case and through the first

appeal that the Sublease had not been extended, that J. Black’s had no right to

occupy the property, and that he should be paid contractual hold over rent as a

consequence.       He also ignored the default provisions of the Sublease and

expired while case was on appeal). But, because J. Black’s award of attorney's fees is
contested on appeal, and depends on the viability of the trial court's decree of specific
performance, the issue is not moot. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642-43
(Tex. 2005) (appellee's remaining issue in recovering attorney's precluded application of
mootness doctrine)”) (emphasis added). (15CR 890). J. Black’s further noted below that had the
Amarillo Court of Appeals believed that J. Black’s claims were mooted by operation of the
Seventh Circuit Court’s decision, it could have reversed and rendered judgment on such claims,
rather than reversing and remanding to the district court for a determination of whether J. Black’s
was ready, willing and able to perform its obligations under the Sublease. (15CR 1010).


                                                17
continuously asserted that J. Black’s was in default based on non-existent

breaches. Woody never repudiated such claims and required the Court of Appeals

to tell him that his demand to vacate or pay holdover rent was improper and in

violation of the Sublease.     Without the grant of specific performance, and

especially in light of Woody’s demonstrated intent to improperly terminate the

Sublease for non-existent and non-contractual defaults, J. Black’s needed a

judicial direction entitling it to enforcement of the Sublease going forward.

      On remand, the district court determined that J. Black’s had shown with

competent, uncontroverted summary judgment evidence that it was ready, willing

and able to perform its obligations under the Sublease, and that J. Black’s had no

adequate remedy at law, so as to be eligible for specific performance of that

agreement and that as a consequence, J. Black’s was therefore entitled to

attorneys’ fees in connection with its affirmative claim of breach under chapter 38

of the Texas Civil Practice and Remedies Code. Both the trial Court and the

Amarillo Court of Appeals thus determined and affirmed that Woody breached the

Sublease by, among other things, refusing to acknowledge that the Sublease

continues in full force and effect and has been properly extended by J. Black’s and

by, asserting unsupportable and contractually non-existent defaults and

demanding holdover rent.




                                         18
      On December 12, 2014, Woody filed its latest summary judgment motion

(the “Woody Motion for Summary Judgment”), seeking summary judgment that

specific performance and the granting of attorneys’ fees were not available. (15CR

911–995). That Fifth Summary Judgment Motion was merely a re-hash of the

same legal arguments that both the Trial and Appellate Courts already found

meritless –– first when this Court granted J. Black’s summary judgment motions

and overruled most of the arguments raised in the Counter-Defendants’ prior

motion for new trial; and subsequently when the Amarillo Court of Appeals

determined that J. Black’s was entitled to specific performance (and therefore its

consequent claim for attorney’s fees was not moot), if this Court found that

J. Black’s was ready, willing and able to perform the sublease. On January 27,

2015, J. Black’s filed its own Motion for Final Summary Judgment. (15CR 996–

1261). On March 11, 2015, the Court denied Woody’s Motion for Summary

Judgment, and granted J. Black’s Motion for Summary in part, excepting as to the

issue of attorney’s fees. (15CR1639–1640).

      At trial on this case on the issue of attorney’s fees, held March 25, 2015,

Woody acknowledged that the only issues before the Court on remand were

“[J. Black’s] requests for relief for specific performance and attorney’s fees against

us.” (5 RR 13). Because the uncontroverted evidence before the Court shows that

J. Black’s was ready, willing and able to perform, and did in fact perform, its



                                         19
obligations under the Sublease at all times, the district court complied with

instructions from the Court of Appeals and awarded J. Black’s the Specific

Performance of the Sublease and its extensions to which it is entitled, a decision

which this Court should affirm.




                                       20
                                       ARGUMENT

I.     WOODY BREACHED THE SUBLEASE

       A.     Woody’s Breach was established by the District Court
       On November 20, 2009, J. Black’s filed its first Motion for Partial Summary

Judgment (the “First Motion for Summary Judgment”), by which it sought “partial

summary judgment on its breach of contract counterclaim, which alleges in part

that Woody has breached the Sublease by refusing to acknowledge the extension of

the Sublease and by demanding holdover rent,” and prayed the court grant it relief

on the basis of the same request. (15CR 87, 95). On December 17, 2009, the

Court granted the First Motion for Partial Summary Judgment “in full.” (15CR

478). Subsequently the Court granted J. Black’s second Motion for Partial

Summary Judgment filed August 27, 2010 (the “Second Motion for Summary

Judgment”), 9 and on the basis thereof and upon the basis of J. Black’s third Motion

for Final Summary Judgment filed November 23, 2010 (the “Third Motion for

Summary Judgment”), the Court entered its January 25, 2011 “Amended

9
  The Second Motion for Summary Judgment prayed that the Court grant J. Black’s Motion for
Summary Judgment “(a) J. Black’s has not breached the Sublease as alleged by Plaintiffs,
(b) Woody has breached the Sublease by asserting groundless defaults, and (c) Plaintiffs'
claims for conversion, trespass to personal property, and theft fail as a matter of law.” (15 CR
482, 501). The subsequent “Corrected Order Granting Defendants’ Second Motion for Partial
Summary Judgment” and final “Amended Interlocutory Order Granting Defendants’ Second
Motion for Partial Summary Judgment” granted the Second Motion for Partial Summary
Judgment without reservation on the issue of breach. (15CR 636). Although Woody emphasizes
the fact that one version of the Order crossed through the specific reference to a finding of
breach, such a finding was not necessary to the granting in full of the Second Motion for
Summary Judgment because Woody’s breach of the Sublease had already been established by
the Court’s grant of the First Summary Judgment.


                                              21
Interlocutory Order Granting Defendants’ Second Motion for Partial Summary

Judgment” and “Final Judgment on Defendants’ Motion for Final Summary

Judgment and Granting Defendants’ Request for Leave to File Trial Amendment.”

(15CR 636, 768, 769–771). The January 25, 2011 Judgment incorporated the prior

orders on the Defendants’ motion for summary judgment, granted the Third

Motion for Summary Judgment in all respects, and rendered final judgment.

(15CR 769-771).

      After the January 25, 2011 Judgment was entered, the Court later granted a

new trial “only with respect to Defendants' Motion for Final Summary Judgment”

on April 27, 2011, and after a significant delay engendered by Woody’s refusal to

respond to requests to agree to a trial date, a new “Final Judgment” was entered on

January 13, 2013 (15 CR 850, 868-870).            The new Final Judgment also

incorporated the prior Summary Judgment Orders and decreed that “Plaintiff Bob

E. Woody breached the Sublease between the parties,” that “Defendants properly

exercised their right to extend the Sublease for an additional term and the Sublease

continues in full force and effect” and that “specific performance of the contract is

equitable and necessary to afford Defendants sufficient relief; the Sublease

continues in full force and effect” and that “Defendants are entitled to recover

attorney fees under Tex. Civ. Prac. & Rem. Code 38.001.”




                                         22
      B.     Woody’s Breach affirmed by the Amarillo Court of Appeals
      On Appeal of the original Final Judgment, the Amarillo Court of Appeals

overruled Woody’s first three issues, in which Woody’s “contend[ed] the trial

court erred in adjudging Woody breached the sublease by refusing to acknowledge

its extension by J. Black’s,” and in fact found such contentions “meritless.” (15CR

885, 887, 889).

       Although the Court of Appeals sustained Woody’s subissue number 4(c) and

remanded for the trial court’s consideration of evidence as to whether J. Black’s

was “ready, willing, and able” to perform its obligations under the Sublease, the

court of appeals did not otherwise disturb the Court’s Final Judgment or the prior

Summary Judgment Orders determining Woody had breached the Sublease.

       The issue of Woody’s breach was established by the Court’s Summary

Judgment rulings, 10 which were incorporated and merged into the Final Judgment,

and cannot be litigated further absent a reversal of summary judgment on that

issue. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139

(Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial summary

judgment is granted, the issues it decides cannot be litigated further, unless the trial

court sets the partial summary judgment aside or the summary judgment is

reversed on appeal”). The Final Judgment of the District Court was reversed by
10
   Woody has admitted this point multiple times. See e.g, Appellant’s Brief at p. 12–13.
(“…J. Black’s did obtain a finding from the trial court that Woody breached the sublease by
“refusing to acknowledge” J. Black’s exercise of its first extension of the sublease…”).


                                            23
the Amarillo Court of Appeals solely on the issue of whether J. Black’s was ready,

able and willing to perform.      Therefore the Court’s prior ruling that Woody

breached the Sublease remains undisturbed, and Woody should not now be

permitted to challenge the determination of his breach for failure to acknowledge

the extension of the Sublease Agreement on appeal. See City of Houston v. Socony

Mobil Oil Co., 421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967),

writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an

interlocutory summary judgment has been merged, presents an opportunity for an

appeal from the summary judgment. If the appeal results in a reversal on points not

involved in the summary judgment, that portion of the case decided on summary

judgment will not be remanded for a new trial”).

      C.     Woody’s new defense that he did not actually “breach” the
             Sublease, but merely “repudiated” his obligations thereunder, is
             untimely and unsupported by legal authority or the facts of this
             case
      Despite acknowledging that the Court had previously found (and the

Amarillo Court of Appeals affirmed) that Woody had breached the Sublease,

Woody argues the issue should be re-litigated because “the effect of the remand is

to re-open the case in its entirety on all factual issues,” citing Hudson v. Wakefield,

711 S.W.2d 628, 630 (Tex. 1986) and First State Bank of Bishop v. Grebe, 162

S.W.2d 165 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.). As shown




                                          24
above, the Amarillo Court of Appeals did not reverse on the issue of Woody’s

breach and that issue was not reopened for the District Court.

      Even were the issue of breach not already determined by the previous ruling

of the trial court and Amarillo Court of Appeals, however, the determination that

Woody breached the Sublease is still correct because (a) the issue of breach has

been decided as a matter of law and the effect of the district court’s granting each

of the prior Motions for Summary Judgment necessarily precludes the existence of

a material issue of fact; and (b) the Court did not limit its March 25, 2015 Final

Judgment solely to those determinations of breach made in the prior Summary

Judgment Orders. (5 RR 8). As such, even if this Court of Appeals does not deem

the issue of Woody’s breach to have been previously decided and affirmed by the

Courts before, the entirety of the record and evidence –– including the notices of

rejection of the 1st Option Extension, the notices of default for non-existent and

extra-contractual breach and demand for Holdover Rent made by Woody in

October 2009 –– before the trial Court was enough to sustain its finding of breach.

      By rejecting the Sublease’s extension made pursuant to the terms thereunder,

Woody breached the agreement of the parties. Without citation to any relevant

authority or factual record, however, Woody argues that his actions in fact

constituted an “anticipatory repudiation,” and not an “actual” breach of the




                                         25
Sublease. 11 Woody further argues that since J. Black’s determined to ignore the

repudiation and itself continued to perform its obligations under the Sublease, there

was no breach for which specific performance could be ordered. Woody’s

arguments in this regard are substantively without merit.

          In addition to refusing to honor the extension after the necessary time of

performance, Woody also sent demands and notices of default based upon non-

existent and extra-contractual obligations (e.g. bad food quality). These fabricated,

and contractually non-existent, defaults were not simply a contemporaneous

repudiation of the effectiveness of the contract, but were also assertions of

contractual breaches that had no basis in fact or in the contract.

          The parties agreed in the Sublease that certain specific activities (or the

failure to perform certain actions – e.g. timely payment of rent) would constitute

defaults. (15 CR 23–24). With respect to the variety of his claims of default, 12

however, Woody did not assert J. Black’s committed any act that the parties agreed

fit within the Sublease’s frame work for determining a “default,” but rather made

up provisions that were asserted as contractual defaults that are nowhere found in

the Sublease. In doing so, Woody further breached the terms of the Sublease by

asserting claims that were not within the four corners of the instrument and outside

the parties’ agreement.

11
     Woody’s “Anticipatory Repudiation” argument is further refuted in Section II.B.1, below.
12
     See 11CR 108, 144–145 158–159, 171-173; 15CR 8–11, 163–164.


                                                 26
      Thus, by rejecting the continuing effectiveness of the Sublease before,

during and after the time for performance of Woody’s obligations, by demanding

holdover rent, and by asserting that certain factual situations constituted defaults

under the agreement (even though the Sublease contained no such terms) the

district court found that Woody’s acts properly constituted violations of the

Sublease found by the district court.

II.   THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT AWARDING
      SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO J. BLACK’S ON THE
      BASIS OF WOODY’S BREACH.
      As shown above, on appeal, the Amarillo Court of Appeals overruled

Woody’s first three points of error and thereby affirmed this Court’s finding that

Sublease was validly extended and that Woody breached the lease. Then after

having determined that the question of Specific Performance was not moot, the

Court of Appeals reversed and remanded this Court’s decision on the sole issue of

whether J. Black’s had offered proof that it was ready, willing, and able to

perform the Sublease and extension, as would be required for specific

performance. On March 31, 2015, the district court, accounting for the Amarillo

Court of Appeals’ decision, the prior Summary Judgment Orders, and the

evidence before it, correctly determined that specific performance was an

available and equitable remedy and awarded such performance of the Sublease to

J. Black’s.



                                        27
       A.     J. Black’s is entitled to specific performance of the Sublease and
              its extensions because it was ready, willing and able to perform its
              own obligations under the Sublease at all relevant times
       Specific performance is an equitable remedy that may be awarded upon a

showing of breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d

530, 535 (Tex. App.—Dallas 2007, pet. denied). The decision to award J. Black’s

specific performance of the Sublease based on Woody’s breach of contract was an

equitable matter wholly within the trial court’s discretion.                See Roundville

Partners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex. App.—Austin 2003, pet.

denied) (whether to award specific performance is left to trial court’s discretion). 13

A trial court’s award of specific performance is reviewed for an abuse of

discretion, giving deference to the trial court’s decision. Smith v. Dass, Inc.,

283 S.W.3d 537, 542 (Tex. App.—Dallas 2009, no pet.). As an equitable remedy,

this Court should not disturb the trial court’s ruling on specific performance unless

it is arbitrary, unreasonable, and unsupported by guiding rules and principles.

Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 836

(Tex. App.—Dallas         2008,      pet.     denied);     Fitzsimmons        v.    Anthony,

716 S.W.2d 719, 720 (Tex. App.—Corpus Christi 1986, no writ). Woody has


13
   See also Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007,
pet. denied) (equitable remedy of specific performance may be awarded upon showing of breach
of contract); Frank v. Kuhnreich, 546 S.W.2d 844, 848 (Tex. App.—San Antonio 1977, writ
ref’d n.r.e.) (affirming summary judgment awarding plaintiff specific performance of lease upon
proof that default claimed by sublessor had been cured by sublessee within time allowed by
lease).


                                              28
failed to establish an abuse of the trial court’s discretion in awarding specific

performance.

             1.    J. Black’s was Ready, Willing and Able to perform its
                   Obligations under the Sublease
      As noted by the Amarillo Court of Appeals, “to obtain specific

performance, a party must, among other things, plead and prove it was ready,

willing and able to timely perform its obligations under the contract.”         See

DiGiuseppe v. Lawler, 269 S.W.3d 588, 593 (Tex.2008). To do so, “a plaintiff

must show it could have performed its contractual obligations.” Id. (citing

Corzelius v. Oliver, 148 Tex. 76, 220 S.W.2d 632, 635 (1949) (“[T]o be entitled

to specific performance, the plaintiff must show that it has substantially performed

its part of the contract, and that it is able to continue performing its part of the

agreement. The plaintiff’s burden of proving readiness, willingness and ability is a

continuing one that extends to all times relevant to the contract and thereafter”);

see also Henry S. Miller Co. v. Stephens, 587 S.W.2d 491, 492 (Tex.Civ.App.-

Dallas 1979, writ ref’d n.r.e.) (noting a party seeking specific performance must at

all times remain ready, willing and able to perform its contractual responsibilities

according to the terms of the contract).

      The Amarillo Court of Appeals also took note of a recent case decided by

the Tyler Court of Appeals, which determined it was “enough on a seller’s breach

for a purchaser to merely plead readiness, willingness and ability to perform,”


                                           29
when the    movant for summary judgment in that case “stated his readiness,

willingness and ability to perform in his summary judgment affidavit.” Jarvis v.

Peltier, No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, at *20, 2013 WL

1755797 (Tex.App.-Tyler Apr. 24, 2013, n.p.h.) (citing Burford v. Pounders, 145

Tex. 460, 199 S.W.2d 141, 145 (1947).           J. Black’s proof far exceeded that

required by the various Courts of Appeal to address this issue.

      The Affidavit of Sean Fric, a manager of J. Black’s GP, LLC, the general

partner of J. Black’s, L.P., attests that J. Black’s benefits immeasurably from its

downtown location and the brand associations related thereto. (15CR 1199).

While the ability, willingness and readiness of J. Black’s to perform under the

Sublease is not seriously in question, contained in the affidavit of Sean Fric is also

uncontroverted and incontrovertible evidence that J. Black’s was at all times

ready, willing, and able to perform, and did in fact perform, all of its obligations

under the Sublease, including without limitation all obligations to pay all rental

amounts due and owing and to provide all notices of extension under the terms of

the Sublease. (15CR 1199–1120, 1256–1261).

      Further, the district court has repeatedly found, and Woody now freely

admits, that J. Black’s is not now, nor has ever been, in default of its obligations

under the Sublease –– despite the demands of Woody for performance that was

not required, and for the payment of Holdover Rent which would have only been



                                          30
required as a result of wrongful possession after termination of the Sublease.

(15CR 481-631, 636; 11CR 949). As such, J. Black’s is entitled to the grant of

specific performance of the Sublease and its judgment that Woody be compelled

to comply with its obligation to allow J. Black’s to peaceably and quietly maintain

its right to possess and enjoy the Premises thereunder.

             2.     J. Black’s Remedies at Law are inadequate
       The district court found that J. Black’s had an inadequate remedy at law for

Woody’s breach of the Sublease as a prerequisite to its award of specific

performance. (15CR 869; 1005–1006; 1639–1640). This determination was of

course correct insofar as the Sublease granted to J. Black’s a unique interest in real

estate. 14 The Trial Court considered evidence on this issue from Mr. Fric as part of

J. Black’s Fourth Motion for Summary Judgment, who proved that J. Black’s

immeasurably benefits from its location and brand associations related thereto.

(15CR 1199). Although Woody has claimed that J. Black’s could have been made

whole if Woody were permitted to wrongfully and without cause in the Sublease

eject it from the premises and simply pay some amount of lost profits, this

argument overlooks the unique features of agreements for the use and possession

of real estate—location, location, location. See Rus-Ann Dev., Inc. v. ECGC, Inc.,

222 S.W.3d 921, 927 (Tex. App.—Tyler 2007, no pet.) (specific performance is
14
   See In re Hecht, 213 S.W.3d 547, 550 (Tex. Spec. Ct. Rev. 2006) (recognizing "location,
location, location" as the "appropriate axiom" in real estate to "capsulize the core of the
undertaking").


                                            31
more readily available as a remedy for the sale of real estate than for the sale of

personal property because damages are generally believed to be inadequate in

connection with real property). Woody argues (without evidence or any expert

opinion in support) that because there was an operating history for the business,

J. Black’s damages must be calculable. But the existence of an operating history

does not negate the uniqueness of the interest in real estate or make the loss of the

location any less irreparable. See e.g., Frank v. Kuhnreich, 546 S.W.2d 844,848

(Tex. App.—San Antonio 1977, writ ref’d n.r.e.) (affirming summary judgment

awarding plaintiff specific performance of lease upon proof that default claimed by

sublessor had been cured by sublessee within time allowed by lease, but remanding

on issue of calculation of lost profit damage award for same time period and on

cross-issue of whether to award specific performance of subsequent option to

renew).

      The plain fact remains that the Sublease entitles J. Black’s to operate a bar

and restaurant in a very popular entertainment district of Austin, Texas. The

district court below was permitted to find, and did find, that mere damages for lost

profits would not adequately compensate J. Black’s if it were required to suddenly

lose its interest in the Subleased premises or move from this location, where it had

established a successful and well-known business. Specific performance is

therefore warranted because J. Black’s lacked an adequate remedy at law due to the



                                         32
unique nature of this interest in real estate. In addition, Woody’s repeated and

continuing assertions of non-existent and contractually absent breaches of the

Sublease clearly justified the Court’s judicial remedy of specific performance, and

was required to preserve the unique interest in real estate possessed by J. Black’s

by virtue of the terms of the Sublease.

      As such, J. Black’s is entitled to a grant of specific performance of the

Sublease and a judgment that Woody be compelled to comply with its obligation

to allow J. Black’s to peaceably and quietly maintain its right to possess and enjoy

the Premises thereunder.

      B.     Woody’s arguments against the availability of the award of
             specific performance are a school of red herrings.
      Woody attempts to create his own new legal doctrines related to the law of

specific performance, by proffering unsupported arguments and extrapolations

from case law that is inapposite to the facts of this dispute. For example, Woody

asserts, without support, that there exists a “three way distinction between (1) an

actual breach of a performance obligation; (2) an anticipatory repudiation of a

performance obligation; and (3) a legal dispute” in the law related to specific

performance. See Appellant’s Brief, at p. 27. Woody’s arguments that “an order

of specific performance must compel performance by both parties,” and that this

award requires “continuing supervision” of the parties, and/or “deprives Woody of

future rights” are equally unpersuasive. See Appellant’s Brief at p. 31–32, 34.


                                          33
These are simply a remix of arguments Woody has urged without success below,

and this court should not now be swayed by their inclusion again here.

              1.      Woody’s “Three-Way Characterization” finds no support
                      in the record, or in the authority
       The argument that a “legal dispute” does not constitute a breach of a contract

is particularly confusing and unpersuasive with respect to this dispute. Even if

such an argument was not waived by Woody’s failure to raise it before the trial

court, 15 however, it finds no support in any authority cited by Woody, and is a

mischaracterization of the actual breach found multiple times by the district court,

and affirmed by the Court of Appeals.

       Similarly, Woody’s arguments regarding “anticipatory repudiation” and the

district court’s failure to find Woody violated “present performance obligations”

are equally murky and inapplicable. Not only are the cases he cites regarding

anticipatory repudiation and present performance obligations inapposite and

inapplicable to cases related to the award of specific performance, either generally

15
   See Norra v. Harris County, No. 14-05-01211-CV, 2008 WL 564061, *1 (Tex. App.—
Houston [14th Dist.] 2008, no pet.) (although appellant labeled challenge as one to legal
sufficiency, court “conclude[d] that these complaints are not challenges to the legal sufficiency
of the evidence and are instead legal arguments that were not presented to the trial court. As
such, [appellant] has failed to preserve error on these challenges, and we therefore affirm the
judgment of the trial court.”); see also Azad v. Aaron Rents, Inc., No. 14-07-01087-CV, 2009
WL 4842761, *6 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (where appellants’ response to
appellee’s motion for summary judgment focused on different issues than were raised in
appellants’ brief, the appellants’ new challenges were not construed as ones to the legal
sufficiency of evidence and were deemed waived); Tello v. Bank One, N.A., 218 S.W.3d 109,
119 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (appellant’s new legal challenge on appeal,
claiming damages should be offset, was not a challenge to legal sufficiency, and was not
adequately briefed in terms of legal sufficiency, and therefore was waived on appeal).


                                               34
or to this case, but Woody’s undisputed breaches of the Sublease (which he

attempts to characterize as “repudiation”) were never found to be “anticipatory.”

Rather, the evidence upon which the district court relied in fact shows that Woody

rejected the 1st Extension of the Sublease, fabricated non-existent defaults under

the Sublease, and demanded holdover rent after his time for performance of the 1st

Extension (and subsequent extensions) had come. (15CR 17–28, 1254–1255; see

also 15CR 6–79). In fact, Woody’s attempted termination and unabated demand

for holdover rent due to the alleged expiration of the original term has itself never

been repudiated or withdrawn, imperiling the current viability of the Sublease and

requiring the Court’s award and enforcement to protect J. Black’s’ continuing

rights. While Woody attempts to make much of his failure to physically expel

J. Black’s from the location, the fact that Woody refused to acknowledge the

extension, asserted multiple factually and contractually non-existent defaults and

demanded holdover rent are no less breaches.

             2.    Woody’s claim that the decree of specific performance lacks
                   a “mutuality of remedy” is incorrect
      To the extent Woody would argue J. Black’s be deprived of specific

performance on the basis that there is no “mutuality of remedy,” or complains that

the Judgment entered by the District Court does not “compel performance by both

parties” under the Sublease and its extension terms, Woody is plainly wrong.

Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92, 97 (Tex. 1968)


                                         35
(where buyer of real estate timely communicated its unconditional exercise of

option to purchase, it was entitled to specific performance of option by seller);

Parson v. Wolfe, 676 S.W.2d 689, 692 (Tex. App.—Amarillo 1984, no writ) (in

contract for sale of real property, sellers had option to perform or pay damages;

thus, there was no lack of mutuality of remedies to bar specific enforcement);

Miller v. Compton, 185 S.W.2d 754, 757 (Tex. Civ. App.—Eastland 1945, no writ)

(option to purchase contained in lease agreement is not subject to attack on ground

that it lacks elements of a binding contract; right conferred thereby may be

enforced by suit for specific performance to compel seller to execute a conveyance

to tenant); San Antonio Joint Stock Land Bank v. Malcher,164 S.W.2d 197, 200

(Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) (where optionee tendered

money for purchase of realty and optionor refused to accept the tender, optionee

was entitled to specific performance).       The case cited by Woody to prove

otherwise, E.M. Goodwin, Inc. v. Stuart,52 S.W.2d 311, 314 (Tex. Civ. App.—San

Antonio 1932), writ granted (Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632

(Comm'n App. 1935), is completely inapposite, because the Court in E.M.

Goodwin simply refused to uphold specific performance when the contract

required on the one hand the personal services of one of the parties, which personal

services can never be compelled by specific performance because the amount to

indentured servitude.



                                        36
      Here, J. Black’s is merely asking for the performance of a Sublease for real

property, which is entirely capable of performance by each party upon order of the

Court. The extension of the Sublease is only one aspect of performance, which

merely extends the term of the Sublease, but continues all of the mutual obligations

of the parties to it. These further obligations remain mutual and interdependent.

Woody’s remedies for any future breach by J. Black’s under the Sublease (which

this Court has determined did not previously exist) remain, and the argument that

there is lack of mutuality related to the extension fails to contemplate that the

Sublease as a whole contains mutual obligations which have not been eradicated

by the granting of specific performance.

               3.      The grant of specific performance does not require
                       “continuous supervision” of the parties.
      The equitable remedy of specific performance by its very nature operates to

compel a party violating a duty under a valid contract to comply with its

obligations.        S. Plains Switching, Ltd. v. BNSF Ry., 255 S.W.3d 690, 703

(Tex.App.-Amarillo 2008, pet. denied). By its grant of specific performance, the

district court required Woody to treat J. Black’s as a tenant in good standing, allow

it to peacefully exist in the subleased space pursuant to the terms of the Sublease as

executed, and not continuously demand holdover rent at an increased rate. Thus,

there were obligations of Woody to be “specifically performed” under the

agreement. The fact that the Sublease contains more than a single responsibility


                                           37
Woody is obliged to uphold over the course of the term of the Sublease and its

extensions should not prohibit the Court from ordering its performance, nor does it

require any onerous supervision on this Court’s behalf. In fact, so long as the

parties comply with the obligations in the Sublease as they originally agreed to do,

this Court’s involvement should no longer be required at all.

                4.     The decree of specific performance does not deprive Woody
                       of rights under the Sublease

         Woody makes the unsupported allegation that a decree of specific

performance of the Sublease might somehow “deprive Woody of future contractual

rights under the sublease that might arise on J. Black’s defective future

performance or non-performance under the sublease.” 16 Woody cites a century-old

case, Redwine v. Hudman, for this proposition, but Redwine is clearly inapposite to

the facts at issue in this suit. See 104 Tex. 21, 26, 133 S.W. 426, 429 (1911). In

Redwine, the Supreme Court declared it could not decree specific performance of

an option contract, because it could not compel the performance of a contract to

sell real property on the basis that the non-performing party had the contractual

right to make an election of how to perform the contract. In this case, Woody has

no election of whether to perform its obligations under the Sublease for so long as

J. Black’s exercises its sole discretion to extend the terms of the Sublease, and

therefore, the Court can and should decree the specific performance of Woody’s

16
     See Plaintiff’s Motion for Summary Judgment, at ¶ 6.


                                                38
obligations under the Sublease and its extensions. Further, as set forth above in

sections B(2) and B(3) for so long as the terms of the Sublease are in existence,

Woody will maintain all of his rights thereunder.

III.   WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED SUMMARY
       JUDGMENT EVIDENCE AND THE EXCLUSION OF A PORTION OF HIS OWN
       AFFIDAVIT IS SPURIOUS
       This Court will review a trial court's ruling sustaining or overruling

objections to summary judgment evidence for an abuse of discretion. Garner v.

Fidelity Bank, N.A., 244 S.W.3d 855, 859 (Tex.App.–Dallas 2008, no pet.); Bd. of

Trustees of Fire and Police Retiree Health Fund v. Towers, Perrin, Forster &

Crosby, Inc., 191 S.W.3d 185, 192–93 (Tex.App.–San Antonio 2005, pet. denied).

Woody complains that the district court abused its discretion in accepting and

considering the testimony of Sean Fric, a manager of the general partner in the

entities that operate and control the business of J. Black’s with knowledge of

J. Black’s business, and asks this Court to find error with the decision to overrule

Woody’s objection thereto. (15CR 1288–1291, 1613–1616, 1639). Woody is

incorrect, as the affidavit of Mr. Fric was competent evidence of J. Black’s

readiness, willingness, and ability to perform its obligations under the Sublease,

and such evidence as was offered by Mr. Fric has been repeatedly found sufficient

to prove the prerequisite conditions to the award of specific performance.




                                         39
      A.     The District Court Correctly Overruled Woody’s Objections to
             J. Black’s Summary Judgment Evidence
      To determine whether a trial court abused its discretion, this Court must find

the trial court acted without reference to any guiding rules or principles; in other

words, whether the act of the trial court was arbitrary or unreasonable. Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985). Woody

attempts to challenge the affidavit testimony of Sean Fric by arguing about the

quantum of the evidence provided about willingness and ability of J. Black’s to

perform under the Sublease. Woody suggests that J. Black’s could have provided

more evidence of ability to perform by providing bank account statements and

other operating history, but J. Black’s was not required to provide such evidence to

demonstrate the effectively undisputed fact that it was ready and able to perform its

obligations under the Sublease and did exactly that. Mr. Fric’s affidavit provides

sufficient factual certainty to the determination that J. Black’s was financially

capable to perform, and as referenced in other portions of Woody’s briefing, did

perform the Sublease through and past the first extension of it.

      Simply put, the evidence proffered by J. Black’s to show it was ready, able,

and willing to perform its obligations under the contract, and that J. Black’s lacked

adequate remedy at law, has been found sufficient in analogous cases. See

Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559, 575 at fn 6 (Tex.

App.—Fort Worth 2008, pet. denied) (obligor averred additional funds were


                                         40
available   to   supplement     pre-payment     penalty);    Jarvis   v.   Peltier,

400 S.W.3d 644, 654 (Tex. App.—Tyler 2013), review denied (Aug. 30,

2013)(evidence sufficient for award of specific performance when movant for

summary judgment stated he was “ready, able and willing” to perform and

“included this language in his first amended petition, in his motion for summary

judgment, and in his affidavit submitted as summary judgment evidence”). As

such, Woody’s point of error number 2 should be overruled.

      B.    The District Court correctly excluded the February 4, 2015
            Affidavit of Bob E. Woody, and its exclusion was not material to
            the award of specific performance in this Case
      Woody further complains that the district court struck paragraph 3 of Bob E.

Woody’s February 4, 2015 affidavit (“Woody’s February 2015 Affidavit”). In

addition to having been filed after the 21-day notice required for affirmative

evidence in support of Woody’s own Motion for Summary Judgment, Woody’s

February 2015 Affidavit’s statements to the effect that he had, as of February 4,

2015, “accepted, acknowledged and agreed” that J. Black’s “timely exercised its

third option to extend the Sublease” was a declaration of his own mental state, and

inappropriate, self-serving and conclusory testimony made by an interested

witness, and was therefore properly struck. See e.g., Hayes v. E.TS. Enterprises,

Inc., 809 S.W.2d 652, 657 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991).

(15CR 1270, 1610-1612).



                                        41
       In addition to being an improper attempt to introduce incontrovertible

testimony of “mental workings of an individual’s mind,” Woody fails to show

how the excluded testimony from paragraph 3 of his February 2015 Affidavit was

material to any of the dispositive issues on this case and “probably caused the

rendition of an improper judgment,” as is required to show the district court

abused its discretion. See e.g, Perez v. Williams, 01-14-00504-CV, 2015 WL

5076294, at *11 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.), citing

Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618, 632 (Tex. App.—Houston [1st

Dist.] 2013, no pet.). The single statement by Woody that he had accepted,

acknowledged, and agreed that the 3rd Extension Option had been exercised –– in

addition to being a complete contradiction of his repeated acts in breach of the

parties’ agreement throughout five years of legal maneuvering –– does not

counteract or in any way cure his prior and continuing breaches of the Sublease or

vitiate the need and availability of the award of specific performance and

attorney’s fees). The exclusion was therefore proper, and not an abuse of the

district court’s discretion.




                                        42
IV.   J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER ATTORNEY’S
      FEES AS THE PREVAILING PARTY IN A BREACH OF CONTRACT CASE UNDER
      CPRC § 38.001.

      A.     The Law permits the award of fees under Chapter 38 upon the
             award of specific performance

      Woody claims that J. Black’s is not entitled to recover its attorney’s fees

under Texas Civil Practice and Remedies Code § 38.001, despite J. Black’s having

fully prevailed on a breach of contract claim, because the affirmative relief

awarded to J. Black’s was specific performance rather than monetary damages.

Like the other arguments that Woody has made over several years of this dispute,

Woody’s argument is legally untenable. The award of fees to J. Black’s must be

affirmed.

      Chapter 38 of the Texas Civil Practices and Remedies Code provides that a

“prevailing party” may recover its attorneys’ fees in a suit based upon breach of

contract. See Tex. Civ. Prac. & Rem. Code § 38.001(8) (allowing recovery of

attorney’s fees “in addition to the amount of a valid claim” for breach of contract).

The law is clear that a “valid claim” for purposes of Section 38.001(8) includes a

claim for specific performance. See Jones v. Kelley, 614 S.W.2d 95, 96, 100-01

(Tex. 1981) (awarding attorney’s fees under predecessor statute to section 38.001

in suit for specific performance of earnest money contract); See also Albataineh v.

Eshtehardi, 01-12-00671-CV, 2013 WL 1858864, at *2 (Tex. App.—Houston [1st

Dist.] May 2, 2013, no pet.) (“A judgment requiring specific performance of a


                                         43
material contract right can support an award of attorney's fees”); Rasmusson v.

LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th District]

2003, pet. denied) (where party sought attorney’s fees in addition to claim for

specific performance, its failure to recover other money damages did not preclude

award of attorney’s fees). Because J. Black’s prevailed on its breach of contract

claim against Woody, it is entitled to recover its attorney’s fees –– in the amount

stipulated to by the parties and awarded in the Final Judgment, in addition to the

additional and necessary attorneys fee accrued in further litigating this case upon

remand and to protect the Final Judgment during the pendency of this second

appeal –– pursuant to Section 38.001.

                                      PRAYER

      Based on the foregoing, Appellees J. Blacks, L.P. and J. Black’s G.P.,

L.L.C. respectfully pray that this Court overrule each of the issues presented by

Appellant Bob E. Woody, and, on that basis, affirm the relief awarded by the trial

court in its entirety, specifically including (1) the trial court’s grant of J. Black’s

Motion for Summary Judgment and its denial of the Appellants’ Motion for

Summary Judgment; and (2) the specific performance, attorney’s fees, and interest

awarded to J. Black’s in the Final Judgment.




                                          44
      Appellees further pray that this Court tax all costs against Appellants, in this

Court and below, and award Appellees any such other relief at law or equity to

which they may be justly entitled. Tex. R. App. P. 43.4; Tex. R. Civ. P. 139.


                                       Respectfully submitted,


                                       By:    /s/ Eric J. Taube
                                              Eric J. Taube
                                              State Bar No. 19679350
                                              etaube@taubesummers.com
                                              Andrew P. Vickers
                                              State Bar No. 24084021
                                              avickers@taubesummers.com
                                              100 Congress Avenue, Suite 1800
                                              Austin, Texas 78701
                                              Telephone: (512) 472-5997
                                              Telecopier: (512) 472-5248

                                       ATTORNEYS FOR APPELLEES


                      CERTIFICATE OF COMPLIANCE
       I hereby certify that this Appellees’ Brief complies with the typeface
requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a
conventional typeface no smaller than 14-point for text and 12-point for footnotes.
This document also complies with the word-count limitations of Tex. R. App.
P. 9.4(i)(2)(B). According to the word count tool of the computer program used to
prepare this document, this Brief contains 11,093 words, excluding any parts
exempted by Tex. R. App. P. 9.4(i)(1).


                                       /s/ Eric J. Taube
                                       Eric J. Taube




                                         45
                          CERTIFICATE OF SERVICE
      Pursuant to the Texas Rules of Appellate Procedure and Local Rule 4(d), a
true and correct copy of the foregoing was served, via e-filing and via email on
counsel listed below, on the 18th day of December, 2015.

         Tom C. McCall
         tmccall@themccallfirm.com
         David B. McCall
         dmccall@themccallfirm.com
         THE MCCALL FIRM
         3660 Stoneridge Road, Suite F-102
         Austin, TX 78746-7759
         Telephone: (512) 477-4242
         Telecopier: (512) 477-2271

         Jeremy J. Gaston
         jgaston@hmgllp.com
         HAWASH, MEADE & GASTON LLP
         1221 McKinney Street, Suite 3150
         Houston, TX 77010-2034
         Telephone: (713) 658-9007
         Telecopier: (713) 658-9011

         Hector H. Cárdenas, Jr.
         hcardenas@cardenas-law.com
         THE CÁRDENAS LAW FIRM
         2600 Via Fortuna, Suite 200
         Austin, TX 78746
         Telephone: (512) 477-4242
         Telecopier: (512) 477-2271


                                                     /s/ Eric J. Taube
                                              Eric J. Taube
                                              etaube@taubesummers.com




7440-2\00546688.001                      46
AUTHORITIES
Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013)
2013 WL 1858864

                                                                    the restrictive covenant is of value, and affords a recovery of
                                                                    attorney's fees to the aggrieved partner as a prevailing party.
                  2013 WL 1858864
                                                                    We affirm.
    Only the Westlaw citation is currently available.

          SEE TX R RAP RULE 47.2 FOR
    DESIGNATION AND SIGNING OF OPINIONS.                                                     Background
              MEMORANDUM OPINION                                    Hossein Eshtehardi and Mohamed Albataineh were partners
               Court of Appeals of Texas,                           in operating the Joy of Houston Sports Bar, a sexually
                 Houston (1st Dist.).                               oriented business. To comply with a Harris County regulation
                                                                    prohibiting sexually oriented businesses from operating
        Mohamed ALBATAINEH, Appellant
                                                                    within 1,500 feet of a residence, they purchased a nearby
                         v.
                                                                    property specifically to prevent it from becoming a residence.
    Hossein M. ESHTEHARDI, JK & HE Business,
   LLC d/b/a Joy of Houston Sports Bar, Appellees.                  In December 2010, the partners had a falling out. As part
                                                                    of a buy-out settlement agreement, Albataineh received title
        No. 01–12–00671–CV.            |   May 2, 2013.
                                                                    to the property. Eshtehardi formed JK & HE Business,
On Appeal from the 80 District Court, Harris County, Texas,         LLC to run the club. In their “Transfer and Settlement
Trial Court Cause No.2011–51347.                                    Agreement” the parties prohibited the use of the property
                                                                    as a residence, because the club's continued operation under
Attorneys and Law Firms                                             Harris County regulations depended upon this restriction.
                                                                    A special warranty deed transferring the property contained
Adolph R. Guerra Jr., for Mohamed Albataineh.                       a restrictive covenant to the same effect. In May 2011,
                                                                    Albataineh leased the property to Michael Leo. The lease
Casey Todd Wallace, Benjamin Allen, for Hossein M.
                                                                    agreement expressly required that Leo use the property for
Eshtehardi, JK & HE Business, LLC d/b/a Joy of Houston
                                                                    residential purposes only. Eshtehardi and the corporation he
Sports Bar.
                                                                    formed sued Albataineh for breach of the agreement and
Panel consists of Justices JENNINGS, BLAND, and                     restrictive covenant.
MASSENGALE.


                                                                                              Discussion
               MEMORANDUM OPINION
                                                                    Standard of Review
JANE BLAND, Justice.                                                We review a trial court's award of attorney's fees based on
                                                                    breach of contract for an abuse of discretion. Weaver v.
 *1 In this restrictive covenant case, a partner in a strip
                                                                    Jamar, 383 S.W.3d 805, 813 (Tex.App.-Houston [14th Dist.]
club venture sued his former partner, later ousted from
                                                                    2012, no pet. h.). The test for an abuse of discretion is whether
the business, for breach of a settlement agreement and for
                                                                    the trial court's decision was arbitrary or unreasonable. Id.
declaratory and injunctive relief. After a bench trial, the trial
court found a breach of the agreement. The breach arose
from the former partner's violation of a restrictive covenant
prohibiting residential use of property near the strip club,                                   Analysis
property that had been parceled out to the former partner in
                                                                    Albataineh contends that Eshtehardi could not recover
the settlement agreement. Although the trial court awarded no
                                                                    attorney's fees under section 38.001(8) of the Texas Civil
money damages, it enjoined the ousted partner from using the
                                                                    Practice and Remedies Code, because Eshtehardi did not
property as a residence, and it awarded the aggrieved partner
                                                                    recover monetary damages. Section 38.001(8) provides for
$119,000 in attorney's fees. On appeal, the ousted partner
                                                                    the recovery of reasonable attorney's fees in a claim on an
challenges the award of attorney's fees. We conclude that the
                                                                    oral or written contract “in addition to the amount of a
trial court's injunctive relief requiring specific performance of
                                                                    valid claim and costs.”TEX. CIV. PRAC. & REM.CODE


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               1
Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013)
2013 WL 1858864

ANN. § 38.001(8) (West 2008). A “Valid claim” under
                                                                     Eshtehardi obtained a permanent injunction prohibiting
section 38.001(8) is not limited to a claim for monetary
                                                                     Albataineh from using the property as a residence—an award
damages. Butler v. Arrow Mirror & Glass, 51 S.W.3d 787,
                                                                     of specific performance of the parties' settlement agreement
797 (Tex.App.-Houston [1st Dist.] 2001, no pet.). Instead,
                                                                     and of the restrictive covenant in the special warranty
it includes any claims for which the party recovers “at least
                                                                     deed. The trial court heard evidence that the injunction was
something of value.” Id. (quoting Rogers v. RAB Ins., Ltd.,
                                                                     necessary, because enforcement of the restrictive covenant
816 S.W.2d 543, 551 (Tex.App.-Dallas 1991, no writ)). An
                                                                     has intrinsic value to Eshtehardi's continuing business
award of an injunction to enforce specific performance under
                                                                     operations. A judgment requiring specific performance of a
a contract is something of value. Id. (holding that injunction
                                                                     material contract right can support an award of attorney's fees.
enforcing covenant not to compete was something of value);
                                                                     See Butler, 51 S.W.3d at 797.
Williams v. Compressor Eng'g Corp., 704 S.W.2d 469, 474
(Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e) (same);
                                                                     Accordingly, we hold that the trial court did not abuse its
Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287
                                                                     discretion in awarding attorney's fees under section 38.001(8)
(Tex.App.-Houston [14th Dist.] 2003, pet. denied) (holding
                                                                     of the Texas Civil Practice and Remedies Code. See Butler,
that award of specific performance permitted recovery of
                                                                     51 S.W.3d at 797.
attorney's fees under section 38.001).

 *2 Albataineh contends, citing MBM Financial Corporation
v. Woodlands Operating Company, L.P., that money damages                                      Conclusion
in particular are required to recover attorney's fees under
section 38.001. 292 S.W.3d 660, 670 (Tex.2009).MBM                   We affirm the judgment of the trial court.
Financial held that “a client must gain something before
attorney's fees can be awarded.”Id. at 663.It does not stand
                                                                     All Citations
for the proposition that injunctive relief awarding specific
performance precludes the recovery of attorney's fees under          Not Reported in S.W.3d, 2013 WL 1858864
chapter 38. See id. at 670.

End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                2
Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)
48 Tex. Sup. Ct. J. 474

                                                                         fees in insurer's declaratory judgment action; the
                                                                         controversy remained live because a finding of
     KeyCite Yellow Flag - Negative Treatment                            a duty to defend would necessitate a remand to
Disagreed With by ACMAT Corp. v. Greater New York Mut. Ins. Co.,
                                                                         the trial court to consider an award of attorney
 Conn.,   May 29, 2007
                                                                         fees. V.T.C.A., Civil Practice & Remedies Code
                     159 S.W.3d 640                                      § 37.009.
                 Supreme Court of Texas.
                                                                         44 Cases that cite this headnote
   ALLSTATE INSURANCE COMPANY, Petitioner,
                    v.                                             [2]   Action
         Ruth HALLMAN, Respondent.                                            Moot, Hypothetical or Abstract Questions
                                                                         A case becomes moot if a controversy ceases
           No. 03–0957. | Argued Oct. 20,
                                                                         to exist or the parties lack a legally cognizable
          2004. | Decided March 11, 2005.
                                                                         interest in the outcome.
Synopsis
                                                                         57 Cases that cite this headnote
Background: Homeowners' insurer brought action against
insured for declaratory judgment that policy did not
cover her liability to neighbors for property damage and           [3]   Insurance
bodily injury caused by limestone mining companies that                      Pleadings
leased property from insured. Insured counterclaimed for                 To determine liability insurer's duty to defend,
declaratory judgment. The 86th Judicial District Court,                  courts look at the allegations in the pleadings and
Kaufman County, Glen M. Ashworth, J., entered summary                    the insurance policy's language.
judgment in favor of insurer, but denied requests for attorney
fees. Insured appealed. The Dallas Court of Appeals, Wright,             6 Cases that cite this headnote
J., 114 S.W.3d 656, reversed and remanded. Insurer's petition
for review was granted.
                                                                   [4]   Insurance
                                                                             Pleadings
                                                                         If the pleadings do not allege facts within the
[Holding:] The Supreme Court, Jefferson, C.J., held as a                 scope of the policy's coverage, a liability insurer
matter of first impression that the insured's lease of her               does not have a duty to defend.
property for limestone mining was a “business pursuit”
within the meaning of business pursuits exclusion of liability           8 Cases that cite this headnote
coverage.
                                                                   [5]   Insurance
                                                                             Pleadings
Reversed and rendered.
                                                                         In the event of an ambiguity, courts construe the
                                                                         pleadings liberally in the suit against the insured,
                                                                         resolving any doubt in favor of coverage and the
 West Headnotes (7)                                                      liability insurer's duty to defend.

                                                                         11 Cases that cite this headnote
 [1]     Declaratory Judgment
             Appeal and Error
         Judgment for insured in underlying tort suit for          [6]   Insurance
         which liability insurer had provided defense did                    Business Pursuits
         not render moot a determination whether the                     The “business pursuits” inquiry as an exception
         insurer owed a duty to defend and indemnify the                 to liability coverage involves two elements: (1)
         insured, where she continued to seek attorney                   continuity or regularity of the activity, and (2) a



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             1
Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)
48 Tex. Sup. Ct. J. 474

        profit motive, usually as a means of livelihood,      mining on her property. Hallman sought coverage under her
        gainful employment, earning a living, procuring       homeowners insurance policy (“the policy”) with Allstate
        subsistence or financial gain, a commercial           Insurance Company (“Allstate”), requesting that Allstate
        transaction or engagement; the profit need not        defend and indemnify her in the lawsuit. Allstate and Hallman
        be realized since the issue is the expectation or     both sought a declaratory judgment to determine whether
        anticipation for profit in the future and business    the policy covered the underlying litigation. The trial court
        ventures often result in a loss.                      granted summary judgment in Allstate's favor. The court of
                                                              appeals reversed the trial court's judgment and remanded
        6 Cases that cite this headnote                       for further proceedings, holding that Allstate had a duty
                                                              to defend and indemnify Hallman in the limestone mining
 [7]    Insurance                                             litigation. 114 S.W.3d 656, 663. Because we conclude that
            Business Pursuits                                 damages to third parties caused by commercial limestone
                                                              mining conducted on an insured's property fall within the
        Insured's lease of her property for limestone
                                                              policy's business pursuits exclusion, we reverse the court of
        mining was a “business pursuit” within the
                                                              appeals' judgment and render judgment for Allstate.
        meaning of business pursuits exclusion of
        liability coverage in homeowners' insurance
        policy; although the insured executed only
        one lease, she was perpetually engaged in the                                       I
        continuous act of leasing her property to the
        mining company until the lease expired, and
                                                                                      Background
        even though the pleadings in the neighbors' suit
        against the insured did not contain any reference     In 1995, Hallman leased property she owns in rural Kaufman
        to a pecuniary interest in the lease or expound on    County to Norton Crushing, Inc. (“Norton”) for limestone
        insured's motive for leasing her property, a profit
                                                              mining. 1 In 1996, neighboring landowners sued Hallman,
        motive could be inferred from the nature of the
                                                              Norton, and all subcontractors involved in the mining project,
        activity.
                                                              alleging that the blasting from the mining damaged their
        13 Cases that cite this headnote                      property and their health. Hallman filed a claim under
                                                              the policy requesting defense and indemnification. Allstate
                                                              agreed to defend Hallman under a reservation of rights but
                                                              filed this declaratory judgment action seeking a determination
                                                              that Hallman's claim was not covered under the policy's terms.
Attorneys and Law Firms
                                                              Hallman counterclaimed seeking a declaration that Allstate
*641 Roy L. Stacy, Pamela J. Touchstone, Stacy & Condor,      had a duty to defend and indemnify her in the underlying
LLP, Dallas, for Petitioner.                                  litigation. Both parties sought attorney's fees.

David Taubenfeld, Erika Lea Blomquist, Matthew Scott          Allstate moved for summary judgment, arguing that the
Carol, Charles George Orr, Haynes and Boone, LLP, Dallas,     injuries and damages relating to the limestone mining did
for Respondent.                                               not constitute an “occurrence” as required for coverage under
                                                              the policy, and alternatively, that the mining operations were
Opinion
                                                              excepted from coverage under the policy's business *642
Chief Justice JEFFERSON delivered the opinion of the Court.   pursuits exclusion. Hallman moved for partial summary
                                                              judgment, asserting that she was entitled to a defense because
In this case we must determine whether, under a homeowners    her neighbors' allegations constituted an “occurrence” as
insurance policy's terms, an insurer has a duty to defend     defined in the policy. The trial court granted Allstate's
and indemnify an insured's potential liability for damages    motion, denied Hallman's, and denied both parties' requests
resulting from limestone mining operations conducted on       for attorney's fees. The court of appeals reversed, concluding
the insured's property. Neighboring property owners sued      that the policy covered Hallman's claim because: (1) the
Ruth Hallman (“Hallman”) for damages related to limestone     mining damages constituted an “occurrence,” and (2) the



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       2
Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)
48 Tex. Sup. Ct. J. 474

business pursuits exclusion did not apply. 114 S.W.3d at 663.     The Texas Employment Commission appealed, arguing that
The court of appeals remanded the attorney's fees issue to        the amendment rendered the case moot. Id. The farm workers
the trial court for further proceedings. Id. at 663–64. We        cross-appealed, contesting the denial of attorney's fees. Id.
granted Allstate's petition for review to determine whether the   The court of appeals held that the case was moot and that
policy covers potential liability for damages from commercial     attorney's fees were barred by sovereign immunity. Id. at 150–
limestone mining. 47 Tex. Sup.Ct. J. 753 (July 2, 2004).          151. We disagreed, holding:

During oral argument before this Court, the parties announced                   Clearly, a controversy exists between
that the underlying lawsuit between Hallman and her                             the farm workers and TEC. The “live”
neighbors had recently concluded with a jury verdict                            issue in controversy is whether or
in Hallman's favor. Allstate provided Hallman with a                            not the farm workers have a legally
defense throughout the trial and does not intend to seek                        cognizable interest in recovering their
reimbursement for the defense costs.                                            attorney's fees and costs. The fact
                                                                                that the Legislature wisely undertook
                                                                                action to bring the farm workers
                                                                                within the scope of TUCA does not
                              II                                                moot or void the workers' interest in
                                                                                obtaining attorneys *643 fees and
                          Mootness                                              costs for the successful disposition of
                                                                                their claim. Contrary to the court of
 [1] As a preliminary matter, we must consider whether the                      appeals' suggestion, the attorney's fees
conclusion of the underlying litigation renders this case moot.                 issue need not be severed in order to
The main issue here is whether Allstate has a duty to defend                    be considered; it is an integral part of
and indemnify Hallman in the mining litigation. Allstate,                       the farm workers' claim and as such
however, has already provided the requested defense, for                        breathes life into the appeal. Due to
which it will not seek reimbursement. Additionally, because                     the existence of the “live” issue of
Hallman was not found liable at trial, there is nothing for                     attorney's fees and costs, we hold that
Allstate to indemnify. Nevertheless, both parties maintain that                 the suit was not moot.
a justiciable controversy remains because Hallman continues
to seek an award of attorney's fees for expenses incurred in      Id. at 151.
defending against Allstate's declaratory judgment action and
in pursuing her own declaratory relief.                           Similarly, Hallman's remaining interest in obtaining
                                                                  attorney's fees “breathes life” into this appeal and prevents
 [2] We agree with the parties that this case is not              it from being moot. See id. The parties correctly point
moot. A case becomes moot if a controversy ceases to              out that in order to resolve the attorney's fees dispute,
exist or the parties lack a legally cognizable interest           we must first determine whether Allstate had a duty to
in the outcome. Bd. of Adjustment of San Antonio v.               defend and indemnify under the policy. In a declaratory
Wende, 92 S.W.3d 424, 427 (Tex.2002). In Camarena                 judgment proceeding, the trial court has the discretion to
v. Texas Employment Commission, 754 S.W.2d 149, 151               award “equitable and just” attorney's fees. Tex. Civ. Prac.
(Tex.1988), we held that a dispute over attorneys fees is a       & Rem.Code § 37.009. Here, the trial court, having found
live controversy. In that declaratory judgment action, farm       against Hallman on the coverage issue, also denied her
workers sued to challenge the constitutionality of the Texas      request for attorney's fees. Because the court of appeals found
Unemployment Compensation Act's (“TUCA”) agricultural             that Hallman prevailed on the coverage issue, it remanded
exemption. Id. at 150. The trial court held that the act          the attorney's fees question to the trial court. 114 S.W.3d
was unconstitutional but found that sovereign immunity            at 663–64. Our decision in this case will resolve whether
barred the farm workers' request for attorney's fees. Id. Four    Allstate had a duty to defend. The controversy is live because
months later, the Legislature amended the TUCA, rectifying        an affirmative answer would necessitate a remand to the
the offending provision. Id. Consequently, the trial court        trial court to consider whether an award of attorney's fees is
modified its judgment, holding that the amended act was           appropriate in light of the changed status of prevailing parties.
constitutional and enjoining the former act's enforcement. Id.


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              3
Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)
48 Tex. Sup. Ct. J. 474

Accordingly, we will address the merits of this coverage         or financial gain, a commercial transaction or engagement.”
dispute.                                                         Id. at 780 (citations omitted). Regarding the second element,
                                                                 the court further noted: “The profit need not be realized—the
                                                                 issue is the expectation or anticipation for profit in the future
                                                                 —since often business ventures result in a loss.” Id.
                             III

                                                             Most jurisdictions follow similar versions of this two-part
                          Discussion                         inquiry when construing business pursuits exclusions. See,
                                                             e.g., Sun Alliance Ins. Co. of P.R., Inc. v. Soto, 836 F.2d
 [3] [4] [5] To determine an insurer's duty to defend, we 834, 836 (3d Cir.1988); Stuart v. Am. States Ins. Co. 134
look at the allegations in the pleadings and the insurance   Wash.2d 814, 953 P.2d 462, 465 (1998); Frankenmuth Mut.
policy's language. Nat'l Union Fire Ins. Co. of Pittsburgh,  Ins. Co. v. Kompus, 135 Mich.App. 667, 354 N.W.2d 303,
Pa. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141   307–308 (1984); see also Lee R. Russ & Thomas F. Segalla,
(Tex.1997); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co.,  Couch on Insurance § 128:13 (3d ed. 1997 & Supp.2004). A
387 S.W.2d 22, 24 (Tex.1965). If the pleadings do not allege few jurisdictions, however, limit the exclusion's application
facts within the scope of the policy's coverage, an insurer
                                                             to those activities that constitute an insured's principal
does not have a duty to defend. Am. Physicians Ins. Exch. v.
                                                             occupation. See, e.g., Brown v. Peninsular Fire Ins. Co., 171
Garcia, 876 S.W.2d 842, 848 (Tex.1994). However, in the
                                                             Ga.App. 507, 320 S.E.2d 208, 209 (1984); Asbury v. Ind.
event of an ambiguity, we construe the pleadings liberally,  Union Mut. Ins. Co., 441 N.E.2d 232, 239 (Ind.Ct.App.1982).
resolving any doubt in favor of coverage. Merchs. Fast Motor
                                                             Because the policy's definition of business as “including
Lines, Inc., 939 S.W.2d at 141; Heyden Newport Chem.
                                                             trade, profession or occupation” encompasses more than
Corp., 387 S.W.2d at 26.                                     an insured's primary occupation, we conclude that the
                                                             majority approach more accurately describes the exclusion's
Under the terms of the policy, Allstate has a duty to defend
                                                             parameters. Accordingly, we adopt the two-part standard
Hallman against a suit alleging damages caused by an
                                                             articulated in Pennington for determining whether a claim
“occurrence.” However, the policy specifically excludes from
                                                             is excluded from coverage under the business pursuits
coverage: “bodily injury or property damage arising out of
                                                             exclusion. See Pennington, 810 S.W.2d at 780.
or in connection with a business engaged in by an insured.
But this exclusion does not apply to activities which are
                                                              [7] Applying the Pennington standard, the court of appeals
ordinarily incidental to non-business pursuits.” “Business”
                                                             concluded that the underlying petition did not allege
is defined as “includ[ing] trade, profession or occupation.”
                                                             continuity of activity because Hallman entered into only one
Allstate argues that Hallman's claim is barred from coverage
                                                             lease agreement, which was executed nearly ten years ago.
under this business pursuits exclusion.
                                                             114 S.W.3d at 662. The court further noted the petition's
                                                             failure to allege that Hallman leased her property as a means
 [6] Although the business pursuits exclusion is a fairly
                                                             of livelihood, or earning a living, or that her principal business
common provision of insurance policies, we have never
                                                             was leasing property. Id. Based on these conclusions, the
directly addressed its application. 2 The parties and the    court of appeals held that the business pursuits exclusion did
court of appeals relied on the standard set forth by the San not apply to Hallman's claim. See id. at 662–63.
Antonio Court of Appeals in United Services Automobile
Ass'n v. Pennington, 810 S.W.2d 777, 778–80 (Tex.App.-       We disagree. By narrowly limiting its focus to Hallman's
San Antonio 1991, writ denied), a case involving a business  initial execution of the lease, the court of appeals
pursuits exclusion provision substantially *644 identical    misconstrued the nature of commercial leasing activity. The
to the one here. The Pennington court, after reviewing       pleadings establish that the mining activity conducted on
the dictionary definitions of “trade,” “profession,” and     Hallman's property pursuant to the lease began in 1995, was
“occupation,” as well as case law from other jurisdictions,  ongoing at the time the plaintiffs initiated their suit in 1996,
defined the “business pursuits” inquiry as involving two     and remained ongoing at the time the plaintiffs filed their
elements: “(1) continuity or regularity of the activity, and sixth amended petition in 2001. Although Hallman executed
(2) a profit motive, usually as a means of livelihood,       only one lease, until that lease expires, she is perpetually
gainful employment, earning a living, procuring subsistence  engaged in the continuous act of leasing her property to the



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             4
Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)
48 Tex. Sup. Ct. J. 474

                                                                        Furthermore, as numerous courts have recognized, the
mining company. Thus, the limestone mining lease meets the
                                                                        purpose of the business pursuits exclusion is to lower
continuity requirement of the business pursuits exclusion.
                                                                        homeowners insurance premiums by removing coverage for
                                                                        activities that are not typically associated with the operation
Next, we consider whether profit was Hallman's motivation
                                                                        and maintenance of one's home. See, e.g., Buirkle v. Hanover
for leasing her property. The court of appeals, noting
                                                                        Ins. Cos., 832 F.Supp. 469, 486–487 (D.Mass.1993); Kepner
that courts are limited to the language in the pleadings
                                                                        v. W. Fire Ins. Co., 109 Ariz. 329, 509 P.2d 222, 223 (1973);
and the policy when determining an insurer's duty to
                                                                        LeBlanc v. Broussard, 396 So.2d 535, 536 (La.Ct.App.1981).
defend, concluded that the lease failed to meet the profit
                                                                        Commercial limestone mining is not an activity typically
motive requirement. 114 S.W.3d at 662–63. Admittedly, the
                                                                        associated with owning and maintaining a home. Thus, the
pleadings do not contain any reference to Hallman's pecuniary
                                                                        limestone mining lease at issue here is exactly the type of
interest in the lease, nor do they expound on her motive
                                                                        commercial enterprise that the business pursuits provision
for leasing her property. However, *645 we conclude that,
                                                                        was designed to exclude.
in this circumstance, a profit motive can be inferred from
the nature of the activity. One generally does not allow
                                                                        We hold that Hallman's lease to Norton constituted a business
limestone mining with dynamite blasting to occur on his
                                                                        pursuit and therefore the allegations in the underlying
or her property without some expectation of remuneration
                                                                        litigation are excluded from coverage under the policy.
or monetary gain. See Lee R. Russ & Thomas F. Segalla,
Couch on Insurance § 128:13 (3d ed.1997) (noting that
courts look “particularly to the nature of the activity” when
determining if an activity constitutes a “business pursuit”);                                         IV
cf. In re San Juan Dupont Plaza Hotel Fire Litig., 789
F.Supp. 1212, 1220 (D.P.R.1992) (holding that business
                                                                                                 Conclusion
pursuits exclusion defeated coverage because “[i]nvestment
activities are commercial ventures which, by their very                 Therefore, even if the allegations in the underlying lawsuit
nature, are entered into with the intent to earn profit”); Vallas       state an “occurrence,”—a question we do not reach—we
v. Cincinnati Ins. Co., 624 So.2d 568, 571 (Ala.1993) (finding          nevertheless conclude that the business pursuits exclusion
business pursuits exclusion applicable and noting “we cannot            applies and bars coverage. Because the trial court reached
say that the limited partnership, which was formed to buy               the same conclusion and denied Hallman's request for fees,
and sell investment real property for capital gain, was not             there is no need to remand this case to the trial court for
‘an undertaking ... for gain [or] profit’ ”); State Farm Fire &         a determination of Hallman's request for attorney's fees.
Cas. Co. v. Drasin, 152 Cal.App.3d 864, 199 Cal.Rptr. 749,              Accordingly, we reverse the court of appeals' judgment and
750, 753 (1984) (claims arising from partnership agreement              render judgment for Allstate. See Tex.R.App. P 60.2(c).
to acquire mining leases fell under business pursuits exclusion
where “[t]he purpose of acquiring the mining leases was
to enjoy the production of income, profits and write-offs               All Citations
incidental to the mining operations”).
                                                                        159 S.W.3d 640, 48 Tex. Sup. Ct. J. 474


Footnotes
1       Meridien Aggregates, Co., L.L.P. (“Meridien”) purchased Norton's interest in 1999 and now operates the lease.
2       We have, however, addressed the “activities incidental to non-business pursuits” exception to the exclusion. See State
        Farm Fire & Cas. Co. v. Reed, 873 S.W.2d 698, 698–701 (Tex.1993).


End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  5
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761


                                                           Bradley M. Whalen, Stephen H. Lee, N. Kimberly Hoesl, for
                   2009 WL 4842761                         Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron
     Only the Westlaw citation is currently available.     Rents, Inc.
           SEE TX R RAP RULE 47.2 FOR                      Panel consists of Chief Justice HEDGES and Justices
     DESIGNATION AND SIGNING OF OPINIONS.                  ANDERSON and SEYMORE.
           SUBSTITUTE MEMORANDUM
             OPINIONON REHEARING
              Court of Appeals of Texas,                                SUBSTITUTE MEMORANDUM
                Houston (14th Dist.).                                     OPINIONON REHEARING

 Hardam S. AZAD and Manohar S. Mann, Appellants            CHARLES W. SEYMORE, Justice.
                         v.
                                                            *1 On appellants' motion for rehearing, we deny the
     AARON RENTS, INC., d/b/a Aaron Rents,                 requested relief, but withdraw our opinion filed August 13,
   Inc., d/b/a Texas Aaron Rents, Inc., Appellee.          2009, and issue this substitute memorandum opinion.

        No. 14–07–01087–CV.          |   Dec. 17, 2009.
                                                           In this commercial lease case, Hardam S. Azad and Manohar
                                                           S. Mann (collectively, the landlords) appeal a summary
 West KeySummary                                           judgment in favor of, and an award of attorney's fees to,
                                                           Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron
                                                           Rents, Inc. (“Aaron”). In three issues, the landlords contend
 1       Landlord and Tenant                               (1) the pleadings and summary judgment proof precluded
             Breach by lessor                              the trial court from granting summary judgment on Aaron's
         Landlord and Tenant                               affirmative defenses of breach of quiet enjoyment and breach
             What constitutes breach of covenant           of conditions subsequent, (2) the pleadings and summary
         Landlords committed material breach of            judgment proof precluded granting summary judgment on
         commercial lease's quiet-enjoyment provision,     an earlier summary judgment motion (which the court,
         and thus tenant was discharged from further       in fact, denied), and (3) the lease contract precluded the
         performance of lease. The provision required      trial court from rendering a judgment on attorney's fees.
         that the tenant be able to enjoy the premises     Because all dispositive issues of law are settled, we issue this
         without hindrance. Landlords' failure to follow   memorandum opinion and affirm. SeeTex.R.App. P. 47.4.
         city's requirements for proper water and
         sanitation easement prevented tenant from
         obtaining a certificate of occupancy.              I. FACTUAL AND PROCEDURAL BACKGROUND
         Cases that cite this headnote                     In October 2001, the landlords leased Aaron approximately
                                                           7,500 square feet of the South Village Shopping Center. The
                                                           initial term of the lease was five years, but the lease contained
                                                           a provision that, if the anchor tenant, Auchan Hypermart, at
On Appeal from the 333rd District Court, Harris County,    any time ceased business, Aaron could terminate the lease
Texas, Trial Court Cause No.2004–53200.                    between the thirty-sixth and the forty-eighth month of the
                                                           term by giving a ninety-day notice. The lease also contained
Attorneys and Law Firms                                    the following warranty of quiet enjoyment:
William F. Harmeyer, for Hardam S. Azad and Manohar S.
                                                                        35.    Quiet     Enjoyment.Landlord
Mann.
                                                                        warrants that it has good and
                                                                        indefeasible fee simple title to the
                                                                        Center, including the premises, and



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       1
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

              has the lawful authority to enter
              into this Lease. Landlord further                        b. Landlord will provide Tenant with all reasonable
              warrants that Tenant, subject to the                     assistance to aid Tenant in obtaining the aforesaid permits
              terms and conditions of this Lease,                      and approvals.
              will peaceably and quietly hold and
                                                                       c. If any of the aforesaid conditions subsequent is not
              enjoy the Premises and use the
                                                                       satisfied ... upon notice to Landlord, Tenant may elect to
              Common Areas during the Term
                                                                       terminate this Lease....
              without hindrance or interruption, so
              long as no Default by Tenant shall
                                                                     Finally, the lease provided for attorney's fees in actions to
              occur.
                                                                     enforce, defend, or interpret the rights under the lease:

Additionally, pursuant to Paragraph 37 of the lease, Aaron's                     30. Attorney's Fees.In any action, suit
performance was conditioned on its ability to obtain the                         or proceeding to enforce, defend or
necessary permits and certificates to complete its build-out of                  interpret the rights of either Landlord
the leased premises and to operate its business. Paragraph 37                    or Tenant under the terms of this
provided, in relevant part:                                                      lease or to collect any amount due
                                                                                 landlord or Tenant hereunder, the
  37. Conditions Subsequent.                                                     prevailing party, pursuant to a final
                                                                                 order of a court having jurisdiction
  a. Landlord and Tenant agree that their obligations under
                                                                                 over said matter as to which applicable
  this Lease are expressly contingent upon the following:
                                                                                 periods within which to appeal have
     (i) The ability of Tenant to secure, through the exercise                   elapsed, shall be entitled to recover
     of due diligence and good faith efforts, ... a Certificate of               all reasonable costs and expenses
     Occupancy and such use and other permits and approvals                      incurred by said prevailing party in
     from all appropriate zoning and other governmental                          enforcing, defending or interpreting its
     and quasi-governmental authorities as are necessary to                      rights hereunder, including, without
     permit Tenant to ... conduct its business ... without any                   limitation, all collector [sic] and court
     requirement that ... Tenant alter or improve the Premises                   costs, and reasonable attorney's and
     or any ... sewer ... or other system ... which is contained                 paralegal fees, whether incurred out
     on or about the Premises ...;                                               of court, at trial, on appeal, or in any
                                                                                 bankruptcy proceeding.
     (ii) The ability of Tenant to secure, through the exercise
     of due diligence and good faith efforts, all building and       On January 2, 2002, Aaron opened for business in the leased
     related permits necessary for Tenant to make its intended       premises although many of the renovations and alterations
     Initial Alterations ...;                                        required under the lease were not complete. Aaron prepared
                                                                     to complete its build-out of the leased premises and applied
     *2 ...
                                                                     for building permits from the City of Houston (“the City”).
     (iv) The ability of Tenant to secure, through the exercise
     of due diligence and good faith efforts, ... all necessary      On January 16, 2002, the City's Utility Analysis Section,
     permits, ... easements and approvals pertaining to the          Water/Wastewater Department sent two letters, addressed to
     Building, occupancy ... and any other governmental              the landlords, describing defects with the landlords' property.
     permits which, in the sole judgment of Tenant, are              In the first letter, the City explained there was no record
     necessary to permit it to construct the Alterations and         of an easement connecting the landlords' property to the
     operate upon the Premises.... Landlord agrees to execute        nearby city sanitary sewer. In the second letter, the City
     any applications or other documents requested by Tenant         explained the landlords' property was built over an existing
     in order to obtain any permits ... and approvals....            water line and an existing storm sewer easement and the City
                                                                     would require documentation allowing the encroachments.
                                                                     In the second letter, the City stated it would issue no
                                                                     building permit until the problems described in the letter



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              2
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

were resolved: “Until such time that proper documentation            leased premises the following day and intended to seek
is presented to this office allowing this encroachment or the        reimbursement and damages.
water line/easement is abandoned and relocated through the
City's Joint Referral Committee, a building permit cannot be         On September 24, 2004, the landlords sued Aaron, alleging
issued.”The City included an identical statement regarding           claims for breach of the lease. Aaron answered, raising,
the storm sewer easement. Milton Wells, the landlords'               among other matters, the affirmative defense of prior breach
property manager, immediately went to the City, explained            by the landlords based on their failure to (1) obtain a
the City's records were in error, and asked the City to              certificate of occupancy, (2) complete all improvements
withdraw their letters. 1 The City refused to do so.                 by October 31, 2001, (3) provide electrical, mechanical,
                                                                     plumbing, sewer, and heating and ventilation systems
 *3 Willie Chandler, Aaron's construction manager, also met          in good order, and (4) secure all necessary permits,
with City personnel. According to Chandler, Wells had given          licenses, variances, easements and approvals. Aaron also
Chandler a “single 8 ½ x 11 inch document plat showing               counterclaimed against the landlords for expenses incurred in
the layout of the shopping center where the lease[d] premises        partially building out the leased space and for its attorney's
was [sic] located.”The City told Chandler the document was           fees and expenses, pursuant to both the lease and “applicable
insufficient to solve the easement problem and the landlords         Texas Code and Statutes.”
would have to resolve the problem themselves.
                                                                     In May 2005, Aaron filed a traditional motion for summary
In January and February 2002, the landlords and Aaron                judgment. It argued the landlords could not enforce a contract
exchanged correspondence regarding Aaron's late or non-              they had breached before Aaron vacated the premises.
payment of rent and the landlords' failure to obtain a permit        Specifically, Aaron argued the landlords had breached the
before beginning improvements and their failure to complete          contract by failing to deliver a certificate of occupancy and
the improvements. By letter dated February 7, 2002, Aaron            to complete the improvements by October 31, 2001. The trial
also asked the landlords to resolve the easement issues              court orally denied the motion and noted the denial on the
immediately. According to Wells, in April 2002, he gave              docket sheet.
Chandler all the surveys he had obtained in his research and
Chandler said he would take care of what was needed to                *4 In March 2006, Aaron again moved for traditional
obtain a certificate of occupancy.                                   summary judgment on the grounds of the landlords' prior
                                                                     breach of the lease. In the 2006 motion, Aaron specifically
Without a building permit, Aaron could not complete its              relied on the landlords' obligations under Paragraphs 35
build-out of the space and could not obtain a certificate of         (quiet enjoyment) and 37 (conditions subsequent). After
occupancy. A certificate of occupancy is necessary for a             considering the pleadings, the motion, the response, and
business to operate. According to the landlords' designated          the summary judgment evidence, the trial court granted
expert, if the City learns a business is occupying a building        the motion. 2 Aaron subsequently non-suited its claims for
without a certificate of occupancy, the City will give it thirty     breach-of-contract damages, but maintained its claims for
days to obtain one, and if it cannot do so, the City will lock the   attorney's fees and expenses.
premises. The landlords and their designated expert agreed
that Aaron would not be allowed to obtain the final building         The landlords filed a motion for a take-nothing judgment on
permit or the certificate of occupancy until the easement            Aaron's claim for attorney's fees. The trial court denied the
issues were fully resolved. The landlords also agreed the            motion.
easement issues affected the landlords' ownership of the entire
property, not just the portion leased by Aaron, and knew they        Following a non-jury trial on attorney's fees, the trial court
had to resolve these issues in order to re-lease the property.       rendered final judgment, decreeing that the landlords take
The landlords did not fulfill these conditions while Aaron           nothing on their claims against Aaron. The trial court
occupied the leased property.                                        found Aaron was the prevailing party, and ordered that
                                                                     Aaron recover the following amounts from the landlords: (1)
In March 2003, Auchan closed. By letter dated April 29,              $75,000 attorney's fees for trial, (2) $15,291.77 for costs and
2003, Aaron notified the landlords it was vacating the               expenses of trial, (3) $15,000 if Aaron prevailed in the court
                                                                     of appeals, (4) $5,000 if either landlord filed a petition for



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              3
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

review and the supreme court denied the petition, (5) $10,000       In reviewing a traditional summary judgment, we examine the
if Aaron prevailed in any appeal to the supreme court by            entire record in the light most favorable to the non-movant,
any party, and (6) post-judgment interest. The court further        indulging every reasonable inference and resolving any
ordered as follows: (1) if no valid appeal were filed, the          doubts against the motion. Yancy v. United Surgical Partners
trial level amounts would become due and owing on dates             Int'l, Inc., 236 S.W.3d 778, 782 (Tex.2007). When a trial
corresponding to the deadlines set forth in Texas Rule of           court's order granting summary judgment does not specify
Appellate Procedure 26.1; and, (2) depending on whether             the grounds on which it was granted, we will affirm the
Aaron prevailed on appeal and in any supreme court review,          judgment if any theory advanced in the motion is meritorious.
the corresponding appellate level amounts would become due          See Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). Thus,
and owing on the dates the mandate issued from the court of         to prevail on appeal, the landlords must show that each of
appeals or the supreme court.                                       Aaron's theories is meritless. See Star–Telegram, Inc. v. Doe,
                                                                    915 S.W.2d 471, 473 (Tex.1995).

                                                                    Aaron's summary judgment motion rested on the affirmative
 II. THE TAKE–NOTHING SUMMARY JUDGMENT
                                                                    defenses that the landlords had first breached the lease in
In issue one, the landlords contend “[t]he pleadings and            two ways—by violating the quiet-enjoyment provision and
summary judgment evidence precluded” the trial court from           by violating the conditions-subsequent provision of the lease.
rendering summary judgment (1) on Aaron's “breach of                When one party to a contract commits a material breach
quiet enjoyment affirmative defense” and (2) on Aaron's             of that contract, the other party is discharged or excused
“conditions subsequent affirmative defense.” In issue two,          from further performance. Mustang Pipeline, Inc. v. Driver
the landlords make the same argument regarding Aaron's              Pipeline, Inc., 134 S.W.3d 195, 196 (Tex.2004) (per curiam).
affirmative defense of the landlords' prior breach for failing to
(1) timely complete improvements and (2) obtain a certificate       In Paragraph 35 of the lease, captioned “Quiet Enjoyment,”
                                                                    the landlords warranted they had “good and indefeasible fee
of occupancy. 3
                                                                    simple title” to the shopping center and the premises leased
                                                                    to Aaron. Paragraph 35 also provided, “Landlord further
A party moving for traditional summary judgment must
                                                                    warrants that Tenant, subject to the terms and conditions of
establish that no genuine issue of material fact exists and it
                                                                    this Lease, will peaceably and quietly hold and enjoy the
is entitled to judgment as a matter of law. SeeTex.R. Civ.
                                                                    Premises and use the Common Areas during the Term without
P. 166a(c); Provident Life & Accident Ins. Co. v. Knott,
                                                                    hindrance or interruption, so long as no Default by Tenant
128 S.W.3d 211, 215–16 (Tex.2003). To be entitled to
                                                                    shall occur.”Thus, under the plain language of Paragraph 35,
traditional summary judgment, a defendant must conclusively
                                                                    breach by the landlords occurred if Aaron could not “enjoy
negate at least one essential element of each of the plaintiff's
                                                                    the Premises ... without hindrance.”
causes of action or conclusively establish each element
of an affirmative defense. Sci. Spectrum, Inc. v. Martinez,
                                                                    The record contains the following, undisputed, summary
941 S.W.2d 910, 911 (Tex.1997); Brown v. Hearthwood
                                                                    judgment proof:
II Owners Ass'n, 201 S.W.3d 153, 159 (Tex.App.-Houston
[14th Dist.] 2006, pet. denied). A party conclusively                 • Two letters sent January 16, 2002, from the City
establishes a matter if reasonable people could not differ              of Houston to the landlords in response to the
about the conclusion to be drawn from the evidence. See City            landlords' December 20, 2001 applications concerning
of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex.2005).                    the availability of city water and waste water facilities to
                                                                        the shopping center;
 *5 We review de novo both a trial court's grant of traditional
summary judgment and its interpretation of an unambiguous                in one letter, the City explained there was no record of
contract. See Knott, 128 S.W.3d at 215 (regarding summary                an easement connecting the landlords' property to the
judgment); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983)                nearby city sanitary sewer;
(stating, if written instrument is so worded it can be given
certain or definite legal meaning or interpretation, it is not           in the other letter, the City explained the landlords'
ambiguous and court will construe contract as matter of law).            property was built over existing water line and existing
                                                                         storm sewer easements, the City required documentation



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              4
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

     allowing the encroachments, and the City stated it would      Despite the preceding summary judgment proof, the
     issue no building permit until the problems described in      landlords, on appeal, argue “[t]he pleadings and summary
     the letter were resolved;                                     judgment evidence precluded the trial court from entering
                                                                   summary judgment on Aaron Rents' breach of quiet
   *6 • Deposition testimony of Milton Wells, the landlords'       enjoyment affirmative defense.”In their response to Aaron's
    property manager, that the matters raised in the January       motion for summary judgment, the landlords did not address
    16 letters affected the landlords' entire property, as well    Aaron's affirmative defense based on the landlords' purported
    as that of the tenants;                                        breach of the “quiet enjoyment” provision in the lease.
                                                                   Instead, the landlords focused solely on Aaron's defense
  • The deposition testimony of Hardam S. Azad that
                                                                   based on the landlords' purported breach of conditions
    the landlords were responsible for “removing” or
    “dissolving” the easement problem;                             subsequent. 5 To the extent the landlords are now presenting
                                                                   an issue other than legal insufficiency of the evidence to
  • The affidavit of Willie Chandler, Aaron's construction         support summary judgment in favor of Aaron on its breach-
    manager, in which he stated it was important for Aaron         of-quiet-enjoyment defense, they have waived this issue.
    to secure a building permit to allow it to finish its build-   See City of Houston v. Clear Creek Basis Authority, 589
    out of the leased space, and without a permit, Aaron was       S.W.2d 671, 678 (Tex.1979) (“With the exception of an attack
    unable to begin construction;                                  on the legal sufficiency of the grounds expressly raised by
                                                                   the movant in his motion for summary judgment, the non-
  • The deposition testimony of the landlords' designated          movant must expressly present to the trial court any reasons
    expert, Neresh Dham, former Division Manager for               seeking to avoid movant's entitlement....”); Augusta Court
    the Plan Review Section of the Public Works and                Co–Owners' Ass'n v. Levin, Roth & Kasner, 971 S.W.2d
    Engineering Department, that, until the Department was         119, 122 (Tex.App.-Houston [14th Dist.] 1998, pet. denied)
    satisfied an easement existed, a building permit would         (“[I]ssues a non-movant contends avoid summary judgment
    not issue, “[t]hen, depending on the building permit, the      that are not expressly presented to the trial court by written
    certificate of occupancy would not issue”;                     answer or other written response to the summary judgment
                                                                   motion are waived on appeal.”).
  • The deposition testimony of Rudolfo Moreno, an engineer
     in the Department of Public Works, that generally
                                                                    *7 Additionally, in this court, the landlords have only
     speaking, he believed that, without a building permit,
                                                                   minimally briefed their argument that summary judgment was
     one could not get a certificate of occupancy;
                                                                   precluded on Aaron's breach-of-quiet-enjoyment affirmative
  • Dham's deposition testimony that, without a certificate        defense. The landlords' entire argument on the quiet-
    of occupancy, Aaron's occupancy of the premises was            enjoyment ground comprises (1) quotation of Paragraph
    illegal and could be terminated after thirty days' notice      35 of the lease, (2) conclusory statements there was no
    and failure to correct the problem;                            summary judgment proof the landlords did not have good and
                                                                   indefeasible fee simple title to the shopping center or that
  • Moreno's and Azad's testimony the City and landlords did       Aaron was not in exclusive, peaceful and quiet possession
     not resolve the easement issue until August, 2004; and        of the premises, and (3) an assertion the summary judgment
                                                                   evidence indicated Aaron had exclusive, continuous, and
  • Wells's testimony the landlords eventually resolved the
                                                                   uninterrupted possession of the premises from the time it
    easement matters because they were considering re-
                                                                   accepted possession until it vacated the premises, without
    leasing locations and knew the easement matters had to
                                                                   any claims or demands by the landlords, City, or any
    be resolved eventually if the new tenants were to obtain
                                                                   third party, that it cease conducting business or vacate the
    building permits.
                                                                   premises. 6 Other than case law setting forth the general
Viewing this proof in the light most favorable to the landlords,   standard of summary judgment review, the landlords cite no
we conclude, at a minimum, it conclusively establishes Aaron       law. Their sole record citation comprises twenty consecutive
                                                                   pages of summary judgment proof consisting of Wells's two-
was unable to enjoy the premises without hindrance. 4
                                                                   page affidavit with the attached documents. 7 They do not
                                                                   direct this court to any specific parts of that proof.



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           5
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

To present an issue on appeal properly, an appellant must             to recover all reasonable costs and expenses incurred by
provide a clear and concise argument for the contentions              said prevailing party in enforcing, defending or interpreting
made, with appropriate citations to the record and authorities.       its rights hereunder, including, without limitation, all
Tex.R.App. P. 38.1(i). It is not our responsibility to sift the       collector [sic] and court costs, and reasonable attorney's
record to find error or evidence in support of an appellant's         and paralegal fees, whether incurred out of court, at trial,
argument. Melendez v. Exxon Corp., 998 S.W.2d 266, 280                on appeal, or in any bankruptcy proceeding. (Emphasis
(Tex.App.-Houston [14th Dist.] 1999, no pet.).                        added.)

In sum, we conclude the landlords have not shown that a             The landlords argue that, pursuant to this paragraph, there can
fact issue exists that would defeat summary judgment on             be no “prevailing party” until a final court order, which is
Aaron's defensive theory of prior breach of the promise of          not subject to further appeal, is in place. Put differently, they
quiet enjoyment in Paragraph 35 of the lease; the landlords         argue an unappealable order is a condition precedent to any
have not shown this summary judgment ground is meritless.           party's entitlement to, claim for, and recovery of, attorney's
We therefore affirm summary judgment in favor of Aaron              fees. The landlords further argue Aaron was required to prove
on this ground and need not address the landlords' argument         performance of all conditions precedent and failed to do so.
challenging summary judgment on the ground of breach of
the conditions-subsequent provision. See Star–Telegram, 915         Under Paragraph 30, a party is “entitled” to attorney's fees
S.W.2d at 473; Carr, 776 S.W.2d at 569.                             if it is “the prevailing party, pursuant to a final order ...
                                                                    [for] which applicable periods within which to appeal have
Accordingly, we overrule the landlords' first issue. As noted       elapsed....” Even if one construes this language to mean
above, we have overruled the landlords' second issue, directed      that all possibilities for appeal must have expired before the
at an earlier summary judgment motion, as moot. 8                   ultimately “prevailing” party may receive its attorney's fees,
                                                                    there is no language in Paragraph 30 that precludes a party
                                                                    from making its claim for attorney's fees before that time or
                                                                    that precludes the court from making a conditional award of
                 III. ATTORNEY'S FEES
                                                                    those fees before disposition of the final appeal. 9
In issue three, the landlords argue “the parties' lease contract
precluded the trial court from entering a judgment on               The court made such a conditional award in the present case.
attorney's fees.”The landlords do not dispute the amounts           According to the judgment, if the landlords did not file a valid
awarded, but challenge the award of any attorney's fees before      appeal from the judgment, the award for trial attorney's fees
rendition of a final, nonappealable judgment.                       would become due and payable to Aaron according to the
                                                                    deadlines set forth in Texas Rule of Appellate Procedure 26.1;
The parties to a contract are free to adopt the standard of their   and, depending on whether Aaron prevailed on appeal and in
choice for recovery of attorney's fees, and we are bound by         any supreme court review, attorney's fees would become due
that choice. See One Call Sys., Inc. v. Houston Lighting &          and owing on the dates the mandate issued from the court of
Power, 936 S.W.2d 673, 676 (Tex.App.-Houston [14th Dist.]           appeals or the supreme court.
1996, writ denied). In construing the parties' contract, we
give the language its plain and grammatical meaning unless it       In short, the trial court's award of attorney's fees is consistent
would defeat the parties' intentions. Id. at 675.In the present     with the attorney's fees provision in the lease. Accordingly,
case, the landlords rely on Paragraph 30 of the lease, which        we overrule the landlords' third issue.
provided:

   *8 Attorney's Fees.In any action, suit or proceeding to
                                                                                         IV. CONCLUSION
  enforce, defend or interpret the rights of either Landlord
  or Tenant under the terms of this Lease or to collect             Having overruled the landlords' three issues, we affirm the
  any amounts due Landlord or Tenant hereunder, the                 judgment of the trial court.
  prevailing party, pursuant to a final order of a court having
  jurisdiction over said matter as to which applicable periods
  within which to appeal have elapsed, shall be entitled



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                6
Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)
2009 WL 4842761

All Citations

Not Reported in S.W.3d, 2009 WL 4842761


Footnotes
1      Wells was unsure whether he spoke with Rodolfo Moreno in the Public Works Department or to someone else.
2      In an initial order granting Aaron's motion for summary judgment, the trial court stated the landlords had not filed a
       response. The landlords filed a motion for new trial, and the trial court granted the motion and subsequently entered a
       second order granting Aaron's motion.
3      Aaron asserted these latter two grounds in its May 2005 motion for summary judgment. Both parties agree the trial court
       denied the May 2005 summary judgment motion and that Aaron did not repeat the May 2005 grounds in its second
       summary judgment motion. Accordingly, we overrule issue two as moot.
4      We take no position on whether the lack of a sewer easement and encroachments on water and storm sewer easements
       constituted a defect in the landlords' title.
5      The landlords attached and incorporated by reference their response to Aaron's May 2005 motion for summary judgment.
       In that response, the landlords addressed Aaron's defense that the landlords had breached the lease by not providing a
       certificate of occupancy. That defensive ground is not the same as Aaron's 2006 ground based on the landlords having
       not resolved the easement problems, a breach that led to Aaron's inability to obtain a certificate of occupancy.
6      This third component of the landlords' argument appears to raise an issue other than a “no evidence” issue.
7      The landlords filed the affidavit and documents with their response to Aaron's May 2, 2005 motion for summary judgment,
       and Wells's statements in the affidavit are responsive to the grounds raised in the May 2, 2005 motion. See note 3, supra.
8      See note 3, supra.
9      The landlords' interpretation of Paragraph 30 would result in the necessity of a second lawsuit for the prevailing party in
       the contract suit to recover its attorney's fees for the contract suit. Such piecemeal litigation is generally disfavored. See
       Fid. Mut. Life Ins. Co. v. Kaminsky, 820 S.W.2d 878, 882 (Tex.App.-Texarkana 1991, writ denied) (stating (1) for policy
       purposes, allowing separate suit for attorney's fees arising out of a transaction encourages multiplicity of suits and delays
       in litigation, and (2) facts and complexity of suit is before court at time of initial action, and neither judicial economy nor
       litigants' and counsels' time is well served by allowing separate suits).


End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                7
Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


                                                                         A professional malpractice claim is based on
                                                                         negligence.
     KeyCite Yellow Flag - Negative Treatment
Declined to Extend by In re Enron Corp. Securities, Derivative &         Cases that cite this headnote
ERISA Litigation,   S.D.Tex.,    June 1, 2009

                       191 S.W.3d 185                              [2]   Negligence
                  Court of Appeals of Texas,                                 Elements in general
                        San Antonio.                                     In an action for negligence, the plaintiff must
                                                                         prove that there is a duty owed to him by the
     BOARD OF TRUSTEES OF THE FIRE AND
                                                                         defendant, a breach of that duty, that the breach
       POLICE RETIREE HEALTH FUND, San
                                                                         proximately caused the plaintiff injury and that
       Antonio and The Fire and Police Retiree
                                                                         damages occurred.
     Health Care Fund, San Antonio, Appellants,
                          v.                                             1 Cases that cite this headnote
   TOWERS, PERRIN, FORSTER & CROSBY, INC.,
   Gary L. Gross, and Michael Rodriguez, Appellees.                [3]   Negligence
                                                                             Necessity of causation
           No. 04–04–00027–CV. | Nov. 23,
                                                                         Negligence
       2005. | Rehearing Overruled Feb. 2, 2006.
                                                                             Substantial factor
Synopsis                                                                 Negligence
Background: Fire and Police Retiree Health Care Fund and                     Foreseeability
its Board of Trustees brought actuarial malpractice action               The two elements of proximate cause are cause
against actuary firm, alleging that inaccurate estimates of              in fact, or substantial factor, and foreseeability.
health care costs and inaccurate conclusions regarding the
necessary pre-funding rate proximately caused millions of                Cases that cite this headnote
dollars of damage to the Fund. The 45th Judicial District
Court, Bexar County, David Peeples, J., granted firm's motion
                                                                   [4]   Negligence
for summary judgment, and Fund appealed.
                                                                             In general; degrees of proof
                                                                         Cause in fact and foreseeability cannot
                                                                         be satisfied by mere conjecture, guess, or
Holdings: The Court of Appeals, Sarah Duncan, J., held that:             speculation.

[1] firm did not cause injury to Fund, and                               1 Cases that cite this headnote

[2] lay testimony by union negotiators that union and
                                                                   [5]   Negligence
city would have adopted higher rates was speculative and
                                                                              “But-for” causation; act without which
inadmissible.
                                                                         event would not have occurred
                                                                         Negligence
Affirmed.                                                                    Substantial factor
                                                                         “Cause in fact” is established when the act or
                                                                         omission was a substantial factor in bringing
                                                                         about the injuries, and without it, the harm would
 West Headnotes (11)
                                                                         not have occurred.

 [1]      Negligence                                                     1 Cases that cite this headnote
              Trades, Special Skills and Professions
                                                                   [6]   Accountants


                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           1
Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


             Actions
                                                                     2 Cases that cite this headnote
        In an accountant malpractice case, expert
        testimony is usually necessary to establish the
        causal link between the plaintiff's damages and       [10]   Evidence
        the accountant's negligence.                                     Facts Forming Basis of Opinion
                                                                     The requirement that lay testimony be based on
        1 Cases that cite this headnote
                                                                     the witness's perception presumes the witness
                                                                     observed or experienced the underlying facts.
 [7]    Insurance                                                    Rules of Evid., Rule 701.
            Actuaries
                                                                     2 Cases that cite this headnote
        Negligence
            Miscellaneous particular cases
        Actuary firm which provided actuarial report          [11]   Evidence
        to city and unions did not cause injury to Fire                  Facts Forming Basis of Opinion
        and Police Retiree Health Care Fund, which                   A speculative opinion, such as an opinion on
        was underfunded due to inaccurate estimates                  what someone else was thinking at a specific
        of health care costs and inaccurate conclusions              time, does not help the jury to either understand
        regarding the necessary pre-funding rate; city               the witness' testimony better, or decide the
        and union were not required to raise contribution            question of the other person's intent; mere
        rates if firm had recommended a higher funding               conjecture does not assist the jury.
        rate, and city and unions had failed to follow
        firm's previous recommendation for an increase               1 Cases that cite this headnote
        in the contribution rates.

        Cases that cite this headnote
                                                             Attorneys and Law Firms
 [8]    Evidence
                                                             *187 G. Wade Caldwell, Perry C. Robinson, Martin,
            Facts Forming Basis of Opinion
                                                             Drought & Torres, Inc., San Antonio, for appellants.
        Lay testimony by union negotiators that union
        and city would have adopted higher rates of          George H. Spencer, Jorge E. Canseco, Clemens & Spencer,
        contribution to the Fire and Police Retiree Health   P.C., San Antonio, for appellees.
        Care Fund if actuarial firm had recommended
        higher rate was speculative and inadmissible         Sitting: CATHERINE STONE, Justice, PAUL W. GREEN,
        in professional malpractice action against firm;     Justice (not participating), SARAH B. DUNCAN, Justice.
        testimony was based not on their perceptions but
        on their conclusions regarding what the city's
        negotiators, the members of the city council, and                            OPINION
        hundreds of members of the union would have
                                                             SARAH DUNCAN, Justice.
        done if firm had recommended a higher pre-
        funding rate. Rules of Evid., Rule 701.              The Fire and Police Retiree Health Care Fund, San Antonio
                                                             and its Board of Trustees appeal the trial court's take-
        1 Cases that cite this headnote
                                                             nothing judgment against them in their actuarial malpractice
                                                             suit against Towers, Perrin, Forster & Crosby, Inc.; Gary
 [9]    Evidence                                             L. Gross; and Michael Rodriguez. We hold the trial court
            Facts Forming Basis of Opinion                   correctly granted Towers Perrin's no-evidence motion for
        The perception underlying the lay witness's          summary judgment on causation and acted within the ambit
        testimony may be what was seen, heard, smelled,      of its discretion in sustaining Towers Perrin's objections to
        tasted, touched or felt. Rules of Evid., Rule 701.


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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


the Fund's causation evidence. We therefore affirm the trial        San Antonio and its governing Board (collectively, “the
court's judgment.                                                   Fund”).

                                                                    Pursuant to its statutory authority, the Board retained
                                                                    Towers, Perrin, Forster & Crosby, Inc. “to provide ...
  FACTUAL AND PROCEDURAL BACKGROUND
                                                                    actuarial valuation[s] to determine the actuarial liability and
“Because of the lasting health consequences associated with         appropriate pre-funding rate 2 for the Fund.” One of these
the stressful nature of the professions of firefighting and         valuations, “conducted as of July 1, 2000,” resulted in a report
law enforcement,” the Texas Legislature created the Fire            dated November 9, 2000. The 2000 Report is signed by a
and Police Retiree Health Care Fund “to provide health care         principal of Towers Perrin, Gary L. Gross. Also working on
benefits for persons who retired on or after October 1, 1989,       the project was Michael Rodriguez.
from [certain] municipal fire or police department[s]....”
TEX.REV.CIV. STAT. ANN.. art. 6243q, § 1.01 (Vernon                 The 2000 Report recommended that, based on “[t]he
2003). An article 6243q fund is a statutory trust, id. § 1.04(a),   assumptions outlined in Appendix B ... and agreed upon by
that is administered by a board of trustees, id. § 1.04(b),         the [Board],” the pre-funding rates be 9.4% of the City's
composed of various city officials, two active firefighters         payroll and $20 per month for each employee. Based upon
and two active police officers, and retiree representatives of      these assumptions and recommended pre-funding rates, the
the fire and police departments. Id. § 2.01(a). Because the         2000 Report concluded it would take twenty-five years
board of an article 6243q fund “administer[s] and hold[s]           to amortize the Fund's $110,640,506 unfunded accrued
in trust the assets of the fund for the exclusive benefit of        liability. 3 The recommended pre-funding rate of 9.4% plus
the beneficiaries of the fund,” id. § 1.04(b), its “board has       $20 was adopted by the City and the unions in their 2002
complete authority and power to ... administer the fund for         collective bargaining agreements.
the exclusive benefit of the beneficiaries of the fund; ...
order payments from the fund; ... independently control the         In 2001, after a billing dispute with Towers Perrin, the Board
fund; and ... conduct all litigation on behalf of the fund.”        engaged Rudd and Wisdom, Inc. to produce another actuarial
Id. § 3.01(a). The board also has final responsibility for the      evaluation of the Fund; this evaluation, which measured the
investment of the reserve funds, id. § 6.04(d), which are           Fund as of October 1, 2001, resulted in a report dated May
defined as all assets other than “a reasonably safe amount of       20, 2002. The 2002 Report concludes in part as follows:
surplus necessary to defray reasonable expenses of the fund.”
Id. § 6.03(a)-(b). So that a board may properly perform its           1. The Fund will have a long term inadequate financing
duties, it is given statutory authority to enter into contracts          arrangement if monthly contributions remain at the
with various professionals, including actuaries. *188 1 Id.              present level of $20 per active participant and 9.4% of
§ 6.05(a). “Membership in the fund,” “[c]ontributions to the             covered payroll *189 by the City of San Antonio and
fund,” and “[r]etirement health benefits” are determined in              if present health benefits are left unchanged.
accordance with the collective bargaining agreements. Id. §§
                                                                      2. In order to have an adequate financing arrangement,
4.01, 4.02(a), 5.01.
                                                                         contributions will have to be significantly increased. Our
                                                                         best estimate is that effective October 1, 2002 total
The collective bargaining agreements involved in this
                                                                         contributions should be increased to 13.94% of covered
case are those between the City of San Antonio and
                                                                         payroll assuming continuation of the active participant
the firefighters' and police officers' unions—Local 624
                                                                         contribution of $20 per month.
International Association of Firefighters and the San Antonio
Police Officers' Association. See id. §§ 1.02(4), 1.03                ....
(“This Act applies to a paid fire and police department
of a municipality with a population of 750,000 or                     6. The significant increase in the actuarially recommended
more that has adopted Chapter 174, Local Government                      level of contributions can be attributed primarily to
Code.”). Accordingly, shortly after passage of article 6243q,            changes in actuarial assumptions for (a) current annual
these entities adopted collective bargaining agreements                  health benefit claims costs, and (b) future annual
establishing the Fire and Police Retiree Health Care Fund,               increases in benefit claims costs (trend).




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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)




(emphasis in original). If the 13.94% pre-funding rate were         c. There is no evidence that any claimed failure of any
adopted in the 2002 collective bargaining agreements, the           Defendant to meet the applicable standard of care with
City's contribution would increase by approximately $7.9            respect to the sensitivity tests provided for under certain
million. The 2002 Report also concluded that the Fund's             circumstances by Actuarial Standard of Practice 6, and/
unfunded accrued liability was $263,347,529. Although this          or with Defendant Towers Perrin's own internal policies
unfunded accrued liability could be amortized in forty years at     relating to one method available for the development of a
the recommended 13.94% pre-funding rate, it would take an           claims cost assumption was a proximate cause of damage
“infinite” number of years to amortize the unfunded accrued         to the Plaintiff or the Intervenor;
liability at the present pre-funding rate of 9.4%.
                                                                    d. There is no evidence that any claimed negligent act or
Rudd and Wisdom's 2003 Report, which evaluated the Fund             omission of any Defendant was a proximate cause or an
as of October 1, 2002 and which was dated January 21,               actual cause of damage to the Plaintiff or the Intervenor;
2003, presented a yet bleaker picture. According to the
                                                                    e. There is no evidence that any Defendant failed to meet
2003 Report, the Fund's estimated liabilities would not be
                                                                    the applicable standard of care by failing to include in the
amortized over the long term unless the existing contribution
                                                                    Actuarial Study as of July 1, 2000 the recommendation
rates were “substantially increased” to “19.93% of covered
                                                                    that an increase in the funding to 15.39% was needed to
payroll in addition to the assumed continuation of the active
                                                                    amortize the unfunded actuarial accrued liability of the
participant contributions that would be made if the collective
                                                                    Plaintiff or the Intervenor;
bargaining agreements in effect October 1, 2002 were to
continue indefinitely ($20 per month for police officers and        f. There is no evidence that any Defendant failed to meet
$70 per month for fire fighters after fiscal year 2003–2004).”      the applicable standard of care by failing to conclude in the
The recommended pre-funding rate of 19.93% could be                 Actuarial Study as of July 1, 2000 that the Plaintiff or the
accomplished with a ten-year phase-in at 1.38% per year.            Intervernor had an unfunded actuarial accrued liability of
Without the phase-in, the City's contributions would increase       $263,347,529;
by approximately $20 million the first year. 4
                                                                    g. There is no evidence that the Plaintiff or the Intervenor
Alleging Towers Perrin's inaccurate estimates of health care        [has] sustained any legally recoverable damages as a result
costs and inaccurate conclusions regarding the necessary            of anything any of the things Defendants allegedly did or
pre-funding rate proximately caused millions of dollars of          failed to do; and
damage to the Fund, the Fund filed suit against Towers
                                                                    h. There is no evidence that the Plaintiff or the Intervenor
Perrin, Gross, and Rodriguez (collectively, “Towers Perrin”)
                                                                    [has] sustained any damages in connection with the
for professional negligence. On March 17, 2003, in response
                                                                    matters in controversy in this case which are not wholly
to Towers Perrin's argument that the Fund lacked standing,
                                                                    speculative.
the Fund's Board of Trustees intervened. Later that year,
Towers Perrin filed a motion for summary judgment alleging        After ruling on Towers Perrin's objections to the Fund's
there is no evidence on the following elements of the Fund's      and its Board's summary judgment evidence, the trial court
negligence cause of action:                                       granted Towers Perrin's motion for summary judgment on
                                                                  all eight grounds and rendered a take-nothing judgment. The
  a. There is no evidence that any Defendant failed to meet
                                                                  Fund appealed.
  the applicable standard of care with regard to the estimated
  medical cost increases reflected in the Actuarial Study as
  of July 1, 2000;
                                                                                     APPLICABLE LAW
   *190 b. There is no evidence that any Defendant failed
  to meet the applicable standard of care with regard to the       [1]    [2]   [3]   [4]     [5]    [6] A professional malpractice
  estimated claims and administrative expenses reflected in       claim is “based on negligence.” Cosgrove v. Grimes, 774
  the Actuarial Study as of July 1, 2000;                         S.W.2d 662, 664 (Tex.1989) (attorney malpractice). In an
                                                                  action for negligence, “[t]he plaintiff must prove that there
                                                                  is a duty owed to him by the defendant, a breach of that



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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


duty, that the breach proximately caused the plaintiff injury    Burgess Mktg., Inc., 744 S.W.2d 170 (Tex.App.-Waco 1987,
and that damages occurred.” Id. at 665. “The two elements        writ denied) ].” Contrary to the Fund's assertions, however,
of proximate cause are cause in fact (or substantial factor)     this case is entirely unlike Greenstein.
and foreseeability.” IHS Cedars Treatment Ctr. of Desoto,
Texas, Inc. v. Mason 143 S.W.3d 794, 798 (Tex.2004).             In Greenstein, the plaintiffs—Burgess Marketing, its
“These elements cannot be satisfied by mere conjecture,          principal owner Jack Burgess, and his wife—sued Burgess
guess, or speculation.” Id. at 798–99. “Cause in fact is         Marketing's accounting firm, Greenstein, Logan & Company,
established when the act or omission was a substantial factor    for accounting malpractice. Id. at 177. The plaintiffs alleged,
in bringing about the injuries, and without it, the harm         and the jury found, that Greenstein Logan's negligent failure
would not have occurred.” Id. at 799. In an accountant           to discover during its 1984 and 1985 audits that Burgess
malpractice case, “[e]xpert testimony is usually necessary to    Marketing had underpaid its federal excise tax proximately
establish ... the causal link between the plaintiff's damages    caused Burgess Marketing $3.5 million in damages. Id. On
and the accountant's negligence.” Greenstein, Logan & Co. v.     appeal, the court rejected Greenstein Logan's challenge to the
Burgess Mktg., Inc., 744 S.W.2d 170, 185 (Tex.App.-Waco          sufficiency of the evidence to support the jury's proximate
1987, writ denied) (citing Kemmerlin v. Wingate, 274 S.C. 62,    cause finding, holding “[t]he jury could have reasonably
261 S.E.2d 50, 51 (1979)).                                       concluded ... that the negligent failure of Greenstein Logan
                                                                 to perform the 1984 and 1985 audits in accordance with
                                                                 generally accepted auditing standards was a substantial
                                                                 factor in bringing about Burgess Marketing's bankruptcy,
                       CAUSATION
                                                                 and that the damage would not have occurred but for such
The Fund argues the trial court erred in granting a summary      negligence” from evidence that, “as soon as the underpayment
judgment against it *191 on causation because “[t]here is        was discovered,” “Burgess Marketing immediately resumed
more than a scintilla of evidence from which a jury could        paying the correct federal excise tax each month”; “Burgess
reasonably infer the Health Fund was damaged as a result of      immediately increased prices on non-gasoline items sold at
[Towers Perrin's] negligent 2000 Study.” We disagree.            [its] convenience stores”; Burgess “imposed stringent cost
                                                                 controls”; and “[t]hese management decisions resulted in the
                                                                 company's operations again becoming profitable within six
                                                                 months.” Id. at 186. According to the plaintiffs' experts,
                    Standard of Review                           “if Greenstein Logan had discovered the underpayment
                                                                 during the 1984 audit when the company's liability was
We review a summary judgment de novo. Joe v. Two Thirty
                                                                 only $287,229, Burgess could have then made the same
Nine Joint Venture, 145 S.W.3d 150, 156 (Tex.2004). We will
                                                                 management decisions which he later made.” Id. (emphasis
therefore reverse an order granting a “no evidence” motion for
                                                                 added).
summary judgment under Rule 166a(i) only if the respondent
produced summary judgment evidence raising a genuine issue
                                                                 As indicated by the emphasized “he” in the previous sentence,
of material fact on each challenged element. See TEX.R. CIV.
                                                                 Burgess was the principal owner of Burgess Marketing and
P. 166a(i). “When reviewing a summary judgment, we take
                                                                 thus able to cause the company to “resume[ ] paying the
as true all evidence favorable to the [respondent], and we
                                                                 correct federal excise tax each month”; “increase [ ] prices
indulge every reasonable inference and resolve any doubts in
                                                                 on non-gasoline items sold at [its] convenience stores”;
the [respondent's] favor.” Joe, 145 S.W.3d at 157.
                                                                 and “impose[ ] stringent cost controls”—unilaterally and
                                                                 immediately. In this case, on the other hand, the City and
                                                                 hundreds of union members must negotiate the pre-funding
                         Discussion                              rate during the collective bargaining process; neither can
                                                                 unilaterally or immediately change the pre- *192 funding
 [7] To support its argument, the Fund points to “evidence
                                                                 rate. Indeed, when Towers Perrin recommended a significant
showing the City and the unions relied on past Towers Perrin
                                                                 increase in the pre-funding contribution rate to 10.6% in
studies to determine the contribution rate and that higher
                                                                 1992, that recommendation was not followed; instead, a
pre-funding rates probably would have been adopted if they
                                                                 contribution rate of 8.5% by October 1997 was adopted. And
had been known” and asserts this evidence “is identical to
                                                                 that 2.1% difference pales in comparison to the difference
the permissible predicting in Greenstein [, Logan & Co. v.


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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


between the 9.4% pre-funding rate adopted in the 2002              in collective bargaining agreements. Because the summary
collective bargaining agreements and the 13.94% and 19.93%         judgment record does not contain even a scintilla of evidence
rates recommended in the 2002 and 2003 Reports, which              on this issue, we hold the trial court correctly granted a no-
represented increases for the City of $7.9 million and $20         evidence summary judgment against the Fund on causation.
million, respectively. As a result, as Towers Perrin points
out, any “evidence that [the] City and the Firefighters Union
previously followed Towers Perrin's recommendations is not
                                                                                OBJECTIONS TO SUMMARY
competent evidence that these entities ... would have agreed
                                                                                  JUDGMENT EVIDENCE
in the collective bargaining process to ... raise contribution
rates.” Towers Perrin also points out yet another significant      The causation issue was addressed in the affidavits of George
distinction between Greenstein and this case: Unlike Burgess       Suther and John Anderson Jr.; but Towers Perrin's objections
Marketing, which was legally required to pay its excise taxes,     to this evidence were sustained. Accordingly, in its final
the City and the unions were not required to raise contribution    issue, the Fund argues the trial court abused its discretion in
rates, legally or otherwise; they had simply “agreed in            sustaining Towers Perrin's objections to certain of the Fund's
principle, in 1995, that, once an actuarially sound fund was       summary judgment evidence. In light of our holding that the
established by current contribution levels, the responsibility      *193 trial court correctly granted a no-evidence summary
for future contributions ... would be jointly shared by the        judgment against the Fund on causation, we address only the
parties, and would be quantified and allocated by negotiation      propriety of the trial court's rulings on the objections to the
in future agreements, as necessary.” In short, this case is        affidavit testimony of the two witnesses offered by the Fund
entirely unlike Greenstein.                                        to establish causation—George Suther and John Anderson Jr.

The Fund also cites The Orthopaedic Clinic of Monroe
v. Ruhl, 34,700 (La.App. 2 Cir. 5/11/01), 786 So.2d 323,
writ denied, 2001–1727 (La.10/5/01), 798 So.2d 970. Again,                              Standard of Review
however, the evidence in Ruhl was held to be sufficient to
                                                                   We review a trial court's evidentiary rulings under the abuse
establish causation because the record included testimony
                                                                   of discretion standard. See United Blood Servs. v. Longoria,
from both the plaintiffs' and the defendants' experts “that
                                                                   938 S.W.2d 29, 30 (Tex.1997).
[the] plaintiffs suffered financially as a result of the failure
to terminate,” which was caused by the defendant actuary's
failure to timely provide the needed actuarial calculations.
786 So.2d at 331 (emphasis added). No such testimony                                        Discussion
appears in this summary judgment record.
                                                                    [8] Anderson was the firefighters' union's chief negotiator
                                                                   in the 2002 collective bargaining process. He testified that
The Fund also argues there is “expert evidence of causation”
                                                                   he is “familiar with the history of the negotiations with the
and points to the affidavits of Dr. Carl M. Hubbard
                                                                   City of San Antonio over the funding of the ... Fund;” both
and Lawrence Mitchell and the deposition testimony of
                                                                   the union and the City “relied on the recommendations of
Robert May. Hubbard authored a report that concluded the
                                                                   Towers Perrin” in negotiating the 1999 and 2002 collective
economic loss to the Fund of using the contribution rates
                                                                   bargaining agreements; and, “given the long history of relying
recommended by Towers Perrin and agreed to in the 2002
                                                                   on the Towers Perrin recommended contribution rates, and
Firefighters' Collective Bargaining Agreement instead of the
                                                                   the history of [the union] and the City of San Antonio
rate recommended in the Rudd and Wisdom 2002 report
                                                                   adopting these rates, it is my opinion, which I believe is
is $16.5 million. Mitchell and May concluded that Towers
                                                                   well founded, that there is a reasonable certainty that [the
Perrin's conduct fell below the standard of care and resulted
                                                                   union] and the City of San Antonio would have adopted
in a recommended pre-funding rate in the 2000 Report that
                                                                   higher contribution rates in the 2002 Firefighters CBA if it
was too low. As evidenced by their conclusions, however,
                                                                   had been known that the contribution rates recommended
Hubbard, Mitchell, and May testified on the issues of breach
                                                                   in the 2000 Towers Perrin study were too low.” Suther,
and damages. None even purported to testify on causation,
                                                                   president of the firefighters' union and one it's the lead
i.e., if Towers Perrin had recommended a higher pre-funding
                                                                   negotiators in the negotiations leading up to the firefighters'
rate, it would have been adopted by the City and the unions
                                                                   2002 collective bargaining agreement, testified to the same


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Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


                                                                   such as an opinion on what someone else was thinking
effect. The trial court sustained Towers Perrin's objection
                                                                   at a specific time, does not help the jury to either (1)
that this testimony was “opinion testimony by a person never
                                                                   understand the witness' testimony better, or (2) decide the
designated as an expert witness on this topic by the [Fund]
                                                                   question of the other person's intent. Mere conjecture does
under the controlling provisions of [the] Court's Scheduling
                                                                   not assist the jury.” *194 Fairow v. State, 920 S.W.2d
Order entered on April 23, 2003.” The Fund does not argue
                                                                   357, 361 (Tex.App.-Houston [1st Dist.] 1996), aff'd, 943
that it designated Anderson and Suther as expert witnesses;
                                                                   S.W.2d 895 (Tex.Crim.App.1997). “Speculate” means “to
rather, the Fund argues it was not required to designate
                                                                   take to be true on the basis of insufficient evidence.”
them “as experts in order [for them] to give [their] opinion
                                                                   WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY
on matters which involve lay testimony.” In support of its
                                                                   1133 (Merriam–Webster Inc.1988).
argument, the Fund cites Texas Rule of Evidence 701.

                                                                   We hold the Rule 701 test is not met by Anderson's and
[9]   [10]     [11]   Rule 701 provides as follows:
                                                                   Suther's causation testimony. This testimony was based not
             If the witness is not testifying as                   on their perceptions but on their speculative conclusions
             an expert, the witness' testimony in                  regarding what the City's negotiators, the members of the
             the form of opinions or inferences is                 San Antonio City Council, and hundreds of members of the
             limited to those opinions or inferences               firefighters' union would have done if Towers Perrin had
             which are (a) rationally based on                     recommended a higher pre-funding rate. Accordingly, we
             the perception of the witness, and                    hold the trial court did not abuse its discretion in sustaining
             (b) helpful to a clear understanding                  Towers Perrin's objections to this testimony.
             of the witness' testimony or the
             determination of a fact in issue.

TEX.R. EVID. 701. “The perception underlying the lay                                      CONCLUSION
witness's testimony may be what was seen, heard, smelled,
                                                                   Because the summary judgment evidence fails to raise a
tasted, touched or felt.” State v. Brainard, 968 S.W.2d
                                                                   genuine issue of material fact on causation, the trial court
403, 412 (Tex.App.-Amarillo 1998) (citing HULEN D.
                                                                   correctly granted Towers Perrin's motion for a no-evidence
WENDORF, ET AL., TEXAS RULES OF EVIDENCE
                                                                   summary judgment on this ground. And the trial court
MANUAL VII–5 (3d ed.1991)), aff'd in part and rev'd
                                                                   properly sustained Towers Perrin's objections to the only
in part on other grounds, 12 S.W.3d 6 (Tex.1999). Thus,            evidence tendered by the Fund on the causation issue because
“Rule 701's requirement that the testimony be based on
                                                                   it is based not on perception but speculation. We therefore
the witness's perception presumes the witness observed             affirm the trial court's judgment.
or experienced the underlying facts, thus meeting the
personal-knowledge requirement of [R]ule 602.” Turro v.
State, 950 S.W.2d 390, 403 (Tex.App.-Fort Worth 1997,              All Citations
pet. ref'd) (citing Bigby v. State, 892 S.W.2d 864, 889
(Tex.Crim.App.1994), cert. denied, 515 U.S. 1162, 115 S.Ct.        191 S.W.3d 185
2617, 132 L.Ed.2d 860 (1995)). “A speculative opinion,


Footnotes
1      An actuary is “[a] statistician who computes insurance and pension rates and premiums on the basis of experience
       tables.” BLACK'S LAW DICTIONARY 34 (5th ed.1979).
2      The pre-funding or contribution rate is the amount contributed by the City and the police officers and firefighters to “pre-
       fund” their expected retiree health care benefits; the pre-funding rate is expressed in the collective bargaining agreements
       as a percentage of the City's payroll and a monthly contribution for an employee.
3      The Fund's unfunded accrued liability was explained in the 2000 Report:
            Prior to 1992, $117 per month was contributed for each active police officer and fire fighter to prefund the
            postretirement medical benefits for the members and their spouses. An actuarial valuation of the liabilities performed
            as of October 1, 1992 indicated that a prefunding rate of $341 (or 10.6% of payroll) was necessary to adequately
            fund the retireee medical liability. Because this was such a large increase, the parties involved agreed to gradually


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              7
Board Of Trustees of Fire and Police Retiree Health Fund..., 191 S.W.3d 185 (2005)


            increase the contribution levels reaching the rate of 8.5% of payroll for police officers and $234 per active per month
            for fire fighters for the fiscal year beginning October 1, 1997. In 1997 Towers Perrin updated the valuation results
            and determined that a funding rate of 9.4% was appropriate.
4      According to the 2003 Report, this “significant increase” “can be attributed primarily to these changes: (a) the change in
       the amortization period from 40 years to 30 years, (b) the change in the payroll increase assumption from 7% to 6% per
       year, (c) the 1% increase in assumed annual increases in future benefit claims costs (trend) for the first 9 fiscal years after
       the valuation date, (d) the 5% increase in assumed benefit claims costs for the fiscal year ending September 30, 2002,
       and (e) the change in the investment return assumption from 8.5% to 8.25% per year.” “Another source of increase in the
       recommended contribution rate was adverse experience (worse than assumed) during fiscal year 2001–2002, including
       both adverse investment experience and adverse claims costs.”


End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 8
Burford v. Pounders, 145 Tex. 460 (1947)
199 S.W.2d 141

                                                                       Where lease referred to premises as “being block
                      145 Tex. 460                                     No. 10 of a subdivision of a 66 3 /10 acres of
                 Supreme Court of Texas.                               the Archer Survey located about 2½ miles West
                                                                       of the City of Tyler on the Dallas Highway”,
                      BURFORD                                          although no plat showing block No. 10 was of
                         v.                                            record in the county deed records, description
                    POUNDERS et al.                                    in lease was sufficient to authorize admission
                                                                       of extrinsic evidence to explain the terms used
              No. A-862.      |   Jan. 22, 1947.                       therein, and, where extrinsic evidence identified
                                                                       land, lease was not void under the statute of
Error to Court of Civil Appeals of Sixth Supreme Judicial
                                                                       frauds for want of sufficient description of land.
District.
                                                                       Vernon's Ann.Civ.St. art. 3995.

Trespass to try title suit by W. R. Pounders against S.                Cases that cite this headnote
O. Burford, wherein defendant cross-complained against
plaintiff and R. E. Beaird for specific performance of an
option to purchase contained in a lease and in the alternative   [3]   Specific Performance
for damages against R. E. Beaird for alleged breach of                     Necessity
contract. To review a judgment of the Court of Civil Appeals,          Where promissor openly refuses to perform
192 S.W.2d 914, affirming a judgment for the plaintiffs, the           contract or declares his intention not to perform,
defendant brings error.                                                promisee need not make tender of payment
                                                                       of consideration before suing for specific
Reversed and remanded.                                                 performance, but it is sufficient if promisee is
                                                                       ready and willing and offers to perform in his
                                                                       pleadings.

 West Headnotes (6)                                                    17 Cases that cite this headnote


 [1]    Specific Performance                                     [4]   Vendor and Purchaser
            Bona Fide Purchasers                                           Questions for Jury
        Vendor and Purchaser                                           Whether time is of essence of contract giving
            By Tenant                                                  option to purchase realty is ordinarily a question
        Where lease contract was not filed for record                  of fact.
        but tenant was in visible physical possession of
                                                                       1 Cases that cite this headnote
        premises at time of sale thereof by landlord,
        purchaser had constructive notice of lease and
        was not innocent purchaser for value, and was            [5]   Appeal and Error
        in no better position than landlord to defend                     Implied Findings in General
        tenant's suit for specific performance of option to            The rule that supplemental findings necessary to
        purchase contained in lease.                                   support judgment are presumed is not applicable
                                                                       when findings and conclusions disclose the basis
        9 Cases that cite this headnote
                                                                       for judgment, and the court does not find such
                                                                       necessary supplemental facts.
 [2]    Evidence
            Sufficiency of Description to Admit Parol                  10 Cases that cite this headnote
        Evidence
        Frauds, Statute Of                                       [6]   Specific Performance
            Contents of Instrument                                         Necessity



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          1
Burford v. Pounders, 145 Tex. 460 (1947)
199 S.W.2d 141

        Specific Performance                                     was engaged in the real estate business and had sold some of
            Payment of Consideration Into Court                  the other tracts of the subdivision. In the interest of brevity
          A tenant offering in his pleadings to do equity        it is stated here that the Court of Civil Appeals held (and we
          could maintain suit for specific performance of        are in accord with its holding) that constructive notice of the
          option to purchase contained in lease without          contents of the lease contract was visited upon Pounders at the
          tendering the agreed price to landlord who             time he received the deed; and that as pointed out by the Court
          repudiated option by selling to third person           in its opinion, ‘Under the pleadings supported by the above
          without notice to tenant as required by option,        facts and other evidence not necessary to detail, Pounders was
          and tenant would be awarded land on paying             not an innocent purchaser for value.’ Ramirez v. Smith, 94
          into court the agreed price as tendered in his         Tex. 184, 59 S.W. 258; 43 T. J., Vendor-Purchaser, Sec. 389.
          pleadings.                                             He knew some one was in possession and Beaird told him
                                                                 it was Burford. There were visible circumstances indicating
          20 Cases that cite this headnote                       that Burford was in possession. It is well to note here also that
                                                                 Pounders (not being an innocent purchaser) was in no better
                                                                 position that his grantor (Beaird) to defend Burford's suit for
                                                                 specific performance. Langley v. Norris, 141 Tex. 405, 173
Attorneys and Law Firms                                          S.W.2d 454, 148 A.L.R. 555. See also in this connection
                                                                 the well considered case of Driebe v. Fort Penn Realty Co.,
 *461 **141 Lasseter, Spruiell, Lowry, Potter & Lasater          331 Pa. 314, 200 A. 62, 117 A.L.R. 1091. Pounders, with
and Wilbert Lasater, all of Tyler, for petitioner.               notice, involved himself in the lease contract relations of
                                                                 Beaird an Burford. It makes for brevity also to note at this
John Y. Lawhon, of Tyler, for respondents.
                                                                 point our agreement with the Court of Civil Appeals that
Opinion                                                          the description of the land given in the lease contract was
                                                                 sufficient to authorize the admission of the extrinsic evidence
TAYLOR, Justice.                                                 referred to in the opinion ‘to explain the terms' used in the
                                                                 lease, and to make feasible the identification of the land;
W. R. Pounders filed this suit against S. O. Burford in trespass and that ‘under such status, the lease contract was not afoul
to try title to a small tract of land, the last remaining unsold of the statute of frauds (Vernon's Ann.Civ.St. art. 3995).’
of 11 similar tracts of the R. E. Beaird Subdivision located     See discussion in the opinion and authorities there cited. At
about two and a half miles west of the City of Tyler on the      Beaird's home on March 5, 1943, Beaird and Burford agreed
Dallas highway. Burford duly answered and filed a cross          upon the terms of the lease. After writing and signing it,
action against Pounders, joining R. E. Beaird as codefendant,    Beaird sent it to Burford. Burford signed it, and, according
seeking primarily specific performance of contract; and in the   to a stipulation of the parties, attached his check for $25 and
alternative, recovery of damages. No question of defective       on March 12, 1943, mailed both the contract and the check to
pleadings is urged by any of the parties. Upon trial without     Beaird. There were no further negotiations between them and
a jury judgment was for Pounders and Beaird, and against         there is no question of mutual mistake, accident or fraud, in
Burford on his cross action. The Court of Civil Appeals          the case. For convenience we *463 set out at this point the
affirmed the judgment. 192 S.W.2d 914, 915.                      body of the lease contract without paragraphing: ‘The lease
                                                                 is for two years. Consideration Twenty-five dollars per year
 *462 The controversy arose out of a two-year lease contract
                                                                 payable in advance each year. This lease is for the purpose of
made on March 5, 1943, **142 whereby Beaird as lessor
                                                                 pasturing and gardening * * *. R. E. Beaird, Lessor, agrees to
(also the owner) gave Burford, the lessee, a ‘refusal to
                                                                 permit the lessee, S. O. Burford, to remove from the premises
purchase’ the land for an agreed price of $1,000. The contract
                                                                 any improvements, that may be put there by the Lessee, when
is copied in the Court of Civil Appeals opinion. The trial
                                                                 this lease expires. * * * Burford, lessee, agrees to vacate
court's findings of fact and conclusions of law, the statement
                                                                 the premises on notice of the sale,-at any time-of the above
of facts, and also certain stipulations made by the parties upon
                                                                 described acreage, on the return of whatever unearned portion
the trial, constitute a part of the record before us.
                                                                 of the rent money by R. E. Beaird or by any one to whom he
 [1] [2] It appears that Beaird, about five months before the
                                                                 may sell the same. * * * Beaird agrees to give S. O. Burford
lease expired, and while Burford was in possession of the land
                                                                 the refusal of purchase of the above described land before he
using it for garden and pasture, deeded it to Pounders, who


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             2
Burford v. Pounders, 145 Tex. 460 (1947)
199 S.W.2d 141

sells the same to any one else. Also, that whatever amount          option * * * Beaird purported to sell such property to cross-
of rent money having been paid will apply on purchase price         defendant, W. R. Pounders, on or about October 18, 1944,
of same. The price agreed upon by this contract shall be One        while said lease contract was in * * * effect and without giving
Thousand Dollars for the 6 1/3 acres.’ (Italic ours.)               cross-plaintiff an opportunity to exercise his option * * *. That
                                                                    on or about February 20, 1945, cross-plaintiff gave notice to
                                                                    * * * Beaird of his election to exercise said option * * *. At
Beaird testified that Burford duly paid him the $50 called          that time cross-plaintiff had paid * * * as rent under the * *
for in the contract, $25 a year in advance, and that he told        * lease; and on or about February 20, 1945, * * * tendered
Pounders that Burford had a written lease contract. It was          * * * $950.00 * * * in cash to * * * Beaird, and requested
admitted by Beaird that he deeded the property to Pounders          a conveyance of said property in compliance with the terms
without letting Burford know he contemplated selling it and         of said contract. That * * * Beaird refused to accept said
without giving him an opportunity to buy it, and the trial court    money and * * * Beaird and Pounders have refused to make
found that Burford knew sometime before Christmas, 1944,            conveyance of said property * * *, and still refuse to do so.
that Beaird had sold the land. On February 20, 1945, Burford        That cross-plaintiff * * * tenders * * * $950.00 * * * in court,
wrote Beaird that he was formalizing (by means of the letter)       and asks that cross-defendants perform said contract.’
the prior verbal notice of his desire to exercise his option to
purchase the land; and that he was therewith tendering the          The trial court found that when Beaird sold the land to
consideration provided in the contract, **143 ‘to wit, the          Pounders, Burford (not having ‘sold his property in Houston’)
sum of $1000.00 less the $50.00 I have paid you in rent.’           ‘was not then in position to have bought and paid for the land
Burford stated in the letter that he would be within his legal      at that time.’ Beaird testified it was his intention all along to
rights to remain in possession after the expiration of the lease    sell the land for.$1000.00 only in event ‘of an emergency’;
contract, that he was sending Pounders a copy of the letter,        that while he wrote and signed the above contract, it was
and finally, that ‘you will consider this a formal notice that      not the contract he and Burford entered into; that he put in
I do now claim, and shall continue to claim, the exclusive          the ‘refusal-to-purchase’ clause not as an option, but ‘as a
right of possession.’ Beaird testified that Burford brought a       matter of courtesy to a young man * * * he was trying to do
check to the house ‘and handed it to me, and I didn't even          something for’; and that the reason behind his adding ‘that
look at it’; that he told him he had already sold the place to      clause’ was to give Burford ‘the first shot at it’ if he had to sell
Pounders ‘would have nothing further to do with that part           for $1,000. Beaird was straight-forward in his statement that
of it.’ Before stating the remaining pertinent facts we quote       he harbored such mental reservation, in that when questioned
from a recent general statement, 49 American Jurisprudence,         further as *465 to why he put in the option clause he replied:
Special Performance, the following general statement of the         ‘I just made a mistake, that's all.’ The date mentioned, it will
applicable law: ‘Whatever difference of opinion there may be        be noted, was well within the two-year contract period.
as to the necessity of tender of performance before suit when
the defendant *464 is not in default, it is clear that a tender     The trial court's conclusions of law on which he predicated
is unnecessary if the defendant repudiates the contract before      his judgment against Burford were as follows:
suit, or it appears that he would have refused the tender if        ‘III. The ‘Option’, not specifying any time within which it
it had been made. * * * If the defendant puts himself in an         might, or should, be exercised, and the land being for sale at
attitude of default, resists the performance, and insists that he   all times while rented by Burford, time was necessarily of the
is not bound by the contract, tender to him is unnecessary. *       essence of such an ‘option’, and the same was invalid for lack
* * Consequently, all that is required in such case is that the     of a provision of time for the exercise thereof.
plaintiff place himself in favor with the court, and this may
be done by a proper offer in the pleadings.’ (Italics ours.)        ‘IV. Burford, not being in position to have purchased the
                                                                    land at the time it was **144 sold to Pounders, and it being
Burford, it appears from the following pleading contained in        subject to sale all of the time since it was rented to Burford,
his trial cross-petition, made such proper offer: ‘That said        the failure to notify Burford to then exercise his option if he
lease contract contained a provision giving the cross-plaintiff     wanted to, would have been a futile thing, as under his own
an option to purchase the above described property at any time      testimony he could not then have performed by then buying
during the term of the lease for the sum of * * *. $1000.00 *       the land, and there being no provision binding Beaird to hold
* *, less whatever * * * cross-plaintiff might have previously      the sale of the land for him to any particular time, Burford
paid as rent for the property. * * * That in violation of the       suffered no injury by the sale to Pounders without notice to


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  3
Burford v. Pounders, 145 Tex. 460 (1947)
199 S.W.2d 141

him (Burford) of the sale, and, therefore cannot recover either
specific performance or damages.’ (Italics ours.)
                                                                     The Court of Civil Appeals recognized in the concluding
                                                                     paragraph of its opinion that ‘Beaird was in default in failing
It will be observed that the trial court concluded as matters of     to give Burford the refusal to purchase,’ but excused his
law as a basis for his judgment, (1) and that the option was         default on the authority of a statement quoted from 58 C.J.,
invalid because the contract contained no provision fixing a         Specific Performance, Sec. 316 (sound law but not applicable
time for its exercise, (2) that Beaird repudiated his contract       here). The law applicable to the present case is pointed
by selling the land without giving Burford the refusal to            out by subsequent statement in the same section that ‘on
purchase, and (3) that Burford suffered an injury for the            the contrary, complainant ordinarily is entitled to specific
reason he was not in position at the time the land was sold to       performance where he alleges and proves that he * * * is
exercise his option. It will be observed also that he was careful    ready, able and willing to perform.’ The author, in addition to
not to hold that the date upon which he found Burford had the        stating the law as just quoted, points by footnote references
money (February 21, 1945) was not within a reasonable time           to subsequent sections (342 and 348-350) dealing with the
for exercising the option.                                           specific subjects of ‘Tender Excused’ and ‘Tender or Offer
 [3] The Court of Civil Appeals affirmed the judgment based          Excused,’ respectively. In a footnote (2, f) under section 342
on the above holdings as matters of law, and Burford applied         dealing with specific performance in ‘Suit by Purchaser,’ it
for writ of error. He alleged among other points of error            is stated that ‘In Texas' an actual tender ‘is not necessary
in his application, that the Court of Civil Appeals erred in         where the purchaser pleads and proves a willingness to pay,
upholding the trial court's conclusions stated in No. IV, supra,     but is entitled to relief provided that, within a time fixed
and urged in support of the point that under the circumstances       in the decree, he shall pay the amount due,’ citing among
of this case it was not incumbent on Burford to make a               other **145 cases, Kalklosh v. Haney, and Lockwood v.
tender in the matter *466 of exercising his option within            Frost, supra. *467 In section 348 it is stated that ‘whatever
a reasonable time after learning of the sale, but that it was        difference of opinion may exist as to the original necessity
sufficient for him to offer to do equity in his pleadings.           of a tender of the consideration before suit, * * * it appears
This contention is in exact accordance with the statement            to be quite well settled that a formal tender is excused where
of the law quoted above, 199 S.W.2d 143, and with the                a tender would be a useless and idle ceremony’; and that
settled law of Texas. The Court of Civil Appeals was in error        a ‘tender is also excused where defendant repudiates the
in rendering judgment against Burford. The applicable law            contract’; and further that ‘tender in pleadings (is) sufficient’
has been definitely settled in this state. Regester v. Lang,         where plaintiff sets forth that he is ready, able and willing ‘or
Tex.Com.App., 49 S.W.2d 715; Kalklosh v. Haney, opinion              * * * pays the consideration into court.’ In section 349 dealing
by Judge Tarlton, 4 Tex.Civ.App. 118, 23 S.W. 420; Babcock           with ‘Repudiation of Contract,’ it is stated that ‘the necessity
v. Lewis, 52 Tex.Civ.App. 8, 113 S.W. 584 (wr. ref.); Taylor         of a tender is dispensed with where defendant repudiates
v. Kaufman, Tex.Civ.App., 267 S.W. 526; Lockwood v.                  the contract, or makes any declaration which amounts to a
Frost, Tex.Civ.App., 285 S.W. 874; San Antonio Joint Stock           repudiation, * * *,’ citing the Texas cases, Taylor v. Kaufman
Land Bank v. Malcher, Tex.Civ.App., 164 S.W.2d 197 (ref.             and Babcock v. Lewis, supra. In the following section (350)
want merit); 58 C.J., Specific Performance, Secs. 348-350. In        it is stated that ‘if a tender of the purchase price or other sums
the case first cited (in which the promissor denied he had ever      before suit is necessary, it is excused where the vendor or
made the contract under consideration) the court pointed out         seller has put it out of his power to perform, as where he has
that a tender ‘would have been a vain and useless thing,’ (49        conveyed the property * * * to a third person.’
S.W.2d 717) and said: ‘It is thoroughly settled that where a
defendant has openly and avowedly refused to perform his             The assignment under which it was urged that it was not
part of a contract, or declared his intention not to perform it, a   incumbent on Burford to make tender of the amount due as
plaintiff need not make tender of payment of the consideration       therein set out, is sustained. It appears from the trial court's
before bringing suit. It is sufficient if he is ready and willing    conclusions of law that he not only did not find as a fact
and offers to perform in his pleadings.’ See in this connection      that Burford did not make such offer within a reasonable
the following well considered cases in other jurisdictions:          time before suit and within a reasonable time under the
Cummings v. Nielson, 42 Utah 157, 129 P. 619; Casto v.               circumstances, but that he was careful not to so hold. He
Cook, 91 W.Va. 209, 112 S.E. 502; and Driebe v. Fort Penn            merely held, as appears from the court's concluding finding
Realty Co., supra.                                                   of fact, that Burford, ‘took no action then (when he learned


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 4
Burford v. Pounders, 145 Tex. 460 (1947)
199 S.W.2d 141

                                                                   the findings and conclusions disclose the basis therefor, and
Beaird had sold the property) * * * because he had not sold’
                                                                   that the court did not find such necessary supplemental facts.
his Houston property and did not have the money ‘until about
February 21, 1945.’
                                                                    [6] Since Beaird put himself in an attitude of default, and
There was no question that the value of the land materially        repudiated the contract by selling to Pounders, a tender to
changed. The court's finding was that the market value was         Beaird was unnecessary. It was sufficient for Burford to offer
the same at the time of the sale in October, at the time of        in his pleadings to do equity. This Burford has done. The only
the trial, and at the time Burford tendered his check. While       matter remaining to be done by the trial court is to direct that
the Court of Civil Appeals apparently held that Burford had        payment be made into court by Burford forthwith as tendered
a reasonable time within which to make tender it did so, not       in his pleadings; and that upon the making of such payment
upon a fact finding of the court below, but as a matter of         into court, judgment be entered denying Pounders recovery
law, saying (in conclusion III) that the contract was invalid.     of the land and awarding Burford judgment for title and writ
This was incorrect. The material consideration is that Burford     of possession.
offered in his pleadings to do equity. Cases and authorities
cited 199 S.W.2d 144, and authority quoted 199 S.W.2d 143,
                                                                   The judgments of the courts below are reversed and set
both supra.
                                                                   aside and the cause is remanded for further proceedings in
 [4] [5] It conclusively appears that whether time was of
                                                                   accordance herewith. It is so ordered.
the essence of the contract (ordinarily a question of fact)
was taken out of the case by Beaird's testimony, and that
it would have been an idle ceremony to tender the agreed           SIMPSON, J., not sitting.
price at any time, since *468 he made it clear that it was
his intention to sell at that price only in the event of an        All Citations
emergency. The rule that supplemental findings necessary to
                                                                   145 Tex. 460, 199 S.W.2d 141
support the judgment are presumed, has no application when

End of Document                                                © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              5
City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)


                                                                       reversed on appeal. Rules of Civil Procedure,
                                                                       rule 166–A.
                       421 S.W.2d 427
               Court of Civil Appeals of Texas.                        12 Cases that cite this headnote
                    Houston (1st Dist.).

       The CITY OF HOUSTON, Appellant,                           [3]   Appeal and Error
                     v.                                                   On Motion for Judgment
   SOCONY MOBIL OIL COMPANY, Inc., Appellee.                           An interlocutory summary judgment is not
                                                                       appealable until a final judgment is entered
               No. 15118. | Nov. 16, 1967.                             disposing of all parties and issues in the cause.
           |    Rehearing Denied Dec. 7, 1967.                         Rules of Civil Procedure, rule 166–A.

Action for damage resulting to realty from lowering of grade           6 Cases that cite this headnote
of street by defendant. The District Court, Harris County, W.
Sears McGee, J., entered judgment in favor of plaintiff and
defendant appealed. The Court of Civil Appeals, Coleman,         [4]   Appeal and Error
J., held that grant of summary judgment establishing liability            Ordering New Trial of Certain Issues Only
of city for damage to real estate resulting from lowering of           An appeal from a final judgment, in which
grade was properly entered based on unsworn pleadings of               an interlocutory summary judgment has been
the parties, and defendant's answer was insufficient to raise          merged, presents an opportunity for an appeal
issues of fact precluding summary judgment in view of fact             from the summary judgment, and if the appeal
matter sought to be raised constituted affirmative defenses            results in a reversal on points not involved
and defendant failed to carry burden of submitting evidence            in the summary judgment, that portion of the
in support thereof.                                                    case decided on summary judgment will not be
                                                                       remanded for a new trial.
Judgment affirmed.
                                                                       9 Cases that cite this headnote


                                                                 [5]   Appeal and Error
 West Headnotes (9)
                                                                          Specification of Errors
                                                                       A question not presented in a point of error or
 [1]    Judgment                                                       by argument under points of error in appellant's
            Partial Summary Judgment                                   brief cannot be considered.
        Purport of rule providing for an interlocutory
        summary judgment on issue of liability although                3 Cases that cite this headnote
        there is a genuine issue as to amount of damages
        is to make issues determined on such motion for          [6]   Judgment
        partial summary judgment final. Rules of Civil                     Presumptions and Burden of Proof
        Procedure, rule 166–A.                                         Burden is on movant for summary judgment to
                                                                       demonstrate by evidence that there is no material
        3 Cases that cite this headnote
                                                                       factual issue upon elements of his claim, and
                                                                       upon going forward with such evidence he is
 [2]    Judgment                                                       entitled to such judgment unless his opponent
            Construction and Operation                                 comes forward with a showing that there is a
        Once an interlocutory summary judgment is                      disputed fact issue.
        entered, the issues decided cannot be further
        litigated unless the judgment is set aside by the              2 Cases that cite this headnote
        trial court, or unless the summary judgment is



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       1
City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)




 [7]    Pleading                                                 Opinion
            Anticipating Defenses
                                                                 COLEMAN, Justice.
        It is not incumbent upon plaintiff to incorporate
        in his pleading allegations which negative an            This is a suit for the damage resulting to real estate from the
        affirmative defense.                                     lowering of the grade of Long Point and Foley Streets by
                                                                 the City of Houston. After appellee secured an interlocutory
        1 Cases that cite this headnote
                                                                 summary judgment decreeing *429 liability, the cause was
                                                                 tried to a jury on the question of damages. Based on the
 [8]    Appeal and Error                                         jury verdict and the interlocutory summary judgment, the trial
           Matters Occurring After Judgment                      court entered a final judgment in favor of appellee.
        Admissions of fact and response to
                                                                 Appellant contends that the trial court erred in overruling
        interrogatories and evidence introduced at trial
                                                                 its motion for judgment non obstante veredicto because the
        on a bill of exceptions could not be considered
                                                                 evidence established that the City of Houston levied a paving
        in determining propriety of grant of a partial
                                                                 assessment on the property in question and appellee failed
        summary judgment which was entered prior to
                                                                 to appeal from such assessment in the manner provided
        filing of admissions of fact and prior to trial on
                                                                 by law, and, further, estopped itself from denying that the
        bill of exceptions.
                                                                 property was enhanced in value by the paving by paying the
        Cases that cite this headnote                            assessment, which was based on the enhanced value of the
                                                                 property. By its other point appellant contends that the trial
                                                                 court erred in entering judgment for appellee for the same
 [9]    Judgment
                                                                 reasons.
            Evidence and Affidavits in Particular Cases
        Grant of summary judgment establishing                   The summary judgment establishing liability was based on
        liability of a city for damage to real estate            the unsworn pleadings of the parties and the answers made to
        resulting from lowering of grade was properly            certain requests for admissions of fact. In its petition appellee
        entered based on unsworn pleadings of the                alleged ownership of certain real property fronting 125 feet
        parties, and defendant's answer was insufficient         on Long Point Road and 125 feet on Old Campbell Road
        to raise issues of fact precluding summary               (Foley Street) within the City of Houston. This property was
        judgment in view of fact matter sought to                improved by the construction of a modern gasoline service
        be raised constituted affirmative defenses and           station. In connection with a street improvement program
        defendant failed to carry burden of submitting           the City of Houston lowered the grade on Long Point Road
        evidence in support thereof.                             and Foley Street from two to three feet, thereby destroying
                                                                 all approaches to and entries upon the plaintiff's premises.
        2 Cases that cite this headnote                          It was alleged that as a result of the steep grades between
                                                                 the plaintiff's lot and the streets resulting from this work, it
                                                                 is impossible to construct suitable driveways to the filling
                                                                 station and that in order to restore the premises to a suitable
Attorneys and Law Firms                                          condition for use as a filling station it would be necessary to
                                                                 remove all improvements and lower the grade of the lot. The
*428 William A. Olson, City Atty., Homer T. Bouldin,             petition alleged damage in the sum of $21,205.00.
Trial Supervisor, Joseph G. Rollins, Senior Asst. City Atty .,
Houston, for appellant.                                          In its answer the City of Houston alleged that by Ordinance
                                                                 No. 61—1982 enacted by the City on November 1, 1961, the
William H. Tabb, John A. Berke, Jr., David R. Latchford,         City Council of the City of Houston determined the necessity
Jerome, E . Dawkins, Dallas, for appellee.                       for the paving of Long Point Road and of assessing the various
                                                                 abutting property owners, including plaintiff, for this work;
                                                                 that thereafter, and in compliance with law, due notice was
                                                                 given to plaintiff of this paving assessment and opportunity



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             2
City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)


was afforded and plaintiff to protest same and present any          motion for new trial appellant complained of the failure to
claims for damages but, instead, on April 4, 1963 it did            grant an instructed verdict; alleged error in submitting the
voluntarily pay the full amount of the paving assessment            case to the jury, and alleged error in that the court refused
assessed against it for net benefits and enhancements to            its motion for judgment non obstante veredicto. There was
plaintiff's property resulting from such paving; hence, any         no complaint made to the court entering the final judgment
claim for diminution in market value to its premises which          that the 113th District Court had erred in entering the partial
plaintiff might otherwise have had has been expressly waived        summary judgment at any stage of the proceeding, unless
by said plaintiff.                                                  such complaint can be implied from the recitation in the
                                                                    judgment that the defendant duly excepted and gave notice of
The plaintiff's unsworn motion for summary judgment was             appeal.
filed on October 21, 1965, and alleged that the attached
interrogatories and admissions show that, except for the            Appellant has no point in its brief in this Court specifically
amount of damages, there is no genuine issue as to any              complaining of the action of the trial court in granting the
material fact. This motion was set for hearing on November          partial summary judgment. The summary judgment is not
8, 1965. On this date the City filed its unsworn answer to          mentioned by appellant in its argument under either of the
the motion for summary judgment in which it stated that in          points presented.
addition to the question of damages there remained to be
proved other facts in order to establish the liability of the       During the trial of the damage issue before the jury,
City, and that the burden of proving such facts rested on the       the trial court sustained appellee's objection to appellant's
plaintiff.                                                          proffered evidence concerning the paving assessment. The
                                                                    final judgment incorporated the partial summary judgment
The trial court proceeded to hear the motion and, on                and was based thereon.
November 8, 1965, entered a decree sustaining the motion
and ordering that the cause proceed to trial on the sole issue      Rule 166—a, Texas Rules of Civil Procedure, specifically
of damages.                                                         provides that a summary judgment, interlocutory in character,
                                                                    may be rendered on the issue of liability alone although
After the entry of this decree the plaintiff filed a supplemental   there is a genuine issue as to the amount of damages. It is
petition in answer to certain special exceptions contained in       provided that the judgment shall be rendered on the pleadings,
the City's answer. On the 6th day of June, 1966, the special        depositions, admissions, and affidavits on file, and that no
exceptions were heard and the trial court entered an order          oral testimony shall be received at the hearing . If there is no
overruling them with the exception of one bearing on the issue      genuine issue as to a material fact developed on the basis of
of damages.                                                         this evidence, the movant is entitled to a judgment. The rule
                                                                    also provides that when judgment is not rendered on the whole
The cause proceeded to trial on the issue of damages on             case or for all the relief asked, the trial court shall ascertain
November 14, 1966, and a judgment was entered on the 19th           if practicable, what material facts exist without substantial
day of *430 December, 1966, reciting the fact that the issue        controversy and shall set out such facts in an order. On the
of liability had been established by the order of the 113th         final trial such facts shall be deemed established and the trial
Judicial District Court on November 8, 1965, and setting out        shall be conducted accordingly.
the issues on damages together with the answers of the jury.         [1]     [2]    [3] It is the clear purport of this rule to make
The judgment then decreed that the plaintiff recover the sum        the issues determined on the motion for summary judgment
of $7,750.00, representing the difference in the market value       final. Once an interlocutory summary judgment is entered, the
of the property immediately before and immediately after the        issues decided cannot be further litigated unless the judgment
damage.                                                             is set aside by the trial court, or unless the summary judgment
                                                                    is reversed on appeal. An interlocutory summary judgment
Appellant presented the matters it relies on for reversal in its
                                                                    is not appealable until a final judgment is entered disposing
motion for judgment non obstante veredicto and in its motion
                                                                    of all parties and issues in the cause. Maples v. Klimist, 377
for new trial. In its motion for judgment it alleged that it
                                                                    S.W.2d 774 (Tex.Civ.App., Texarkana, 1964).
was entitled to an instructed verdict by reason of the failure
to appeal from the special assessment and the subsequent
                                                                     [4] An appeal from a final judgment, in which an
payment thereof. There was no mention of the summary
                                                                    interlocutory summary judgment has been merged, presents
judgment and, of course, no motion to set it aside. In the


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             3
City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (1967)



an opportunity for an appeal from the summary judgment.
If the appeal results in a reversal on points not involved in    Appellant's points do not challenge the propriety of the
the summary judgment, that portion of the case decided on        summary judgment except insofar as a material question of
summary judgment will not be remanded for a new trial.           fact is raised as to the failure of appellee to appeal from
Coleman v. Hudson Gas & Oil Corporation, 403 S.W.2d 482          the order levying the special assessment and finding that the
(Tex.Civ.App ., Beaumont, 1966, ref. n.r.e.).                    property was enhanced in value by the street improvements,
                                                                 and insofar as a question of waiver of damage was raised by
 [5] A question not presented in a point of error, or by appellee's action in voluntarily paying the assessment.
argument under the points of error, in appellant's brief, cannot  [8] [9] There were no affidavits, depositions, or admissions
be considered. Lott v. Lott, 370 S.W.2d 463 (Tex.Sup., 1963).    on file as of November 8, 1965, tending to raise issues
                                                                 of fact as to any of these matters. Plaintiff's supplemental
                                                                 petition and brief in support of the petition, filed April 26,
 *431 If by liberal construction we may hold that the question
                                                                 1966, and the admissions of fact filed on March 19, 1966,
of waiver of damages by reason of failure to appeal from
                                                                 in response to interrogatories, cannot be considered since
the action of the City Council in finding that the street
                                                                 the summary judgment was entered prior thereto. For the
improvements enhanced the value of the property of appellee
                                                                 same reason the evidence introduced at the trial on the bill
and levying an assessment, which was paid by appellant, was
                                                                 of exceptions cannot be considered. There was no summary
presented to this Court by appellant's points, we find no merit
                                                                 judgment evidence to support the allegations in appellant's
in the points.
 [6]    [7] The propriety of the action of the trial court in answer. Since we are of the opinion that the matters sought
                                                                 to be raised constituted affirmative defenses, appellant had
granting the summary judgment depends on the facts properly
                                                                 the burden of submitting evidence raising issues of fact with
before the Court at the time the judgment was entered. The
                                                                 reference thereto. Gulf, Colorado & Santa Fe Railway Co. v.
burden was on the movant for a summary judgment, in an
                                                                 McBride, supra.
action in which the defendant has pleaded an affirmative
defense, to demonstrate by evidence that there is no material
factual issue upon elements of his claim. He is then entitled    The judgment of the Trial Court is affirmed.
to his judgment unless his opponent comes forward with a
showing that there is such a disputed fact issue upon his        All Citations
affirmative defense. It is not incumbent upon the plaintiff
to incorporate in his pleading allegations which negative the    421 S.W.2d 427
affirmative defense. Gulf, Colorado & Santa Fe Railway Co.
v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1959).

End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               4
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29




     KeyCite Yellow Flag - Negative Treatment                       Affirmed in part, reversed in part, and remanded.
Distinguished by Bishop v. Miller,     Tex.App.-Hous. (14 Dist.),
 September 12, 2013                                                 Paul W. Green, J., filed a dissenting opinion in which
                      269 S.W.3d 588                                Jefferson, C.J., O'Neill and Johnson, JJ., joined.
                   Supreme Court of Texas.

  Nick DiGIUSEPPE d/b/a Southbrook Development
                                                                     West Headnotes (14)
       Co. and Frisco Master Plan, Petitioners,
                         v.
            Roger LAWLER, Respondent.                                [1]    Specific Performance
                                                                                Nature and grounds of duty of plaintiff
            No. 04–0641. | Argued Oct. 20,                                  An essential element in obtaining the equitable
           2005. | Decided Oct. 17, 2008.                                   remedy of specific performance is that the party
           | Rehearing Denied Dec. 19, 2008.                                seeking such relief must plead and prove he was
                                                                            ready, willing, and able to timely perform his
Synopsis                                                                    obligations under the contract.
Background: Vendor brought action against purchaser
of real property for a declaration that the parties' land                   12 Cases that cite this headnote
sale contract was terminated, and requested damages for
breach of contract and also sought to quiet title. Purchaser
                                                                     [2]    Specific Performance
counterclaimed for breach of contract, among other claims,
                                                                                Nature and grounds of duty of plaintiff
and sought specific performance. After jury determined
that vendor breached contract, the 219th Judicial District                  It is a general rule of equity jurisprudence
Court, Collin County, granted judgment in favor of purchaser                in Texas that a party must show that he has
and ordered specific performance. Vendor appealed. The                      complied with his obligations under contract
Dallas Court of Appeals, 2004 WL 1209569, affirmed in                       to be entitled to specific performance of the
part and reversed in part. Purchaser appealed. The Supreme                  contract, and as a consequence, a plaintiff
Court initially declined review, but then granted motion for                seeking specific performance, as a general
rehearing and petition for review.                                          rule, must actually tender performance as a
                                                                            prerequisite to obtaining specific performance.

                                                                            16 Cases that cite this headnote
Holdings: Sitting en banc, the Supreme Court, G. Alan
Waldrop, J., sitting by assignment, held that:
                                                                     [3]    Specific Performance
                                                                                Nature and grounds of duty of plaintiff
[1] remedy provision in contract did not eliminate or
waive purchaser's burden to prove all essential common law                  When a defendant refuses to perform or
elements for obtaining specific performance;                                repudiates a contract, the plaintiff may be
                                                                            excused from actually tendering his or her
[2] purchaser was not entitled to a deemed jury finding that                performance to the repudiating party before
he was ready, willing, and able to perform under the contract;              filing suit for specific performance.

                                                                            1 Cases that cite this headnote
[3] purchaser's pleaded allegations did not satisfy his burden
to prove that he was ready, willing, and able to perform his
obligations when they came due; but                                  [4]    Specific Performance
                                                                                Nature and grounds of duty of plaintiff
[4] purchaser did not waive for appellate review his request                When a defendant refuses to perform or
for a refund of earnest money.                                              repudiates a contract, a plaintiff seeking



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           1
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

        specific performance is excused from tendering
        performance pre-suit and may simply plead                     6 Cases that cite this headnote
        that performance would have been tendered but
        for the defendant's breach or repudiation; this        [8]    Appeal and Error
        exception to the general rule requiring actual                   Failure to Urge Objections
        tender is grounded in the notion that actual pre-
                                                                      Ordinarily, failure to brief an argument on
        suit tender of performance should be excused
                                                                      appeal waives the claimed error, but this rule is
        when it would be a useless act, an idle ceremony,
                                                                      relaxed when fact issues are not germane to the
        or wholly nugatory.
                                                                      resolution of the issue and the issue is a question
        4 Cases that cite this headnote                               of law involving constitutional ramifications or
                                                                      fundamental error.

 [5]    Specific Performance                                          1 Cases that cite this headnote
            Nature and grounds of duty of plaintiff
        Even when pre-suit tender of performance is            [9]    Specific Performance
        excused, a plaintiff is still obligated to plead                  Trial or hearing
        and prove his readiness, willingness, and ability
                                                                      Purchaser was not entitled to a deemed jury
        to perform at relevant times before specific
                                                                      finding that he was ready, willing, and able to
        performance of contract may be awarded.
                                                                      perform under land sale contract with vendor so
        10 Cases that cite this headnote                              as to permit him to obtain specific performance
                                                                      despite submission of a jury question on such
                                                                      claim, even though jury question had been
 [6]    Jury                                                          submitted as to whether purchaser complied with
               Issues of Fact in Equitable Actions                    land sale contract and jury returned a verdict
        When contested fact issues must be resolved                   finding that vendor had breached the contract;
        before a court can determine the expediency,                  whether purchaser complied with contract or
        necessity, or propriety of equitable relief, a party          was excused from complying with contract,
        is entitled to have a jury resolve the disputed fact          remedy of specific performance still required
        issues.                                                       proof that he was ready, willing, and able to
                                                                      perform, and existence of jury question relating
        3 Cases that cite this headnote                               to vendor's breach of contract claim did not
                                                                      provide fair notice of purchaser's claim for
 [7]    Specific Performance                                          specific performance. Vernon's Ann.Texas Rules
            Enforcement by purchaser                                  Civ.Proc., Rule 279.
        Specific Performance                                          1 Cases that cite this headnote
            Nature and grounds of duty of plaintiff
        Provision in land sale contract which set forth
                                                               [10]   Specific Performance
        that one of purchaser's available remedies for
                                                                          Nature and grounds of duty of plaintiff
        breach of contract would be to seek to enforce
        specific performance did not create an automatic              Offering to perform on a contract does not
        right to specific performance upon a finding                  establish the ability to perform, nor does having
        of breach on the part of vendor, and did not                  the ability to perform demonstrate a tender of
        eliminate or waive purchaser's burden to prove                that ability, and the law requires a demonstration
        all essential elements under common law for                   of both before specific performance may be
        obtaining specific performance, including that he             awarded, unless the requirement of tender is
        was ready, willing, and able to perform under the             excused.
        contract.
                                                                      1 Cases that cite this headnote



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         2
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

                                                                       specific performance, and raised the earnest
 [11]   Specific Performance                                           money issue as soon as he was aware of the
            Nature and grounds of duty of plaintiff                    reversal of the trial court's judgment by the Court
        In order to obtain specific performance of a                   of Appeals.
        contract, a plaintiff must prove that he was ready,
        willing, and able to perform his obligations when              3 Cases that cite this headnote
        they came due, and pleading an offer to perform
        at the time the lawsuit is filed does not satisfy
        or replace the need to demonstrate the ability to
        perform at the relevant time.                         Attorneys and Law Firms

        8 Cases that cite this headnote                        *590 Craig T. Enoch, Melissa Prentice Lorber, Winstead
                                                              PC, Austin, James Robert Krause, Lawrence J. Friedman,
                                                              Jeffrey Thomas Hall, Friedman & Feiger, L.L.P., Dallas, TX,
 [12]   Specific Performance
                                                              for Petitioner.
            Necessity
        Purchaser's pleaded allegation, that he was           Hilaree A. Casada, Hermes Sargent Bates, L.L.P., Julia F.
        ready, willing and able to fund the purchase of       Pendery, Attorney At Law, David W. Shuford, Law Office of
        land from vendor on a given date of zoning            David W. Shuford, Daon M. Ward, Godwin Pappas Langley
        approval, did not satisfy his burden to prove         Ronquillo, LLP, Dallas, TX, for Respondent.
        that he was ready, willing, and able to perform
        his obligations when they came due as was             Douglas Laycock, University of Michigan Law School, Ann
        required to obtain specific performance of the        Arbor, MI, for Amicus Curiae.
        land sale contract, where evidence on the
                                                              Opinion
        question of whether the said zoning approval
        date triggered purchaser's obligation to perform
                                                              Justice WALDROP 1 delivered the opinion of the Court,
        was conflicting, and the jury was not asked to
                                                              in which Justice HECHT, Justice WAINWRIGHT, Justice
        resolve the dispute.
                                                              BRISTER, and Justice WILLETT joined.
        5 Cases that cite this headnote
                                                              This case involves a claim for specific performance of a
                                                              real estate purchase contract. After a trial in which the jury
 [13]   Pleading                                              found that the seller breached the contract, the trial court
            Denials                                           rendered judgment in favor of the buyer and ordered specific
        A fact cannot be proved by a controverted             performance. The court of appeals reversed on the basis that
        pleading; the pleading simply puts the matter at      the buyer did not obtain a finding of fact or prove that he was
        issue.                                                ready, willing, and able to perform. The court of appeals also
                                                              concluded that the buyer had waived an alternative claim for
        Cases that cite this headnote                         refund of his earnest money by failing to file a notice of appeal
                                                              as to that alternative basis for relief. We affirm the judgment
                                                              of the court of appeals with respect to the claim for specific
 [14]   Appeal and Error
                                                              performance, reverse with respect to the finding of waiver on
           Nature or form of remedy
                                                              the alternative claim for refund of earnest money, and remand
        Purchaser did not waive for appellate review
                                                              the case to the trial court for further proceedings.
        his request for a refund of earnest money, as
        an alternative theory of recovery to his request
        for specific performance of land sale contract,
        even though he did not file notice of appeal                    I. Factual and Procedural Background
        from trial court judgment against him on the
                                                              In October 1998, Nick DiGiuseppe d/b/a Southbrook
        issue, where purchaser had obtained favorable
                                                              Development Co. entered into a contract with Richard Lawler
        judgment from trial court on his request for
                                                              to purchase approximately 756 acres of Lawler's land near


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           3
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

Frisco, Texas, for $40,000 an acre. 2 The contract made          filed the purchase contract in the deed records. 3 On April
closing of the *591 purchase contingent on obtaining             14, 2000, Lawler filed suit against DiGiuseppe in Collin
acceptable rezoning of the property from the City of Frisco to   County District Court seeking a declaration that the purchase
accommodate DiGiuseppe's development plans, and provided         contract was terminated, requesting damages for breach of
that closing that would occur on the fifteenth day after         contract, and also seeking to quiet title as a result of the filing
successful completion of rezoning. The purchase contract also    of the purchase contract in the deed records. DiGiuseppe
provided for a three-stage deposit of earnest money with the     counterclaimed for breach of contract, quantum meruit,
title company: (1) $100,000 upon the signing of the contract;    breach of a duty of good faith and fair dealing, statutory fraud,
(2) $100,000 upon the submission to the City of Frisco of        promissory estoppel, *592 and specific performance. 4
the application to rezone the property; and (3) $400,000 upon
“approval by the planning and zoning commission of the City      The purchase contract limited the remedies available to the
of Frisco of zoning acceptable to Purchaser of the ‘Land’ as     parties in the event of a breach. In the event DiGiuseppe
applied for.” DiGiuseppe made the first two earnest money        failed to close, Lawler's “sole and exclusive” remedy was
deposits. However, a dispute arose as to whether the events      to retain the earnest money as liquidated damages, and he
that would trigger the requirement for the third deposit had     expressly waived any right to claim any other damages or
occurred.                                                        specific performance from DiGiuseppe. In the event Lawler
                                                                 defaulted in performing his obligations under the contract
In late November 1999, after numerous meetings and a             for any reason other than DiGiuseppe's default or a proper
number of revisions to the rezoning application, the Planning    termination of the contract under its provisions, DiGiuseppe
and Zoning Commission approved new zoning for the                could choose between two remedies: (1) terminate the
property at issue. This new zoning was approved by the           contract and receive a full and immediate refund of the earnest
City Council on January 4, 2000. Although the new zoning         money, or (2) “seek to enforce” specific performance of the
differed from the zoning that the parties had applied for in     contract. DiGiuseppe also expressly waived any right to claim
their original application, it was acceptable to DiGiuseppe.     damages.

On January 12, 2000, Lawler faxed a letter to DiGiuseppe         The case was ultimately tried to a jury and the parties' breach
notifying him that Lawler considered DiGiuseppe in default       of contract claims were submitted on broad-form questions
of the purchase contract for failing to make the third earnest   inquiring as to whether either party failed to comply with
money deposit. Lawler took the position that the requirement     the contract. The jury answered favorably to DiGiuseppe
for the third ($400,000) earnest money deposit had been          that Lawler had failed to comply with the contract and that
triggered when the Planning and Zoning Commission had            DiGiuseppe had not failed to comply. A damages question
approved zoning that DiGiuseppe found acceptable. The            was also submitted and the jury found that DiGiuseppe had
January 12 letter also declared the contract “cancelled”
                                                                 suffered $295,696.93 in damages. 5 Although disputed at
and demanded release of the earnest money on deposit to
                                                                 trial, no question was requested by either party or submitted
Lawler. DiGiuseppe objected to Lawler's notification that the
                                                                 to the jury with respect to specific performance or whether
contract was terminated, taking the position that the third
                                                                 DiGiuseppe was ready, willing, and able to perform under the
earnest money installment had not been triggered because
                                                                 contract at the time he alleged the transaction should have
the new zoning was not approved “as applied for.” He also
                                                                 closed.
declared that he was moving forward with the transaction and
demanded that Lawler continue to move toward closing.
                                                                 On DiGiuseppe's post-verdict motion, the trial court rendered
                                                                 a take-nothing judgment against Lawler and granted
Acting on the belief that the contract with DiGiuseppe was
                                                                 DiGiuseppe specific performance of the purchase contract
terminated, Lawler signed a new purchase contract for the
                                                                 together with an award of attorneys' fees in the amount of
property with DRHI, Inc.—the parent company of DR Horton
                                                                 $75,000. The trial court also appointed a receiver to take
—on February 1, 2000. DiGiuseppe, acting on the belief that
                                                                 possession of the property and effectuate a closing of the
the contract was not terminated, proceeded with finalizing
                                                                 purchase contract in accordance with its terms.
his side of the transaction and demanded that Lawler close.
The transaction did not close. Both parties alleged the other
                                                                 The court of appeals reversed the trial court's order granting
was responsible for the failure to close. DiGiuseppe then
                                                                 specific performance, holding that DiGiuseppe had failed to


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               4
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

conclusively establish, or to request and obtain a finding          obtained a favorable judgment as to specific performance in
of fact on, an essential element of his claim for specific          the trial court, DiGiuseppe argues he was not obligated to
performance—that he was ready, willing, and able to                 file a notice of appeal in the court of appeals to preserve the
perform under the terms of the purchase contract. Lawler            option of pursuing a refund of his earnest money in the event
v. DiGiuseppe, 2004 WL 1209569 (Tex.App.-Dallas 2004)               an appellate court reversed the trial court's award of specific
(mem.op.). The court of appeals also held that the omitted fact     performance. We granted the motion for rehearing and the
finding on specific performance was not necessarily referable       petition for review. 48 TEX. SUP.CT. J. 878 (June 17, 2005).
to a submitted theory and declined to imply a finding that
DiGiuseppe was ready, willing, and able to perform. The
court of appeals upheld the award of attorneys' fees, however,
                                                                                     II. Specific Performance
on the theory that Lawler *593 had pursued a Declaratory
Judgment Act claim, and that statute allows the trial court to       [1] An essential element in obtaining the equitable remedy
award fees as are just and equitable. 6 The court of appeals        of specific performance is that the party seeking such relief
declined to render judgment for the $295,696.93 in damages          must plead and prove he was ready, willing, and able to
found by the jury on the basis that there was no evidence           timely perform his obligations under the contract. In 1938,
to support the finding. 7 The court also declined to award          we stated: “ ‘The doctrine is fundamental that a party seeking
DiGiuseppe any portion of the $200,000 in earnest money that        the remedy of specific performance ... must show himself
he had deposited on the basis that he had waived this claim         to have been ready, desirous, prompt, and eager.’ These
by not filing a notice of appeal on that issue.                     principles have been long recognized and respected by the
                                                                    Courts of Texas.” Ratcliffe v. Mahres, 122 S.W.2d 718, 721–
DiGiuseppe sought review in this Court on two grounds: (1)          22 (Tex.Civ.App.-El Paso 1938, writ ref'd) (quoting 4 JOHN
the purchase contract provided for the remedy of specific           NORTON POMEROY, JR., A TREATISE ON EQUITY
performance in the event of a breach by Lawler regardless of        JURISPRUDENCE § 1408, at 2779 (3d ed.1905)); see also
whether DiGiuseppe obtained a finding of fact that he was           DeCordova v. Smith's Adm'x, 9 Tex. 129, 146 (1852); cf.
ready, willing, and able to perform; and, (2) in the alternative,   Gober v. Hart, 36 Tex. 139, 140 (1871–1872). We reaffirmed
if he is not entitled to specific performance, the court of          *594 the rule in Corzelius v. Oliver, 148 Tex. 76, 220
appeals erred in failing either to award the damages found          S.W.2d 632, 635 (1949) (notwithstanding defendant's refusal
by the jury or to allow DiGiuseppe to recover the $200,000          to perform her obligations under contract, plaintiff was
in earnest money he paid. In his briefing on the merits,            required to show that he could have performed his contractual
DiGiuseppe included a related point that he had also argued         obligations to obtain specific performance), and it has been
in the court of appeals: that a finding relating to the omitted     followed by other courts of appeals in reported decisions in
jury question on his being ready, willing, and able to perform      addition to the court of appeals in this case. 17090 Parkway,
should be deemed found pursuant to Texas Rule of Civil              Ltd. v. McDavid, 80 S.W.3d 252, 257–59 (Tex.App.-Dallas
Procedure 279 as an omitted element “necessarily referable”         2002, pet. denied); Chessher v. McNabb, 619 S.W.2d 420,
to a theory submitted without objection. After considering          421 (Tex.Civ.App.-Houston [14th Dist.] 1981, no writ);
briefing on the merits, this Court initially declined review. 48    Hendershot v. Amarillo Nat'l Bank, 476 S.W.2d 919, 920–
TEX. SUP. CT. J. 440 (Mar. 14, 2005).                               21 (Tex.Civ.App.-Amarillo 1972, no writ). “[T]o be entitled
                                                                    to specific performance, the plaintiff must show that it has
DiGiuseppe then filed a motion for rehearing stressing that the     substantially performed its part of the contract, and that it
purchase contract gave him the option to obtain at least one of     is able to continue performing its part of the agreement.
two potential remedies in the event of a breach by Lawler—          The plaintiff's burden of proving readiness, willingness and
either seeking to enforce specific performance or terminating       ability is a continuing one that extends to all times relevant
the contract and receiving a refund of the earnest money            to the contract and thereafter.” 25 RICHARD A. LORD,
deposited. DiGiuseppe adamantly contended on rehearing              WILLISTON ON CONTRACTS § 67:15, at 236–37 (4th
that, even if this Court declined to review the court of            ed.2002) (citations omitted).
appeals judgment with respect to specific performance, the
Court should grant relief with respect to the $200,000 in            [2] It is also a general rule of equity jurisprudence in
earnest money paid to Lawler because the jury had found that        Texas that a party must show that he has complied with
Lawler breached the contract and DiGiuseppe did not. Having         his obligations under the contract to be entitled to specific



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

performance. Glass v. Anderson, 596 S.W.2d 507, 513            at issue had already been sold to a third party and the
(Tex.1980) (“A party who asks a court of equity to compel      lawsuit was a suit by the third party for possession of the
specific performance of a contract must show his own           land). However, even when pre-suit tender of performance
compliance with the contract.”); Bell v. Rudd, 144 Tex.        is excused, a plaintiff is still obligated to plead and
491, 191 S.W.2d 841, 844 (1946); see also Wilson v.            prove his readiness, willingness, and ability to perform at
Klein, 715 S.W.2d 814, 822 (Tex.App.-Austin 1986, writ         relevant times before specific performance may be awarded.
ref'd n.r.e.) (“Generally speaking, it is a prerequisite to theCorzelius, 220 S.W.2d at 635; Burford, 199 S.W.2d at 144;
equitable remedy of specific performance that the buyer        17090 Parkway, Ltd. v. McDavid, 80 S.W.3d 252, 256
of land shall have made an actual tender of the purchase       (Tex.App.-Dallas 2002, pet. denied); Chessher v. McNabb,
price ... [unless] actual tender would have been a useless     619 S.W.2d 420, 421 (Tex.Civ.App.-Houston [14th Dist.]
act .... “ (citation omitted)). As a consequence, a plaintiff  1981, no writ); Hendershot v. Amarillo Nat'l Bank, 476
seeking specific performance, as a general rule, must actually S.W.2d 919, 920 (Tex.Civ.App.-Amarillo 1972, no writ).
tender performance as a prerequisite to obtaining specific     The rule relating to excusing pre-suit tender of performance
performance. McMillan v. Smith, 363 S.W.2d 437, 442–43         together with its corollary that a plaintiff must plead and
(Tex.1962).                                                    prove readiness, willingness, and ability to timely perform
                                                               before specific performance may be awarded was succinctly
 [3] [4] A corollary to this rule is that when a defendant stated in Hendershot v. Amarillo National Bank: “One of
refuses to perform or repudiates a contract, the plaintiff may the essential equitable elements in obtaining a decree of
be excused from actually tendering his or her performance      specific performance is that the party seeking the decree
to the repudiating party before filing suit for specific       must plead and prove that he is ready, willing and able
performance. In such a circumstance, a plaintiff seeking       to perform, even though a tender of the purchase price
specific performance is excused from tendering performance     may be excused.” 476 S.W.2d at 920 (citing Corzelius,
pre-suit and may simply plead that performance would have      220 S.W.2d at 635; Burford, 199 S.W.2d at 143–44). As
been tendered but for the defendant's breach or repudiation.   one treatise explains, “[a]lthough a repudiation [by the
Id.; Corzelius v. Oliver, 220 S.W.2d at 632, 634; Burford      defendant] usually will excuse the plaintiff from actually
v. Pounders, 145 Tex. 460, 199 S.W.2d 141, 143–44              tendering performance, courts require that the plaintiff
(1947). This exception to the general rule—that actual         demonstrate his own readiness, willingness, and ability to
tender of performance is a prerequisite to obtaining specific  perform on the date set by the contract before ordering the
performance—is grounded in the notion that actual pre-suit     defendant to perform.” EDWARD YORIO, CONTRACT
tender of performance should be excused when it would be a     ENFORCEMENT: SPECIFIC PERFORMANCE AND
“useless act, an idle ceremony, or wholly nugatory.” Wilson,   INJUNCTIONS § 6.4, at 144–45 (1989) (citation omitted).
715 S.W.2d at 822 (citing POMEROY, supra ). This Court
acknowledged this reasoning in Burford: “[I]t appears to be    In this case, the only questions submitted to the jury relating
quite well settled that a formal tender is excused where a     to the breach of the purchase contract were:
tender would be a useless and idle ceremony; and that a tender
is also excused where defendant repudiates the contract....”      (1) Did Lawler fail to comply with the contract?
199 S.W.2d at 145 (citation and internal quotation marks
                                                                  (2) Did Di[G]iuseppe fail to comply with the contract?
omitted); see also Regester v. Lang, 49 S.W.2d 715, 717 (Tex.
Comm'n App.1932, holding approved) (holding that tender        The jury answered “Yes” as to Lawler and “No” as to
of performance before bringing suit is not required when it    DiGiuseppe. Neither party requested a question as to whether
would be a “vain and useless thing” given defendant's open     DiGiuseppe was ready, willing, and able to perform at the
repudiation of the contract).                                  relevant time. Nor did either party object to the omission
                                                                  of such a question. Consequently, there is no finding of
 [5] The concept of excusing pre-suit tender of performance       fact in this case or objection to a lack of a finding of fact
when such tender *595 would be useless or futile has              with respect an essential element of specific performance
been recognized in Texas equity jurisprudence for over one        —that DiGiuseppe was ready, willing, and able to perform
hundred years. Ward v. Worsham, 78 Tex. 180, 14 S.W.              at relevant times. Notably, the evidence on DiGiuseppe's
453, 453 (1890) (excusing actual tender of payment by             readiness and ability to perform—all from the testimony
a settler with a right to purchase school land when land          of DiGiuseppe—was equivocal and conflicting. DiGiuseppe



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

testified that he did not have the funds to close at the time     point is sufficient, DiGiuseppe contends, to trigger his right
originally specified by the purchase contract, or any written     to specific performance regardless of whether he had shown
commitments from third parties to fund the closing at that        that he was ready, willing, and able to perform. DiGiuseppe's
time, and that he could not close. 8 He later testified that he   basic contention is that the remedy provisions of the purchase
                                                                  contract negate or waive the requirement under Texas law that
“had the *596 means to close the contract.” 9
                                                                  he prove his readiness, willingness, and ability to perform as

 [6] When contested fact issues must be resolved before a         a condition to obtaining specific performance. 10
court can determine the expediency, necessity, or propriety
of equitable relief, a party is entitled to have a jury resolve   Lawler responds that specific performance was not automatic
the disputed fact issues. See State v. Tex. Pet Foods, Inc.,      under the purchase contract in the event he defaulted. He
591 S.W.2d 800, 803 (Tex.1979) (holding that litigant has a       asserts that the purchase contract's reference to DiGiuseppe
right to have ultimate issues of fact submitted to a jury in an   having the right to “seek to enforce” specific performance
equitable action); see also Hollywood Park Humane Soc'y v.        does not equate to a right to automatically receive specific
Town of Hollywood Park, 261 S.W.3d 135, 139 (Tex.App.-            performance. Rather, he argues, the remedy provision is no
San Antonio 2008, no pet.) (“[W]e recognize that the right        more than a contractual acknowledgment between the parties
to a jury trial extends to material, disputed issues of fact      that specific performance would be an available remedy
in equitable proceedings.”); Casa El Sol–Acapulco, S.A. v.        for DiGiuseppe in the event of a default by Lawler, and it
Fontenot, 919 S.W.2d 709, 715–16 (Tex.App.-Houston [14th          did not eliminate or waive the requirement that DiGiuseppe
Dist.] 1996, writ dism'd by agr.); see also WILLISTON ON          demonstrate that he is entitled to specific performance
CONTRACTS, supra, § 67:15, at 237 (“A trial court's finding       under the law. Lawler contends that the “may ... seek to
in a specific performance action regarding a purchaser's          enforce” language expresses the parties' intent that specific
financial inability to purchase involves a factual issue.”).      performance would be an available remedy in the event of
Lawler did not concede or stipulate in the trial court that       breach—as distinct from an action for damages, recission,
DiGiuseppe was ready, willing, and able to perform. The           or other remedy—if DiGiuseppe can show that he meets the
issue was disputed and it was an issue on which DiGiuseppe        requirements for the grant of specific performance.
—as the party seeking specific performance—had the burden
of proof. Corzelius v. Oliver, 148 Tex. 76, 220 S.W.2d 632,     We agree with Lawler and the court of appeals that the remedy
634 (1949); 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d           provision at issue here does not entitle DiGiuseppe to obtain
252, 256 (Tex.App.-Dallas 2002, pet. denied); Hendershot v.     specific performance merely upon a showing of a breach or
Amarillo Nat'l Bank, 476 S.W.2d 919, 920 (Tex.Civ.App.-         default by Lawler. The provision at issue limits the available
Amarillo 1972, no writ).                                        remedies to either (1) terminating the contract and receiving
                                                                a refund of earnest money, or (2) seeking to enforce specific
 [7] [8] DiGiuseppe does not raise an issue with respect to performance. It does not in any way alter the requirements
the state of the applicable law, but contends that the parties' for obtaining specific performance in the event DiGiuseppe
contract alters the manner in which the law applies to this     decides *598 to seek such a remedy. The provision states
case. He concedes that he did not request a finding by the      only that DiGiuseppe “may, at [his] option, ... seek to enforce
jury on the issue of whether he was ready, willing, *597        specific performance of [the] Contract.” This language does
and able to perform under the terms of the purchase contract.   not speak to altering the legal requirements for obtaining
He complains that the court of appeals misinterpreted and       specific performance. Nor does it purport to make obtaining
misapplied the remedy provisions of the purchase contract.      specific performance automatic in the event of a default or
He argues that, because the parties had agreed in the purchase  breach by Lawler.
contract that one of his available remedies would be to seek
to enforce specific performance, he had a right to specific     To the contrary, the provision plainly grants DiGiuseppe
performance in the event Lawler breached or defaulted on the    only the right to “seek to enforce” specific performance,
contract without the need for any further proof. According      leaving open the possibility that he may seek to enforce it,
to DiGiuseppe, the only material disputed fact issue—by         but be unable to do so. The unambiguous language of the
virtue of the language of the remedy provision in the contract  provision makes two remedies available to DiGiuseppe in
—is whether Lawler failed to comply with the contract.          the event of a default by Lawler, and in effect excludes
Consequently, the finding by the jury against Lawler on this    all others. One of those remedies is specific performance.



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

It is available as a remedy, but nothing in the provision         with the contract, without more, is not “necessarily referable”
suggests DiGiuseppe is relieved of his obligation to prove        to specific performance as a ground of recovery.
he is entitled to it under the law. Therefore, we construe
the provision in the purchase contract limiting DiGiuseppe's      Moreover, the question submitted to the jury as to
remedies in the event of a default by Lawler to neither waive     DiGiuseppe's compliance with the contract addressed
nor negate DiGiuseppe's obligation to plead and prove all         Lawler's breach of *599 contract claim against DiGiuseppe.
essential elements under Texas common law for obtaining           As the Houston Court of Appeals articulated in Superior
specific performance, including that he was and is ready,         Trucks, Inc. v. Allen:
willing, and able to perform under the contract.
                                                                              The purpose of the “necessarily
 [9] As an alternative basis for relief, DiGiuseppe argues                    referable” requirement in Rule 279 is
that the omitted jury finding as to his readiness, willingness,               to give parties, against whom issues
and ability to perform may be deemed found in his favor                       are to be deemed, fair notice of a
pursuant to Texas Rule of Civil Procedure 279. His theory is                  partial submission, so that they have
that specific performance was at least partially submitted to                 an opportunity to object to the charge
the jury in the form of a question regarding his compliance                   or request submission of the missing
with the contract, and Lawler failed to object to the omission                issues to the ground of recovery or
of a “ready, willing, and able” question. We agree with the                   defense. Once a party is on notice of
court of appeals that a deemed finding under Rule 279 is not                  the independent ground of recovery
available here.                                                               or defense due to the existence of an
                                                                              issue “necessarily referable” thereto,
If no element of an independent ground of recovery that                       if that party fails to object or request
is not conclusively established by the evidence is included                   submission of the missing issues, he
in the charge without request or objection, the ground of                     cannot be heard to complain on appeal,
recovery is waived. TEX. R. CIV. P. 279. As we have                           as he is said to have consented to the
noted, DiGiuseppe did not conclusively establish his claim                    court's findings on the missing issues.
for specific performance from an evidentiary standpoint.
                                                                  664 S.W.2d 136, 144 (Tex.App.-Houston [1st Dist.] 1983,
Under Rule 279, if at least one element of an independent
                                                                  writ ref'd n.r.e.). The existence of the question relating to
ground of recovery was submitted to the jury and is
                                                                  Lawler's claim for breach of contract, standing alone, did not
“necessarily referable” to that ground of recovery, an omitted
                                                                  give Lawler fair notice of a partial submission of a claim
finding that is supported by some evidence shall be deemed
                                                                  by DiGiuseppe for specific performance such that Lawler
found by the court in such a manner as to support the
                                                                  should have known to object to a missing question regarding
judgment. Id. DiGiuseppe contends that the submission of
                                                                  DiGiuseppe's readiness, willingness, and ability to perform.
a question as to whether he complied with the contract
                                                                  Pursuant to Rule 279, the question regarding DiGiuseppe's
is the submission of at least one of the elements of a
                                                                  compliance with the contract, therefore, is not necessarily
claim for specific performance and is necessarily referable
                                                                  referable to an omitted question relating to DiGiuseppe's
to that ground of recovery. However, as the court of appeals
                                                                  readiness, willingness, and ability to perform. DiGiuseppe
pointed out, DiGiuseppe's compliance with the contract is
                                                                  had the burden to prove that he was ready, willing, and able
neither essential nor necessarily referable to his request for
                                                                  to perform. He also had the obligation to request a question
specific performance. As discussed previously, DiGiuseppe's
                                                                  on this issue. He did not. Rule 279 does not operate to shift
tender of performance under the contract could have been
                                                                  the burden to Lawler to request such a jury question regarding
excused due to Lawler's breach without altering in any
                                                                  specific performance or to object to its absence under these
way DiGiuseppe's obligation to prove that he was and is
                                                                  circumstances.
ready, willing, and able to perform. Whether DiGiuseppe
complied with the contract or was excused from complying
with the contract, he would still be required to prove that
he was ready, willing, and able to perform to obtain specific             III. Tender of Performance vs. Readiness,
performance. Therefore, the question as to his compliance                     Willingness, and Ability to Perform




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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

 [10] The dissent argues that a non-breaching plaintiff             in effect, eliminate the plaintiff's contractual obligation to be
seeking specific performance satisfies the requirement of           capable of performance at the time the contract required, and
showing he is ready, willing, and able to perform by simply         grant the plaintiff the option to enforce the contract at any time
offering to perform in his pleadings as opposed to actually         he might become capable of performing before limitations
proving to the finder of fact that he is and was—in fact—           runs. A defendant's breach or repudiation should not alter the
ready, willing, and able to perform. 11 This conflates two          contract and give the non-breaching party a contract different
distinct concepts: (1) the tender (or offer) of performance         from what he had. The plaintiff must prove that he was ready,
and (2) the proof that one has actually been ready, willing,        willing, and able to perform his obligations when they came
and able to perform. As noted above, in circumstances where         due. Otherwise, he would be able to take unfair advantage
a defendant has not repudiated or refused to perform, the           of the defendant by requiring the defendant's performance
law requires a plaintiff seeking specific performance to show       without showing that he also could and would have performed
both that he was ready, willing, and able to perform at the         as required by the contract.
relevant time and that he tendered that performance. These
two requirements are not the same thing. One can be perfectly        [12] [13] A standard requiring proof of ability to perform,
capable of performing contractual obligations and yet not           rather than a mere pleading to that effect, is essential to
tender or offer that performance. Likewise, a party could           serving the interest of equity underlying the remedy of
very well tender or offer performance, but not be capable           specific performance. Allowing a plaintiff to simply plead
of performing. Offering to perform does not establish the           a willingness to tender is no substitute for requiring him to
ability to perform, nor does having the ability to perform          produce evidence showing that he was ready, willing, and
demonstrate a tender of that ability. The law requires a            able to perform his contractual obligations at the relevant
demonstration of both before specific performance may be            time. Whether a plaintiff was ready, willing, and able to
awarded unless the requirement of tender is excused.                perform his contractual obligations when they came due,
                                                                    and would have done so but for the defendant's breach or
It is entirely reasonable for the law to distinguish between        repudiation is a question of fact. A fact cannot be proved by a
tender of performance and ability to perform when providing         controverted pleading. The pleading simply puts the matter at
the remedy of specific performance. For example, it is              issue. 12 In this case, DiGiuseppe alleged in pleadings that he
sensible to excuse pre-suit tender of performance if it would       “was ready, willing and able to [fund the purchase of property
be useless or if it has been frustrated by the *600 defendant,      from Lawler] on March 3, 2000,” the date DiGiuseppe says
such as in cases of repudiation by the defendant or an open         his obligation to do so was triggered. The evidence on
declaration of a refusal to honor the contract by the defendant.    the subject was conflicting, and the jury was not asked to
A plaintiff need not actually tender performance when the           resolve the dispute. The dissent would hold that DiGiuseppe's
defendant has repudiated his own obligations. Otherwise, the        pleading was all he needed, that a plaintiff satisfies the need
plaintiff would be required to go further than the defaulting       to establish a relevant fact by alleging the truth of the fact. If
defendant to obtain specific performance. On the other hand,        allegations were the equivalent of proof, there would be no
ordering specific performance without requiring the plaintiff       need for trials. The equivocal and conflicting evidence as to
to show that he was capable and willing to perform at the time      DiGiuseppe's ability to close illustrates one of the problems
required by the contract grants the plaintiff more than he is       with the dissent's view. What if the evidence establishes
entitled to under the contract. A plaintiff's pleading that he is   that a plaintiff could not and cannot perform? Under the
ready, willing, and able to perform at the time the lawsuit is      dissent's theory, such a plaintiff would be awarded specific
filed says nothing about whether he was ready, willing, and         performance based solely on his pleading even if he, in *601
able to perform at the time required by the contract. A plaintiff   fact, could not and cannot perform. Without proof that he
who could not arrange funding in time for closing may be able       could perform as required by the contract, the plaintiff gets
to marshal all the funds he needs by the time he files pleadings    more than he bargained for—an inequitable result. Without
in a lawsuit for specific performance.                              proof that he can perform at the time of the award, the award
                                                                    is pointless.
 [11] The dissent's view that merely pleading an offer to
perform at the time the lawsuit is filed satisfies or replaces      By combining the pleading and proof requirements, the
the need to demonstrate the ability to perform at the relevant      dissent would nullify the proof requirement and encourage
time would essentially rewrite the parties' contract. It would,     gamesmanship. A purchaser who lacked funds to close a



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

transaction when called for in a contract could later compel      his purchase right within a reasonable time. Id. at 145. The
performance by a seller who balked. A seller who is unable to     Court in Burford noted with approval the accepted general
deliver title at the agreed time for closing could later compel   rules of equity relating to specific performance, stating that a
performance by a remorseful buyer. If a plaintiff was, in fact,   plaintiff “ordinarily is entitled to specific performance where
unable to perform at the relevant time, a defendant's breach      he alleges and proves that he ... is ready, able and willing
or repudiation is harmless and equity should not provide a        to perform.” Id. at 144 (emphasis added). The Court agreed
remedy in such a situation. The law does not and should not       that “it was not incumbent on Burford to make a tender in
allow pleading readiness, willingness, and ability to perform     the matter of exercising his option within a reasonable time
to substitute for proof of that fact.                             after learning of the sale, but that it was sufficient for him to
                                                                  offer to do equity in this pleadings.” Id.(emphasis added). The
The dissent's view is unique. There is no Texas case that         Court then held that since Beaird had repudiated the purchase
has adopted such a rule and we have found none in any             option by selling to Pounders, a tender to Beaird by Burford
other jurisdiction. The dissent's discussion of the Texas         was unnecessary. Id. at 145. At no point did the Court hold
cases that have addressed the issue raised by the dissent         or suggest that proof by Burford of readiness, willingness,
—Burford, Corzelius, Parkway, Chessher, and Hendershot—           and ability to perform was unnecessary or waived by Beaird's
fails to distinguish between pleading tender of performance       actions. Burford was required to prove that he was ready,
and proving readiness, willingness, and ability to perform.       willing, and able to exercise his option to purchase, but
This distinction is crucial. In each of these cases, pre-suit     because the parties had not specified a deadline for exercising
tender of performance was excused due to a repudiation            the option, Burford was not required to prove his ability to
or breach by the party against whom specific performance          perform at the time of the illicit sale to Pounders.
was sought. None of the cases hold that the repudiation or
breach relieved the party seeking specific performance from       Burford makes two things clear: (1) pleading an offer to
the obligation to prove readiness, willingness, and ability to    perform is in lieu of tender; and (2) adducing proof that a
perform. Each of these cases is entirely consistent with the      plaintiff was ready, willing, and able to perform, as required
rule that a plaintiff seeking specific performance must plead     by the pertinent authorities constitutes an entirely separate
and prove (1) compliance with the contract including tender       requirement from tender. This distinction is consistent with
of performance unless excused by the defendant's breach or        available authorities on the subject and has been consistently
repudiation, and (2) the readiness, willingness, and ability to   followed by Texas courts. The dissent reads the statements in
perform at relevant times. 13                                     Burford as confusing, but we do not. Burford was required to
                                                                  prove he was ready, willing, and able to perform, and he did
The seminal case of Burford v. Pounders, upon which later         so. The issue in the case was whether Burford would have to
cases rely, illustrates the point. 145 Tex. 460, 199 S.W.2d       show he was ready, willing, and able to perform at the time of
141, 141–42 (1947). Beaird leased land to Burford, with           the sale to Pounders, or within a reasonable time. The lower
an option allowing Burford to purchase the property for           courts held that Burford was required to show his capacity
$ 1000, less the rent paid. Beaird ignored the option to          to perform at as of the time of the sale to Pounders—a point
purchase and, five months before the lease expired, sold the      at which it was undisputed Burford was not in a position to
property to Pounders, who was aware of Burford's lease.           perform. This Court held that, because there was no deadline
Id. at 142. According to an undisputed finding by the trial       in the lease for the purchase option, Burford could meet his
court, Burford was not in a position at the time of the sale to   burden by showing the ability and willingness to perform
Pounders to exercise his option to purchase the property. Id.     within a reasonable time for exercising his option. Burford
at 143. Neither Beaird nor Pounders told Burford of the sale.     made this showing.
Two months before the lease expired, Burford attempted to
exercise his option and tendered $950 to Beaird, which Beaird     The dissent also reads Corzelius as confusing and seeks
refused. Id. at 142–43. Burford sued for specific performance     to distinguish its holding by reference to the contractual
and the case was tried to the bench. Because he did not know      period for performance in the contract at issue in the case.
of the sale, Burford did not make any tender of performance       We view Corzelius as completely consistent with Burford
on the option at the time of the sale. However, the lease *602    and the other authorities cited above which point out the
did not specify when the option was to be exercised and           distinction between tender of performance and proof of ability
the trial court did not find that Burford had failed to invoke    to perform. The fact that Corzelius needed to show the ability



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

to perform at any point in a contractually agreed time frame      issue. However, this Court has held that a litigant who has
does not alter the fact that he needed to show the ability to     obtained a favorable judgment and has no reason to complain
perform as required by the contract. How such proof could         in the trial court is not required to raise an issue regarding an
be made rather than whether it must be made was at issue in       alternate ground of recovery until an appellate court reverses
Corzelius. The Court rejected the claim that Corzelius was        the judgment. Boyce Iron Works, Inc. v. Sw. Bell Tel. Co.,
obliged to produce binding commitments for financing in           747 S.W.2d 785, 787 (Tex.1988). Consequently, DiGiuseppe
order to raise an issue of fact. The Court was careful to note    was not required to raise his alternate theory of recovery until
other competent evidence in the record, including evidence        the judgment in his favor about which he had no complaint
showing the value of the property he sought to purchase           was reversed. Id. As soon as he was aware of the reversal of
via a mortgage and testimony from a bank officer and his          the judgment by the court of appeals, DiGiuseppe raised the
brother on their willingness to lend money for the purchase, as   issue of his alternative ground for recovery both in the court of
evidence supporting a finding that Corzelius was in a position    appeals and in this Court. The issue is not waived. Since it has
to perform per the contract. Corzelius v. Oliver, 148 Tex. 76,    been determined on appeal that DiGiuseppe is not entitled to
220 S.W.2d 632, 635–36 (1949).                                    specific performance as awarded by the trial court, he should
                                                                  be allowed to present his alternative ground for recovery to
 *603 The dissent also argues that policy considerations          the trial court for a determination in the first instance as to
weigh in favor of its view because non-breaching buyers           whether he should recover under that alternative theory.
would be put at a disadvantage by having to demonstrate at
the time of the lawsuit that they were capable of performing
as called for by the contract. However, this overlooks the fact
                                                                                          V. Conclusion
that if the buyer was not able to perform his obligations as
required by the contract, the breach by the seller did no harm.   We affirm the holding of the court of appeals that the
From an equitable standpoint, it would be unfair to reward the    contract at issue in this case does not alter DiGiuseppe's
buyer with a result that he could not have achieved—specific      obligation to prove and secure a finding of fact that he was
performance at a later date based on later acquired capability    ready, willing, and able to perform his obligations under the
—simply because of a breach by the seller.                        purchase contract as a prerequisite to obtaining the equitable
                                                                  relief of specific performance. In affirming this part of the
All of the language relied on by the dissent from Parkway,        court of appeals' judgment, we hold that an essential element
Chessher, Hendershot, and Regester v. Lang, as suggesting         in obtaining the equitable remedy of specific performance is
that a pleading alone is sufficient to satisfy part of the        that the party seeking such relief must plead and prove he
plaintiff's burden, refers to tender of performance when          is ready, willing, and able to timely perform his obligations
the defendant has repudiated. None of the cases stand for         under the contract. We also affirm the holding of the court of
the proposition that merely pleading readiness, willingness,      appeals that such a finding cannot be deemed based on the
and ability to perform is sufficient to obtain an award           jury charge as submitted under Rule 279. Finally, we reverse
of specific performance. The dissent's theory merges the          the court of appeals's holding that DiGiuseppe waived his
concepts of tender of performance and proof of ability to         claim to the alternate ground of recovery under the purchase
perform. The cases do not. The dissent's view is inconsistent     contract relating *604 to refund of the earnest money, and
with established case law and would be unique to equity           hold that he should have an opportunity to present this claim
jurisprudence.                                                    to the trial court for disposition. Accordingly, we affirm the
                                                                  judgment of the court of appeals in part, reverse in part, and
                                                                  remand the cause to the trial court for further proceedings
               IV. Refund of Earnest Money                        consistent with this opinion.

 [14] DiGiuseppe argues that if the judgment in his favor
for specific performance is reversed, he should be allowed to
                                                                  Justice GREEN filed a dissenting opinion, in which
seek recovery on his alternative remedy under the purchase
                                                                  Chief Justice JEFFERSON, Justice O'NEILL, and Justice
contract of termination and recovery of earnest money he
                                                                  JOHNSON joined.
paid. We agree. The court of appeals held that DiGiuseppe
waived this option by failing to file a notice of appeal on the   Justice MEDINA took no part in the decision of the case.



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

                                                                        discovery of financial portfolios on the question of whether
                                                                        the buyer was sufficiently capable of purchasing the property
Justice GREEN, joined by Chief Justice JEFFERSON, Justice
                                                                        at the time required by the contract. Unscrupulous sellers
O'NEILL, and Justice JOHNSON, dissenting.
                                                                        will be virtually immunized from the penalty of specific
The Court requires an innocent buyer, otherwise excused
                                                                        performance, the most severe consequence of breaching a
from his contractual obligations by the seller's breach, to
                                                                        contract of sale, and disorder will be the order of the day
nevertheless prove, in a suit for specific performance, that he
                                                                        in volatile real *605 estate markets. Because the Court's
could have fully performed those obligations had the seller
                                                                        holding lacks common sense and adheres to a misreading of
not breached. 269 S.W.3d at 590. This makes no sense for
at least two reasons. First, it provides the breaching seller           our precedents, I respectfully dissent. 1
information he was not entitled to under the contract. A seller
entering into a real estate transaction is rarely entitled to know      I agree with the Court that it has long been part of the
the details of how the buyer intends to finance the transaction.        jurisprudence of this state that, to obtain the equitable
At closing, the buyer will either perform or not, and in the            remedy of specific performance, a party must show himself
latter event, the contract will provide remedies for the breach.        to have been “ready, willing, and able” to timely perform
But if the seller breaches the contract before closing and the          his obligations under the contract being enforced. See 269
buyer sues to enforce the deal, the Court now says the buyer            S.W.3d at 593; see also Ratcliffe v. Mahres, 122 S.W.2d
must prove to a fact-finder, at a trial many months or years            718, 721–22 (Tex.Civ.App.-El Paso 1938, writ ref'd) (quoting
after the sale was originally supposed to close, that he was,           4 JOHN NORTON POMEROY, JR., A TREATISE ON
at the time specified by the contract, “ready, willing, and             EQUITY JURISPRUDENCE § 1408, at 2779 (3d ed.1905)).
able” to perform. Id. at 590. To do this, the innocent buyer            But it has likewise been a long-standing Texas rule that a non-
will necessarily be required to reveal his plan for financing           breaching plaintiff seeking specific performance need only
the transaction—information a seller generally would not be             make such a showing by offering to perform in his pleadings.
privy to under agreed contract terms.                                   Burford v. Pounders, 145 Tex. 460, 199 S.W.2d 141, 144
                                                                        (1947). The Court's insistence that a party seek and obtain
Second, and perhaps most important, the Court's holding                 a jury finding that he is ready, willing, and able to perform
makes no sense because a finding that the buyer was ready,              before being entitled to the remedy departs from that rule.
willing, and able to perform at the closing time specified in
the contract is irrelevant. Although the Court does not say             Specific performance is an equitable remedy that rests in the
what the trial court is supposed to do with such a finding,             sound discretion of the trial court. Kress v. Soules, 152 Tex.
presumably it would order a date for the transaction to                 595, 261 S.W.2d 703, 704 (1953); Am. Apparel Prods., Inc. v.
close within a reasonable time. But what if the buyer was               Brabs, Inc., 880 S.W.2d 267, 269 (Tex.App.-Houston [14th
able to close on the original contract date and is unable to            Dist.] 1994, no writ). Generally, to be entitled to specific
close on the court-appointed date? The whole exercise is                performance, a party must prove that it has complied with
rendered meaningless. The only thing that makes sense is to             all the contract's terms. Glass v. Anderson, 596 S.W.2d
do precisely what the trial court did in this case, which is to set     507, 513 (Tex.1980). When a seller breaches a real estate
a closing date within a reasonable time after a finding that the        contract, however, we have long held that the buyer need not
seller breached. While it is true that the buyer might gain some        actually tender the purchase price in order to seek specific
benefit by getting a reprieve from the original contract closing        performance. Ward v. Worsham, 78 Tex. 180, 14 S.W. 453,
date, it is just as likely, particularly in light of today's troubled   453 (1890).
financial times, that he will be worse off and be unable to
                                                                                     The practice in equity in similar cases
close. But at least this has the virtue of being meaningful and
                                                                                     is not to require a tender or a payment
of not placing impractical burdens on an innocent party, both
                                                                                     into court of the purchase money....
features that are lacking in the Court's rule.
                                                                                     When [the buyer] pleads his right he
                                                                                     should offer to pay, and the court,
The Court's holding will also tend to severely limit or
                                                                                     if judgment should be given for him,
eliminate specific performance as a viable remedy for a
                                                                                     should decree a payment within a
seller's breach of a real estate contract. In large transactions,
                                                                                     reasonable time, and that, in default of
it is doubtful that many non-breaching buyers would be
willing to subject themselves and/or their investors to open


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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

             a compliance, his right should cease                   matter remaining to be done by the trial court is to direct that
             and be determined.                                     payment be made” and that the sale be completed, awarding
                                                                    the purchaser judgment for title. Id. at 145 (emphasis added).
Id. This has remained the law in Texas for well over 100 years,
as the Court recognizes. See 269 S.W.3d at 594. Until today,        One statement in Burford, however, appears to have given
however, the Court has not required a non-breaching buyer           rise to the confusion of the lower courts on this issue.
to make the “useless and idle” showing of proof of ability to       Quoting from Corpus Juris, the Court in Burford stated that
complete the transaction when the seller's repudiation of the       a “complainant ordinarily is entitled to specific performance
contract excused the buyer from tendering the purchase price.       where he alleges and proves that he ... is ready, able, and
See Burford, 199 S.W.2d at 145.                                     willing to perform.” Id. at 144 (quoting 58 C.J. Specific
                                                                    Performance § 316 (1932)) (emphasis added). After citing
The issue of a party's own performance as a condition to            that general rule, though, the Court went on to explain the
obtaining specific performance is a matter to be contemplated       exception that excuses tender for non-breaching buyers, citing
by the trial court's judgment, not the jury's verdict. See          additional Corpus Juris sections and comments:
Regester v. Lang, 49 S.W.2d 715, 716–17 (Tex. Comm'n
App.1932, holding approved) (holding it was reversible error          [Regarding a specific performance suit brought by a
for a defendant to argue to the jury that the plaintiff had           purchaser, under a footnote to section 342], it is stated that
not paid the purchase money into the court registry, and that         “In Texas” an actual tender “is not necessary where the
specific performance might result in the defendant delivering         purchaser pleads and proves a willingness to pay, but is
his property *606 without being paid). “It is sufficient if           entitled to relief provided that, within a time fixed in the
[the party seeking specific performance] is ready and willing         decree, he shall pay the amount due”.... In section 348 it
and offers to perform in his pleadings.” Id. at 717. To               is stated that “whatever difference of opinion may exist as
require anything more would be futile because, as this Court          to the original necessity of a tender of the consideration
recognized in Regester, the buyer “would be required under a          before suit, ... it appears to be quite well settled that a formal
proper decree of specific performance to pay this sum before          tender is excused where a tender would be useless and
he could obtain any interest” in the property. Id.                    idle ceremony”; and that a “tender is also excused where
                                                                      defendant repudiates the contract”; and further that “tender
We reiterated these principles in Burford v. Pounders,                in pleadings (is) sufficient” where plaintiff sets forth that he
instructing that when a seller has refused to perform and the         is ready, able and willing “or ... pays the consideration into
buyer's tender would be futile, “the material consideration is        the court.” In section 349, ... it is stated that “the necessity
that [the buyer] offered in his pleadings to do equity,” and          of tender is dispensed with where defendant repudiates the
nothing more is required. 199 S.W.2d at 145. The plaintiff            contract, or makes any declaration which amounts to a
Burford was a tenant in possession with an option to buy              repudiation....” In the following section (350) it is stated
under a right of first refusal. Id. at 141–42. The lessor,            that “if a tender of the purchase price or other sums before
ignoring Burford's option, conveyed the property to defendant         suit *607 is necessary, it is excused where the vendor or
Pounders. Id. at 142. Two months after the sale, Burford              seller has put it out of his power to perform, as where he
attempted to exercise his option, eventually seeking specific         has conveyed the property ... to a third person.”
performance. Id. at 142–43. Burford would not have been
able to make payment at the time of the sale to Pounders, but       Id. at 144–45 (emphasis removed). The Court never returned
would have been able to pay two months later. Id. at 143–44.        to any discussion of the general rule that requires proof of
Because Burford had to exercise the option to buy within a          ability to pay, instead holding that the seller defaulted and
“reasonable time,” the issue in the case was whether Burford        repudiated by selling the property to Pounders. Id. at 145.
was required to tender performance within a reasonable time         For a non-breaching buyer, “[t]he material consideration is
of learning of the sale to Pounders, or whether it was sufficient   that [he] offer[s] in his pleadings to do equity.” Id. The
for Burford to later offer to perform in his pleadings. Id. at      court emphasized this rule with italics: “[A]ll that is required
144–45. Citing Regester, we again emphasized that all that          in such case is that the plaintiff place himself in favor
was necessary in such a case is that the party seeking specific     with the court, and this may be done by a proper offer
performance be ready and willing and offers to perform in his       in the pleadings.” Id. at 143 (quoting 49 Am.Jur. Specific
pleadings. Id. at 144 (citing Regester, 49 S.W.2d at 717). And      Performance § 144, at 167 (1943)) (italics in original).
when a party offers in his pleadings to do equity, “[t]he only      Because Burford had made the sufficient showing by offering


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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

in his pleadings to do equity, the Court held that Burford          Contrary to the Court's conclusion, see 269 S.W.3d at 693,
was entitled to specific performance. Id. at 145. The Court         nowhere does Corzelius indicate that a non-breaching buyer,
later confirmed that holding, saying that Burford adopted           under a non- *608 option contract, must prove ability to
the substance of the rule that “if, because of defects in the       perform at the time specified in the contract when tender
vendor's title, which he fails or refuses to cure, ... a tender     of payment is excused. Corzelius is distinct from the non-
of performance by the vendee would be a useless act ..., his        option contract case because the timing of the buyer's ability
failure to make such tender will not preclude in his behalf         to pay was relevant to whether the buyer had exercised his
the equitable relief of specific performance, at least where        option to purchase and therefore the seller had an obligation
he tenders performance in his bill or petition.” McMillan           to convey the property. Even when a buyer must show ability
v. Smith, 363 S.W.2d 437, 442–43 (Tex.1962) (quoting 79             to pay, a buyer need not show a firm financing commitment
A.L.R. 1240).                                                       to be entitled to specific performance, but need only put
                                                                    on evidence of his financial capacity and creditworthiness.
Although the Court claims Burford holds that a non-breaching        Corzelius, 220 S.W.2d at 635 (recognizing that financing
plaintiff is required to prove he was ready, willing, and able      sources would probably be reluctant to execute a commitment
to perform, and somehow distinguishes between tender and            for financing to complete a sale of lands the owner had
proof of ability to pay, the Court misrepresents the rule in that   decided not to convey). Notwithstanding the evidence offered
case. In Burford, the Court held that when a seller repudiates      at trial and the jury's finding, “Corzelius [was not] bound to
the contract, tender is excused and “all that is required” is       do more here than make the tender which was contained in
that the plaintiff offer to do equity, which can be done in the     his pleadings.” Id.
pleadings. 199 S.W.2d at 143. Burford does not support the
Court's new rule, and neither do the other cases relied on by       It appears that misreading of the brief statements in Burford
the Court.                                                          and Corzelius led courts of appeals to rule erroneously that a
                                                                    plaintiff seeking specific performance must always prove to a
The Court cites Corzelius v. Oliver, another case involving         fact-finder that he is ready, willing, and able to perform under
the buyer's ability to pay within a contractual time limit for      the contract. See 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d
exercising an option. 148 Tex. 76, 220 S.W.2d 632, 633              252, 256 (Tex.App.-Dallas 2002, pet. denied); Chessher v.
(1949). In Corzelius, the plaintiff had a one-year option to        McNabb, 619 S.W.2d 420, 421 (Tex.Civ.App.-Houston [14th
reacquire lands conveyed to his ex-wife as part of a divorce        Dist.] 1981, no writ); Hendershot v. Amarillo Nat'l Bank,
settlement. Id. Although the plaintiff attempted to exercise        476 S.W.2d 919, 920 (Tex.Civ.App.-Amarillo 1972, no writ).
the option, his ex-wife (the defendant) refused because she         Those cases did not offer any reasoning as to why proof
objected to his source of financing, and eventually a jury          before a fact-finder is necessary even though actual tender
found for the plaintiff. Id. at 633–34. At trial, one of the        is excused when a seller has breached. On this point, 17090
issues before the jury was whether the plaintiff could have         Parkway simply cites Chessher and Hendershot. 80 S.W.3d
made payment within the one-year time limit contemplated            at 256. Chessher cites only Hendershot. 619 S.W.2d at 421.
by the contract. Id. at 634. The jury found that, but for the       Hendershot cites only this Court's decisions in Burford and
defendant's actions, such a payment could have been timely          Corzelius without any analysis and without recognizing that
made. Id. On appeal, the only issue was the defendant's             those cases involved option contracts containing conditions
contention that “there was no evidence to show that Corzelius       precedent to the seller's obligation to convey the property. See
was ready and able to perform within the time limit of the          476 S.W.2d at 920. Hendershot's misreading of Burford and
option.” Id. In addressing that point, the Court noted that         Corzelius therefore resulted in repeated error in the courts of
“it would appear but reasonable” for Corzelius to show that         appeals, which now repeats itself in this Court, eclipsing the
he could have performed under the agreement, id. at 635,            long-standing rule that a party seeking specific performance
and then detailed the evidence to conclude that there was           need only offer to perform in its pleadings.
at least some evidence to support the jury's finding in that
regard. Id. Certainly, taken alone, this part of Corzelius could    Lawler cites a number of cases in support of his position that
arguably support an interpretation that proof of the ability to     ability to pay must be proven at trial, but I am not persuaded
pay is an appropriate subject for a fact-finder's consideration     that such a rule exists in Texas. 2 As already discussed, the
in a specific performance case. But such a reading is not           cases requiring proof of ability to pay at trial are perpetuating
accurate and has given rise to confusion in the lower courts.       Hendershot's erroneous reading of our opinions in Burford



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

and Corzelius, which did not distinguish, as the Court does,       must make that showing. EDWARD YORIO, CONTRACT
between an excused tender requirement and an unexcused             ENFORCEMENT: SPECIFIC PERFORMANCE AND
requirement to prove ability to pay. The Court contends            INJUNCTIONS § 6.4, at 145 (1989 & Supp.2004). Yorio
that such a distinction is “entirely reasonable,” noting that      acknowledges the Texas rule in a footnote, however, by
a party could well offer performance but not be capable            quoting a Seventh Court of Appeals case holding that “when
of performing. *609 269 S.W.3d at 599. But when the                the seller has conspicuously breached the contract, it is
seller's breach relieved the buyer of his obligation to appear     only necessary that the purchaser be ready and willing, and
at closing and perform as required under the contract, it          offers to perform within his pleadings.” Id. at n. 10 (quoting
may be impossible for anyone to know whether the buyer             Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d 518,
could have performed. Continued efforts to perform such as         527 (Tex.App.-Amarillo 1998, pet. denied), which relied on
arranging financing or appearing at the scheduled closing          Burford, and also citing 17090 Parkway ). Comment b to
would be useless, just as the Court recognizes that tendering      section 363 of the Restatement (Second) of Contracts, which
payment would be. The Court erroneously concludes that             addresses securing performance for an agreed exchange
ordering specific performance without requiring the non-           and states that specific performance may be refused if
breaching buyer to prove ability to pay at the time required       “performance is not secured to the satisfaction of the court,”
by the contract “grants the plaintiff more than he is entitled     supports the long-standing Texas rule:
to under the contract.” Id. at 600. In fact, the opposite is
true. When a contract provides for simultaneous performance          The desired security can often be afforded by the terms
by both seller and buyer, the seller must give the buyer             of the order itself. If performance by the injured party
the full opportunity to perform as provided by the contract,         is already due or will be due simultaneously with the
or face remedies for breach in cutting off that opportunity.         performance of the party in breach, the order may be
Requiring a buyer to prove that it could have performed at           made conditional on the injured party's rendition of his
a time when the seller's breach eliminated that obligation           performance....
and when the subject property was under contract for sale
                                                                      *610 The question of security does not arise until the
to a third party imposes a much higher burden on the buyer
                                                                     time for issuance of an order. At the pleading stage,
than the contract requires. The seller's own breach cannot
                                                                     a mere allegation by the plaintiff that he is ready and
impose an extra-contractual obligation on the buyer to prove
                                                                     willing to perform is usually sufficient in a suit for
useless financing commitments. The Court contends that my
                                                                     specific performance or an injunction. Actual performance
view would “essentially rewrite the parties' contract” and
                                                                     or tender is generally not required.
“eliminate the plaintiff's contractual obligation to be capable
of performance at the time the contract required.” 269 S.W.3d      Restatement (Second) of Contracts § 363 cmt. b (1981).
at 600. In fact, it is actually the breaching seller who altered   Because DiGiuseppe need only offer to perform in his
those contractual obligations when he breached the contract        pleadings to establish his entitlement to specific performance,
by agreeing to sell the property to a third party.                 the only disputed fact issue to be resolved by the jury was
                                                                   whether Lawler breached the contract. See White v. Sw. Bell
The Court relies on contracts treatises as support for its         Tel. Co., 651 S.W.2d 260, 262 (Tex.1983) (holding that only
claim that requiring a non-breaching buyer to prove ability        disputed factual issues are presented to the jury).
to pay is an entrenched rule in Texas jurisprudence. 269
S.W.3d at 593. The author of the primary treatise relied on        Aside from the doctrinal reasons for this rule, there are
by the Court cites law from various jurisdictions, seemingly       important policy considerations at stake here. Requiring
favoring Montana and Connecticut, but the only citation            advance proof of an ability to pay puts the breaching seller
to Texas law is to a case that does not mention or                 in a better position than he would have been if the deal had
discuss the showing a plaintiff must make to obtain specific       gone through as contemplated in the contract by allowing him
performance. 25 RICHARD A. LORD, WILLISTON ON                      greater security in the solvency of the transaction. Unless the
CONTRACTS § 67:15, at 236–38) (4th ed.2002); see                   contract provides otherwise, sellers must wait until closing to
Shuler v. Gordin, 644 S.W.2d 446, 447–49 (Tex.1982).               find out whether the buyer can and will actually go through
Edward Yorio's treatise, which states the general rule that        with the deal. If a seller suspects that a buyer cannot perform,
a plaintiff must show readiness, willingness, and ability to       the seller faces a choice: (1) wait until closing to see if
perform, is silent on whether or how a non-breaching buyer         the buyer tenders the required payment, or (2) breach the



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DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

contract and face remedies for breach. The Court introduces         is not to burden the fact-finder with a speculative inquiry
the concept of harmless breach, concluding that a seller's          into the buyer's finances and potential financing prospects,
breach “does no harm” when the seller, in advance of closing,       but rather for the trial court to set a prompt closing date,
believes a buyer will not be capable of performing under the        supervised by the court, during which DiGiuseppe may tender
contract and prematurely eliminates the buyer's opportunity         performance. Only then must DiGiuseppe prove ability to
to complete the transaction. 269 S.W.3d at 603. But such a          pay, by tendering the payment due. If DiGiuseppe is unable
breach, which cuts off a buyer's opportunity to show that he is     to close, Lawler will then be entitled to remedies the contract
in fact capable of performing at the time performance is due,       provides.
is inherently harmful.
                                                                    In my view, once a party has pled the remedy of specific
Requiring a non-breaching buyer to demonstrate ability to           performance with sufficient specificity, nothing else is
pay imposes a burden on buyers to secure firm funding               required with regard to ability to pay. It is understood that
commitments well in advance of closing and disclose funding         by bringing the action (and undertaking the costs and risk
sources, a burden that typically would not exist in transactions    involved in such litigation), the party is ready and willing to
performed under a property sales contract. Until today, we          consummate the transaction should the court render judgment
have never required a non-breaching purchaser to put on             in its favor. Here, DiGiuseppe has done all that is required. 3
such proof. Cf. Corzelius, 220 S.W.2d at 635 (explaining            His first pleading in the trial court and his cross-petition
that it would not be necessary for a purchaser “to produce a        requested the remedy of specific performance and stated
firm commitment for an adequate loan” and recognizing that          that, as soon as acceptable zoning was approved, he was
“[b]anks, insurance companies, and others loaning money             ready, willing, and able to satisfy his funding obligations
would probably be reluctant to execute a commitment for             under the contract. DiGiuseppe's pleadings indicated that
a loan to complete a sale of lands which the owner had              he “possessed the necessary capital to move forward with
declared she would not convey”). The sale of property often         the acquisition of the Property.” Moreover, during trial, he
becomes a complex transaction that may involve developers           testified that he was ready and able to close after March 7,
with many properties, numerous lenders, investors who may
                                                                    2000, the date the city council approved acceptable zoning. 4
wish to remain confidential until closing, and other sources
                                                                    DiGiuseppe stated that he had three homebuilders who would
of cash flow that may not come together until the last minute.
                                                                    have funded the purchase and that “if there hadn't been
Sellers find out at closing whether a buyer can pay, and buyers
                                                                    another contract in place, [they] would have closed the deal.”
need not choose a source of financing or secure a financing
                                                                    Though the Court finds DiGiuseppe's testimony “equivocal
commitment until shortly before closing. See Shuler, 644
                                                                    and conflicting” because DiGiuseppe did not demonstrate
S.W.2d at 448 (indicating that the time for buyer and seller
                                                                    that would not have been able to close the transaction on
to show their ability to perform is at closing). I see no reason
                                                                    his own, 269 S.W.3d at 600, I am satisfied that DiGiuseppe
to change this state of affairs simply because a seller has, for
                                                                    presented at least some evidence of his ability, with the help
whatever reason, breached his agreement and forced a non-
                                                                    of investors he had secured, to tender the money required
breaching plaintiff to seek judicial enforcement. And, in a
case such as this, in which the buyer testified that he was ready   under the contract. 5 See Corzelius, *612 220 S.W.2d at 635
and able to close when acceptable zoning was approved and           (holding that a buyer is obligated to do no more than offer
continued to be ready and able to close, equity demands no          to perform in his pleadings, but a buyer who put on some
more of a non-breaching buyer.                                      evidence of creditworthiness and willing funding sources
                                                                    sufficiently established ability to pay). Contrary to the Court's
Finally, it is entirely possible that a buyer who is ready,         suggestion, DiGiuseppe was not required to prove that he
willing, and able to perform at the time of trial may find          had cash in hand or that a written financing agreement was
his *611 fortunes diminished by the time the closing date           in place. DiGiuseppe offered to do equity in his pleadings,
arrives such that he is no longer able to make payment. Just        and he presented some evidence of his willingness and ability
as we do not require tender of payment when it would be a           to perform under the contract. When a seller's repudiation
“useless and idle ceremony,” we cannot require a showing of         of a contract makes the buyer's tender of payment useless
ability to perform at the time of trial when it, in many cases,     and excuses that requirement, there is no principled reason
would be equally meaningless. See Burford, 199 S.W.2d at            to impose on the innocent buyer an obligation to establish
145. The most efficient way to ensure DiGiuseppe's payment          pre-closing funding arrangements, which is not required by
                                                                    the contract and has never been required by this Court.


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             16
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

DiGiuseppe did all that is required to show that he is entitled
to the remedy of specific performance. I believe that, upon
                                                                    All Citations
the jury's finding that Lawler breached the contract and
DiGiuseppe did not, the trial judge had authority to order          269 S.W.3d 588, 52 Tex. Sup. Ct. J. 29
specific performance. Because the Court holds otherwise, I
respectfully dissent.


Footnotes
1      Hon. G. Alan Waldrop, Justice, Court of Appeals for the Third District of Texas at Austin, sitting for JUSTICE MEDINA
       by commission of Hon. Rick Perry, Governor of Texas, pursuant to Section 22.005 of the Texas Government Code.
2      The parties contemplated a final purchase price of approximately $28 million. The written contract was initially prepared
       by DiGiuseppe. The signed version included a typewritten main body with a few handwritten deletions and interlineations
       initialed by the parties, a typewritten addendum with additional handwritten deletions and interlineations, and a two-page,
       handwritten addition to the addendum relating to earnest money. The contract also included an August 1999 amendment
       as well as exhibits describing the property and the development plans.
3      Lawler also did not close with DRHI. The failure of that transaction was the subject of separate litigation.
4      After the dispute arose, but before he counterclaimed in the lawsuit, DiGiuseppe transferred his interest in the purchase
       contract to a Texas limited partnership called Frisco Master Plan LP. The parties do not dispute the validity of the
       assignment to Frisco Master Plan LP or that Frisco Master Plan is controlled by DiGiuseppe. Therefore, for simplicity, we
       refer to DiGiuseppe, Southbrook Development, and Frisco Master Plan LP collectively as “DiGiuseppe.”
5      The jury charge consisted of eight questions, none of which dealt with fact issues related to specific performance. In
       addition to the two questions on breach of the contract, Question 3 inquired as to damages for Lawler's failure to comply
       with the contract. Question 4 was a waiver question as to Lawler's claims (unanswered). Question 5 was the liability
       question on DiGiuseppe's promissory estoppel claim. Question 6 inquired as to damages relating to the promissory
       estoppel claim. Question 7 inquired whether DiGiuseppe performed compensable work for Lawler. Question 8 inquired
       as to the value of any compensable work performed by DiGiuseppe (also unanswered).
6      Lawler has not challenged this ruling.
7      The court did not address the purchase contract language whereby each of the parties expressly waived any claims
       for damages.
8      The following exchange occurred during examination by Lawler's counsel:
         Q. Mr. DiGiuseppe, you personally did not have the money to close this contract, did you?
         A. I did not.
         Q. When you assigned—when you entered into this contract, you had a right to assign it, right?
         A. That's right.
         Q. And so you were going to have to find a third party or parties to assign this contract in order for it to close, correct?
         A. That's exactly what [Lawler] was saying.
         Q. I'm just asking you. That's what had to happen, isn't it?
         A. Yes.
         Q. You couldn't close the contract?
         A. No.
         Q. How did you intend for [Lawler], then, to close this contract?
         A. For [Lawler]—
         Q. For you to close the contract, for you to make the purchase or for somebody to make the purchase of this contract?
         A. Well, normally what I do is—dealing with a piece of property like this, I'll put it under contract, do the work, do the
            zoning. And through that process, I usually put together parties to be the investors in the deal. And they, then, close
            on the contract, and they would fund the development of the property and so on. And I would be the development
            arm of that entity usually.
         Q. You never had any written agreement from any third parties to close this contract, did you?
         A. I haven't gotten a written agreement with the parties that were going to close it with me, no. That's not the way I
            do business.
         Q. You don't use contracts?



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              17
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

          A. No. What I mean is if somebody tells me they are going to do something, I expect them to do it.
          Q. Well, in your deposition, didn't you tell me that you felt that there would be three different home builders that might
             participate and provide that money to close this deal?
       ***
          A. Three different home builders were going to close the deal with me, yes.
          Q. But you didn't have any written agreement from them that they were going to close the deal?
          A. Not a written agreement, no.
       ***
          Q. When you sent the letter that said you were ready, willing and able to close this contract, you, individually, couldn't
             close that contract, could you?
          A. I, individually, never intended to close that contract.
          Q. You didn't have the funds to close the contract, did you?
          A. Not personally, no.
9      The following exchange occurred during examination by DiGiuseppe's counsel:
          Q. Mr. DiGiuseppe, you had the means to close the contract, didn't you?
          A. Yes. In fact, a month later, we closed one that was $24 million.
10     We note that DiGiuseppe's argument on this point is not that the law does not normally require proof of readiness,
       willingness, and ability to perform before specific performance will be awarded, but that his contract with Lawler negated
       or waived this requirement by agreement. The dissent argues that DiGiuseppe was not required to prove and obtain a
       finding of fact that he was ready, willing, and able to perform because Texas law does not require such proof where the
       defendant has repudiated or breached the contract. However, this argument was not raised or briefed because it is not
       the position DiGiuseppe takes in the case. Ordinarily, failure to brief an argument waives the claimed error. Fed. Sign v.
       Tex. S. Univ., 951 S.W.2d 401, 410 (Tex.1997). This rule is relaxed when fact issues are not germane to the resolution
       of the issue and the issue is a question of law involving constitutional ramifications. Id. The rule may also be relaxed
       where the issue is one involving fundamental error. W.J. McCauley v. Consol. Underwriters, 157 Tex. 475, 304 S.W.2d
       265, 266 (1957) (“[T]he Supreme Court is authorized to and will consider fundamental error even though not assigned
       by the parties.”). The dissent's argument is not of constitutional dimension, and, even if we agreed with this analysis, we
       would not view it as raising a point of fundamental error.
11     As noted above, supra footnote 10, this issue was not raised by DiGiuseppe as a point of error nor briefed by the parties.
12     TEX.R. CIV. P. 92 (“A general denial of matters pleaded by the adverse party which are not required to be denied under
       oath, shall be sufficient to put the same in issue.”).
13     The dissent also points to the comments to section 363 of the Restatement (Second) of Contracts as supporting
       its position. However, section 363 deals with the issue of securing the ability to perform by a party seeking specific
       performance at the time of the order granting specific performance. RESTATEMENT (SECOND) OF CONTRACTS §
       363 (1981). This section of the Restatement notes that if performance by the injured party cannot be secured to the
       satisfaction of the court at the time of the requested order of specific performance, specific performance may be refused.
       Section 363 does not address the question of whether proof of the willingness and ability to perform at the time required
       by the contract is a prerequisite to obtaining specific performance in any way.
1      In footnote 10, the Court takes the position that DiGiuseppe did not raise or argue that he was not required to prove or
       obtain a finding of fact that he was ready, willing, and able to perform, suggesting that such an argument should not be
       addressed in this dissent. 269 S.W.3d at 597. Yet that is the basis for the court of appeals' decision, –––S.W.3d ––––,
       ––––, and the Court provides exhaustive discussion on this very issue in its opinion. Id. at 593. In the first issue raised in
       his petition for review, DiGiuseppe claims that “[t]he court of appeals erred in reversing the trial court's award of specific
       performance to DiGiuseppe.” I believe, as the Court appears to, that DiGiuseppe's issue sufficiently raised the question
       of whether Texas law requires such proof from a non-breaching buyer.
2      See Kress, 261 S.W.2d at 704 (recognizing that specific performance is an equitable remedy); 17090 Parkway, 80 S.W.3d
       at 256 (relying on erroneous and distinguishable courts of appeals' cases, as explained above); Lazy M. Ranch, Ltd. v.
       TXI Operations, LP, 978 S.W.2d 678, 683 (Tex.App.-Austin 1998, pet. denied) (rejecting specific performance because
       the buyer breached the contract and had unclean hands); Am. Apparel Prods., 880 S.W.2d at 269–70 (rejecting specific
       performance because the buyer unilaterally rescinded the contract); Gordin v. Shuler, 704 S.W.2d 403, 408 (Tex.App.-
       Dallas 1985, writ ref ‘d n.r.e.) (rejecting specific performance because the buyer failed to comply with the contract terms
       and failed to disclose material information); Chessher, 619 S.W.2d at 421 (same); Hendershot, 476 S.W.2d at 920
       (erroneously interpreting Burford and Corzelius, as explained above).



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              18
DiGiuseppe v. Lawler, 269 S.W.3d 588 (2008)
52 Tex. Sup. Ct. J. 29

3      Strictly speaking, the pleadings filed by DiGiuseppe did not request the remedy of specific performance. Frisco
       Master Plan, the limited partnership to which DiGiuseppe transferred his interest under the contract, requested specific
       performance as a third-party plaintiff to the suit between DiGiuseppe and Lawler. Accordingly, the trial court's judgment
       granted specific performance in favor of Frisco Master Plan, not DiGiuseppe. Because DiGiuseppe was acting on behalf
       of Frisco Master Plan and Southbrook Development Company, I have not distinguished between these three parties for
       the purposes of this opinion.
4      DiGiuseppe testified as follows:
          Q. Could you close after March 7th [the date DiGiuseppe accepted the zoning changes]?
          A. Absolutely.
          Q. Could Mr. Lawler close after March 7th?
          A. No.
          Q. Were you ready and able to close after March 7th?
          A. We were.
          Q. Are you ready and able to close today?
          A. We are.
       ***
          Q. You want to close this contract in accordance with its terms, don't you?
          A. Yes, I do.
5      Though, as the Court points out, DiGiuseppe did not have cash in hand to personally tender payment under the contract,
       DiGiuseppe testified that he had secured financing sources.
          Q. Now, you had no ability to close this transaction yourself, did you?
          A. I, personally, was not going to close the deal myself, no.
          Q. You were going to get some investors to do it, weren't you?
          A. I had them.
       ***
          Q.... Is there any question—I want you to tell the jury—is there any question that you have the commitments and have
            the money to close this deal?
          A. Not at all—
       ***
          Q. And can you close this deal now?
          A. Yes.


End of Document                                              © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          19
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)


                                                                                   Amendment or modification
                                                                              Trial court's plenary jurisdiction gives it not only
    KeyCite Yellow Flag - Negative Treatment
                                                                              authority but responsibility to review any pretrial
Holding Limited by TransAmerican Natural Gas Corp. v. Powell,   Tex.,
 June 19, 1991                                                                order upon proper motion, and in doing so, it
                                                                              is presumed that court is familiar with entire
                      701 S.W.2d 238                                          record of case up to and including motion to be
                  Supreme Court of Texas.                                     considered.

        Ida E. DOWNER, Petitioner,                                            8 Cases that cite this headnote
                   v.
  AQUAMARINE OPERATORS, INC., Respondent.
                                                                        [3]   Pretrial Procedure
                                                                                  Striking pleadings
            No. C–4141. | Dec. 4, 1985.
           | Rehearing Denied Jan. 15, 1986.                                  Pretrial Procedure
                                                                                  Dismissal or default judgment
Wife of deceased seaman brought action for damages                            In refusing to grant new trial and reinstate
against shipowner. Trial court struck shipowner's answer as                   party's answer which had been struck at prior
discovery abuse sanction and signed interlocutory default                     hearing on Motion for Sanctions as discovery
judgment as to liability. Jury trial on issue of damages was had              sanction, trial court could consider evidence
in the 334th District Court, Harris County, Ken Harrison, J.                  introduced subsequent to original sanctions
Shipowner appealed. The Court of Appeals, 689 S.W.2d 472,                     hearing. Vernon's Ann.Texas Rules Civ.Proc.,
reversed judgment of trial court. Wife appealed. The Supreme                  Rule 215a(c) (Repealed).
Court, Wallace, J., held that: (1) trial court had authority under
rule regarding failure of party to appear at oral deposition to               35 Cases that cite this headnote
strike answer of shipowner; (2) trial court correctly imposed
discovery sanction of striking shipowner's answer; and (3)
                                                                        [4]   Appeal and Error
trial court correctly refused to admit evidence of contributory
                                                                                 Abuse of discretion
negligence.
                                                                              Test for whether trial court abused its discretion
Judgment of Court of Appeals reversed and judgment of trial                   is whether court acted without reference to any
court affirmed.                                                               guiding rules and principles, i.e., whether the
                                                                              act was arbitrary or unreasonable, and mere
                                                                              fact that trial judge may decide matter within
                                                                              his discretionary authority in different manner
 West Headnotes (8)                                                           than appellate judge in similar circumstance does
                                                                              not demonstrate that an abuse of discretion has
                                                                              occurred.
 [1]     Pretrial Procedure
             Corporate officers, agents, and employees                        3513 Cases that cite this headnote
         President of company which was party to action
         was a “party” within meaning of Rule 215a(c)
                                                                        [5]   Pretrial Procedure
         regarding failure of party to appear at oral
                                                                                  Striking pleadings
         deposition, where president testified he was
         in complete charge of all operations of the                          Pretrial Procedure
         company. Vernon's Ann.Texas Rules Civ.Proc.,                             Dismissal or default judgment
         Rule 215a(c) (Repealed).                                             Trial court correctly imposed discovery sanction
                                                                              of striking defendant's answer and signing
         27 Cases that cite this headnote                                     interlocutory default judgment as to liability
                                                                              under Rule 215a(c)(Repealed) regarding failure
 [2]     Pretrial Procedure                                                   of party to appear at oral deposition, where



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  1
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)


       shipowner voluntarily sent crew to sea rather
       than producing them for depositions as agreed        Terry P. Ayre and Thomas A. Brown, Brown, Sims, Wise &
       on two occasions, attorney for wife of deceased      White, Houston, for respondent.
       seaman stated shipowner's attorney waited until
                                                            Opinion
       one hour past deposition time to advise wife's
       attorney that wife's attorney would have to fly      WALLACE, Justice.
       to another city to take depositions on following
       day, and shipowner failed to produce president       This is an appeal from a judgment for damages in a suit
       of shipowner and immediate supervisor of             brought under the Jones Act and under admiralty law. The
       captain for deposition and did not explain this      trial dealt only with damages because the trial court struck the
       failure. Vernon's Ann.Texas Rules Civ.Proc.,         defendant's answer as a discovery abuse sanction and signed
       Rule 215a(c) (Repealed).                             an interlocutory default judgment as to liability. The court
                                                            of appeals reversed the trial court judgment, holding that the
       17 Cases that cite this headnote                     action of *240 that court was an error of law and an abuse of
                                                            discretion. 689 S.W.2d 472. We reverse the judgment of the
 [6]   Appeal and Error                                     court of appeals and affirm the judgment of the trial court.
          Sustaining challenge or excusing juror
                                                            The issues before us are whether TEX.R.CIV.P. 215a(c), as
       Alleged error of trial court in refusing to strike
                                                            it existed prior to the amendment effective August 1, 1984,
       a juror for cause did not result in harm, where
                                                            authorized the trial court to strike defendant's answer, and, if
       challenged juror was a spare.
                                                            so, whether the exercise of that authority constituted an abuse
       1 Cases that cite this headnote                      of discretion.

                                                            Edward P. Downer was a seaman aboard the vessel Four
 [7]   Damages                                              Point IV. He drowned while attempting to free a line that
          Scope of issues and questions considered          had fouled the vessel's propeller. Ida E. Downer, his widow,
       Trial court correctly refused to admit evidence      brought this action against Aquamarine Operators, Inc., the
       of contributory negligence in trial to determine     owner and operator of the vessel. The case was filed in the
       damages, where defendant's answer had been           151st District Court of Harris County. Both Downer and
       struck and default judgment rendered as to           Aquamarine are residents of Harris County, Texas.
       liability and defendant had no pleading to
       support contributory negligence.                     Downer filed Notice of Intent to Take the Depositions of
                                                            All Members of The Crew on June 1. The notice identified
       14 Cases that cite this headnote
                                                            each crew member, including the captain, Chester P. Dalfrey,
                                                            by name only. Downer also requested depositions of the
 [8]   Appeal and Error                                     immediate supervisor of Chester Dalfrey and the custodian of
          Amount of recovery or extent of relief            Edward Downer's personnel file. On June 1, Aquamarine
       Alleged error of trial court in awarding             notified Downer that the crew was at sea and would not
       prejudgment interest was not presented to trial      appear. Aquamarine at that time agreed to produce the
       court and was thus waived on appeal.                 requested persons on June 22. On June 21, Aquamarine
                                                            again notified Downer that the crew was at sea and would not
       4 Cases that cite this headnote                      appear. It agreed to produce them on July 5.

                                                            Downer filed written Notice of Intent to Take Depositions of
                                                            the same individuals for July 5. On that date, the requested
Attorneys and Law Firms                                     deponents did not appear, whereupon Downer filed a Motion
                                                            for Sanctions. A hearing on the Motion for Sanctions was
*239 John O'Quinn, Frank M. Staggs, Jr., O'Quinn &          set for August 22. Aquamarine made no appearance at the
Hagans, Houston, for petitioner.



             © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         2
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)


hearing; the trial court granted the Motion for Sanctions and       With the above information before it, the trial court overruled
signed an Order Striking Aquamarine's Answer.                       Aquamarine's Motion to Reconsider the Sanctions and to
                                                                    reinstate its answer. The court signed an order granting an
Downer filed a Motion for Interlocutory Default Judgment            interlocutory default judgment as to liability. Aquamarine
to which Aquamarine responded. The response contained               filed a Motion to Set Aside the Default Judgment. The
Aquamarine's reasons for not producing the requested                motion contained practically the same information as the
individuals for depositions and its failure to appear at the        Motion to Reconsider Sanctions set out above. The trial court
sanctions hearing.                                                  considered this motion and overruled it. On April 16, 1984,
                                                                    the case was preferentially set for trial for June 4, and the trial
The reason offered for the first two occasions was that work        court refused to consider Aquamarine's Second Motion to
for the FOUR POINT IV was scarce and, when work was                 Set Aside the Interlocutory Default Judgment and Reinstate
available, it was necessary to send the vessel and crew to          Defendant's Pleadings.
sea rather than produce them for depositions. On the third
occasion, the vessel was in port at New Iberia, Louisiana,          A jury trial was had in a different court, the 334th District,
but Coast Guard regulations required a skeleton crew to be          on the issue of damages. At the trial, Chester Dalfrey testified
kept aboard at all times. Aquamarine's attorney stated that         that he was captain of the FOUR POINT IV and as such he
he notified Downer's attorney on July 1 of the necessity            was in complete charge of the vessel with authority over all of
to take the depositions in New Iberia. Downer's attorney            its operations. Mr. Clark Ivans testified that he was president
stated that he first learned that the individuals would not         of Aquamarine at all times pertinent to this case, and that as
appear as noticed when Aquamarine's attorney called him an          such, he was the immediate supervisor of Chester Dalfrey.
hour after the depositions were scheduled to commence. Both
agreed that Aquamarine requested that the depositions be             [1] We now address the issue of whether the trial court had
taken in New Iberia on July 6. However, Downer's attorney           authority under Rule 215a(c) to strike Aquamarine's answer.
stated that he could not do so because he was preferentially        That rule stated in pertinent part:
set for trial in Houston starting at 9:00 a.m. on July 6.
                                                                                 If a party or an officer or managing
The reason given by Aquamarine for not appearing at                              agent of a party, except for good
the sanctions hearing was that Hurricane Alicia had struck                       cause shown, fails to appear before
La Porte, the residence of Mr. Ayres, Aquamarine's lead                          the officer who is to take his oral
counsel, four days previously. Mr. Ayres was involved in                         deposition ... the court in which the
cleaning up after the hurricane and mitigating the damages                       action is pending on motion and notice
to his home. Also, he had a hearing set in federal court in                      may strike out all or any part of
Beaumont on the following day and was directing all of his                       the pleading of that party or dismiss
available attention to that matter.                                              the action or proceeding or any part
                                                                                 thereof....
To his Motion to Reconsider the Sanctions, Mr. Ayres
                                                                    As noted above, Ivans testified that as president of
attached an affidavit from his secretary, which stated that she
                                                                    Aquamarine he was in complete charge of all operations of
had called the clerk of the court on July 7, and had advised
                                                                    the company. Thus he was a party as contemplated by Rule
her that Mr. Ayres had to make a docket call in Angleton on
                                                                    215a(c).
August 22. She understood the clerk to say that the sanctions
hearing would be reset for September 6. In response to this
                                                                     [2]    [3] The next question is whether the trial court, in
motion, Downer's attorney advised the court by letter of his
                                                                    refusing to grant a new trial and reinstate Aquamarine's
version of the circumstances leading up to the non-appearance
                                                                    answer, could consider the evidence introduced subsequent
on July 5, and the time when he was first advised *241
                                                                    to the original sanctions hearing. Aquamarine contends that
that the named individuals would not appear. Attached to this
                                                                    the trial court, in imposing sanctions, could consider only
letter to the court was a copy of a letter dated July 28, written
                                                                    the evidence before it at the time of the sanctions hearing,
by Mr. Bales, an associate of Mr. Ayres, which confirmed that
                                                                    and not any evidence subsequently produced. A trial court's
the sanctions hearing was set for August 22.
                                                                    plenary jurisdiction gives it not only the authority but the
                                                                    responsibility to review any pre-trial order upon proper


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 3
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)


motion. In doing so, it is presumed that the court is familiar      case, and now embodied in Rule 215. The use of sanctions
with the entire record of the case up to and including the          by trial courts to prevent discovery abuse has developed
motion to be considered. The plenary jurisdiction of the trial      steadily over the past several years. These changes reflect the
court in this case continued through the final judgment and         continuing pattern both to broaden the discovery process and
overruling of Aquamarine's motion for new trial. When               to encourage sanctions for failure to comply.
considering the motion for new trial, the court had before
it the reasons advanced by Aquamarine for not appearing             The United States Supreme Court in National Hockey League
for depositions or the sanctions hearing; Downer's response         v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct.
to Aquamarine's motions; and the evidence produced at the           2778, 49 L.Ed.2d 747 (1976) approved the use of sanctions
trial on damages. Thus, the court of appeals erred in holding       not only to assure compliance with the discovery process but
that the trial court did not have authority under Rule 215a(c)      also to deter those who might be tempted to abuse discovery
to strike Aquamarine's answer.                                      in the absence of a deterrent.

We now turn to the court of appeals holding that the trial          This court and various courts of appeals have also followed
court abused its discretion in striking Aquamarine's answer.        this progression. See, e.g., Dyson v. Olin Corp., 692 S.W.2d
The court of appeals concluded its review of the abuse of           456 (Tex.1985), (Kilgarlin, J., concurring) (unnamed witness
discretion issue by stating: “The facts of the case simply do       not permitted to testify); Jarrett v. Warhola, 695 S.W.2d 8
not, in our opinion, show this to be an appropriate case to         (Tex.App.—Houston [14th Dist.] 1985, writ ref'd), (plaintiff's
impose the ultimate sanctions of striking the pleadings and         cause of action dismissed); City of Houston v. Arney,
entering default judgment.” We interpret that statement to          680 S.W.2d 867 (Tex.App.—Houston [1st Dist.] 1984,
mean that the court of appeals disagreed with the decision of       no writ) (defendant's answer struck for failure to answer
the two trial judges who reviewed the matter.                       interrogatories); Southern Pacific Transportation v. Evans,
                                                                    590 S.W.2d 515 (Tex.Civ.App.—Houston [1st Dist.] 1979,
 [4] The test for abuse of discretion is not whether, in            writ ref'd n.r.e.) (defendant's answer struck and interlocutory
the opinion of the reviewing court, the facts present an            default judgment rendered as to liability), cert. denied, 449
appropriate case for the trial court's action. Rather, it is        U.S. 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980).
a question of whether the court acted without reference
to any guiding rules and *242 principles. Craddock v.               In various speeches and law review articles, different
Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126               members of this court have encouraged trial judges to use
(Tex.Comm.App.—1939, opinion adopted). Another way                  sanctions to the degree necessary to assure compliance with
of stating the test is whether the act was arbitrary or             discovery procedures and deter abuse of the process. Barrow
unreasonable. Smithson v. Cessna Aircraft Co., 665 S.W.2d           and Henderson, 1984 Amendments to the Texas Rules of Civil
439, 443 (Tex.1984); Landry v. Travelers Insurance Co.,             Procedure Affecting Discovery, 15 ST. MARY'S L.J. 713
458 S.W.2d 649, 651 (Tex.1970). The mere fact that a trial          (1984) (presented to the Texas College of the Judiciary Nov.
judge may decide a matter within his discretionary authority        29, 1984); Kilgarlin and Jackson, Sanctions for Discovery
in a different manner than an appellate judge in a similar          Abuse Under New Rule 215, 15 ST. MARY'S L.J. 767 (1984);
circumstance does not demonstrate that an abuse of discretion       Pope and McConnico, Practicing Law With the 1981 Texas
has occurred. Southwestern Bell Telephone Co. v. Johnson,           Rules, 32 BAYLOR L.REV. 457 (1981); Spears, The Rules
389 S.W.2d 645, 648 (Tex.1965); Jones v. Strayhorn, 159             of Civil Procedure: 1981 Changes In Pretrial Discovery, 12
Tex. 421, 321 S.W.2d 290, 295 (Tex.1959).                           ST. MARY'S L.J. 633 (1981).

To determine the trial judge's guiding rules and principles         The trial court in this case was free to examine the factors
in imposing sanctions for discovery abuse, we must look             before it to determine whether to levy sanctions. Among these
to the Texas Rules of Civil Procedure as promulgated                were the following: (1) whether voluntarily sending the crew
and amended by this Court as well as the decisions of               to sea rather than producing them for depositions as agreed on
appellate courts of this State and of the United States. The        two occasions was in conscious disregard of this court's rules;
Texas Rules of Civil Procedure pertaining to discovery and          (2) whether the contradictory statements of both attorneys
sanctions for noncompliance have been amended several               indicated that Aquamarine's attorney did in fact wait until
times, culminating in Rule 215a as it existed at the time of this   one hour past the scheduled time for depositions on July 5,



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             4
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (1985)


                                                                        [6] The second point was that the trial court improperly
to advise Downer's attorney that he would have to fly to
                                                                       refused to strike a juror for cause. After the court had ruled on
New Iberia and take depositions on the following day; (3)
                                                                       challenges for cause, there were 26 names left on the jury list.
whether Aquamarine's attorney consciously disregarded the
                                                                       Each party was given six jury strikes, so, after making those
sanctions hearing in preference to his personal needs and
                                                                       strikes, 14 names remained on the list. The challenged juror
the federal court case set the following day; (4) whether
                                                                       was Number 14 and was thus a spare. There was no harm in
the information contained in the secretary's affidavit as to
                                                                       refusing to dismiss him for cause.
the date of the sanctions hearing conflicted with the letter
from an attorney *243 in that law firm confirming that the
                                                                        [7] The third point was that the trial court improperly refused
hearing was set on August 22; and (5) the unexplained failure
                                                                       to admit evidence of Downer's contributory negligence.
of Aquamarine to produce for depositions on any of the
                                                                       Contributory negligence is an affirmative defense which
occasions in question Clark Ivans, the immediate supervisor
                                                                       must be pleaded. Aquamarine's answer had been struck and
of Chester Dalfrey and the president of Aquamarine.
                                                                       default judgment rendered as to liability. Thus, defendant had
                                                                       no pleading to support contributory negligence, so the court
 [5] The record contains no indication that the trial court
                                                                       did not err in refusing to admit the requested evidence.
was capricious, arbitrary, or unreasonable. Thus, the court
of appeals erred in holding that the trial court abused its
                                                                        [8] Aquamarine's remaining point before the court of
discretion.
                                                                       appeals was that the trial court erred in awarding prejudgment
                                                                       interest in a Jones Act case tried to a jury. This point was not
In determining whether to reverse and render this cause or to
                                                                       presented to the trial court and was thus waived.
remand it to the court of appeals, we must look to the four
points of error raised by Aquamarine before the court of
                                                                       Aquamarine's points of error presented to the court of
appeals but not addressed by that court. If those points raise
                                                                       appeals but not considered by that court concerned questions
questions of law, as opposed to questions of fact, they can be
                                                                       of law over which we have jurisdiction. There is no merit to
addressed by this court.
                                                                       these points so it is not necessary for this cause to be remanded
                                                                       to the court of appeals.
The first point was that Downer's First Amended Original
Petition was insufficient to support the judgment. The
                                                                       The judgment of the court of appeals is reversed and the
contention is that the facts supporting the cause of action
                                                                       judgment of the trial court is affirmed.
were not pleaded. TEX.R.CIV.P. 47 requires that a petition
contain a short statement of the cause of action sufficient to
give fair notice of the claim involved. Our rules do not require
                                                                       All Citations
pleadings to contain evidence or factual detail. That point is
overruled.                                                             701 S.W.2d 238



End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  5
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)


                                                                      relief unless it is arbitrary, unreasonable, and
                                                                      unsupported by guiding rules and principles.
                    252 S.W.3d 833
                Court of Appeals of Texas,                            4 Cases that cite this headnote
                          Dallas.

            W.R. EDWARDS, Jr., Appellant                        [3]   Appeal and Error
                          v.                                                Consideration and effect of findings or
    MID–CONTINENT OFFICE DISTRIBUTORS,                                failure to make findings
   L.P. and Inwood Office Furniture, Inc., Appellees.                 When a trial court makes written findings of
                                                                      fact following a non-jury trial, these assist
       No. 05–06–01421–CV.          |     April 25, 2008.             in appellate court's review of the trial court's
                                                                      exercise of its discretion by revealing the trial
Synopsis
                                                                      court's reasoning and analysis and help assure
Background: Lender, a member of an informal lending
                                                                      both the reviewing court and the litigants that
cartel, brought action for money had and received against
                                                                      the trial court's decision resulted from thoughtful
office furniture supply company for damages in its failure to
                                                                      deliberation.
repay money used by furniture store to purchase receivables.
The 95th Judicial District Court, Dallas County, Karen Gren           Cases that cite this headnote
Johnson, J., entered take-nothing judgment in favor of supply
company. Lender appealed.
                                                                [4]   Appeal and Error
                                                                           Allowance of remedy and matters of
                                                                      procedure in general
[Holding:] The Court of Appeals, Lang-Miers, J., held that
                                                                      If the evidence is sufficient to support the trial
money fronted to furniture supply did not in equity and good
                                                                      court's findings and conclusions, the trial court
conscience belong to lender.
                                                                      did not abuse its discretion.

                                                                      11 Cases that cite this headnote
Affirmed.

                                                                [5]   Implied and Constructive Contracts
                                                                          Nature of right
 West Headnotes (9)
                                                                      The claim for money had and received
                                                                      belongs conceptually to the doctrine of unjust
 [1]    Implied and Constructive Contracts                            enrichment.
            Money Received
                                                                      23 Cases that cite this headnote
        The claim for money had and received seeks
        equitable relief, and a trial court exercises broad
        discretion in balancing the equities involved in a      [6]   Implied and Constructive Contracts
        case seeking equitable relief.                                    Restitution
                                                                      The doctrine of unjust enrichment applies the
        9 Cases that cite this headnote
                                                                      principles of restitution to disputes that are not
                                                                      governed by a contract between the parties; it
 [2]    Appeal and Error                                              characterizes the result of a failure to make
           Trial in Equitable Actions                                 restitution under circumstances that give rise
        Appeal and Error                                              to an implied or quasi-contractual obligation to
           Effect in Equitable Actions                                return those benefits.

        The Court of Appeals will not disturb a trial                 11 Cases that cite this headnote
        court's ruling on a claim seeking equitable



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          1
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)




 [7]    Implied and Constructive Contracts                   Darrell G. Noga, Elizabeth Flora, Fee, Smith, Sharp, Vitullo,
            Nature of right                                  LLP, Robert H. Renneker, Dallas, for Appellees.
        Implied and Constructive Contracts
                                                             Before Justices LANG, LANG–MIERS, and MAZZANT.
            Defenses
        To prove a claim for money had and received, a
        plaintiff must show that a defendant holds money
                                                                                       OPINION
        which in equity and good conscience belongs to
        him; a defendant may present any facts or raise      Opinion by Justice LANG–MIERS.
        any defenses that would deny a claimant's right
        to recover under this theory.                        W.R. Edwards, Jr. appeals the trial court's judgment for
                                                             appellees, Mid–Continent Office Distributors, L.P. and
        25 Cases that cite this headnote                     Inwood Office Furniture, Inc., following a bench trial on a
                                                             claim for money had and received. For the reasons that follow,
 [8]    Implied and Constructive Contracts                   we affirm.
            Consideration or Purpose for Which Money
        Was Received
        Money fronted to furniture supply company                                  BACKGROUND
        on behalf of furniture store by lender, a
        member of an informal lending cartel, as a           The trial testimony showed that Edwards was a member
        means to allowing store to obtain furniture          of an informal lending cartel. He met Matthews through
        orders, did not, in equity and good conscience,      a mutual cartel acquaintance and subsequently loaned him
        belong to lender, thus precluding lender's claim     $10,000. Matthews repaid that loan on time. A few months
        against company for money had and received;          later, Matthews approached Edwards seeking another loan.
        transaction represented a high-risk scheme           He told Edwards that his company, MAC Group, L.L.C.
        whereby store proposed to assign the value of        (collectively Matthews or MAC), a furniture broker, needed
        the furniture to lender and sell the furniture on    to borrow money in connection with three of its customer
        lender's behalf, if lender agreed to pay off the     orders. He explained that three customers placed furniture
        suppliers so the furniture could be delivered.       orders with MAC, each gave MAC a fifty percent deposit,
                                                             but his suppliers would not deliver the furniture until
        Cases that cite this headnote                        MAC paid them the full amount. Matthews proposed to
                                                             sell the receivables for these customers to Edwards at a
                                                             discounted value if Edwards would agree to pay off the
 [9]    Implied and Constructive Contracts
                                                             suppliers so the furniture could be delivered. Together,
            Nature of right
                                                             Matthews and Edwards drafted a “Factoring Agreement”
        In an action for money had and received, the         which reflected the terms of their agreement. It listed the
        absence of proof of detrimental reliance by          three customers, with total payments owed to MAC of
        a defendant does not assure the plaintiff of         approximately $70,000.00; and seven suppliers to whom
        recovery; instead, detrimental reliance is one       MAC owed a total of $62,052.93, including $28,272.22 to
        of the factors that a trial court considers in       Mid–Continent, a furniture wholesaler, and $15,292.34 to
        balancing the equities in a claim for money had      Inwood, a furniture manufacturer.
        and received.
                                                             At Matthews' request, Edwards called Pat Henin, an
        6 Cases that cite this headnote
                                                             operations manager at Mid–Continent, to verify the amount
                                                             MAC owed. The telephone conversation lasted five minutes
                                                             or less, and there is conflicting testimony about what was said.
                                                             However, Edwards testified that Henin confirmed the balance
Attorneys and Law Firms
                                                             MAC owed and that he understood her to say Mid–Continent
*834 Kent Frank Brooks, Dallas, for Appellant.               was holding orders for these MAC customers until it received



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         2
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)



full payment. 1 Based on this conversation, Edwards did not       the judgment denying him relief. Those reviews involve
think he needed to call Inwood or the other suppliers to          overlapping standards of review. 6
confirm that they were also holding orders for these MAC
customers, 2 *835 and he signed the Factoring Agreement,           *836 [1]       [2]    [3]     [4] The claim for money had and
agreeing to purchase MAC's receivables. He obtained a             received seeks equitable relief. See Stonebridge Life Ins.
cashier's check for $28,272.22 payable to Mid–Continent and       Co. v. Pitts, 236 S.W.3d 201, 203 n. 1 (Tex.2007) (per
authorized Matthews to pick up the cashier's check and hand       curiam); Acoustical Screens in Color, Inc. v. T.C. Lordon Co.,
deliver it to Mid–Continent. The cashier's check contains the     Inc., 524 S.W.2d 346, 350 (Tex.Civ.App.-Dallas 1975, writ
                                                                  ref'd n.r.e.). And a trial court exercises broad discretion in
notation “MAC 908.” 3 Edwards also wrote personal checks
                                                                  balancing the equities involved in a case seeking equitable
on his Schwab account to the remaining suppliers, including
                                                                  relief. See In re Gamble, 71 S.W.3d 313, 317 (Tex.2002)
a check to Inwood for $15,292.22. 4 All of those checks           (orig.proceeding); Craddock v. Sunshine Bus Lines, Inc., 134
contained the notation, “MAC Group Payment,” in the “For”         Tex. 388, 393, 133 S.W.2d 124, 126 (1939). We will not
line.                                                             disturb a trial court's ruling on a claim seeking equitable
                                                                  relief unless it is arbitrary, unreasonable, and unsupported
Matthews wrote letters to the three MAC customers advising        by guiding rules and principles. See Cire v. Cummings,
them that their accounts had been sold to Edwards and             134 S.W.3d 835, 838 (Tex.2004). When a trial court makes
to forward their payments to Edwards. When Edwards did            written findings of fact following a non-jury trial, these assist
not receive their payments, he called them to find out            in our review of the trial court's exercise of its discretion
why they had not paid him. The customers told him they            by revealing the trial court's reasoning and analysis and help
never received the furniture. Edwards then called Matthews.       assure both the reviewing court and the litigants that the
Matthews admitted he deceived Edwards and told him the            trial court's decision resulted from thoughtful deliberation.
payments Edwards made to the vendors were for past-due            See Williams v. Chisolm, 111 S.W.3d 811, 815 (Tex.App.-
balances on orders for other customers, not the customers         Houston [1st Dist.] 2003, no pet.). If the evidence is sufficient
whose receivables Edwards purchased.                              to support the trial court's findings and conclusions, the trial
                                                                  court did not abuse its discretion. See Reese v. Duncan, 80
Edwards sued Mid–Continent and Inwood for damages. 5              S.W.3d 650, 659 (Tex.App.-Dallas 2002, pet. denied); El
The parties waived a jury and tried the case to the               Paso County Hosp. Dist. v. Gilbert, 64 S.W.3d 200, 203–04
court. Edwards contended that he paid the money to Mid–           (Tex.App.-El Paso 2001, pet. denied).
Continent and Inwood by mistake “based [on] a fraudulent
representation of another party” and appellees owed him           We review challenges to the sufficiency of the evidence
the money he had paid them. The trial court disagreed             to support findings of fact under the same standards for
and entered a take-nothing judgment in favor of Mid–              reviewing evidence to support a jury's verdict. Walker
Continent and Inwood. It subsequently issued findings of fact     v. Cotter Prop., Inc., 181 S.W.3d 895, 899 (Tex.App.-
and conclusions of law. In two issues on appeal, Edwards          Dallas 2006, no pet.). In evaluating the legal sufficiency
specifically challenges the legal and factual sufficiency of      of the evidence to support a finding, we must determine
certain of the trial court's findings of fact. He contends that   whether the evidence as a whole rises to a level that would
he proved the claim for money had and received against            enable reasonable and fair-minded people to differ in their
appellees and the trial court erred by granting a take-nothing    conclusions. Columbia Med. Ctr. Subsidiary, L.P. v. Meier,
judgment against him.                                             198 S.W.3d 408, 414 (Tex.App.-Dallas 2006, pet. denied)
                                                                  (citing City of Keller v. Wilson, 168 S.W.3d 802, 822
                                                                  (Tex.2005)). Anything more than a scintilla of evidence is
                                                                  legally sufficient to support a challenged finding. Walker,
                STANDARD OF REVIEW
                                                                  181 S.W.3d at 899. When we review a finding for factual
Appellant complains about the findings of fact issued by          sufficiency, we consider all of the evidence and will set
the court to support its judgment denying his claim for           aside a finding only if it is so contrary to the overwhelming
money had and received. However, a review of the findings         weight of the evidence as to be clearly wrong and unjust.
of fact in this case does not end our inquiry. Instead, we        See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242
review those findings in the context of whether they support      (Tex.2001) (per curiam); Cain v. Bain, 709 S.W.2d 175, 176



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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)


(Tex.1986) (per curiam). And we review a trial court's legal       the plaintiff.” Staats, 150 Tex. at 584, 243 S.W.2d at 687–
conclusions de novo. See Walker v. Anderson, 232 S.W.3d            88 (internal quotations and citations omitted). To prove the
899, 908 (Tex.App.-Dallas 2007, no pet.). We evaluate              claim, a plaintiff must show that a defendant holds money
those conclusions independently to determine whether the           which in equity and good conscience belongs to him. See Best
trial court correctly drew the conclusion from the facts. Id.      Buy Co. v. Barrera, 248 S.W.3d 160, at 162–63 (Tex. 2007)
Unchallenged findings of fact are conclusive on appeal unless      (per curiam) (citing Staats, 150 Tex. at 584, 243 S.W.2d at
the contrary is established as a matter or law or there is no      687). A defendant may present any facts or raise any defenses
evidence to support the findings. Toles v. Toles, 45 S.W.3d        that would deny a claimant's right to recover under this theory.
252, 265 n. 6 (Tex.App.-Dallas 2001, pet. denied) (citing          Id. at 162–63 (citing Stonebridge, 236 S.W.3d at 205–06 and
McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex.1986)).           Staats, 150 Tex. at 584, 243 S.W.2d at 687).

Consequently, we first determine whether the evidence              Texas courts have allowed restitution for these types of claims
is sufficient to support the challenged findings and then          in a variety of cases: by a defrauded party against the party
determine whether the trial court's judgment—as a decision of      who committed the fraud, see Staats, 150 Tex. at 583–85,
a claim seeking equitable relief—is arbitrary, unreasonable,       243 S.W.2d at 686–88; Wiseman v. Baylor, 69 Tex. 63, 64–
or unsupported by guiding rules and principles.                    66, 6 S.W. 743, 743–44 (Tex.1887); by a party that made an
                                                                   overpayment, Benson v. Travelers Ins. Co., 464 S.W.2d 709,
                                                                   710–13 (Tex.Civ.App.-Dallas 1971, no writ); and by a party
                                                                   that paid or credited money to the wrong person or account,
   *837 CLAIM FOR MONEY HAD AND RECEIVED
                                                                   see Amoco Prod. Co., 946 S.W.2d at 163–65 (payment to
 [5] [6] Edwards contends that he established each element wrong person); Doss v. Homecomings Fin. Network, Inc.,
of his claim for money had and received. As we noted, a cause      210 S.W.3d 706, 710–11 (Tex.App.-Corpus Christi 2006, pet.
of action for money had and received is equitable in nature.       denied) (payment applied to wrong account); *838 Lyman
Stonebridge Life Ins. Co., 236 S.W.3d at 203 n. 1; Acoustical      D. Robinson Family Ltd. P'ship v. McWilliams & Thompson,
Screens in Color, Inc., 524 S.W.2d at 350. The claim “belongs      P.L.L.C., 143 S.W.3d 518, 520 (Tex.App.-Dallas 2004, pet.
conceptually to the doctrine of unjust enrichment.” Amoco          denied) (earnest money released to wrong client).
Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex.App.-El Paso
                                                                   Conversely, some Texas courts have rejected a claim for
1997, no writ). 7 The doctrine of unjust enrichment applies
                                                                   restitution and held that money paid under a unilateral mistake
the principles of restitution to disputes that are not governed
                                                                   of fact cannot be recovered. See, e.g., Pacific Molasses
by a contract between the parties. Id. It characterizes the result
                                                                   Co. v. Graves, 451 S.W.2d 294, 298 (Tex.Civ.App.-San
of a failure to make restitution under circumstances that give
                                                                   Antonio 1970, writ ref'd n.r.e.); Sellman v. Am. Nat'l Ins.
rise to an implied or quasi-contractual obligation to return
                                                                   Co., 281 S.W.2d 150, 154 (Tex.Civ.App.-Texarkana 1955,
those benefits. Id.
                                                                   writ dism'd). And other courts have held that as between
                                                                   two innocent parties, the party that must suffer the loss is
 [7] The courts describe this claim in general principles.
                                                                   the one that mistakenly created the situation and was in the
For example, courts have stated that a claim for money had
                                                                   best position to have avoided it. See Holden Bus. Forms
and received seeks to restore money where equity and good
                                                                   Co. v. Columbia Med. Ctr. of Arlington Subsidiary, L.P., 83
conscience require restitution, see id.; it is not premised on
                                                                   S.W.3d 274, 278 (Tex.App.-Fort Worth 2002, no pet.) (self-
wrongdoing, but seeks to determine to which party, in equity,
                                                                   insured employer denied restitution of insurance benefits paid
justice, and law, the money belongs, Staats v. Miller, 150 Tex.
                                                                   to hospital before employer discovered claim not covered by
581, 584, 243 S.W.2d 686, 687 (1951); and it seeks to prevent
                                                                   plan); Lincoln Nat'l Life Ins. Co. v. Rittman, 790 S.W.2d 791,
unconscionable loss to the payor and unjust enrichment to
                                                                   794 (Tex.App.-Houston [14th Dist.] 1990, no writ) (insurer
the payee. Bryan v. Citizens Nat'l Bank in Abilene, 628
                                                                   denied restitution of benefits paid to hospital after coverage
S.W.2d 761, 763 (Tex.1982). As these broad and general
                                                                   terminated); Lincoln Nat'l Life Ins. Co. v. Brown Schools,
descriptions demonstrate, a cause of action for money had
                                                                   Inc., 757 S.W.2d 411, 415 (Tex.App.-Houston [14th Dist.]
and received is “less restricted and fettered by technical rules
                                                                   1988, no writ) (same).
and formalities than any other form of action. It aims at the
abstract justice of the case, and looks solely to the inquiry,
whether the defendant holds money, which ... belongs to


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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)


In some cases, the trial court's ruling was reversed because      deliver this order until Matthews paid all outstanding sums
the intermediate court of appeals concluded that the trial        owed to Mid–Continent. Edwards contends that the lack of
court abused its discretion in affording equitable relief. See,   evidence to support the challenged findings shows that Mid–
e.g., London v. London, 192 S.W.3d 6, 13–14 (Tex.App.-            Continent and Inwood did not prove that they detrimentally
Houston [14th Dist.] 2005, pet. denied) (trial court's order      relied on his payments. Edwards also appears to argue that
denying father's claim for money had and received reversed        without sufficient evidence to support these factual findings,
on ground that evidence sufficient to support claim for           there is no evidence to support the trial court's conclusion that
equitable restitution because child support payments were         he did not meet his burden of proof.
made pursuant to court order later reversed on appeal);
Austin v. Duval, 735 S.W.2d 647, 649–50 (Tex.App.-Austin          We have reviewed the record and agree with Edwards that the
1987, writ denied) (trial court's judgment that holders of        evidence is legally insufficient to show that Inwood shipped
lapsed option contract entitled to restitution of earnest money   furniture orders to MAC after Inwood received Edwards's
reversed because earnest money forfeited under express terms      check; that Inwood was deprived of other possible remedies
of option contract); Singer v. St. Paul Mercury Ins. Co., 478     by the delay in Edwards seeking a refund; and that Mid–
S.W.2d 579, 583 (Tex.Civ.App.-San Antonio 1972, writ ref'd        Continent received product for the third order in July 2003,
n.r.e.) (trial court's judgment in favor of insured reversed      but would not ship the order until Matthews made payment
because insurer issued stop-payment order on check when           in full. However, we disagree that the insufficient evidentiary
determined no coverage). See also Pope v. Garrett, 147 Tex.       support for these findings leads to the determination that there
18, 24–25, 211 S.W.2d 559, 561–62 (1948) (court of appeals'       is no support for the trial court's conclusion that Edwards did
judgment that constructive trust should not be impressed upon     not meet his burden of proof.
interests of defendants who did not participate in wrongful
act reversed by supreme court because, but for wrongful acts,      [9] First, Edwards does not cite, and we have not found, a
innocent defendants would not have inherited property).           case stating that a defendant must show detrimental reliance
                                                                  to defeat recovery. And the cases he cites do not apply in
The common thread in these decisions is that they are all         an action for money had and received, or are distinguishable.
dependent upon a balancing of the equities in each unique         See, e.g., Bryan, 628 S.W.2d at 761–64 (reconciling common
case.                                                             law right to restitution with provisions of business and
                                                                  commerce code to lawsuit by bank to recover funds paid over
                                                                  stop-payment order); Monarch Marking Sys. Co. v. Reed's
                                                                  Photo Mart, Inc., 485 S.W.2d 905, 905–07 (Tex.1972) (action
                       DISCUSSION
                                                                  for rescission of contract based on unilateral mistake); Nat'l
 [8] In two issues, Edwards contends that he established          Indem. Co. v. Spring Branch State Bank, 162 Tex. 521, 522–
each element of his claim for money had and received. The         27, 348 S.W.2d 528, 528–31 (Tex.1961) (adopting “federal”
first issue addresses the evidence relating to Inwood, and        or “equitable” rule relating to bank's use of depositor's
the second issue addresses the evidence relating to Mid–          funds); Am. Nat'l Ins. Co. v. Gifford–Hill & Co., Inc., 673
Continent.                                                        S.W.2d 915, 916–22 (Tex.App.-Dallas 1984, writ ref'd n.r.e.)
                                                                  (interpretation of loan agreement relating to allegation of
He first contends that the evidence is insufficient to support    unilateral mistake). 9 Consequently, the absence of proof of
factual findings 17, 18, 19, and 23 8 insofar as those findings   detrimental reliance by appellees does not assure Edwards's
state that Inwood shipped furniture orders *839 to MAC            recovery. Instead, detrimental reliance *840 is one of the
after it received Edwards's check. He also contends that the      factors that a trial court considers in balancing the equities
evidence is insufficient to support factual finding 24, which     in a claim for money had and received. See Best Buy Co.,
states, “The time delay of over four months from Plaintiff's      248 S.W.3d at 162–63 (concluding that defenses of actual
payment to his claim for return of the funds caused Defendant     knowledge and unclean hands are not matters of avoidance
Inwood to be deprived of other possible remedies to its           but instead relate to equities necessary to determine liability
detriment.” And in his second issue, Edwards challenges the       in the first instance).
sufficiency of the evidence to support finding of fact 5, a
similar finding insofar as it finds that Mid–Continent received   Additionally, as the claimant, it was Edwards's burden
product for the third order on July 29, 2003, but would not       to prove that appellees held money which in equity and



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Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)



good conscience belonged to him. See id. Because the             bill). He did not pay the wrong suppliers. See Lyman D.
court concluded that he did not fulfill his burden, we must      Robinson Family Ltd. P'ship, 143 S.W.3d at 520 (restitution
                                                                 allowed when earnest money released to wrong client); Doss,
determine whether the court abused its discretion in making
                                                                 210 S.W.3d at 710–11 (restitution authorized when financial
that decision.
                                                                 institution applied note payment to wrong note); Amoco Prod.
                                                                 Co., 946 S.W.2d at 165 (restitution allowed when company
It is undisputed that appellees held money. But the issue is
                                                                 paid royalty interests to wrong person). And he was not
whether Edwards also proved that the money, in equity and
                                                                 defrauded by Mid–Continent or Inwood. See Staats, 150 Tex.
good conscience, belonged to him. To determine whether
                                                                 at 584–85, 243 S.W.2d at 687–88 (recovery authorized when
the court abused its discretion in deciding that he did not,
                                                                 creditor refused to return surplus arising on sale of security
we first determine whether there was sufficient evidence to
                                                                 for debt); Wiseman, 69 Tex. at 65, 6 S.W. at 743–44 (same).
support the unchallenged findings that explain the court's
reasoning and analysis. Then we determine, based on the
                                                                 Nevertheless, Edwards argues that the trial court erred by
evidence, whether the decision was arbitrary, unreasonable
                                                                 not balancing the equities in his favor for several reasons:
or unsupported by guiding rules and principles. We conclude
                                                                 Mid–Continent and Inwood engaged in business practices
that there was and it was not.
                                                                 whereby they shipped merchandise to MAC before they knew
                                                                 whether or not MAC's check was covered by sufficient funds;
The undisputed evidence shows that MAC owed money to
                                                                 MAC had these unpaid account balances with Mid–Continent
Mid–Continent and Inwood for furniture orders; Edwards
                                                                 and Inwood before Edwards sent his payments to them;
knew MAC owed money to Mid–Continent and Inwood
                                                                 requiring Mid–Continent and Inwood to refund Edwards's
for furniture orders; Edwards agreed to purchase certain of
                                                                 money would put them in the position they were in before they
MAC's receivables even though he knew it was a high-
                                                                 received Edwards's payments; the payments were not used
risk transaction; Edwards confirmed the amount owed to
                                                                 for Edwards's benefit; Mid–Continent and Inwood did not
Mid–Continent and issued a cashier's check payable to Mid–
                                                                 contact Edwards about how the payments should be applied;
Continent for that amount; Edwards did not confirm the
                                                                 Edwards's check to Inwood was not for the full amount of
amounts owed to Inwood or the other suppliers, but instead
                                                                 the account balance, as Inwood had been told it would be;
paid the suppliers the amounts listed in the agreement he
                                                                 and Edwards was deceived by Matthews. We conclude that,
had with MAC; Edwards did not request copies of invoices
                                                                 although these are some of several types of factors courts may
or orders to compare to MAC's receivables; Edwards paid
                                                                 consider in balancing the equities, they are not determinative
Inwood $15,292.22; the check to Inwood contained the
                                                                 of the outcome in this case.
notation that it was for “MAC Group Payment”; and Edwards
advised Mid–Continent and Inwood to credit the payments
                                                                 We conclude that the trial court's decision was not arbitrary,
to MAC's accounts without specifying which invoices the
                                                                 unreasonable or unsupported by guiding rules and principles
payments were intended to cover. This evidence is legally and
                                                                 and, as a result, the court did not abuse its discretion.
factually sufficient to support the trial court's unchallenged
findings of fact. 10 And these unchallenged findings *841
                                                                 We affirm the trial court's judgment.
also demonstrate that, unlike some cases where the claimant
was awarded restitution, Edwards unconditionally paid the
amounts he intended to pay to the parties he actually paid in    All Citations
order to satisfy debts owed by Matthews. He did not overpay
Mid–Continent and Inwood. See Benson, 464 S.W.2d at 712–         252 S.W.3d 833
13 (restitution allowed for overpayment of automobile repair


Footnotes
1      Henin testified that she would not know the names of MAC's customers because furniture orders were typically shipped
       to an installer, not directly to the customer.
2      Edwards also reviewed a copy of MAC's invoices to these customers, but Matthews did not provide, and Edwards did not
       ask to see, the orders MAC placed with Mid–Continent, Inwood, and the other furniture suppliers to compare to MAC's




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          6
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)


       customer invoices. Matthews also provided a copy of “MAC Group's Income History & Projections” from 2002 through
       December 2003 but Edwards testified that he did nothing to verify the numbers contained in that report.
3      The evidence shows that “908” is Mid–Continent's customer number for MAC.
4      Although the check to Inwood was twelve cents less than the amount listed in the agreement, Edwards testified that the
       check he wrote to Inwood corresponded to the same payable in the agreement.
5      Edwards did not sue Matthews, MAC, or the other five suppliers. He sued both Inwood and Mid–Continent for money
       had and received. He also sued Mid–Continent for breach of contract, fraud, negligent misrepresentation and unjust
       enrichment. This appeal involves only the claim for money had and received.
6      In cases involving overlapping standards of review, Texas courts have held that a reviewing court must first determine
       whether the trial court had sufficient information upon which to exercise its discretion and then whether the trial court
       erred in applying that discretion. See, e.g., Reese v. Duncan, 80 S.W.3d 650, 659 (Tex.App.-Dallas 2002, pet. denied)
       (trial court does not abuse discretion if evidence is sufficient to support findings of fact); In re C.A.M.M., 243 S.W.3d 211,
       220–21 (Tex.App.-Houston [14th Dist.] 2007, no pet. h.) (legal and factual insufficiency are not independent grounds for
       reversal but instead are factors to be considered in determining whether trial court abused discretion); Sotelo v. Gonzales,
       170 S.W.3d 783, 787 (Tex.App.-El Paso 2005, no pet.) (once reviewing court determines whether sufficient evidence
       exists upon which trial court could exercise its discretion, then must decide whether trial court made reasonable decision);
       El Paso County Hosp. Dist. v. Gilbert, 64 S.W.3d 200, 203–04 (Tex.App.-El Paso 2001, pet. denied) (after analyzing legal
       and factual sufficiency issues, reviewing court then determines whether, based on evidence, trial court made reasonable
       decision or whether it is arbitrary and unreasonable).
7      In fact, many courts use the term “money had and received” interchangeably with other terms for similar claims. See
       Friberg–Cooper Water Supply Corp. v. Elledge, 197 S.W.3d 826, 832 & n. 38 (Tex.App.-Fort Worth 2006) (recognizing
       that courts focus on facts alleged and recovery sought to categorize action as one for money had and received or for
       restitution), rev'd on other grounds, 240 S.W.3d 869 (Tex.2007) (per curiam); see also Tri–State Chemicals, Inc. v.
       Western Organics, Inc., 83 S.W.3d 189, 193–95 (Tex.App.-Amarillo 2002, pet. denied) (assumpsit); Amoco Prod. Co.,
       946 S.W.2d at 164–65 (unjust enrichment, implied and constructive contracts and trusts); Greer v. White Oak State Bank,
       673 S.W.2d 326, 329–30 (Tex.App.-Texarkana 1984, no writ) (restitution).
8      These factual findings state:
             17. On or about August 22, 2003, Edwards issued six other checks to Matthews's creditors:
                No. 123 to Inwood Office Furniture for $15,292.22
                No. 124 to HBF for $3,075.60
                No. 125 to Shelby Williams for $2,659.43
                No. 126 to Nienkamper ICF for $1,250.00
                No. 127 to Bratrud Furniture for $4,143.40
                No. 128 to Mai Space for $7,359.95
                None of the foregoing checks were delivered with transmittal letters or letters of instruction.
             18. The check Plaintiff sent to Inwood Office Furniture in the amount of $15,292.22, which was the amount (less 12
                cents) owed by Hal Matthews d/b/a/ the MAC Group for one of two invoices that Inwood shipped after receiving
                the payment.
             19. Inwood Office Furniture was never paid for the second invoice shipped that date, in the amount of $1,960.92,
                and that amount was written off in December of 2003, so that Inwood remains unpaid for that invoice.
             ***
             23. Defendant Inwood manufactured and properly shipped by common carrier the one shipment of two invoices
                ordered by Hal Matthews d/b/a/ the MAC Group, and it was delivered by Nancy Baer Trucking and accepted.
9      Edwards also cites cases from other jurisdictions and an unpublished 1980 Tyler court of appeals case. See Pickett
       v. Republic Nat'l Bank of Dallas, Trustee, No. 1303, 1980 Tex.App. LEXIS 3119 (Tex.App.-Tyler Feb. 28, 1980). The
       opinion in that case was withdrawn and a new opinion substituted at Pickett v. Republic Nat'l Bank of Dallas, Trustee,
       601 S.W.2d 405 (Tex.Civ.App.-Tyler 1980), aff'd, 619 S.W.2d 399 (Tex.1981). Edwards does not cite to or state how the
       substituted opinion supports his argument.
10     This evidence supports the following unchallenged findings of fact:
             9. The transaction between [Edwards] and Matthews was a high-risk transaction through which [Edwards] hoped to
                make a significant profit. Although the transaction was high-risk, [Edwards] neither requested copies of purchase
                orders that Matthews had submitted to any of his vendors nor did he compare any purchase orders with the
                accounts that he was purchasing from Matthews.



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                7
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833 (2008)


           ***
           13. On August 18, 2003, Matthews and [Edwards] entered into an agreement entitled “Factoring Agreement” whereby
             Matthews sold the Billingsley, Hance Scarborough, and Senior Management invoices to [Edwards] for the sum of
             $62,052.81. Matthews did not provide Edwards—nor did Edwards request—copies of Matthews's purchase orders
             to or the invoices from Mid–Continent, Inwood Office Furniture, or other vendors. [Edwards] drafted and prepared
             the Factoring Agreement himself.
           ***
           15. On August 18, 2003, [Edwards] telephoned Mid–Continent's office in Houston and spoke with Pat Henin to inquire
             whether certain furniture had been shipped. [Edwards] did not request copies of the purchase orders submitted
             by Matthews or the invoices Mid–Continent had submitted to Matthews to compare the items included in those
             documents with the accounts he was purchasing from Matthews. [Edwards] did not ask for any written verification
             or detail concerning the items remaining to be shipped, nor did he specifically ask Henin where the items were
             being shipped. Other than placing this one call, [Edwards] took no other steps to confirm or verify the accuracy
             of the accounts that he was purchasing from Matthews.
           16. On August 18, 2003, [Edwards] caused a cashier's check payable to “Mid Continent Furniture Distributors, Inc.”
             in the amount of $28,272.22 to be issued and delivered to Matthews....
           ***
           20. These were the only two invoices Inwood had with the MAC Group. [Edwards] paid Inwood Office Furniture in
             the amount of $15,292.22 representing that he was paying Inwood on Hal Matthews or the MAC Group's behalf
             for the merchandise order placed by the MAC Group. The payment sent by [Edwards] stated on the face of the
             check that it was a “MAC Group Payment.” No cover letter or instructions were sent accompanying the check sent
             by [Edwards] to Inwood Office Furniture.
           21. Inwood Office Furniture did not represent to [Edwards] that they were holding furniture for shipment, or for a
             particular destination.
           22. [Edwards] knew the amount owed Defendant Inwood by the MAC Group and he asked no questions about any
             other accounts or invoices.


End of Document                                             © 2015 Thomson Reuters. No claim to original U.S. Government Works.




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            8
E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)


                                                                        One who contracted to develop and sell another's
                                                                        land and who had not performed his part of
                       52 S.W.2d 311
                                                                        contract could not have specific performance,
       Court of Civil Appeals of Texas, San Antonio.
                                                                        since contract called for his personal services and
                 E. M. GOODWIN, INC.,                                   could not be specifically enforced against him.
                          v.
                                                                        6 Cases that cite this headnote
                     STUART ET AL.

            No. 8791. | April 6, 1932. |
           Rehearing Granted June 22, 1932.
         | Rehearing Overruled July 20, 1932.                   Attorneys and Law Firms

Appeal from District Court, Hidalgo County; Chas. E.            *311 Hill & Greer, of Mission, and James R. Dougherty, of
Thompson, Judge.                                                Beeville, for appellant.

                                                                Strickland, Ewers & Wilkins, of Mission, Davenport, West
Suit by E. M. Goodwin, Inc., against R. T. Stuart and others.
                                                                & Ransome, of Brownsville, and Bonner & Childress, of
From a judgment dismissing the cause, plaintiff appeals.
                                                                Wichita Falls, for appellees.

Affirmed.                                                       Opinion

                                                                FLY, C. J.

 West Headnotes (4)                                             This is an appeal from the judgment of the district court
                                                                sustaining a general demurrer to the petition and dismissing
                                                                the cause. This is a second appeal of this cause; the opinion
 [1]     Pleading
                                                                given by this court on the former appeal being found in
             Statement of Cause of Action in General
                                                                Stuart et al. v. E. M. Goodwin, Inc., 25 S.W.(2d) 166,
         Petition must be tested on its own allegations.        167. An attempt was made to obtain a writ of error in
                                                                the Supreme Court, but the application was dismissed for
         Cases that cite this headnote
                                                                want of jurisdiction. The former appeal was prosecuted by
                                                                Stuart and others from an order appointing a receiver to take
 [2]     Pleading                                               charge of certain land and a temporary injunction to restrain
             Hearing and Determination on Demurrer              interference with the receiver in the discharge of his duties.
         When assailed through general demurrer, every          We copy the following statement from the former opinion:
         reasonable intendment must be indulged and
                                                                “Appellee [E. M. Goodwin, Inc.] claims an interest in the
         read into petition.
                                                                land subject to the deed of trust under a conveyance from
         Cases that cite this headnote                          E. M. Goodwin, which was executed on the ______ day of
                                                                ______, 1928. The deed of trust on the land was executed
                                                                on November 3, 1918, by the owner, Eloisa Vela Dougherty,
 [3]     Specific Performance                                   to secure a debt due by her to F. G. Oppenheimer and Ben
             Mutuality of Remedy                                F. Levy. The debt and deed of trust were kept alive by
         Where remedy of specific performance is                extensions, so that the debt amounting to $21,811.69 would
         unavailable to one party because of nature of          not be barred by limitations until December 3, 1929. The
         contract, it is unavailable to the other party.        debt and lien are now owned by R. T. Stuart & Co. The land
                                                                in question, after the extension of the debt, was sold by the
         3 Cases that cite this headnote
                                                                owner to J. C. Marks and George Hartnagel, nonresidents,
                                                                subject to the lien and debt. On February 3, 1926, a written
 [4]     Specific Performance                                   contract was entered into between Marks and Hartnagel, and
             Mutuality of Remedy                                it is through that instrument that E. M. Goodwin claims an



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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)


interest. On June 7, 1929, Marks and Hartnagel conveyed            furnish each purchaser an abstract of title, and all deeds, notes,
the land to Edward L. Stallcamp, and he conveyed it to             and deeds of trust necessary to be used in the sale of the
the American Land & Development Company, one of the                land, and that all contracts of sale should be furnished by
appellants herein.”                                                Goodwin. The fifth paragraph is an obligation upon the part
                                                                   of Goodwin to use diligence in the sale of the land, to give the
It is stated by appellant in its brief that “the record on this    necessary advertising and conduct excursions. By the sixth
appeal is a little out of the ordinary,” but an inspection of      clause Goodwin is given exclusive control of the sale of the
the record by this court leads to the conclusion that it is one    land for five years, and it provides for his remuneration and
of the most extraordinary records that has ever been brought       for the sums to be paid the owners, and in clause 7 all money
to its attention. Appellant has inserted in the record a bill of   over and above a certain sum per acre was made a trust fund to
exceptions taken in a proceeding involving the vacating of         be used as therein directed. The eighth clause gives Goodwin
a receivership and the discharge *312 of the receiver. The         power to sell the land upon the terms and conditions he may
bill of exceptions proper contains 116 pages of the record,        elect, providing that no tract smaller than 5 acres shall be sold,
and attached thereto are exhibits of the transcript on the         and that vendor's lien notes shall not run for a longer period
former trial containing 123 pages, and the statement of facts      than ten years, and that notes should be made payable to a
used on the former appeal containing 254 pages. The bill           trustee to be named, and that all damages received for failure
of exceptions, with monstrous exhibits, has no pertinency to       to enter into contracts should be the property of Goodwin.
nor connection with the case on appeal, as fully admitted          The ninth clause is as to the time limit given Goodwin to
by appellant in its brief. No reason is given for including        make sales, and stipulates the amount of land to be sold each
the bill of exceptions in the record. The order vacating the       year. The tenth clause disclaims the agency of Goodwin in
receivership is not before this court.                             the sale of land, and the eleventh section grants the privilege
                                                                   to Goodwin to acquire and develop lands contiguous to the
This appeal is not prosecuted from any order in regard to
                                                                   5,600-acre tract.
the receiver, but only from a judgment sustaining a general
demurrer and special exceptions to the petition. Nine of the       “As some stress is placed on paragraph 12, we copy as
twelve assignments of error assail the action of the court in      follows: ‘12. Said parties of the first part hereby obligate
vacating the receivership, and are all overruled because that      and bind themselves to convey to a trustee to be selected by
matter is not before this court through the appeal bond. The       said parties of the first part and approved by said party of
order in regard to the receivership was separate and distinct      the second part, all of the lands described in this contract
from the final judgment, and is not mentioned therein. The         not later than thirty days prior to the time when said lands
other three assignments of error assail the action of the court    are prepared and ready for placing on the market, and shall
in sustaining the general demurrer and a special exception         furnish to said party of the second part a complete abstract
with six subdivisions.                                             of title to said lands, showing said trustee to be vested with
                                                                   a good merchantable title thereto, and said parties of the first
This suit is based, as on the former appeal, on a certain
                                                                   part shall also furnish with said abstract of title the opinion
contract, and of which a full analysis was given on that appeal.
                                                                   of an attorney to be approved by party of the second part,
We adopt that analysis, and it is copied and made a part of
                                                                   showing said trustee to be vested with an unencumbered and
this opinion:
                                                                   merchantable title to said lands. It is further provided that
“The first paragraph of the contract asserts ownership in          said trustee shall be a resident of Hidalgo County, and shall
Marks and Hartnagel, gives the reasons for making the              maintain his office at Mission, Texas, and all remuneration
contract with E. M. Goodwin, agrees to furnish him the land        received by him for his services shall be determined and paid
for the purposes and on the terms thereinafter set out, and        for by parties of the first part.’
gives a full description of the land. The second paragraph
                                                                   “The thirteenth clause provides for the laying out of 50 acres,
binds the owners to have made a survey of the land and
                                                                   in 10-acre tracts, by the owners, at different points on the tract,
maps and other data in view of irrigation. The third paragraph
                                                                   and the fourteenth for the execution of all deeds by the trustee
binds the owners to survey the land into 40-acre tracts and
                                                                   of the owners to the different purchasers.”
lay out all necessary roads and plat the same and furnish
                                                                    [1] [2] The contract is not on its face incapable of specific
other necessary means to sell the land, and pay for such
                                                                   performance sought through the petition, and appellant had
improvements. In the fourth paragraph the owners agreed to
                                                                   the right to have his petition tried on its own merits. The


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               2
E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)


petition was not to be tested by testimony that had been           up if appellant had not. They seem well satisfied with the
given or might be presented, but on its own allegations. In        increased cost of the record, and no one has the right to
so testing it, when assailed through a general demurrer, every     complain.
reasonable intendment must be indulged and read into it. The
petition was not subject to attack from the general or the         The judgment is reversed, and the cause remanded.
special demurrer, and the facts alleged should have been tried
before the court or jury on the merits of the case.                                 On Motion for Rehearing.

                                                                   PER CURIAM.
We are asked to test the sufficiency of the petition by facts
heard by the judge in a trial had on a plea theretofore filed       [3] [4] Upon a full reconsideration of the facts in the case,
by appellees seeking to vacate and set aside a receivership        we have reached the conclusion that it was erroneously held
granted in the case. In other words, the petition is to be         that the pleadings or evidence disclosed a contract capable
declared in conflict with the *313 facts developed on the          of being specifically enforced in a judicial proceeding.
hearing of a question growing out of and subject to the facts      Appellant had not performed his part of the contract, but
on the merits. We recognize the existence of cases in which        had allowed the limit for the existence of the contract to
it has been held that, if the allegations in a petition are in     be reached. Appellant had not performed services for which
conflict with the facts brought out on a former trial of the       he could demand payment, and the contract was executory
cause, the judge may in view of such conflict hold that the        and incapable of specific performance. We have considered a
petition does not state a cause of action and consequently is      number of authorities on the subject, and some of them have
subject to a general demurrer. This rule has not been more         been fully reviewed and quoted from herein.
forcefully or clearly stated in any case than in the case of
Snow v. Cook, 278 S. W. 520, which was written for this
                                                                   There is a full statement of the allegations of the petition
court by Associate Justice Smith. In that case the action was
                                                                   in the former opinion, which is retained, and it is therefore
to set aside a judgment theretofore rendered in the case on a
                                                                   unnecessary to make another statement.
full hearing of the facts, and it was held that in determining
the sufficiency of the petition in the second suit the court       It is perfectly obvious that Hartnagel and Marks selected and
could take cognizance of the record in the case in which the       employed Goodwin as their agent to sell their land because of
assailed judgment was rendered, and from that record could         his experience, training, and presumed skill in such projects.
determine whether there was basis in fact for destroying the       He was to use diligence in the sale of the land, to advertise
former judgment. That case had been fully developed and a          it, to locate and interest prospective buyers in northern states
judgment rendered on facts offered by the opposing parties.        who were disposed and financially able to purchase the lands
While we are not disposed to question the decision in the case     in small tracts; he was to assemble these prospects into
cited, still the rule therein enunciated has been carried to its   trainloads, move them to the site of the lands, convert them
limit, and we do not believe that the rights of appellant should   into buyers at prices which would net Hartnagel and Marx
be determined on facts offered in a hearing on an affair merely    $62.50 per acre. He was to perform innumerable personal
appurtenant to the main case. The question in the motion to        services which could be efficiently performed only by those
vacate the receivership was not presented to try the right of      trained and skilled in such matters. The contract is purely
appellant to recover, but to set aside a receivership not deemed   executory, since Goodwin has sold none of the land.
necessary to be continued in the case. We are unwilling to
sustain the contention that sustaining the motion denied to        Let us suppose, now, that Goodwin should lose interest in the
appellant the right to recover on his demand against appellees.    project, or was diverted into other fields of activity more to his
There is no such conflict shown between the facts in that          liking, or which promised greater or quicker or more pleasing
proceeding and the allegations in the petition as would destroy    returns. What, in such case, could Hartnagel and Marks do to
the latter.                                                        prevent him from abandoning the project for the new venture?
                                                                   Certainly they could not exact specific performance of any
The costs of including transcript and statement of facts           of his obligations. They would be utterly helpless before his
connected with the former appeal would be assessed against         inaction or indifference or refusal or failure, for any reasons,
appellant but for the fact that appellees insist that they are     to perform.
properly included and state they would have brought them


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               3
E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)




The remedy of specific performance being therefore                And again: “If, at the time of the filing of the bill in equity,
unavailable to one of the parties, because of the nature of the   the contract being yet executory on both sides, the defendant,
contract, it is not available to the other party.                 himself free from fraud or other personal bar, could not have
                                                                  the remedy of specific performance against the plaintiff, then
This rule is specifically applicable to a contract of agency      the contract is so lacking in mutuality that equity will not
to sell land, which “could not be specifically enforced by        compel the defendant to perform but will leave the plaintiff
either party against the other”-- it was an employment of         to his remedy at law.” Id. § 769.
Goodwin “as agent to sell the land,” and therefore “specific
performance could not be had.” Chief Justice Brown in             The rule is thus stated in 36 Cyc. 581: “Although the
Ansley Realty Co. v. Pope & Smith, 105 Tex. 440, 151 S. W.        contract may be one that is otherwise proper to be specifically
525, 527.                                                         enforced, if, at the time of the decree, there remain to be done,
                                                                  on plaintiff's side, personal services or other acts of a kind
The contract being for the personal services of Goodwin,          which, in accordance with the general rule, the court cannot
upon whose personal will the performance thereof rests, it        compel to be done, specific performance is usually refused on
cannot be specifically enforced against him; and, since it        the principle that the remedies in equity must be mutual.”
cannot be enforced against him, it lacks essential mutuality
and cannot be enforced against the other party. 4 Pom. Eq.        And again (36 Cyc. 629) it is said that “relief (of specific
Jur. pp. 2760, 2765, §§ 1401, 1402, note 1; 6 Pom. Eq. Jur.       performance) is refused where * * * the contract calls for * *
§§ 759, 769; 36 Cyc. pp. 581, 621, 629; 25 R. C. L. pp. 232,      * business services, such as agent, manager * * * etc.”
305; Rutland Marble Co. v. Ripley, 10 Wall. 339, 359, 19 L.
Ed. 955; *314 Ansley Realty Co. v. Pope & Smith, 105 Tex.         Further (36 Cyc. 579) the rule is more elaborately stated:
440, 151 S. W. 525; Prusiecke v. Ramzinski (Tex. Civ. App.)
                                                                  “Personal Services or Business Employment--a. In General.
81 S. W. 771, 773; Carrico v. Stevenson (Tex. Civ. App.) 135
                                                                  In cases of this character a decree for specific performance is
S. W. 260, 261; Galbreath v. Farrell (Tex. Civ. App.) 249 S.
                                                                  open not only to the objection that it calls for an undue amount
W. 277, 280; Parrish v. Weber (Tex. Civ. App.) 17 S.W.(2d)
                                                                  of supervision by the court, but to still graver objections,
106.
                                                                  which are well stated in a very recent case: ‘Any system or
It is said by Mr. Pomeroy that “as an almost universal rule       plan by which the court could order or direct the physical
contracts for personal acts will not be directly enforced” (4     coercion of the laborer would be wholly out of harmony with
Pom. Eq. Jur. note 1, § 1402); that courts “cannot enforce        the spirit of our institutions, and his imprisonment would take
a decree” of specific performance in “contracts for personal      away his power to make specific performance. Even if such
services, where the full performance rests upon the personal      authority existed its exercise would be undesirable. If the
will of the contracting party” (note 10, § 1406); that it         relation of employer and employee is to be of value or profit to
“follows, therefore, that the remedial right” of specific         either it must be marked by some degree of mutual confidence
performance, “if it exists at all, must be mutual; each party     and satisfaction, and when these are gone and their places
must be able to enforce the remedy against the other” (note       usurped by dislike and distrust, it is to the advantage of all
1, § 1401); that “if for any reason” either of the parties to a   concerned that their relations be severed.’ ”
contract “is not bound, he cannot compel performance by the
                                                                  And: “On the same principle the direct specific performance
other” (note 3, § 1405).
                                                                  has been refused of contracts to act as agent, manager, or
Mr. Pomeroy says, further, on this point: “It is a familiar       superintendent, or in other business capacity, although the
rule that contracts for personal services, where the full         employment may not be one calling for skill and judgment.”
performance rests upon the personal will of the contracting
                                                                  In 25 R. C. L. (p. 303) it is said that “Chancery will not as
party, will not be specifically enforced against him. It is
                                                                  a rule enter an affirmative decree directing the performance
also generally true that they will not be enforced where the
                                                                  of personal services by an adult. Nor will it in this manner
plaintiff is the one who has contracted to render the services,
                                                                  enforce contracts requiring either continuous acts involving
and there has been no full performance on his part, since
                                                                  skill, judgment and technical knowledge, or, as the rule is
mutuality in the equitable remedy is then lacking.” 6 Pom.
                                                                  sometimes stated, those which require special skill, judgment
Eq. Jur. § 759.
                                                                  and discretion. This is especially true where the contracts are



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E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)


continuous in their nature and run through a number of years          of the nature of the work required by the contract to be done
or an indefinite period of time. This rule is based on the futility   by him, the court could not properly compel him to perform
of the attempt by a court to command one person to render             it. It is entirely clear that the court could not properly compel
personal services to another, or to direct the performance of         appellant to perform his part of the contract. It involved,
duties which it is impossible for the court to superintend.”          not only personal service by him, but, independent of this,
                                                                      the character of the work to be done, that is, the clearing
And that (page 305) “By reason of the doctrine of mutuality, a        of a large body of land, about 25,000 acres, as stated in the
court of equity will refuse to decree the specific performance        contract, which by the terms of the contract was to extend
of an executory contract wherever it creates a duty from the          over a considerable period of time, with many complicated
plaintiff of such confidential or personal nature that the court      provisions regarding the details of the work, would require
could not have enforced it at the instance of the defendant.”         of the court such supervision of the work to be done by
                                                                      appellant as it could not properly undertake. We think that it
Again (Id. p. 232): “It is frequently stated as a general
                                                                      is universally held that a court of equity will not undertake
principle of equity that a contract will not be specifically
                                                                      to decree specific performance of contracts of this nature. 6
enforced unless it has such mutuality that it may be enforced
                                                                      Pom. Eq. Juris. (3d Ed.) §§ 757-760. This is not controverted
by either party, and the language adopted by numerous courts
                                                                      by appellant, but he seeks to avoid the application of this
is to the effect that equity will grant a decree of specific
                                                                      principle upon the ground that he is ready, able, and willing
performance only in cases where there is a mutuality of
                                                                      and offers to perform. This is not sufficient for appellee's
obligation and of remedy. In accordance with this doctrine of
                                                                      protection. If the contract on the part of a plaintiff who seeks
mutuality it is held that when a contract for any reason cannot
                                                                      this remedy is not such as he can be compelled to perform,
be enforced against one of the parties such party will not be
                                                                      if he has in fact done so, he would be in a position to require
permitted to enforce it specifically against the other party,
                                                                      specific performance on the part of the defendant, who would
although except for this particular rule the contract would
                                                                      not be allowed to defend on the ground that plaintiff could
otherwise have been enforceable.”
                                                                      not, on account of the nature thereof, be compelled to perform
In the case of *315 Rutland Marble Co. v. Ripley, supra, the          his part, but that is as far as the plaintiff's rights extend on this
Supreme Court of the United States said that: “It is a general        point. ‘Before plaintiff has performed the personal service,
principle that when, from personal incapacity, the nature             he could not have specific performance, but after his part is
of the contract, or any other cause, a contract is incapable          executed he can get the land.’ 6 Pom. Eq. Juris. (3d Ed.) §
of being enforced against one party, that party is equally            771. That equity will not compel one party to a contract to
incapable of enforcing it specifically against the other, though      perform, where it cannot also compel specific performance by
its execution in the latter way might in itself be free from the      the other party, is, we think, well settled. 6 Pom. Eq. Juris. §
difficulty attending its execution in the former.”                    769 et seq.; Waterman, Sp. Perf. § 198; Redwine v. Hudman
                                                                      [104 Tex. 21], 133 S. W. 426; [Rutland] Marble Co. v. Ripley,
It was said by Judge Neill, of this court, in Prusiecke v.            77 U. S. [10 Wall.] 359, 19 L. Ed. 955.”
Ramzinski, supra: “When a contract is of such a character that
a court of equity is without power to enforce it as against one       The rule is thus stated in Galbreath v. Farrell, supra: “As we
or the other of the parties, the party against whom it cannot         understand the rule under the authorities in cases of this kind,
be enforced cannot, until he has fully performed his part of          before a court of equity will enforce affirmative promises
the agreement, though the other party could be forced to              made by defendant in behalf of the plaintiff, it must also be
perform his, obtain a decree of specific performance. Ikerd v.        able to enforce the affirmative promises made by plaintiff in
Beavers, 106 Ind. 483, 7 N. E. 326, 328. For a court of equity        behalf of the defendant. Such court never deems it wise or just
will not attempt to enforce a contract specifically unless it         to enforce one or more of the promises in a contract until it
can be done mutually and completely, and so as to secure              can enforce all of the contract outstanding at the time of the
substantially beyond question all that the parties contemplate.       suit, including the promises of the plaintiff as well as those of
If this is impracticable, the remedy, if any exists, is to be found   the defendant. Northern Texas Realty & Construction Co. v.
elsewhere.”                                                           Lary (Tex. Civ. App.) 136 S. W. 843; Williston on Contracts,
                                                                      vol. 3, § 1430.”
We quote from the opinion in Carrico v. Stevenson, supra:
“But we think it is an insuperable objection to the relief by
specific performance prayed for by appellant that, on account


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                     5
E.M. Goodwin, Inc. v. Stuart, 52 S.W.2d 311 (1932)



Being fully convinced that our judgment of reversal is not
                                                                      All Citations
sustained by the authorities, it is set aside, and the judgment
of the trial court will be affirmed.                                  52 S.W.2d 311

End of Document                                                   © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 6
First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)




                                                                             Cases that cite this headnote
     KeyCite Yellow Flag - Negative Treatment
Distinguished by Town House Dept. Stores, Inc. v. Ahn,   Guam Terr.,
 March 7, 2003
                                                                       [2]   Appeal and Error
                                                                                 Effect of Decision of Higher Court on
                       162 S.W.2d 165                                        Subsequent Appeal to Intermediate Court
       Court of Civil Appeals of Texas, San Antonio.                         Where Supreme court in former appeal found
                                                                             an additional fact which the trial court expressly
             FIRST STATE BANK OF BISHOP
                                                                             refused to find, in the absence of the statement
                          v.
                                                                             of facts in the former appeal, the Court of Civil
                       GREBE.
                                                                             Appeals, on appeal from judgment entered by
                                                                             trial court on return of mandate from Supreme
            No. 11110. | March 18, 1942.
                                                                             Court, was required to assume that the record
           | Rehearing Denied May 20, 1942.
                                                                             before the Supreme Court in the former appeal
Appeal from District Court, Nueces County, 117th District;                   conclusively disclosed the fact found.
Cullen W. Briggs, Judge.
                                                                             Cases that cite this headnote

Suit by Florine Ella Grebe, a minor, by her next friend, Louis
Hauptreif, against the First State Bank of Bishop, to recover          [3]   Appeal and Error
a sum equal to one-half of the deposit in defendant bank of                     Compliance with Mandate or Directions
the community funds of plaintiff's deceased father and her                   Order of an appellate court reversing and
mother. On return of mandate of Supreme Court reversing                      remanding a cause to the trial court carries with
judgment for defendant and remanding cause for further                       it the necessary instruction, whether express or
proceedings consistent with its opinion, plaintiff moved for                 not, that all further proceedings in the case in the
judgment and defendant filed, inter alia, amended answer                     trial court must be consistent with the opinion of
setting up matters not adjudicated and demanded jury. From                   the reversing court.
a judgment entered on plaintiff's motion without a retrial,
defendant appeals.                                                           5 Cases that cite this headnote

Reversed and remanded for another trial in consonance with
                                                                       [4]   Appeal and Error
opinion of Supreme Court.
                                                                                Compliance with Mandate or Directions
                                                                             Where Supreme Court remanded cause to trial
See, also, Tex.Civ.App., 106 S.W.2d 382; 136 Tex. 226, 150
                                                                             court for “further proceedings consistent with
S.W.2d 64.
                                                                             this opinion” but refused to render judgment or
                                                                             direct trial court to do so, the order to the trial
                                                                             court was, in effect, that the trial judge proceed
 West Headnotes (5)                                                          with a new trial and render judgment upon the
                                                                             new record in accordance with the principles
                                                                             announced in the opinion of the Supreme Court.
 [1]     Appeal and Error
            Authority to Find Facts                                          4 Cases that cite this headnote
         It is not the prerogative of the Supreme Court
         to make findings of fact upon disputed issues
                                                                       [5]   Appeal and Error
         appearing in the record before them but it is
                                                                                Granting New Trial or Rehearing
         within their province to take notice of undisputed
         facts of record and, if material, give them effect                  Where Supreme Court remanded cause to trial
         in their decision.                                                  court for further proceedings consistent with
                                                                             the opinion of the Supreme Court, but refused
                                                                             to render judgment for plaintiff or direct trial


                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                1
First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)


        court to do so and defendant interposed amended           the opinion of the Supreme Court without any further
        answer, setting up new matter not previously              proceedings following the return of the mandate.
        litigated, reversal of defendant's demand for a
        retrial on the merits was error.                          We quote from the majority opinion of the Supreme Court:

        2 Cases that cite this headnote                            *167 “We shall designate the parties as plaintiff and
                                                                  defendant, as they were designated in the trial court.

                                                                  “Plaintiff seeks a reversal of the judgments of the trial court
                                                                  and of the Court of Civil Appeals mainly upon two principal
Attorneys and Law Firms                                           grounds. The first ground is as follows: That the funds
                                                                  on deposit in the bank in the name of W. F. Grebe were
 *166 Boone, Henderson, Boone & Davis, of Corpus Christi,
                                                                  community property of W. F. Grebe and his surviving wife,
for appellant.
                                                                  and that one-half belonged to plaintiff and the other half
Kleberg, Eckhardt & Lowe, of Corpus Christi, and Fuchs &          belonged to her mother, as the sole surviving heirs of the
Fuchs, of New Braunfels, for appellee.                            deceased W. F. Grebe; and that after all the community debts
                                                                  were paid, the bank had no authority to transfer the minor's
Opinion                                                           share of such deposit to her mother, without requiring the
                                                                  mother to qualify as survivor in community, administratrix,
SMITH, Chief Justice.                                             or guardian, when it had knowledge of the status of the parties
                                                                  and the nature of the fund.
This action was brought by appellee, Florine Ella Grebe, a
minor, by her next friend and stepfather, Louis Hauptreif,        “The trial court filed findings of fact, among which are the
against appellant, First State Bank of Bishop. The case has       following:
been twice tried and appealed. The first trial resulted in
judgment in favor of the Bank and on appeal that judgment         “(1) That W. F. Grebe died intestate on March 1, 1924,
was affirmed by this Court. Grebe v. First State Bank, 106        leaving surviving him as his heirs at law his wife, Mrs. W.
S.W.2d 382. On writ of error the Supreme Court reversed the       F. Grebe, and a minor child, the plaintiff in this suit, and that
judgment of this and the trial court, and remanded the cause,     no administration of any kind was had on his estate or on the
Mr. Justice Critz dissenting. 136 Tex. 226, 150 S.W.2d 64, 65.    estate of said minor; which facts the officers of the bank knew.

On the return of the mandate of the Supreme Court to the          “(2) That at the time of his death W. F. Grebe had $3,956.47
trial court, appellee filed a motion for judgment in the latter   on deposit with the bank. That on April 2, 1924, Mrs. W.
court. Appellant filed a plea in abatement, an amended answer     F. Grebe had deposited to her account in the bank the sum
including prayer that additional parties be made defendants in    of $1,242.37, proceeds from the sale of cotton made by her
the suit, and set up various additional matters not adjudicated   deceased husband before his death, and that the officers of
in prior proceedings. The trial judge overruled appellant's       the bank knew the source of said money and knew it to be
plea in abatement, disregarded its amended answer, refused        community property.
to allow its demand for a jury and thereupon, refusing to
hear any testimony and granting appellee's motion, rendered       “(3) That on May 14, 1924, Mrs. Grebe, having paid the
judgment for appellee for the amount of her claim plus interest   funeral expenses and all debts of the deceased from the
computed at the time by the trial judge. The original trial of    deposit in the name of W. F. Grebe, transferred, or directed
the cause was before the then district judge, Honorable Birge     the transfer of, the balance of $3,791.65 remaining in the
Holt, who subsequently retired, whereas, the judgment here        account of W. F. Grebe to her account. All of said money
in question was rendered by Honorable Cullen W. Briggs, his       was community property, which fact the bank then knew. The
successor in office.                                              bank also then knew that W. F. Grebe left a minor daughter.

The controlling question for decision here is that of whether     “(4) That on June 30, 1924, Mrs. Grebe made a loan of
the trial court erred in refusing to retry the case upon          $6,000 to her brother-in-law, H. W. Grebe, and transferred
the return of the mandate of the Supreme Court, reversing         that amount from her account to him; after which $377.68
and remanding the cause, and in rendering judgment upon           remained in her account.



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              2
First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)


                                                                      been placed to the credit of the mother in such bank with full
“(5) That the officers of the bank knew that the loan was made        knowledge on the part of the officials of the bank of the nature
by Mrs. Grebe to H. W. Grebe, and knew that it was used by            of the account and the minor's interest therein.
H. W. Grebe to buy land, and that the vice president of the
bank took the acknowledgment to the deed to H. W. Grebe.              “Therefore the judgments of the Court of Civil Appeals and
Neither the bank nor any of its officers participated in the loan     of the trial court are reversed, and this cause is remanded
transaction or in the land purchase, except as above stated.”         to the trial court for further proceedings consistent with this
 [1]     [2] It appears that the Supreme Court made an                opinion.” (Emphasis ours.)
additional finding of fact which was not included in the
findings made by the trial judge or this Court, and which             The mandate sent down from the Supreme Court to the trial
the trial court had expressly refused to find, to-wit: that the       court embraced the same order.
bank knew that all the community debts of the Grebes had
                                                                      The record shows that in response to the judgment of the
been fully paid at the time it paid over the community funds
                                                                      Supreme Court appellee filed her motion in that court praying
to Mrs. Grebe. As we interpret the opinion of the Supreme
                                                                      that judgment be there rendered for appellee, but, in the
Court their decision of the case was based at least in part
                                                                      alternative, if that relief be denied, then that the Supreme
upon this additional finding, and it is inferable that but for this
                                                                      Court direct the trial court to render judgment for appellee.
additional finding that decision might have been different,
                                                                      The Supreme Court, however, denied both prayers, and let the
since the fact so found was incorporated into each statement
                                                                      order stand reversing the judgments of this and the trial court,
of the hypothesis upon which the decision rested. Appellant
                                                                      and remanding the cause “for further proceedings consistent
complains bitterly against the action of the Supreme Court in
                                                                      with this opinion.”
making this additional finding, upon the familiar theory that
trial courts and Courts of Civil Appeals alone have power to          Appellant urges with much force and persuasiveness that by
determine facts, and that the Supreme Court is without such           these rulings the Supreme Court declined to return the case to
power. It is elemental, of course, that it is not a prerogative       the trial court for the sole purpose of having that court render
of the Supreme Court to make findings of fact upon disputed           judgment on the record as thus made, but remanded the cause
issues appearing in the record before them. But it is clearly         for a new trial upon the whole case in accordance with the
within their province, and it is their duty, to take notice of        principles enunciated in the opinion of the Supreme Court.
undisputed facts of record, and if material give them effect in       The question thus posed is by no means without its serious
their decision. We must assume, then, at least in the absence         difficulties.
of the statement of facts in the former appeal, that the record        [3] The decision here seems to turn on the interpretation to
before the Supreme Court in the former appeal conclusively            be given to the qualification appended by the Supreme Court
disclosed the fact found by that Court in the majority opinion,       to their order reversing the judgments rendered below and
but which the trial court not only failed but expressly refused       remanding the cause “to the trial court for further proceedings
to find, that the bank did know, at the time it paid over the         consistent with this opinion.” The inquiry is narrowed to
community funds to Mrs. Grebe, that all the community debts           the question of the effect to be given the clause “for further
of the Grebes had been paid. We make these observations in            proceedings consistent with this opinion.” We say that every
deference to appellant's earnest complaint of the additional,         order of an appellate court reversing and remanding a cause to
and apparently material, finding made by the Supreme Court.           the trial court carries with it the necessary instruction, whether
                                                                      expressed or not, that all further proceedings in the case in
                                                                      the trial court must be “consistent with the opinion” of the
After announcing the rules of law deemed by them as
                                                                      reversing court; that qualification is understood, is implied by
applicable to the case made, and upon which they based their
                                                                      necessity, so that, at least usually, it adds nothing to the result
ultimate decision of the case, the Supreme *168 Court, in
                                                                      to write it into the opinion or include it in the mandate.
the majority opinion by Mr. Justice Sharp, concluded:

“* * * It therefore follows, in view of the undisputed facts in
                                                                      Appellee's contention is that the qualification that the cause be
this case, that after all the community debts had been paid,
                                                                      remanded to the trial court for further proceedings consistent
one-half of the community funds belonged to the plaintiff, and
                                                                      with the opinion of the Supreme Court amounted to an
that plaintiff is entitled to recover from the bank one-half of
                                                                      instruction to the trial court to proceed and render judgment
all community funds of the deceased and his wife that had
                                                                      for appellee without a new trial or any other proceedings in


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  3
First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)


that court. In support of this contention appellee relies chiefly    with a new trial and render judgment upon the new record
upon the decision of the Supreme Court in Wells v. Littlefield,      in accordance with the principles and holdings announced
62 Tex. 28, 29, but in addition cites numerous other cases as        in the opinion of the Supreme Court. Roberts v. Armstrong,
well. None of the cases cited are deemed in point here, since in     Tex.Com.App., 231 S.W. 371, in which the “holdings” of
each of them the cause was remanded with instructions to the         the Commission of Appeals were expressly approved by the
trial court to do a specified thing, or enter a specific judgment,   Supreme Court. The decision in that case grew out of the
or limit its proceedings to a particular inquiry, whereas, in        opinion of this Court in the first appeal in the same case
this case the order and mandate of the Supreme Court was,            (Armstrong v. Gifford, 196 S.W. 723) and opinion of the
only, that the judgment of the trial court be “reversed, and this    Galveston Court in the second appeal. 212 S.W. 227. In its
cause is remanded to the trial court for further proceedings         mandate in that case this Court reversed the judgment and
consistent with this opinion.”                                       “remanded the cause for further proceedings in accordance
                                                                     with” the reversing opinion. Following this remand the trial
As stated, appellee relies chiefly upon the case of Wells v.         court in that case, as was done in this case, refused to hear
Littlefield, 62 Tex. 28, in which the Supreme Court issued a         any evidence or consider or submit any issue except that
writ of mandamus requiring the trial judge to render judgment        upon the amount of rents involved in the case. The losing
for Wells in pursuance of specific directions given by the           party again appealed, and the Galveston Court affirmed the
Supreme Court in their opinion handed down and mandate               judgment. Writ of error was granted and the Supreme Court,
issued in Wells v. Littlefield, 59 Tex. 556, as follows:             according to its reported opinion, ordered that judgments
                                                                     of the trial court and Court of Civil Appeals be reversed
“* * * The judgment below will be reversed and the cause
                                                                     and remanded “for further proceedings in accordance with
remanded, with directions to the court below to enter up such
                                                                     this opinion.” 231 S.W. 371, 375. On a subsequent appeal,
judgment in favor of the appellant, Marshall Wells, as under
                                                                     however, it was stated that the Supreme Court had reversed
the law as announced by this opinion he was entitled to obtain
                                                                     the judgment “and remanded the cause to be tried upon” a
upon the former trial of the cause, from the result of which this
                                                                     sole issue therein indicated, Tex.Civ.App., 269 S.W. 452,
appeal was taken; and to allow him such recovery as he had a
                                                                     453. The specific instruction must have been embraced in
right to in the state of the record below, had the decision there
                                                                     the mandate of the Supreme Court, for it is not disclosed in
been in his favor upon the trial of the right to the property in
                                                                     the opinion. But the point is immaterial here. The point in
controversy.”
                                                                     issue here is that the Supreme Court held (231 S.W. 371,
Upon a retrial of that case in the District Court, Littlefield       375) that upon an opinion and mandate remanding a cause
amended his pleadings setting up matters diclosed in newly           for further proceedings “in accordance [consistent] with this
discovered testimony, and the trial court heard evidence in a        opinion,” when not modified by more specific instructions,
new trial and again rendered judgment thereon for Littlefield        has the effect of remanding the cause for a new trial on all
 *169 against Wells. As the Supreme Court in reversing the           issues of fact. It was so held by the Supreme Court, as we
judgment and remanding the cause had plainly directed the            construe their opinion, in the cited case. 231 S.W. 371.
trial court to proceed to render judgment for Wells against
Littlefield, writ of mandamus was issued directing the trial
                                                                     Now, in this case, on return of the mandate of the Supreme
judge to render judgment as before directed. 62 Tex. 28.
                                                                     Court to the trial court, appellant demanded a jury and paid
 [4] No such case as that is presented here, for here the
                                                                     the jury fee, and filed an amended answer, including a plea
Supreme Court, in ordering a remand, not only did not render
                                                                     to abate the suit until the recently appointed legal guardian of
judgment or direct the trial court to render judgment for
                                                                     appellee's estate was made a party in lieu of her stepfather,
appellee, but by implication held that it was not a case for
                                                                     Hauptreif, who had brought the suit for appellee as her next
rendition or authorizing or directing the trial court to render
                                                                     friend; followed by general demurrer and general denial and
that or any other particular judgment. This was evidenced
                                                                     special answer, to the effect, as stated in appellant's brief,
by the refusal of the Supreme Court to grant judgment for
                                                                     of “setting up numerous defenses not pleaded at the time of
appellee. The Supreme Court simply reversed the judgment
                                                                     the trial from which the original appeal was taken, including
of the trial court in favor of appellant, and remanded the
                                                                     an allegation that taxes in the sum of $21.60, owed by the
cause to the trial court for further proceedings consistent
                                                                     community estate for 1924 State and County taxes, were
with the opinion of the Supreme Court. The order to the
                                                                     paid October 30th, 1924, which was four months after the
trial court was in effect, simply, that the trial judge proceed
                                                                     date of the transactions with the bank involved in this suit


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               4
First State Bank of Bishop v. Grebe, 162 S.W.2d 165 (1942)


                                                                          guardian had appeared, and that upon trial a full accounting
and alleging that therefore indebtedness of the community
                                                                          be required between the minor plaintiff and her said mother
estate did exist when the bank paid the money to plaintiff's
                                                                          and that the debts and charges against the community estate
mother, and that other indebtedness existed. By said amended
                                                                          which were paid by the plaintiff's mother, together with a
answer, appellant further set up that the plaintiff's parents
                                                                          reasonable amount as allowances for a year's support and in
owned no homestead at the time of her father's death and that
                                                                          lieu of homestead and other exempt property, be ascertained
her father was a farmer, and that the community estate did
                                                                          and allowed as credits and deductions and that defendant be
not have other exempt property allowed by our exemption
                                                                          subrogated to the rights of the minor plaintiff's mother, and
laws, and that the plaintiff's mother had no separate property
                                                                          that there be a full and fair adjustment of the equities between
for her maintenance, and that plaintiff's mother was therefore
                                                                          the parties.”
entitled to allowances for a year's support and in lieu of
homestead and in lieu of other exemptions; that the money                 On the other hand, appellee filed no other pleading than a
loaned by plaintiff's mother was used to purchase a farm by               formal motion for judgment “in favor of Plaintiffs on the
the borrower on which a lien was retained and which farm was              undisputed facts as found by the Supreme Court of Texas in
conveyed to plaintiff's mother as trustee for the minor plaintiff         its opinion of March 12, 1941, reversing and remanding this
in this case, and as such trustee owned and held by plaintiff's           cause for further proceedings consistent with said opinion, *
said mother for the plaintiff from 1928 until after the filing            * *.”
of this suit in 1932, during which time rents and revenues
 *170 were collected by plaintiff's said mother as trustee;               The trial court overruled appellant's general demurrer to
that plaintiff's mother and the next friend herein, the plaintiff's       that motion, refused appellant's demand for jury, refused to
stepfather, had conspired to deprive defendant of its legal               allow appellant to introduce any evidence, heard no evidence
right and that there had never been any accounting between                from either party on the merits or on appellee's motion for
the minor plaintiff and her mother and that the minor plaintiff           judgment, and, granting that motion, rendered judgment for
was entitled to recover no more from the bank than she                    appellee for $2,517.01, with interest, thereupon computed,
could recover from her mother in a legal accounting and that              from the date of the filing of the suit.
defendant, appellant herein, was entitled to be subrogated to              [5]    On the authority of Roberts v. Armstrong,
the rights of plaintiff's mother and to set up all of the defenses        Tex.Com.App., 231 S.W. 371, supra, we hold that the trial
and equities which plaintiff's mother could set up against the            court erred in refusing appellant's demand for retrial on the
plaintiff in an accounting, and that the amount expended by               merits.
the plaintiff's mother for payment of debts and the amounts to
which she would have been entitled as allowances for a year's
support and in lieu of homestead and other exemptions should              The judgment is reversed and the cause remanded for another
be treated as applied for, and were applied for by defendant              trial in consonance with the opinion of the Supreme Court in
bank, and should be adjudicated. Appellant then prayed that               the case.
the plaintiff's mother, joined pro forma by her husband, Louis
                                                                          All Citations
Hauptreif, and J. D. Howard, the guardian of the estate of the
minor plaintiff, be cited, and that the suit be abated until the          162 S.W.2d 165

End of Document                                                       © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                    5
Fitzsimmons v. Anthony, 716 S.W.2d 719 (1986)




                                                                       5 Cases that cite this headnote
                       716 S.W.2d 719
                  Court of Appeals of Texas,
                       Corpus Christi.                          [3]    Contracts
                                                                           Time for Performance Where No Time Is
       Burton M. FITZSIMMONS, et ux., Appellants,                      Specified
                          v.                                           Generally, where no time for performance of
           Alvin E. ANTHONY, et al., Appellees.                        contract is expressly stated in contract, law will
                                                                       imply reasonable time for performance.
               No. 13–86–089–CV. | Aug. 29,
       1986.    | Rehearing Denied Sept. 30, 1986.                     5 Cases that cite this headnote

Purchasers brought suit for specific performance against
vendors of property. The 81st District Court, Wilson County,    [4]    Contracts
Robert Lee Eschenburg, II, J., granted specific performance                Excuses for Nonperformance or Defects
to purchasers. Vendors appealed. The Court of Appeals,                 Where third party's approval is required as
Nye, C.J., held that purchasers were entitled to specific              condition to performance of contract, it is
performance where vendors attempted to cancel the sale after           reasonable to delay performance until approval
purchasers had already demonstrated willingness to perform.            is received.

                                                                       1 Cases that cite this headnote
Affirmed.



 West Headnotes (4)                                            Attorneys and Law Firms

                                                               *719 Per Hardy, San Antonio, for appellants.
 [1]      Specific Performance
              Appeal                                           Bruce W. Bodner, San Antonio, for appellees.
          Appellate court will uphold trial court's findings
          of fact in specific performance action unless they
          are manifestly erroneous and without evidence to                              OPINION
          support them or are so against great weight and
          preponderance of evidence as to be manifestly        NYE, Chief Justice.
          wrong.
                                                               Appellants, Burton M. and Fannie Lee Fitzsimmons,
          Cases that cite this headnote                        challenge the judgments of the trial court, which ordered
                                                               specific performance *720 of their contracts to convey land
                                                               to the appellees. We affirm.
 [2]      Vendor and Purchaser
              Time of Performance and Payment                  The appellees' suits for specific performance were
          Purchasers were entitled to reasonable time to       consolidated for trial. Appellees, Alvin E. Anthony, Errol Ray
          perform under contract for sale of property,         Warren, and Milven D. Warren, Jr., had each entered into
          where contract did not specify date for              a contract of sale with the appellants. The three contracts
          performance or state that time was of the essence;   were executed on May 24, 1983. Attached to each contract
          fact that contract precluded termination for 120     was a metes and bounds description of the three contiguous
          days except on written mutual consent did not        tracts which the appellees were purchasing. Each of the
          mean that vendor could unilaterally cancel after     contracts was a standard Texas Veterans Land Program
          120 days, nor did such provision set 120 days as     “Application and Contract of Sale.” Each contained the
          reasonable time for performance.                     following provision:



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        1
Fitzsimmons v. Anthony, 716 S.W.2d 719 (1986)


                                                                      Chevrolet Oldsmobile, Inc., 678 S.W.2d 707, 713 (Tex.App.
            14. In no event shall this contract be
                                                                      —Corpus Christi 1984, writ ref'd n.r.e.).
            terminated by the veteran or seller
            before the expiration of 120 days
                                                                       [2] Here, the trial court found that the contract neither
            from the date hereof except by written
                                                                      specified a date for performance nor stated that time was
            consent of both parties and written
                                                                      of the essence. It concluded that, in the absence of “time
            notice thereof to the Veterans Land
                                                                      of the essence” provisions and stipulated performance dates,
            Board of the State of Texas. The
                                                                      parties are entitled to a reasonable time to perform their part
            Veterans' Land Board of the State of
                                                                      of a contract. The court further concluded that the parties
            Texas reserves the right to cancel after
                                                                      had demonstrated their willingness to perform before the
            acceptance of the assignment of the
                                                                      appellants' attempt to cancel the sales on September 26, 1983.
            contract if the seller or veteran fails to
                                                                      The conclusion of law filed by the trial court was correct.
            put forth reasonable efforts to comply
            with the terms hereof.
                                                                       [3] Generally, where no time for performance is stated, the
                                                                      law will imply a reasonable time. Moore v. Dilworth, 142
The parties agreed that the one hundred twentieth day was
                                                                      Tex. 538, 179 S.W.2d 940, 942 (1944); Joines v. Burke, 540
September 21, 1983. Ms. Louceyette Voges, owner of the
                                                                      S.W.2d 798, 801 (Tex.Civ.App.—Corpus Christi 1976, no
Wilson County Abstract Company at the time in question,
                                                                      writ). Appellants contend that the 120–day period referred to
testified that, after examining the title to the land and
                                                                      in paragraph fourteen of the contracts, set out above, either 1)
receiving approvals of loans to the appellees, she sent the
                                                                      caused the contracts to expire after 120 days; or 2) gave either
appellees' three commitments to the Veterans Land Board
                                                                      party the right to unilaterally cancel after 120 days; or 3) set
sometime in the middle of August 1983. The Veterans Land
                                                                      120 days as a reasonable time for performance. We disagree.
Board sent letters notifying the appellees that it had approved
                                                                      The language of paragraph fourteen merely states the proper
the transactions on September 8, 13, and 14, 1983. It was
                                                                      method of cancellation of the contract within the *721 120–
waiting for the comptroller's office to issue state warrants
                                                                      day period. It is silent about whether a party may cancel after
(checks) for the amounts approved. By letters of September
                                                                      that time.
20, 21, and 23, 1983, the Board notified the appellees that
the purchases were ready to be closed, and that they should
                                                                       [4] The delay in closing in this case was occasioned by
contact the title company to set a date for closing.
                                                                      waiting for the Board's approval, and no evidence was
                                                                      introduced that appellees were in any way responsible for the
Appellant Burton Fitzsimmons admitted that he received
                                                                      delay. In fact, all of the evidence was to the contrary. All
copies of these letters, knew of their contents, and knew
                                                                      three of the appellees were in touch with the title company
that the deal was proceeding to a point that the closing date
                                                                      on or before September 26, inquiring about setting a closing
was near. Nevertheless, on either Friday, September 23, or
                                                                      date. No closing date was set because the title company had
Monday, September 26, he wrote the Veterans Land Board
                                                                      already been notified that the appellants would not perform.
and informed them that he and his wife wished to cancel the
                                                                      Where a third party's approval is required as a condition of
sale.
                                                                      performance, it is reasonable to delay performance until the
                                                                      approval is received. See Hubler v. Oshman, 700 S.W.2d
 [1] In ordering specific performance, the trial court filed
                                                                      694, 698 (Tex.App.—Corpus Christi 1985, no writ); Carter
findings of fact and conclusions of law. An appellate court
                                                                      v. Gerald, 577 S.W.2d 797, 799–800 (Tex.Civ.App.—Austin
will uphold a trial court's findings of fact unless they are
                                                                      1979, writ ref'd n.r.e.).
manifestly erroneous and without evidence to support them
or are so against the great weight and preponderance of the
                                                                      The judgment of the trial court is affirmed.
evidence as to be manifestly wrong. Trevino v. Castellow
Chevrolet-Oldsmobile, Inc., 680 S.W.2d 71, 75 (Tex.App.
—Corpus Christi 1984, no writ); Hinojosa v. Castellow                 All Citations

                                                                      716 S.W.2d 719

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               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 2
Frank v. Kuhnreich, 546 S.W.2d 844 (1977)




                                                                    [2]   Contracts
                     546 S.W.2d 844                                           Discharge of contract by breach
              Court of Civil Appeals of Texas,
                                                                          Courts do not favor forfeitures, and unless
                       San Antonio.
                                                                          compelled to do so by language that will admit
            Mauricio FRANK, Appellant,                                    no other construction, forfeiture will not be
                        v.                                                enforced.
    Paul KUHNREICH and Belinda, Inc., Appellees.                          Cases that cite this headnote

              No. 15641. | Jan. 5, 1977. |
              Rehearing Denied Feb. 16, 1977.                       [3]   Contracts
                                                                              Construction as a whole
Lessee and sublessee brought action against lessor for specific
                                                                          A written contract must be considered and
performance of lease agreement and for damages, and lessor
                                                                          construed together and various provisions or
filed cross action seeking forfeiture and termination of lease.
                                                                          parts of lease are to be construed as a
The 111th District Court, Webb County, E. D. Salinas, J.,
                                                                          unified whole unless they are so repugnant and
entered summary judgment for plaintiffs, and lessor appealed.
                                                                          inconsistent as to nullify each other.
The Court of Civil Appeals, Klingeman, J., held that evidence
of profits made by lessee in operation of entirely different type         Cases that cite this headnote
of business from that carried on in leased premises, at entirely
different locations, was insufficient to establish amount of
                                                                    [4]   Landlord and Tenant
damages, if any, sustained by lessee at leased premises; and
                                                                              Intention of parties
that lessor was not liable to lessee for damages in amount of
$550 per month, the difference in amount paid by sublessee                Landlord and Tenant
to lessee and amount paid by lessee to lessor.                                Reasonable construction
                                                                          A lease, like other written agreement, should be
Reversed and remanded.                                                    given reasonable construction that will carry out
                                                                          intention of parties as expressed by language of
Cadena, J., did not agree that it was error to award $550.00              contract.
per month.
                                                                          2 Cases that cite this headnote


 West Headnotes (9)                                                 [5]   Landlord and Tenant
                                                                              Construction and Operation
                                                                          Landlord and Tenant
 [1]     Judgment                                                             Construction against drafter
             Form and requisites of judgment
                                                                          A lease is governed by general rule of
         Letter from trial judge addressed to attorneys                   construction of written instruments; any doubts
         of record was not proper method for entry of                     as to meaning of language of lease are to
         summary judgment; however, final judgment,                       be resolved most strongly against lessor who
         which did not mention parties' motions for                       prepared it.
         summary judgment, which did not dispose of
         such summary judgments by direct language, but                   3 Cases that cite this headnote
         which awarded damages to plaintiff, impliedly
         made all findings necessary to support the
                                                                    [6]   Landlord and Tenant
         judgment, including liability issues.
                                                                              Insurance
         5 Cases that cite this headnote                                  Specific Performance
                                                                              Contracts Relating to Real Property



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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)


       Where lease agreement required lessee to carry                  difference in amount paid by sublessee to lessee
       fire and liability insurance on leased premises,                and amount paid by lessee to lessor.
       and further provided for written notice of default
       to be given lessee, with specified time to cure                 Cases that cite this headnote
       such default and to avoid forfeiture of lease, and
       leased premises were not covered by liability
       insurance for certain periods of time, but within
       15 days after notification of suchinsurance            Attorneys and Law Firms
       defaults the defaults were remedied, lessor was
                                                               *845 J. G. Hornberger, J. G. Hornberger, Jr., Laredo, for
       not entitled to forfeiture and termination of lease,
                                                              appellant.
       and lessee was entitled to specific performance
       and possession under lease.                            Roy J. True, True & Zable, Dallas, for appellees.
       2 Cases that cite this headnote
                                                              Opinion

                                                              KLINGEMAN, Justice.
 [7]   Landlord and Tenant
           Damages                                            This is a suit by Paul Kuhnreich and Belinda, Inc. against
       In action brought by lessee against lessor to          Mauricio Frank for specific performance of a lease agreement
       recover damages for lost profits allegedly caused      and for damages. Frank answered by general denial and
       by lessor's failure to turn over leased premises in    a cross-action seeking a forfeiture and termination of the
       tenantable condition within reasonable time after      lease because of the failure of the lessee to comply with the
       fire at leased premises, evidence of profits made      terms of the lease. Both parties filed motions for summary
       by lessee in operation of entirely different type of   judgment on the question of liability, and on December 20,
       business from that carried on in leased premises,      1973, the court found that a forfeiture and termination of
       at entirely different locations, was insufficient to   the lease was not warranted; and based on this finding, the
       establish amount of damages, if any, sustained         court granted plaintiffs' motion for summary judgment and
       by lessee at leased premises.                          denied defendant's motion. Trial on the damage issues was to
                                                              a jury, and in response to the jury's answers on the special
       1 Cases that cite this headnote
                                                              issues submitted, judgment was rendered on January 22,
                                                              1976, awarding damages to the plaintiffs.
 [8]   Landlord and Tenant
           Damages                                            The lease agreement, between Paul Kuhnreich as lessee and
                                                              Mauricio Frank as lessor, was entered into on February 15,
       Lessee has duty to mitigate damages, if possible.
                                                              1969, covering certain property in Laredo, Webb County,
       3 Cases that cite this headnote                        Texas, herein referred to as the Iturbide Street property. This
                                                              lease was for a period of five years, with an option to extend
                                                              for an additional three years.
 [9]   Landlord and Tenant
           Damages                                            The pertinent portions of the lease here involved may be
       Where sublease between lessee and sublessee            summarized as follows:
       was signed after fire at leased premises, at time
                                                              Paragraph 7. It is specifically understood and agreed that
       when lessee was sole shareholder and owner
                                                              lessor will carry Fire and Extended Coverage Insurance on
       of sublessee, and sublease called for rental
                                                              the building located on said leased premises. The lessee,
       payments from sublessee in an amount $550
                                                              however, shall carry liability insurance on the leased premises
       per month greater than paid by lessee under
                                                              to protect both the lessee and the lessor with limits of not less
       lease, lessor, who allegedly failed to turn over
                                                              than $100,000/$200,000 and the premium for said liability
       leased premises in tenantable condition within
                                                              insurance shall be paid by lessee . In addition, the lessee
       reasonable time after fire, was not liable to lessee
                                                              shall carry plate glass insurance on the front windows and the
       for damages in amount of $550 per month, the
                                                              premium for such insurance shall be paid by lessee.


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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)


                                                                    a ladies and men's ready-to-wear store. A fire occurred
Paragraph 13. It is understood and agreed that if rent or other     on the premises on or about January 12, 1972, causing
monies remain unpaid for a period of ten days after mailing         substantial damages. A fire sale was thereafter conducted by
of notice by the lessor stating that same is unpaid, then failure   plaintiffs until about May 31, 1972, and possession was not
to pay such rent by registered mail forthwith shall operate as      relinquished by plaintiffs until on or about June 7, 1972.
a forfeiture under this lease at the option of the lessor and in
the event that any default shall remain unremedied for fifteen      On July 1, 1972, Kuhnreich subleased to Belinda, Inc. (all the
days after written notice by registered mail, then the lessor       stock of Belinda, Inc. was owned by Kuhnreich). Thereafter,
may at his option declare this lease forfeited and the terms        LeBaron, Inc., successor to Belinda, Inc., took over such
shall *846 thereupon end and he may proceed as hereinafter          operations in the latter part of 1972 or early 1973. Kuhnreich
provided .                                                          owns 50% Of the stock of LeBaron.

Paragraph 15. The lessee covenants and agrees that if at any        Repair work on the premises started in September of
time there should be any default in the payment of any rent         1972. There is some testimony that the lessee was getting
or any other consideration herein contained or neglect to           apprehensive during this period and complained to the lessor
perform and observe any or either of the covenants contained        about delay in the repair work, and there is also some
in this instrument, which on his part is to be performed, or the    testimony that the lessor attempted to negotiate for more
performance of any of the terms and conditions of this lease,       favorable rentals under the contract. Frank contends that the
then upon such default, the entire rent for the balance of the      premises wee substantially completed by December 1972,
term shall, at the option of the lessor at once become due and      but there is some dispute as to this. On January 4, 1973,
payable, as if by the terms of this lease they were all payable     Frank, through his attorney, wrote to plaintiffs making certain
in advance, or at the option of the lessor the tenancy hereby       inquiries about compliance with the provisions for carrying
created may be terminated, and the said lessor, his heirs,          liability insurance, 1 and on January 12, 1973, the attorney for
representatives or assigns may cancel this lease forthwith at       Frank wrote to plaintiff and advised him that because of his
his option and may recover the possession of the demised            failure to comply with the terms of the lease agreement, the
premises and may dispossess all persons therefrom.                  lease was being terminated. On January 22, 1973, plaintiffs
                                                                    filed suit against defendant seeking specific performance and
Paragraph 17. Should the premises herein be destroyed or
                                                                    damages, as hereinbefore stated.
rendered untenantable by fire or the elements, lessor agrees
to cause to be rebuilt or repaired the improvements on said         Frank asserts 43 points of error, some of which seek rendition
premises in essentially the same condition as they are at the       while the others seek a remand.
inception of this lease. It is specifically understood and agreed
that such replacement or repairs of such improvements shall         A number of points of error complain that the trial court erred
be made within a reasonable time from the time that said            in granting plaintiffs' motions for summary judgment.
premises become untenantable, and it is further agreed that
during the time that such premises remain untenantable, the          *847 There appears in this transcript a letter dated December
rent provided for herein shall be abated.                           20, 1973 from the trial judge addressed to the attorneys
                                                                    of record, which is filed in the record of such cause and
Paragraph 23. Lessee is hereby given the right and option to        which purports to be the order granting plaintiffs' motion
extend this lease for an additional three (3) years from and        for summary judgment and denying defendant's motion for
after March 31, 1974, upon the same terms and conditions as         summary judgment .
are contained in this lease, EXCEPT that the rental shall be as
follows: (here follows schedule of monthly rentals). Should         The pertinent portions of such letter may be summarized as
the lessee desire to exercise this option he shall give written     follows:
notice to the lessor of his intention to so exercise such option
                                                                    (a) Both parties filed motions for summary judgment,
on or before October 31, 1973. Failure of lessee to give such
                                                                    plaintiffs' seeking specific performance and possession under
notice, as herein provided, shall operate to nullify and destroy
                                                                    the lease contract, and defendant seeking forfeiture and
the option herein granted.
                                                                    termination of the lease.
Kuhnreich opened his business, known as Belinda's, in the
                                                                    (b) There is no genuine issue of material fact.
leased premises on April 14, 1969. It was operated as


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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)




(c) Defendant contends that the lease terminated because            Under such rule, the judgment, dated January 22, 1976,
of failure to comply with the lease provision pertaining to         awarding damages to plaintiff, impliedly made all findings
insurance coverage, and that paragraph 15 of the lease is           necessary to support the judgment, including the liability
controlling.                                                        issues. The points of error are properly before us by virtue
                                                                    of defendant's points of error pertaining to the motions for
(d) Plaintiffs contend that paragraph 13 of the lease is            summary judgment, hereinbefore set forth, ald also by points
controlling, that they fully complied with the provisions           of error of defendant in which he complains that the trial court
thereof.                                                            erred as a matter of law in granting judgment for plaintiffs and
                                                                    in not granting judgment for defendant, and in failing to grant
(e) The premises were not covered by liability insurance for
                                                                    defendant's motions for judgment non obstante veredicto.
certain periods of time, but it is undisputed that within 15 days
after notification of such insurance default, such defaults were    Frank makes no contention that there are any disputed issues
remedied.                                                           of material fact as to the question of liability. His points of
                                                                    error as to liability assert: (a) it is undisputed that plaintiffs
(f) The motion for summary judgment of defendant is
                                                                    were in violation of the insurance provisions contained in the
denied, and the motion for summary judgment of plaintiffs is
                                                                    lease; (b) since plaintiffs clearly violated the provisions of the
sustained.
                                                                    lease, under the terms of the lease no notice was required,
 [1] The letter contained in the records is not a proper
                                                                    and that the lease was effectively terminated by the letter of
method for entry of a judgment and we do not approve
                                                                    January 12, 1973; (c) the trial court erred in granting plaintiffs'
this kind of procedure. The letter contains statements and
                                                                    motion for summary judgment and in overruling defendant's
other material not ordinarily contained in a judgment and
                                                                    motion for summary judgment; (d) the trial court erred as a
a letter of this sort addressed to the attorneys for purposes
                                                                    matter of law in granting judgment for plaintiffs' and in not
of appellate procedure is ordinarily a nullity. Benedict v.
                                                                    granting judgment for defendant; (e) the trial court erred in not
Benedict, 542 S.W.2d 692 (Tex.Civ.App.—Fort Worth 1976,
                                                                    granting defendant's *848 motion for judgment non obstante
no writ); Tejas Trail Property Owners Association v. Holt,
                                                                    veredicto; (f) this case should be reversed and judgment here
516 S.W.2d 441 (Tex.Civ.App.—Fort Worth 1974, no writ).
                                                                    rendered in favor of defendant that plaintiffs take nothing.

                                                                    We have concluded that the trial court did not err in granting
The final judgment, dated January 22, 1976, does not
                                                                    plaintiffs' motion for summary judgment and in refusing to
mention the motions for summary judgment and such
                                                                    grant defendant's motion for summary judgment because of
summary judgments are not disposed of by direct language
                                                                    the following reasons:
in such judgment. In North East Independent School District
                                                                     [2] (1) The courts do not favor forfeitures and unless
v. Aldridge, 400 S.W.2d 893 (Tex.1966), the Court, in
                                                                    compelled to do so by language that will admit no other
discussing the finality of judgments for appellate purpose,
                                                                    construction, forfeiture will not be enforced. G. C. Murphy
stated:
                                                                    Company v. Lack, 404 S.W.2d 853 (Tex.Civ.App.—Corpus
          When a judgment, not intrinsically                        Christi 1969, writ ref'd n.r.e.); Henshaw v. Texas Natural
          interlocutory in character, is rendered                   Resources Foundation, 147 Tex. 436, 216 S.W.2d 566 (Tex.
          and entered in a case regularly set for                   1949); 36 Tex.Jur.2d Landlord & Tenants ss 253, 254 (1962).
          a conventional trial on the merits, no
          order for a separate trial of issues having                [3]    [4] (2) A written contract must be considered and
          been entered pursuant to Rule 174, Texas                  construed together and various provisions or parts of the lease
          Rules of Civil Procedure, it will be                      are to be construed as a unified whole unless they are so
          presumed for appeal purposes that the                     repugnant and inconsistent as to nullify each other. A lease,
          Court intended to, and did, dispose of                    like other written agreement, should be given a reasonable
          all parties legally before it and of all                  construction that will carry out the intention of the parties as
          issues made by the pleadings between                      expressed by the language of the contract.
          such parties.
                                                                     [5] (3) A lease is governed by the general rule of
                                                                    construction of written instruments. Any doubts as to the



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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)


meaning of the language of the lease are to be resolved most
strongly against the lessor who prepared it. 35 Tex.Jur.2d           By a number of points of error, defendant asserts that the
Jury s 20 (1962); Fisher v. Tempco Aircraft Corporation,             jury's answers to Special Issues 1, 2, 4, and 5 are supported by
324 S.W.2d 571 (Tex.Civ.App.—Texarkana 1959, no writ);               no evidence, insufficient evidence, and that the jury's answers
Dedear v. Wilson, 220 S.W.2d 534 (Tex.Civ.App.—Austin                thereto are against the great weight and preponderance of
1949, writ ref'd); Pickrell v. Buckler, 293 S.W. 667                 the evidence. *849 We will first consider the special issues
(Tex.Civ.App.—El Paso 1927, no writ).                                which pertain to lost profits in which defendant asserts
                                                                     that the evidence concerning lost profits is too uncertain or
 [6] We have examined and considered the entire lease,               speculative to support any recovery for lost profits; that the
including specifically, paragraphs 13 and 15 of the lease.           jury answers to these issues are insufficiently supported by the
Paragraph 13 of the lease clearly provides for written notice        evidence; and are against the great weight and preponderance
of default to be given lessee, with a specified time to cure such    of the evidence.
default and avoid forfeiture of the lease. We see no purpose
                                                                     The leased premises involved, sometimes referred to as the
for such provision in the lease if the parties intended that the
                                                                     Iturbide Street Store, contains an area of 4,500 square feet.
lessor could terminate the lease without notice. The parties
                                                                     Such lease was prepared by Frank's lawyer. In April of 1969
did not intend to do a useless thing.
                                                                     Kuhnreich established a business at such leased premises
                                                                     under the name of Belinda. Kuhnreich was the sole owner
A reasonable construction of the two provisions, taken               and the business carried on was a ladies and men's ready-to-
together, is that after a particular default, the party in default   wear store. This operation continued until the fire occurred
was to be given written notice of such default with the right to     on January 12, 1972, causing substantial damage to the leased
cure such default within the time therein provided. The lease        premises. A fire sale was thereafter conducted until about
did not give the lessor the right to terminate the lease without     May 31, 1972, and on June 7, 1972 the premises were
notice, under the complete terms and provisions of the lease.        delivered back to Frank.

We have concluded that the trial court did not err in refusing       Kuhnreich testified that he intended to go back into business
to grant defendant's motion for summary judgment and in              in this location when the premises were repaired. Kuhnreich
granting plaintiffs' motion.                                         further testified that it was his intention to operate therein
 [7] We will next consider those points of error which, if           a business which would include men's wear, electronics,
sustained, will require a reversal and remand of this case.          crystal, porcelain, gifts, and novelties. On the first day of July
These points of error pertain to the jury answers on the             1972, Kuhnreich made a sublease of the premises to Belinda,
damage issues. The jury found, in answer to special issues           Inc., wherein Belinda, Inc. was to pay Kuhnreich $550.00
submitted, that (1) defendant could have turned over the             a month more rental than Kuhnreich was paying Frank.
leased premises in a tenantable condition on October 7,              Kuhnreich was the sole owner of Belinda, Inc. Sometime
1972; (2) defendant failed in turn over the leased premises          after the fire, Belinda, Inc. leased 1,200 square feet of space
to plaintiffs in a tenantable condition; (3) plaintiff, LeBaron,     known as El Lider at an entirely different location. This store
as successor to Belinda, Inc., suffered loss of profits as           was operated from March 1973 until October 31, 1974. The
a result of defendant's failure to turn over the leased              El Lider store sold televisions, stereos, calculators, crystal,
premises to plaintiffs; (4) the sum of $3,500.00 per month           porcelain, china, gifts, and novelties. Kuhnreich testified
would reasonably compensate plaintiff LeBaron for its loss           that the average monthly profit at the El Lider store was
of profits. Based upon such jury findings, judgment was              between $7,000.00 and $8,000.00 a month, but on cross
entered that Kuhnreich recover judgment against defendant            examination he was unable to give specific information in
for $550.00 a month commencing October 7, 1972, and                  regard thereto and stated that his accountant, Arthur Rossi,
continuing through March 31, 1974, an aggregate amount of            knew the details thereof. However, he did testify that for
$9,900.00; LeBaron recover judgment for $3,500.00 a month            the first year of operation there was a loss of $14,985.87,
commencing on October 7, 1972, aggregating $63,000.00.               including a carryover loss of $29,413.97.
The court refused to award damages for the three year option
                                                                     There is testimony that the El Lider location was a temporary
period. Defendant alone excepted to the judgment and gave
                                                                     location, and Kuhnreich testified that he intended to open
notice of appeal to this court.
                                                                     another location at 1006 Grant, which was a larger store



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Frank v. Kuhnreich, 546 S.W.2d 844 (1977)


containing between 3,000 and 3,500 square feet. Plaintiffs          contract cannot escape liability because it is impossible to
continued to operate in the El Lider location until October         state or prove a perfect measure of damages. . . . Where, . . .
31, 1974, when they moved into the Grant location. This             it is shown that the business was a going concern, and was
business is primarily an electronics business with much of the      making a profit, when the contract was breached, such pre-
electronics equipment being sold into Mexico.                       existing profit, together with other facts and circumstances,
                                                                    may be considered in arriving at a just estimate of the amount
The only other witness who testified as to profits was Arthur       of profit which would have been made if plaintiff had not
Rossi, a C.P.A. who handles Belinda's and LeBaron's books.          breached its contract.
He stated that LeBaron's was a business that sells electronics
and a variety of other goods. He testified that LeBaron's
profits ranged from a high of $6,812.00 a month for a               In 17 Tex.Jur.2d Damages s 149 (1960), it is stated:
particular period (March 1974 to March 1975) to a low of                      To substantiate his claim of lost
$5,337.68 a year for the fiscal year which ended February                     profits the plaintiff must bring forward
28, 1974, depending on whether or not officers' salaries                      convincing evidence; opinions and mere
were included in computing such figures. It is seen that the                  estimates will not suffice. And lost
supposed profits vary greatly depending on whether or not                     profits will not be considered sufficiently
officers' salaries are included. Moreover, there is testimony                 proved in the absence of factual data
that plaintiffs had a income tax loss for some of the years                   offered to show prospective income,
involved. The figures are rather meaningless. The officers                    predicated on such factors as previous
could, either by raising or decreasing their salaries, materially             experience, past earnings of the same
change the amount of profits.                                                 or a similar business, the competitive
                                                                              relationship of the business, and the
He was then asked what the profits would have been if it
                                                                              prospects of continued public acceptance
would have been operating at Iturbide Street and stated that he
                                                                              of the product or service offered.
did not have a positive opinion. He further testified that most
of the sales made by plaintiffs were made into Mexico and that
the amount of volume and the amount of profits would depend         The testimony as to lost profits may be summarized as
on whether the Mexican government permitted electronics             follows:
devices to be taken into Mexico without payment of duty.
                                                                    (a) Plaintiff operated a ladies and men's ready-to-wear store at
In Southwest Battery Corporation v. Owen, 131 Tex. 423, 115         the leased premises (1205 Iturbide). This covered the period
S.W.2d 1097 (1938), the Court stated:                               from April 1969 to June 1972. The only evidence as to
 *850 In the early decisions a rigid rule affecting the right       profits earned in such store was testimony that there was a
of recovery for lost profits was announced. Modern business         $29,413.97 carryover loss in the years 1973 and 1974.
methods have caused a relaxation of that hard rule. . . .
                                                                    (b) All the other testimony as to profits pertains to the
The rule denying a recovery where the facts show that such          operation of an entirely different type of business (electronics,
profits claimed are too uncertain or speculative, or where the      novelties, giftware, etc.) at entirely different locations. Even
enterprise is new or unestablished, is still enforced, on the       this testimony is conflicting with different figures as to
ground that the profits which might have been made from             taxable income and as to average monthly profits. The amount
such business are not susceptible of being established by           of such profits differ greatly depending on whether the profit
proof to that degree of certainty which the law demands * * *       includes the salaries of the officers of the corporation or
                                                                    whether it was exclusive of salaries.
It is impossible to announce with exact certainty any rule
measuring the profits the loss for which recovery may be had.       (c) Plaintiffs' accountant, when asked what plaintiffs' monthly
The courts draw a distinction between uncertainty merely as         profits would have been if it was operated as Iturbide Street,
to the amount and uncertainty as to the fact of legal damages.      stated that he had no positive opinion. There is no evidence
Cases may be cited which hold that uncertainty as to the fact       whatsoever of any profits are the established business at the
of legal damages is fatal to recovery, but uncertainty as to        leased premises, 1205 Iturbide Street.
the amount will not defeat recovery. A party who breaks his



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               6
Frank v. Kuhnreich, 546 S.W.2d 844 (1977)


                                                                         [8]     [9] A lessee has a duty to mitigate the damages, if
(d) Moreover, there is no testimony as to the desirability of the
                                                                        possible, and the sublease, which Kuhnreich made, in effect
various locations involved. There is absolutely no evidence
                                                                        artifically increased the amount of damages. There is no
in the record as to the location of the stores, customer
                                                                        showing that the sublease agreement Kuhnreich made with
availability, the probability that the business will remain
                                                                        Belinda, Inc. had any relationship to market value, and there
stable over a period of years, or the probability of increased
                                                                        is no showing that Kuhnreich suffered any real damages by
business. There is no factual data which would show what
                                                                        virtue of this sublease. The court erred in awarding Kuhnreich
profits, if any, would have been made at the leased premises.
                                                                        damages in the amount of $550.00 per month.
The thrust of plaintiffs' contention is that since there is
testimony that he made ‘X’ profits at a new and different
                                                                        Because of the errors hereinabove discussed, we have
location in an entirely different type of business, then,
                                                                        concluded that the judgment must be reversed and remanded.
therefore, he is entitled to ‘X’ profits. This does not
necessarily follow.                                                     By a cross-point, appellees urge that the trial court erred in
                                                                        not granting specific performance of the lease for the period
Under the record before us, it is a matter of some conjecture
                                                                        covered in the option to extend the lease and that they are
and speculation as to whether plaintiffs suffered any damages.
                                                                        entitled to a calculation of their monthly damages so as to
Their claim for damages is based on testimony that they were
                                                                        cover the three year additional period covered in such option.
making ‘X’ amount of profit as an electronics, novelties, and
                                                                        They ask for a modification or reformation of the judgment
gifts business at two locations in Laredo, El *851 Lider and
                                                                        in this respect. Even if we were inclined to agree that the
Grant Street, but there is no testimony as to what effect the
                                                                        profits, if any, would be applicable also to this period, which
opening of another store selling these same type of items on
                                                                        we specifically do not herein pass on, there is no evidence in
the leased premises (Iturbide Street) would have had on the
                                                                        the record as to anticipated profits for such period of time. In
total amount of profits made; whether they would have been
                                                                        view of our general remand, we will not consider such cross-
the same, less, or more.
                                                                        point.
In our opinion, plaintiffs failed to establish by competent
                                                                        We have concluded that the judgment of January 22, 1976
evidence the amount of the damages, if any, that they
                                                                        must be reversed, and that the interest of justice would best
sustained at the leased premises with that degree of certainty
                                                                        be served by a general remand.
which the law requires.
                                                                        The judgment is reversed and remanded to the trial court for
Defendant also asserts that the trial court erred in holding
                                                                        a new trial.
Frank liable to Kuhnreich for damages in the amount of
$550.00 a month, which is the difference in the amount
Belinda, Inc., as sublessee, was to pay him as rent and                 CADENA, Justice.
the amount he was to pay Frank. The sublease between
Kuhnreich and Belinda, Inc. was signed on July 1, 1973, after           I do not agree it was error to award $550.00 per month.
the fire and at the time Kuhnreich owned all the stock of
                                                                        All Citations
Belinda and was the sole owner thereof. Kuhnreich admitted
that he was basically leasing to himself.                               546 S.W.2d 844


Footnotes
1       Demand is hereby made for you to present to me or Mr. Frank immediately competent evidence that the insurance
        referred to in such paragraph has been in force since inception of the lease.


End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  7
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)




                    244 S.W.3d 855                             West Headnotes (19)
                Court of Appeals of Texas,
                          Dallas.
                                                               [1]   Pretrial Procedure
            Vernon Lee GARNER, Appellant                                 Affidavits and Evidence
                         v.                                          Trial court did not abuse its discretion in denying
              FIDELITY BANK, N. A., f/                               borrower's motion for continuance of hearing
             k/a Parkway Bank, Appellee.                             on lender's motion for summary judgment, in
                                                                     lender's action against borrower seeking to
       No. 05–07–00360–CV.          |   Jan. 31, 2008.               collect debt from borrower, as borrower's motion
                                                                     did not include an affidavit stating sufficient
Synopsis
                                                                     cause, as required by rule. Vernon's Ann.Texas
Background: Lender filed lawsuit against borrower, seeking
                                                                     Rules Civ.Proc., Rule 251.
to collect debt from borrower after borrower failed to pay
promissory note on its maturity date or surrender collateral         1 Cases that cite this headnote
secured via commercial security agreement. Lender filed
motion for summary judgment. Borrower responded and
                                                               [2]   Appeal and Error
requested a continuance. The 296th District Court, Collin
                                                                        Continuance
County, Betty Caton, J., denied borrower a continuance
and granted summary judgment to lender, and granted a                The denial of a motion for continuance is
foreclosure of security interest in the collateral. Borrower         reviewed under an abuse of discretion standard.
appealed.
                                                                     9 Cases that cite this headnote


                                                               [3]   Appeal and Error
Holdings: The Court of Appeals, Richter, J., held that:
                                                                        Proceedings Preliminary to Trial

[1] trial court did not abuse its discretion in denying              The denial of a motion for continuance will only
borrower's motion for continuance of hearing on lender's             be reversed on appeal if the trial court's action
motion for summary judgment;                                         was arbitrary, unreasonable, or without reference
                                                                     to any guiding rules and principles.
[2] statements set forth in borrower's responsive summary
                                                                     7 Cases that cite this headnote
judgment affidavit that were allegedly made before
promissory note was signed constituted impermissible parol
evidence;                                                      [4]   Appeal and Error
                                                                        Dockets, Calendars, and Continuance
[3] exception to parol evidence rule for evidence of a               If a motion for continuance is not verified
collateral agreement did not apply to permit statements set          or supported by affidavit, appellate court will
forth in borrower's responsive summary judgment affidavit            presume the trial court did not abuse its
that were allegedly made after note was signed; and                  discretion in denying the motion. Vernon's
                                                                     Ann.Texas Rules Civ.Proc., Rule 251.
[4] evidence of payment as an affirmative defense was
inadmissible.                                                        7 Cases that cite this headnote


                                                               [5]   Pretrial Procedure
Affirmed.
                                                                         Affidavits and Evidence
                                                                     Rule requiring that a motion for continuance
                                                                     include an affidavit stating sufficient cause does



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         1
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)


        not require the party opposing a motion for
        continuance to lodge an objection with the        [10]   Evidence
        trial court under any circumstances. Vernon's                Bills and Notes or Indorsement Thereof
        Ann.Texas Rules Civ.Proc., Rule 251.                     Judgment
                                                                     Negotiable Instruments
        1 Cases that cite this headnote
                                                                 Exception to parol evidence rule for evidence of
                                                                 a collateral agreement did not apply to permit
 [6]    Evidence                                                 statements set forth in borrower's affidavit in
            Bills and Notes                                      response to lender's summary judgment motion
        Judgment                                                 that were allegedly made by lender to borrower
            Negotiable Instruments                               after promissory note was signed, in context
                                                                 of lender's action against borrower to recover
        Statements set forth in borrower's affidavit in
                                                                 unpaid debt from borrower, as statements
        response to lender's summary judgment motion
                                                                 contradicted the express terms of parties' written
        that were allegedly made by lender to borrower
                                                                 agreement.
        before promissory note was signed constituted
        impermissible parol evidence, in context of              1 Cases that cite this headnote
        lender's action against borrower to recover
        unpaid debt from borrower, as parties had
        executed a valid integrated agreement.            [11]   Evidence
                                                                     Prior and Contemporaneous Collateral
        Cases that cite this headnote                            Agreements
                                                                 The parol evidence rule does not bar evidence of
 [7]    Appeal and Error                                         a collateral agreement.
            Allowance of Remedy and Matters of
                                                                 Cases that cite this headnote
        Procedure in General
        Appellate court reviews a trial court's ruling
        sustaining objections to summary judgment         [12]   Evidence
        evidence for an abuse of discretion.                         Prior and Contemporaneous Collateral
                                                                 Agreements
        6 Cases that cite this headnote                          A “collateral agreement,” evidence of which is
                                                                 not barred by parol evidence rule, is one the
 [8]    Evidence                                                 parties might naturally make separately, i.e. one
            Contracts in General                                 not ordinarily expected to be embodied in, or
                                                                 integrated with the written agreement and not so
        When the parties have concluded a valid
                                                                 clearly connected with the principal transaction
        integrated agreement, the parol evidence
                                                                 as to be part and parcel of it.
        rule precludes enforcement of a prior or
        contemporaneous inconsistent agreement.                  1 Cases that cite this headnote

        1 Cases that cite this headnote
                                                          [13]   Evidence
                                                                     Contracts in General
 [9]    Evidence
            Evidence Improperly Admitted                         Exception to parol evidence rule that exists with
                                                                 respect to evidence of a collateral agreement
        Evidence that violates the parol evidence rule
                                                                 does not permit parol evidence that varies or
        is incompetent and without probative force, and
                                                                 contradicts the express or implied terms of the
        cannot properly be given legal effect.
                                                                 written agreement.
        Cases that cite this headnote




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                     2
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)




        1 Cases that cite this headnote                               1 Cases that cite this headnote


 [14]   Contracts                                              [18]   Evidence
            Application to Contracts in General                           Matters of Defense and Rebuttal
        Evidence                                                      Party asserting an affirmative defense bears
             Completeness of Writing and Presumption                  the burden of proving its elements. Vernon's
        in Relation Thereto; Integration                              Ann.Texas Rules Civ.Proc., Rule 94.
        A written agreement will be enforced as written
                                                                      6 Cases that cite this headnote
        and cannot be added to, varied, or contradicted
        by parol testimony; this is particularly true where
        the written contract contains a recital that it        [19]   Bills and Notes
        contains the entire agreement between the parties                   Evidence Admissible Under Plea or Answer
        or a similarly worded merger provision.                       in General
                                                                      Absence of a proper plea of payment renders
        1 Cases that cite this headnote
                                                                      evidence as to payment inadmissible in action
                                                                      to recover unpaid balance of notes. Vernon's
 [15]   Appeal and Error                                              Ann.Texas Rules Civ.Proc., Rule 95.
           Cases Triable in Appellate Court
                                                                      Cases that cite this headnote
        Appellate court reviews the granting of a
        summary judgment motion de novo.

        2 Cases that cite this headnote
                                                              Attorneys and Law Firms

 [16]   Bills and Notes                                       *857 Cecil R. Miskin, Burleson, Susan Bleil, Sondrea King,
              Renewal, and Agreements to Renew                Bleil & King, Fort Worth, for Appellant.
        Fact that lender, in a letter to borrower, offered
        to renew promissory note that borrower failed         Greg Gutman, Dallas, Edward L. Rice, Capelle & Burdette,
        to pay on its maturity date did not establish         L.L.P., Dallas, for Appellee.
        existence of an oral agreement between parties
                                                              Before Justices O'NEILL, RICHTER, and LANG.
        outside the express terms of the loan agreement
        the parties had executed, for purposes of lender's
        action against borrower to recover unpaid debt
        from borrower.                                                                 OPINION

        Cases that cite this headnote                         Opinion by Justice RICHTER.

                                                              This appeal arises from a suit on a promissory note. Vernon
 [17]   Bills and Notes                                       Lee Garner challenges the entry of a traditional summary
              Evidence Admissible Under Plea or Answer        judgment in favor of Fidelity Bank, N.A., f/k/a/ Parkway
        in General                                            Bank. In six issues, Garner argues: (1) the trial court abused
        Borrower's failure to properly plead an account       its discretion when it denied Garner's motion for continuance;
        or otherwise provide requisite notice for payment     (2) the trial court erred when it granted summary judgment
        as affirmative defense to lender's action against     because there was a material issue of fact as to whether
        him to recover unpaid balance of note rendered        the note at issue constituted the complete agreement of the
        evidence as to payment inadmissible. Vernon's         parties; (3) the court erred in granting summary judgment
        Ann.Texas Rules Civ.Proc., Rules 94, 95.              because Garner raised a material issue of fact concerning
                                                              payment; (4) the trial court abused its discretion when it
                                                              sustained Fidelity's objections to Garner's testimony about


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       3
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)


statements and acts that occurred after the note was signed;        paragraph stating “[t]his case has not been on file for any
(5) the trial court awarded Fidelity more relief than it            appreciable length of time, certainly not sufficient to allow
requested; and (6) the trial court erred by awarding attorney's     for adequate discovery.” In his first issue, Garner argues the
fees. Finding no reversible error, we affirm the trial court's      trial court erred by denying the motion for continuance. We
judgment.                                                           disagree.

                                                                     [1]     [2]     [3]     [4]      [5] The denial of a motion for
                                                                    continuance is reviewed under an abuse of discretion
                     I. BACKGROUND
                                                                    standard. General Motors v. Gayle, 951 S.W.2d 469,
Garner is in the used car business. Prior to the lawsuit,           476 (Tex.1997) (orig.proceeding). The denial will only be
Garner had an ongoing *858 business relationship with               reversed if the trial court's action was arbitrary, unreasonable,
Fidelity and entered into various loan agreements to finance        or without reference to any guiding rules and principles. See
the purchase of his vehicle inventory. On December 15,              BMC Software Belg. N.V. v. Marchand, 83 S.W.3d 789, 800
2005, Garner and Fidelity entered into the loan agreement           (Tex.2002). Garner gave no reason why he needed discovery
at issue in this case. To memorialize the agreement, the            to oppose summary judgment on the note, nor did he specify
parties executed a promissory note with a June 15, 2005             the discovery required. Although Garner now asserts the
maturity date and a commercial security agreement granting          discovery was essential to plead or prove a payment defense,
Fidelity a security interest in three specified vehicles. The       this argument was not presented to the trial court until after the
parties also executed a “Notice of Final Agreement” which           summary judgment was granted and Garner filed a motion for
provided that the loan agreement, promissory note, and              new trial. Garner admits the request for a continuance was not
security agreement constituted the final agreement of the           verified, but maintains Fidelity's failure to object to the lack
parties. When Garner did not pay the note on the maturity           of verification precludes it from raising the issue on appeal.
date or surrender the collateral, Fidelity offered to extend        A motion for continuance must include an affidavit stating
the note with a new note in the same principal amount.              sufficient cause. TEX.R. CIV. P. 251; Rabe v. Guaranty
Garner refused. After demanding payment, Fidelity filed suit        Nat'l Ins. Co., 787 S.W.2d 575, 578 (Tex.App.-Houston [1st
against Garner. Garner generally denied the allegations in a        Dist.] 1990, writ denied). If a motion for continuance is not
document entitled “Plea in Abatement, Special Exceptions,           verified or supported by affidavit, we will presume the trial
Special Denials, Affirmative Defense and Original Answer            court did not abuse its discretion in denying the motion.
Subject Thereto” (the Answer). The Answer did not assert            Villegas v. Carter, 711 S.W.2d 624, 626 (Tex.1986); *859
“payment” as an affirmative defense. On October 30, 2006            Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d
Fidelity moved for summary judgment on Garner's liability           256, 270 (Tex.App.-Houston [1st Dist.] 2005, pet. denied).
on the note. The motion was set for hearing on December 14,         The rule does not require the party opposing a motion for
2006. Garner responded on December 7, 2006 and requested            continuance to lodge an objection with the trial court under
a continuance. The crux of Garner's response was that the           any circumstances. See Daugherty v. Jacobs, 187 S.W.3d
parties had agreed to terms other than what was stated in the       607, 620 (Tex.App.-Houston [14th Dist.] 2006, no pet.).
note. At the same time he filed the response, Garner served         Because Garner's motion did not include an affidavit stating
his first request for production of documents on Fidelity. The      sufficient cause, we conclude the trial court's ruling was
trial court granted the summary judgment on December 26,            neither arbitrary nor unreasonable. Garner's first issue is
2006 and awarded Fidelity the amount due under the note with        overruled.
interest, costs, and attorney's fees. The final judgment also
granted a foreclosure of the security interest in the collateral.
                                                                    Objections to Summary Judgment Evidence
This appeal followed.
                                                                    Garner submitted an affidavit in response to the motion for
                                                                    summary judgment. The affidavit described representations
                                                                    allegedly made by Fidelity to Garner and attached numerous
                      II. DISCUSSION                                prior notes between the parties. Fidelity objected to
                                                                    paragraphs 3–16 and 22 of the affidavit and argued the merger
Motion for Continuance                                              clause in the loan documents prohibited the use of parol
Garner's response to Fidelity's motion for summary judgment         evidence to show any other agreements of the parties. The
included a motion for continuance that consisted of a               trial court sustained the objection. In his third issue, Garner


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             4
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)


maintains the trial court erred because the representations        S.W.2d 449, 451–52 (Tex.Civ.App.-Dallas 1980, writ ref'd
described in the affidavit were made after the date of the note.   n.r.e.). In addition, the notice of final agreement provides:
In Garner's view, this demonstrates the statements were not
barred by the parol evidence rule.                                                 *860 THE WRITTEN LOAN
                                                                                  AGREEMENT     REPRESENTS
 [6] [7] [8] [9] We review a trial court's ruling sustaining                      THE   FINAL   AGREEMENT
objections to summary judgment evidence for an abuse                              BETWEEN THE PARTIES AND
of discretion. See Bradford Partners II, L.P. v. Fahning,                         MAY NOT BE CONTRADICTED
231 S.W.3d 513, 521 (Tex.App.-Dallas 2007, no pet.). The                          BY EVIDENCE OF PRIOR
portion of the affidavit Garner argues should have been                           CONTEMPORANEOUS       OR
allowed stated in pertinent part:                                                 SUBSEQUENT          ORAL
                                                                                  AGREEMENTS     OF    THE
             I took that to mean that when the                                    PARTIES.    THERE    ARE
             note came due, that I would pay the                                  NO    UNWRITTEN     ORAL
             interest, plus pay for the cars sold                                 AGREEMENTS BETWEEN THE
             during that period, and, just as before,                             PARTIES.
             the note would be renewed. [The bank
             officer] told me this both before and                  [14] A written agreement will be enforced as written
             after I signed the note in question.                  and cannot be added to, varied, or contradicted by parol
                                                                   testimony. See Smith v. Smith, 794 S.W.2d 823, 827
(Emphasis added). Contrary to Garner's assertion, the
                                                                   (Tex.App.-Dallas 1990, writ withdrawn). This is particularly
affidavit does not refer exclusively to representations alleged
                                                                   true where the written contract contains a recital that it
to have been made after the note was signed. The affidavit
                                                                   contains the entire agreement between the parties or a
also refers to a statement made prior to the signing of
                                                                   similarly-worded merger provision. See Weinacht v. Phillips
the note. When, as here, the parties have concluded a
                                                                   Coal Co., 673 S.W.2d 677, 679 (Tex.App.-Dallas 1984,
valid integrated agreement, the parol evidence rule precludes
                                                                   no writ). Because the evidence Garner sought to admit
enforcement of a prior or contemporaneous inconsistent
                                                                   contradicted the express terms of the written agreement, the
agreement. See Ledig v. Duke Energy Corp., 193 S.W.3d 167,
                                                                   trial court did not err in excluding it. Garner's third issue is
178 (Tex.App.-Houston [1st Dist.] 2006, no pet.). Evidence
                                                                   overruled.
that violates the rule is incompetent and without probative
force, and cannot properly be given legal effect. See Johnson
v. Driver, 198 S.W.3d 359, 364 (Tex.App.-Tyler 2006, no        The Summary Judgment
pet.). The statements made before the note was signed were      [15] In his fourth and fifth issues, Garner complains about
inadmissible parol evidence.                                   the entry of summary judgment. We review the granting of
                                                               a summary judgment motion de novo. AIG Life Ins. Co. v.
 [10] [11] [12] [13] With regard to statements made afterFederated Mut. Ins. Co., 200 S.W.3d 280, 284 (Tex.App.-
the note was signed, we recognize that the parol evidence rule Dallas 2006, pet. denied). When reviewing a traditional
does not bar evidence of a collateral agreement. See Transit   summary judgment, we determine whether the movant met
Enter. v. Addicks Tire & Auto Supply, Inc., 725 S.W.2d         its burden of establishing that no material fact issue exists
459, 461 (Tex.App.-Houston [1st Dist.] 1987, no writ). A       and that it is entitled to judgment as a matter of law. TEX.R.
collateral agreement is one the parties might naturally make   CIV. PROC. 166a; AIG Life, 200 S.W.3d at 284. We take
separately, i.e. one not ordinarily expected to be embodied    the non-movant's evidence as true, indulge every reasonable
in, or integrated with the written agreement and not so        inference in favor of the non-movant, and resolve all doubts in
clearly connected with the principal transaction as to be part the non-movant's favor. TEX.R. CIV PROC. 166a; AIG Life,
and parcel of it. Boy Scouts of Am. v. Responsive Terminal     200 S.W.3d at 284.
Sys., Inc., 790 S.W.2d 738, 745 (Tex.App.-Dallas 1990, writ
withdrawn). This exception, however, does not permit parol     Garner first argues the summary judgment evidence raised a
evidence that varies or contradicts the express or implied     question of material fact about whether the note constituted
terms of the written agreement. See Loe v. Murphy, 611         the complete agreement of the parties. In support of his
                                                                   argument, Garner points to the portions of his affidavit


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            5
Garner v. Fidelity Bank, N. A., 244 S.W.3d 855 (2008)


                                                                       Garner admits he did not file an account, but maintains it was
in which he describes how Fidelity allegedly agreed to
                                                                       impossible to do so because he did not have the discovery he
an arrangement other than what is described in the loan
                                                                       required. As we noted earlier, Garner did not inform the trial
documents and the prior notes he provided to demonstrate the
                                                                       court that he needed discovery to plead or prove payment until
parties previously executed notes with no maturity dates. We
                                                                       after the summary judgment had been determined. Although
have already concluded the trial court did not err by sustaining
                                                                       there was more than adequate time between the filing of the
Fidelity's objections to this evidence. Accordingly, Garner
                                                                       motion for summary judgment and the date on which it was
failed to produce competent summary judgment evidence to
                                                                       set for hearing, Garner did not amend his answer to assert
raise a disputed issue of material fact as to the agreement of
                                                                       a payment defense. Because Garner failed to properly plead
the parties.
                                                                       an account or otherwise provide the requisite notice for an
                                                                       affirmative defense of payment, the trial court did not err
 [16] Garner's summary judgment evidence also included
                                                                       when it sustained Fidelity's objections to Garner's affidavit.
the letter from Fidelity offering to renew the note. Garner
                                                                       Absence of a proper plea of payment renders evidence as to
claims this uncontroverted evidence established the debt was
                                                                       payment inadmissible. See Rea v. Sunbelt Sav., 822 S.W.2d
being renewed and evidenced an ongoing floor planning
                                                                       370, 372 (Tex.App.-Dallas 1991, no writ). Garner's fifth issue
arrangement that did not require Garner to pay for vehicles
                                                                       is overruled.
that had not been sold. The fact that Fidelity offered to renew
the debt, however, does not establish the existence of an oral
agreement outside the express terms of the contract. Garner's
                                                                       The Relief Awarded
fourth issue is overruled.
                                                                       In his second issue, Garner argues the trial court awarded
                                                                       Fidelity more relief than the motion for summary judgment
 [17] Garner also contends he raised a material fact question
                                                                       requested. Specifically, Garner claims there is no support for
on the issue of payment. Garner's affidavit stated he made
                                                                       the order of sale on the collateral or for “assistance to take the
$300 payments each month, but did not specify that the
                                                                       money or any balance thereof remaining unpaid out of any
payments were on the note at issue. Garner did not quantify
                                                                       other property of the defendant.” The motion for summary
the total amount of payments allegedly made or provide any
                                                                       judgment requested foreclosure. Rule 309 establishes what
supporting documentation. Fidelity objected that there were
                                                                       a judgment for foreclosure is to be. See TEX.R. CIV. P.
no pleadings to support a payment defense and the trial court
                                                                       309. The trial court's order tracks the language of Rule 309.
sustained the objection.
                                                                       Garner's second issue is overruled.

 *861 [18] [19] Payment is an affirmative defense that
                                                                       In his sixth issue, Garner argues the attorney's fees award was
must be specifically pleaded. See TEX.R. CIV. P. 94; Tarrant
                                                                       improper because summary judgment should not have been
County Hosp. Dist. v. GE Automotive Serv., Inc., 156 S.W.3d
                                                                       granted. Because we have concluded the trial court did not
885, 896 n. 13 (Tex.App.-Fort Worth 2005, no pet.). The party
                                                                       err in granting the summary judgment, we need not reach this
asserting an affirmative defense bears the burden of proving
                                                                       remaining issue. Garner's sixth issue is overruled.
its elements. See Compass Bank v. MFP Financial Serv., Inc.,
152 S.W.3d 844, 850 (Tex.App.-Dallas 2005, pet. denied).
                                                                       Having resolved all of Garner's issues against him, we affirm
Rule 95 requires the party claiming the defense of payment
                                                                       the judgment of the trial court.
to “file with his plea an account stating distinctly the nature
of such payment, ... failing to do so, he shall not be allowed
to prove the same, unless it be so plainly and particularly            All Citations
described in the plea as to give the plaintiff full notice of the
character thereof.” TEX.R. CIV. P. 95; Mays v. Bank One,               244 S.W.3d 855
N.A., 150 S.W.3d 897, 899 (Tex.App.-Dallas 2004, no pet.).

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   6
Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


                                                                      Testimony of employees of owner of oil and
                                                                      gas lease would be treated as that of interested
                    809 S.W.2d 652
                                                                      witnesses for purposes of summary judgment
                Court of Appeals of Texas,
                                                                      motion, even though owner was not party
                        Amarillo.
                                                                      to suit brought by company to which owner
         Joe W. HAYES, Ty M. Sparks, Cecil                            had executed “farm out” agreement obligating
       Meadows, and Susan Krehbiel, Appellants,                       company to drill test well upon pooled unit
                         v.                                           seeking declaration that release executed by
                                                                      owner was result of mistake; interests of
        E.T.S. ENTERPRISES, INC., Appellee.
                                                                      owner and of company were similar. Vernon's
       No. 07–90–0073–CV. | May 9, 1991.                              Ann.Texas Rules Civ.Proc., Rule 166a.
        | Rehearing Overruled June 5, 1991.
                                                                      1 Cases that cite this headnote
Party to which owner of oil and gas lease had executed
“farm out” agreement obligating party to drill test well upon   [3]   Judgment
pooled unit brought declaratory judgment action seeking                   Weight and sufficiency
declaration that owner's release of oil and gas lease was
                                                                      In case in which summary judgment is sought,
ineffective as result of mistake. The 31st Judicial District
                                                                      conditions authorizing consideration of, and
Court of Hemphill County, Grainger W. McIlhany, J., entered
                                                                      decision upon, testimony of interested witness
summary judgment in favor of party. Mineral interest owners
                                                                      require that such evidence be uncontradicted,
appealed. The Court of Appeals, Boyd, J., held that: (1)
                                                                      clear, direct and positive, free of circumstances
summary judgment evidence was sufficient to establish that
                                                                      tending to discredit or impeach, readily
execution of release was result of mistake, and (2) owners of
                                                                      controverted, and such testimony is especially
mineral interests did not detrimentally change their position
                                                                      entitled to reliance where party opposing
in innocent reliance upon mistaken release executed by owner
                                                                      summary judgment had means and opportunity
of oil and gas lease.
                                                                      of disproving testimony but did not do so.

Affirmed.                                                             8 Cases that cite this headnote

Poff, J., dissented and issued an opinion.
                                                                [4]   Judgment
                                                                          Weight and sufficiency
                                                                      Testimony of interested party as to what that
 West Headnotes (7)                                                   witness knew or intended to do or as to witness'
                                                                      state of mind does no more than raise issue of
 [1]    Appeal and Error                                              fact and does not support summary judgment.
           Reasons for Decision
                                                                      3 Cases that cite this headnote
        Where trial court did not specify which of
        plaintiff's theories was relied upon for grant of
                                                                [5]   Judgment
        summary judgment, summary judgment would
                                                                          Landlord and tenant
        be affirmed on appeal if any of theories advanced
        were meritorious. Vernon's Ann.Texas Rules                    Testimony of employees of owner of oil and gas
        Civ.Proc., Rule 166a.                                         lease was sufficient summary judgment evidence
                                                                      to support finding that owner mistakenly and
        2 Cases that cite this headnote                               inadvertently prepared, executed and sent for
                                                                      filing release of oil and gas leases; employee
 [2]    Judgment                                                      of owner testified that he would not have
            Landlord and tenant                                       signed release had he known of farm out
                                                                      agreement and that this was only such mistake



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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


        during employee's employ with owner. Vernon's         Enterprises, Inc. We disagree and affirm the judgment of the
        Ann.Texas Rules Civ.Proc., Rule 166a.                 trial court.

        Cases that cite this headnote                         Appellants own an undivided mineral interest in the west one-
                                                              half (W/2) of Section 4, Block Z–1, ACH & B Survey in
 [6]    Contracts                                             Hemphill County, Texas (the Property). On April 2, 1982,
            Mistake                                           Cecil Meadows and wife Emma Jean Meadows, executed
                                                              an oil and gas lease to Tom L. Scott, Inc., covering the
        To be entitled to equitable relief on ground of
                                                              Property. On May 14, 1982, this lease was conveyed to the
        unilateral mistake in contract action, party must
                                                              Pogo Producing Company (Pogo).
        show that mistake was of so great consequence
        that to enforce contract as made would be
                                                              On November 30, 1983, the Meadows conveyed a 1.5/320
        unconscionable, that mistake related to material
                                                              mineral interest to appellant Joe W. Hayes, and a like
        feature of contract, that mistake was made
                                                              interest to appellant Ty M. Sparks. On September 11, 1986,
        regardless of exercise of ordinary care, and that
                                                              Hayes conveyed a .75/320 mineral interest to appellant Susan
        parties could be placed in status quo in equity
                                                              Krehbiel (nee Martha Susan Hayes).
        sense that rescission would not result in prejudice
        to other party except for loss of bargain.
                                                              On February 20, 1985, Pogo executed a “farm out” agreement
        3 Cases that cite this headnote                       to appellee by the terms of which appellee was obligated to
                                                              drill a test well upon a pooled unit which included all of
                                                              Section 4. Appellee commenced drilling operations upon the
 [7]    Release
                                                              tract on or about April 5, 1985, and completed a producing
            Mistake
                                                              well on December 27, 1985.
        Owners of mineral interests did not detrimentally
        change their position in innocent reliance upon       On May 14, 1985, during the course of appellee's drilling
        mistaken release executed by owner of oil and         operations, Pogo executed a release of the oil and gas
        gas leases, and thus owner of oil and gas leases      lease. Subsequently, on June 24, 1985, by an instrument
        was entitled to revoke the release.                   denominated as a “Revocation and Rescission of Release of
                                                              Oil and Gas Leases,” which recited it had not been its intent
        1 Cases that cite this headnote
                                                              to release its oil and gas lease, Pogo sought to revoke and
                                                              rescind the release. By an instrument dated March 19, 1986,
                                                              but which recited its effective date as of October 2, 1985,
                                                              and which recited it was made without express or implied
Attorneys and Law Firms                                       warranty of title, Pogo assigned the lease to appellee. In the
                                                              transfer, Pogo retained an overriding royalty interest equal
*653 Robert L. Templeton & Associates, Amarillo, Joe W.
                                                              to the difference between all existing leasehold burdens of
Hayes, Ty M. Sparks, Canadian, for appellants.
                                                              record and 25% of 8/8 production.
Nickum and Naylor, Ronald D. Nickum, Amarillo, for
appellee.                                                     In the action giving rise to this appeal, appellee sought
                                                              a declaratory judgment that Pogo's release was ineffective
*654 Before REYNOLDS, C.J., and BOYD and POFF, JJ.            because it was the result of a mistake. They further alleged
                                                              even if Pogo's release was effective, appellee had obtained a
Opinion
                                                              limitation title to an oil and gas leasehold estate pursuant to
BOYD, Justice.                                                Texas Civil Practice & Remedies Code Annotated § 16.024
                                                              (Vernon 1986) (three year statute). Appellee's successful
In one point, appellants Joe W. Hayes, Ty M. Sparks, Cecil    motion for summary judgment was also based upon these
Meadows and Susan Krehbiel say the trial court erred in       grounds.
granting a summary judgment in favor of appellee E.T.S.




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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


Appellants contend the summary judgment should not have
been granted on either ground. Initially, they contend that         As summary judgment evidence and pertinent to its mistake
any mistake in the execution of the release was a unilateral        ground, appellee attached excerpts from the deposition of
one on Pogo's part and cannot support either cancellation           Kenneth Good, an employee of Pogo, taken in the instant
or rescission. Alternatively, they say, if such a unilateral        case. In that deposition, Good testified that, although he
mistake is to be the basis of the relief sought, it must meet the   intended to sign the release at the time he did so, he
requirements of a “remedial mistake.” Those requirements do         would not have signed it had he known of the farm-
not exist, they continue, because (a) there exists a genuine        out agreement to appellee and that well drilling operations
issue of material fact whether the execution and filing of          were proceeding upon the tract in question. He recited the
the release was in fact a mistake, (b) appellee offered no          preliminary procedures that were standard in his company
summary judgment proof that to enforce the release would            and said that, by the time a release was submitted to him, his
be unconscionable, and (c) there exists a genuine issue of          signature was a mere formality as the release had been cleared
material fact whether Pogo exercised ordinary care in the           by those below him responsible for its accuracy.
execution and filing of the release.
                                                                    He also stated this was the only time such a mistake had been
With regard to the limitation contention, appellants contend        made by Pogo in the twelve years of his employment, and
that appellee did not prove the unbroken chain of title from        it was made because the information about the farm-out and
the sovereign to appellee which is a requisite of the three         the well drilling was not included. Had he known about this
year limitation statute. They also contend that the effect of       missing information, he would not have signed and “would
the release was to make appellee and appellants co-tenants,         also determine how the error occurred and have the situation
and a fact question exists as to whether appellee repudiated        corrected.” He averred that there was absolutely nothing to
appellants' title.                                                  be gained by Pogo by executing the release where a farm-
                                                                    out existed and drilling had commenced. He characterized the
 [1] The rules governing the decision of appeals from               signing of the release as a “mistake. A clerical error. A fluke.”
summary judgments are well established. Under Rule 166a
of the Texas Rules of Civil Procedure, 1 the summary *655           The summary judgment motion was also supported by
judgment movant must establish there is no genuine issue            the affidavit of John W. Chisholm, appellee's senior vice
of fact and the movant is entitled to judgment as a matter          president in charge of administration of oil and gas leases,
of law. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986);           production, marketing and well operations. He averred that
City of Houston v. Clear Creek Basin Authority, 589 S.W.2d          the well on the premises was spudded on April 5, 1985, and
671, 678 (Tex.1979). We are required to view summary                was completed on December 27, 1985, with an absolute open
judgment evidence in the light most favorable to the non-           flow potential of 17,500,000 cubic feet of gas per day.
movant and resolve any doubt of the existence of a genuine
issue of material fact against the movant. Nixon v. Mr.             In opposition to appellee's motion, and relevant to the mistake
Property Management, 690 S.W.2d 546, 548–49 (Tex.1985);             contention, appellants advanced deposition testimony of Gina
Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984).              Gresham taken in the Randall County case. Ms. Gresham was
Since the trial court did not specify which of appellee's           also an employee of Pogo. In that testimony, she recounted
theories was relied upon for summary judgment, it will              in some detail the procedures followed by Pogo in the
be affirmed on appeal if any of the theories advanced are           preparation of releases of oil and gas leases and the company's
meritorious. Rogers v. Ricane Enterprises, Inc., 772 S.W.2d         endeavors to ensure their accuracy. She said the farm-out
76, 79 (Tex.1989); Carr v. Brasher, 776 S.W.2d 567, 569             agreement was not in Pogo's file on the premises at the time it
(Tex.1989).                                                         was checked by Cathy Zella, the employee designated to do
                                                                    so, nor was it there at the time the release was executed.
Another case styled Pogo Producing Company v. Cecil
Meadows et al., No. 32,319–A in the 47th District Court of          Under Pogo's standard operating procedure at the time, had
Randall County, involved the same facts and legal issues in         the information about the agreement been in the file, no
controversy in this case. Although appellee was not a party to      release would have been prepared. She said the release
that suit, the trial court allowed depositions taken in that case   “was an error, ‘big time.’ You don't prepare a release on
to be used in this one.                                             a producing lease.” After the execution of the release was



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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


discovered, she discussed the mistake with everyone in her           question whether the execution and filing of the release was
department, “and built up better procedures.” She also said,         a mistake.
“We just don't prepare releases like we used to.” In addition,
she told Bruce May, another employee of Pogo, that he was             [2] Parenthetically, appellants contend specifically that
partly responsible for the error, because “the obligation dates      Good's testimony and inferentially, the testimony of the
on these instruments (the farm-out agreements) were such that        other employees of Pogo should be considered as that of
he should have taken immediate action to *656 note the files         an interested witness and judged by that standard. Although
with this information. And I'm sure I made him aware of that.”       Pogo is not a party to this suit, it is a party to another suit
                                                                     which will, apparently, determine the effect of the release
Appellants also presented excerpts from deposition testimony         insofar as its interests are concerned. However, because of
of Bruce May taken in the other suit. In that testimony,             the similarity of Pogo's interests to those of appellee, we will
May said that Ms. Gresham had told him he was partially              consider the testimony of its employees in this case as that of
responsible for the execution of the release and that Cathy          interested witnesses. See Martin v. Cloth World of Texas, Inc.,
Zella was also responsible because she prepared the release.         692 S.W.2d 134, 135–36 (Tex.App.—Dallas 1985, writ ref'd
He said that “HBP” was the code placed in files held by              n.r.e.); Hunsucker v. Omega Industries, 659 S.W.2d 692, 697
production but it had not been placed in the file in question.       (Tex.App.—Dallas 1983, no writ).
That code should have been inserted in files where a lease
had been farmed out and a well spudded. However, May                 In pertinent part, Rule 166a(c) provides that a summary
did not feel responsible because he felt Pogo should not rely        judgment may be based upon the testimony of an
exclusively upon code symbols in the files but should consult        interested witness, “if the evidence is clear, positive and
with the district land office to determine lease activity.           direct, otherwise credible and free from contradictions and
                                                                     inconsistencies, and could have been readily controverted.”
In their response, appellants also referred to portions of
deposition testimony of Good taken in the suit to which Pogo         Prior to an amendment effective January 1, 1978, the rule
was a party. In those portions, Good said he was the only            governing summary judgments did not expressly authorize
person who signed releases for Pogo. When a release was put          consideration of the testimonial evidence of an interested
on his desk, he did not make an independent investigation            witness. However, the Supreme Court's construction of
to determine if it should be executed since he had given that        the rule had authorized use of the interested witness'
responsibility to the manager of land administration. When           evidence, under certain conditions. Gibbs v. General Motors
he received releases to be executed, they were accompanied           Corporation, 450 S.W.2d 827 (Tex.1970); Great American
by a memorandum that “basically explains to me that the              R. Ins. Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d 41, 47
lease has expired and that it's an order to execute the release.”    (Tex.1965).
Whenever Good received such a memorandum, he assumed
that whatever steps that needed to have been taken to verify          [3] In the Great American case, the Court set out the
the correctness of the release had been taken. At the time in        conditions authorizing consideration of, and decision upon,
question, that verification would have been the responsibility       the testimony of an interested witness. Those conditions
of Sherri Mills, Cathy Zella, or Bruce May. He also stated that      require that such evidence be uncontradicted, clear, direct and
when he signed the release, he intended to do so.                    positive, free of circumstances tending to discredit *657 or
                                                                     impeach, and readily controverted. Great American R. Ins.
In asserting the evidence is insufficient to support summary         Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d at 47. The
judgment, appellants place particular reliance upon Good's           Court also commented that such testimony was especially
testimony. They argue that the testimony indicates that              entitled to reliance where the opposite party had the means
Good's execution of the release was an intentional act, not          and opportunity of disproving the testimony but did not do
a mistake for which relief might lie. In support of that             so. Id.
position, they especially point out, and rely upon, testimony
that no one tricked Good into signing the release and when            [4] Parenthetically, it was also established as a general rule
he signed it, he intended to surrender Pogo's interest in the        that the testimony of an interested party as to what that witness
lease. In the alternative, they posit that, even viewed in a light   knew or intended to do or as to the witness' state of mind does
most favorable to appellee, Good's testimony creates a fact          no more than raise an issue of fact and would not support



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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


summary judgment. The rationale for that qualification is           [5] That question is one involving matters susceptible of
obvious, i.e., the mental workings of an individual's mind         objective proof or disproof, such, among others, as whether a
are matters about which adversaries have no knowledge or           release was properly due under the lease, whether the typing
ready means of confirming or controverting. See Lewisville         and forwarding of the release for signature, if a release was
State Bank v. Blanton, 525 S.W.2d 696 (Tex.1975); James T.         not properly due, was the result of a breakdown in standard
Taylor, Etc. v. Arlington Ind. School Dist., 160 Tex. 617, 335     operating procedures, and if so, what was the defect in those
S.W.2d 371, 376 (1960); Northrup v. O'Brien, 474 S.W.2d            procedures that caused the forwarding of the release for
614, 618 (Tex.Civ.App.—Dallas 1971, no writ).                      execution.

Those conditions and qualifications are the tests which Texas      It is true that the only testimony bearing upon these matters
courts have traditionally applied to an interested witness'        comes from employees of Pogo. However, that testimony
testimony in determining whether a fact is established or          is clear, direct, and positive. It is uncontroverted and there
negated as a matter of law, whether in summary judgment            are no circumstances in evidence tending to discredit or
proceedings or in jury or non-jury trials. Great American R.       impeach their testimony. In sum, these proofs, in the words
Ins. Co. v. San Antonio Pl. Sup. Co., supra; Valley Stockyards     of the Court in the seminal case of Channel 4, KGBT v.
Co. v. Kinsel, 369 S.W.2d 19, 20 (Tex.1963); James T.              Briggs, 759 S.W.2d 939, 942 (Tex.1988) when it upheld the
Taylor, Etc., v. Arlington Ind. School Dist., 335 S.W.2d at        sufficiency of similar summary proof, “go far beyond state of
376; Owen Development Company v. Calvert, 157 Tex. 212,            mind to establish an objective explanation for the mistake.”
302 S.W.2d 640, 642 (1957); McGuire v. City of Dallas, 141         See also Republic Nat. Leasing Corp. v. Schindler, 717
Tex. 170, 170 S.W.2d 722, 728 (1943); Simonds v. Stanolind         S.W.2d 606, 607 (Tex.1986); *658 Americana Motel, Inc.
Oil & Gas Co., 134 Tex. 332, 136 S.W.2d 207, 208 (1940).           v. Johnson, 610 S.W.2d 143 (Tex.1980); Great American R.
                                                                   Ins. Co. v. San Antonio Pl. Sup. Co., supra; American Quality
The present rule formally recognizes the admissibility of the      Roofing, Inc. v. Ipock, 730 S.W.2d 470, 472 (Tex.App.—
testimony of an interested witness and carries forward the         Fort Worth 1987, no writ); Amara v. Lain, 725 S.W.2d 734,
same qualifications and conditions previously explicated by        736 (Tex.App.—Fort Worth 1986, no writ); Metro Siding
court decisions. See Lofton v. Texas Brine Corp., 777 S.W.2d       Distributors v. Master Shield, Inc., 717 S.W.2d 455, 457
384, 386 (Tex.1989); Beaumont Enterprise & Journal v.              (Tex.App.—Fort Worth 1986, writ ref'd n.r.e.); Duncan v.
Smith, 687 S.W.2d 729, 730 (Tex.1985); Allied Chemical             Horning, 587 S.W.2d 471, 474 (Tex.Civ.App.—Dallas 1979,
Corp. v. DeHaven, 752 S.W.2d 155, 157–58 (Tex.App.—                no writ); Longoria v. Texaco, Inc., 649 S.W.2d 332, 335–36
Houston [14th Dist.] 1988, writ denied).                           (Tex.App.—Corpus Christi 1983, no writ).

The decision of the sufficiency of the testimony of interested     In support of their proposition that the evidence was
witnesses to support a summary judgment, of necessity, must        insufficient to establish mistake as a matter of law, appellants
be decided on a case-by-case basis bearing in mind the             place considerable reliance upon Ladd Petroleum Corp. v.
requirement of the rule and the teachings of the above cases.      Eagle Oil & Gas Co., 695 S.W.2d 99 (Tex.App.—Fort Worth
In this case, appellants assert and appellee does not challenge,   1985, writ ref'd n.r.e.). In that case, as relevant here, the court
that Good understood he was executing a release at the time        was considering a contention that the testimony of Ladd's
he signed it. Thus, the question of his intent or mental process   witnesses, in a jury trial, was sufficient to establish as a matter
in actually executing the instrument is not in issue here.         of law that the release of the oil and gas lease involved there
                                                                   was filed by mistake. In that respect, admittedly in dictum,
What is in issue, in the words of appellee's motion, is whether:   the court said the jury in the case was entitled to weigh the
                                                                   testimony of the witness and made the blanket statement that
  E. Subsequent to the execution of the farmout agreement          “[t]he testimony of an interested witness does no more than
  from Pogo to E.T.S., and while ETS was in the process            raise a fact issue.” Id. at 107.
  of drilling a test well on Section 4, an employee of Pogo
  mistakenly and inadvertently prepared, executed and sent         That general statement, as applied in a summary judgment
  for filing a document entitled “Release of Oil and Gas           proceeding is not only in derogation of the express provision
  Leases”....                                                      of Rule 166a(c) set out above, but is also in derogation of the
                                                                   well established law prior to the inclusion of the provision in



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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


Rule 166a. As such, the case cannot be considered as authority       release and to show that the mistake would have been made
on that point. Parenthetically, the Ladd case is the only Texas      regardless of the exercise of ordinary care.
case cited by either party which, even peripherally, deals with
a release of an oil and gas lease because of a unilateral mistake     *659 We do not think the elements set out in the Roland
and that case is not sufficiently analogous to be helpful in our     case, particularly the one requiring a showing that the mistake
decision.                                                            would have occurred regardless of the exercise of ordinary
                                                                     care, are applicable here. Indeed, in James T. Taylor, Etc. v.
The summary judgment evidence was sufficient to establish            Arlington Ind. School Dist., supra, the Court had occasion
that Good's admitted execution of the release was the result         to discuss at some length the effect of negligence on the
of a mistake. Having made that determination, we must next           part of one claiming equitable relief for his own mistake.
consider the viability of appellants' invocation of what they        After surveying relevant contract cases, the Court concluded,
denominate as the rule of “remedial mistake.” Concomitantly          “We think the authorities, both from this state and from
with that invocation, appellants argue even if the release was       other jurisdictions, clearly indicate that in cases of this kind
executed by unilateral mistake, appellee is not entitled to          (contract cases) ordinary negligence will not necessarily bar
relief because it has not satisfied the requirements of that rule.   the granting of equitable relief.” James T. Taylor, Etc. v.
                                                                     Arlington Ind. School Dist., 335 S.W.2d at 375.
In support of their position that appellee is not entitled to
relief, appellants place primary reliance upon the case of           In additional explication the Court stated that it is only when
Roland v. McCullough, 561 S.W.2d 207 (Tex.Civ.App.—                  negligence amounts to such carelessness or lack of good
San Antonio 1977, writ ref'd n.r.e.). In that case, Roland           faith as to amount to a violation of a positive duty will
had purchased a 200–acre tract from McCullough. The                  equitable relief be denied the supplicating party. Id. En route
appeal arose from a summary judgment granting McCullough             to that conclusion, the Court quoted with approval a statement
recovery on two promissory notes as well as foreclosure of a         from Edwards v. Trinity & B.V. Ry. Co., 54 Tex.Civ.App.
deed of trust on the 200–acre tract.                                 334, 118 S.W. 572 (1909, writ ref'd), that “[e]ven a clearly
                                                                     established negligence may not of itself be a sufficient ground
The land purchased by Roland apparently had no access to             for refusing relief, if it appears that the other party has not
an interstate highway (IH 10) close by. Roland contended             been prejudiced thereby.” Id. The Court also commented that
that although McCullough did not tell him there was access           the elements to show entitlement to relief were generally fact
to IH 10, he did not tell him there was no such access.              questions unless they “can be resolved by the court under the
He also contended that McCullough furnished him with a               undisputed evidence.” Id. 335 S.W.2d at 376. Although the
map of the land from which it could be reasonably inferred           Taylor decision resulted from a suit involving a construction
access existed; and, at the time Roland originally inspected         contract, its teachings are also applicable to a case such as
the property, while IH 10 was under construction, he entered         this one.
the property from IH 10.
                                                                     A study of Roland, in which all of the elements set out in
 [6] Relevant to this case, the court held that Roland was not       that case have been strictly applied, as well as other similar
entitled to equitable relief on the ground of unilateral mistake.    cases, reveals that these are instances arising out of contracts
To be entitled to such relief, said the court, a party must show:    based upon an offer and acceptance, a negotiation, mutuality
(1) the mistake is of so great consequence that to enforce the       of consideration, and performance. Once a bargain has been
contract as made would be unconscionable; (2) the mistake            reached in those instances, it would clearly be inequitable
relates to a material feature of the contract; (3) the mistake       to allow one party relief on the basis of a unilateral mistake
must have been made regardless of the exercise of ordinary           without the necessity of pleading and proving each of the
care; and (4) the parties can be placed in status quo in the         enumerated elements. This cause, of course, does not arise
equity sense, i.e., rescission must not result in prejudice to the   from a suit in which a party is suing another party seeking
other party except for the loss of his bargain. Id. at 213.          relief from such a negotiated contract.

In assuming the applicability of this doctrine to the instant        In this instance, we think the proper rule to apply is that
case, appellants argue the summary judgment evidence is              stated in Armbruster v. Thetis Energy Corp., 675 P.2d 476
insufficient to show the unconscionability of enforcing the          (Okl.App.1983). In that case, a lessee sought cancellation of a



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Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


release of an oil and gas lease executed by the lessee under the
mistaken belief that the lease had expired. In such a situation,
                                                                    POFF, Justice, dissenting.
the court held the lessee was entitled to cancellation of the
                                                                    I respectfully dissent from the affirmance of the granting of
release unless (1) the cancellation would offend the rights of
                                                                    the summary judgment. I cannot agree with the majority's
an innocent purchaser for value or (2) another party in good
                                                                    determination that the evidence offered by the employees of
faith and in innocent reliance, i.e., reliance without notice or
                                                                    Pogo was readily controvertible. I do agree that the Pogo
knowledge of facts which would suggest the probability of
                                                                    employees are interested witnesses, for Pogo, as the owner
an invalid release, had made a position alteration that could
                                                                    of an overriding royalty in the Meadows lease, has a direct
not be reversed without significant prejudice. Id. at 478. See
                                                                    interest in the outcome of this suit. If the contested release is
also Mobil Oil Corp. v. Flag–Redfern Oil Co., 522 P.2d 651
                                                                    held to be a valid release, Pogo will lose its overriding royalty
(Okl.App.1973).
                                                                    interest.

 [7] In our case, appellants admit they did not learn of the
                                                                    I also agree with the majority that the question to be resolved
existence of the release until sometime during the summer of
                                                                    is not the knowledge or intent of Mr. Good, the signator of
1985, which would be after Pogo filed the “Revocation and
                                                                    the release, but rather the question to be resolved is “did an
Rescission of Oil and Gas Leases.” In deposition testimony,
                                                                    employer of Pogo mistakenly and inadvertently prepare the
appellant Hayes said he could not recall if he relied on the
                                                                    release for Good's signature.” I disagree that the question is
release; however, he did not try to lease, sell, or develop
                                                                    susceptible of objective proof or disproof.
his interest. When asked if he had suffered any detriment by
the release, he answered, “I would have to think about that.”
                                                                    In explaining the basis for preparing the release, Pogo's
Appellant Meadows said he did not rely on the release, or
                                                                    employees stated in their depositions that the Meadows lease
lease or develop his interest. Appellant Sparks said he did not
                                                                    file did not contain the Pogo assignment to E.T.S. Enterprises,
“tout” his mineral interest to third parties to lease, was not
                                                                    nor did the file contain any information concerning the
contacted by third parties to lease, and did not attempt to drill
                                                                    commencement of drilling on the Meadows lease. The sum
on the acreage himself. Appellant Susan Krehbiel's interest
                                                                    of Pogo's evidence was that the Meadows lease file indicated
was not conveyed to her by appellant Hayes until September
                                                                    a dormant lease, which was subject to being released. Pogo's
11, 1986. The summary judgment evidence is sufficient to
                                                                    employees also deposed that the failure to file an assignment,
show that appellants made no detrimental position change in
                                                                    and the failure to note in a lease file drilling activity or
innocent reliance upon the Pogo release.
                                                                    production was a departure from Pogo's standard operating
                                                                    procedure.
In Mobil Oil Corp. v. Flag–Redfern Oil Co., 522 P.2d at 656,
the court ruminated, *660 “In the instant case, a mistake
                                                                    The majority opines that, whether the release was properly
of fact has occurred, which was simple human error. The
                                                                    due, whether the preparation of the release was the result
principle of equity can allow this to be rectified, as the
                                                                    of a breakdown in standard operating procedures and what
defendant Flag–Redfern Oil Co. was not damaged by such
                                                                    defect in those procedures caused the release to be signed, are
mistake and would receive a great advantage if the results
                                                                    matters susceptible of objective proof or disproof. I do not
were otherwise.” That summation is applicable to this case,
                                                                    agree, for I fail to see how Hayes et al. could have objectively
particularly since the negligence, if any, in preparing and
                                                                    disproved what knowledge Pogo's employees possessed at
executing the release was that of a third party and not that of
                                                                    the time of the preparation of the release, nor do I envision
appellee.
                                                                    any manner in which Hayes could recreate the status of the
                                                                    Meadows lease file as it existed at the time in question.
Since we have held that appellee is entitled to its judgment
                                                                    The basis for the preparation of the release and the facts
on the basis discussed above, and since one of its theories
                                                                    upon which these actions were taken lies solely within the
supports the judgment, the necessity of discussing appellee's
                                                                    knowledge of the actors, the interested witnesses. The truth or
limitation theory is obviated. Appellants' point of error is
                                                                    falsity of E.T.S. Inc.'s evidence stands solely on the credibility
overruled and the trial court judgment is affirmed.
                                                                    of the interested witnesses. An affidavit by an interested
                                                                    witness to a matter which the adversaries have no knowledge
                                                                    or real means of confirmation does no more than raise an issue
POFF, J., dissents.


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                7
Hayes v. E.T.S. Enterprises, Inc., 809 S.W.2d 652 (1991)


                                                                     been completely erased) was such that it could have been
of fact. Lewisville State Bank v. Blanton, 525 S.W.2d 696,
                                                                     disputed by third parties testifying on Briggs' behalf.
(Tex.1975).

                                                                     I do not find the actions of Pogo's employees in allegedly
Not being present at Pogo's office at the time of the
                                                                     failing to file or note the E.T.S. assignment, to be a technical
preparation of the release and not having access to what
                                                                     mistake subject to investigation, or possible disproof by
facts and knowledge was possessed by Pogo's employees
                                                                     extraneous sources. I find the mistake and the explanation to
when they prepared the release, Hayes had no basis upon
                                                                     be more similar to the mistake made in James T. Taylor, Etc.
which to dispute their story. The only eyewitnesses are Pogo
                                                                     v. Arlington Ind. School Dist., 160 Tex. 617, 335 S.W.2d 371
employees. All physical or documentary evidence was under
                                                                     (1960); wherein a contractor attempted to explain that his bid
the exclusive control of Pogo. In this case, I can envision
                                                                     was incorrect, due to his failure to properly carry a digit while
no outside or independent source Hayes could have mustered
                                                                     adding his cost and preparing his bid. Taylor's employee's
to controvert Pogo's explanation for the preparation of the
                                                                     affidavit setting out the mistake was held not to be sufficient
release. The facts presented by Pogo's employees were not
                                                                     summary judgment proof. The court opined the affidavit was
subject to outside objective verification nor was there a
                                                                     evidence from an interested party which could not be readily
basis upon which to offer opinion or expert testimony. I
                                                                     controverted if untrue. In such cases, the credibility of the
envision Hayes' only option to have been the filing of a
                                                                     witness is presented and a summary judgment is improper.
counter affidavit disputing E.T.S. *661 Inc.'s evidence.
                                                                     Evidence resting solely on the credibility of the interested
Such a counter affidavit would have at best been based on
                                                                     witness is more effectively tested in court at trial than by
assumptions and conjecture and at worst it would have been
                                                                     sterile affidavits at a summary judgment hearing. The trier
perjurious.
                                                                     of fact is uniquely qualified to observe the demeanor of the
                                                                     witnesses as well as his responses, and to test the credibility
The majority finds E.T.S.'s summary judgment evidence
                                                                     of the witnesses.
similar to that summary judgment proof offered in Channel 4,
KGBT v. Briggs, 759 S.W.2d 939 (Tex.1988), and concludes
                                                                     I therefore cannot agree that the evidence offered by the
that the evidence goes far beyond state of mind to establish
                                                                     interested witnesses was sufficient evidence upon which to
an objective explanation for the mistake. In Briggs, which
                                                                     grant the summary judgment. I therefore cannot join in the
was a libel suit, the Supreme Court found the technical
                                                                     majority opinion.
procedures for the production of the telecast (such procedures
being claimed by Channel 4 to be the basis for the technical
mistake) to be subject to investigation. The technical process
                                                                     All Citations
(by which Channel 4 alleged the news special was dubbed
over a political file tape from which Briggs' image had not          809 S.W.2d 652


Footnotes
1      Unless otherwise specified, future reference to rule numbers are to those rules contained in the Texas Rules of Civil
       Procedure.


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 8
Henry S. Miller Co. v. Stephens, 587 S.W.2d 491 (1979)


                                                                          Where contract for sale of real estate did not
                                                                          contain any provision obligating the purchaser
                     587 S.W.2d 491
                                                                          to satisfy the vendor's creditors or otherwise
         Court of Civil Appeals of Texas, Dallas.
                                                                          prevent the vendor's loss of title, vendor was not
          HENRY S. MILLER CO., Appellant,                                 relieved of requirement that he hold title at time
                         v.                                               of trial of his specific performance action.
           Walter H. STEPHENS, Appellee.
                                                                          2 Cases that cite this headnote
            No. 19951. | Aug. 14, 1979.
          | Rehearing Denied Sept. 19, 1979.

Vendor brought suit for specific performance of a real estate    Attorneys and Law Firms
contract of sale. The 101st District Court, Dallas County, E.
H. Griffin, J., granted specific performance and purchaser        *491 Harold Hoffman, Donald C. McCleary, Wynne &
appealed. The Court of Civil Appeals, Akin, J., held that        Jaffe, Dallas, for appellant.
as contract did not contain any provision obligating the
                                                                 Bill C. Hunter, Hunter, Stewart, Salzberger & Vineyard,
purchaser to satisfy vendor's creditors or otherwise prevent
                                                                 Dallas, for appellee.
the vendor's loss of title, vendor was not relieved of the
requirement that he hold title at the time of the trial of his   Before AKIN, ROBERTSON and HUMPHREYS, JJ.
specific performance action; thus, the trial court's judgment
for specific performance was erroneous.                          Opinion

                                                                 AKIN, Justice.
Reversed and remanded.
                                                                 This is an appeal by Henry S. Miller Company, the vendee,
                                                                 from a judgment granting specific performance of a real estate
 West Headnotes (3)                                              contract of sale in favor of the vendor, appellee Walter H.
                                                                 Stephens. Appellant Henry S. Miller Company contends that
                                                                 the trial court erred in granting specific performance because
 [1]    Specific Performance                                     the vendor did not hold title to the land at the time of trial. We
            Nature and Grounds of Duty of Plaintiff              agree with appellant and reverse the trial court's judgment.
        When a party seeks specific performance, he is
        required at all times to remain ready, willing and       The contract in question was for the sale of approximately
        able to perform his contractual responsibilities         490 acres of land in Travis County, Texas, between Stephens
        according to terms of contract.                          as vendor and Henry S. Miller Company as vendee. *492
                                                                 The contract was executed on September 13, 1973, and the
        3 Cases that cite this headnote                          sale was to close on or before July 1, 1974. Henry S. Miller
                                                                 Company refused to close, however, and appellee Stephens
 [2]    Specific Performance                                     brought suit for specific performance. Appellee held the land
            Sufficiency of Title of Vendor                       for approximately two years after the closing date. Six weeks
                                                                 prior to trial, however, appellee lost title to the land through
        Specific performance will not usually be ordered
                                                                 a foreclosure sale and title was transferred to Travis Lake
        for vendor unless he has legal title to property at
                                                                 Properties, Ltd. Travis Lake Properties was not a party to
        time of trial.
                                                                 this lawsuit. Despite appellee's lack of title and the absence
        1 Cases that cite this headnote                          of Travis Lake Properties as a party to the suit, the trial
                                                                 court granted specific performance of the land sale contract
                                                                 and ordered appellant Henry S. Miller Company to pay the
 [3]    Specific Performance
                                                                 contract purchase price of $1,446,531.00.
            Sufficiency of Title of Vendor




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              1
Henry S. Miller Co. v. Stephens, 587 S.W.2d 491 (1979)


                                                                 different proposition that the vendor will be excused if the
 [1]     [2] When a party seeks specific performance, he is
                                                                 loss of title occurred as a result of a contingency or obligation
required at all times to remain ready, willing and able to
                                                                 assumed directly by the vendee. In Fant v. Howell, supra,
perform his contractual responsibilities according to the terms
                                                                 both parties knew at the time of contract that third parties
of the contract. Kluck v. Leuschner, 70 S.W.2d 768, 769
                                                                 were holding adverse possession to the land. After the vendee
(Tex.Civ.App. Waco 1934, writ ref'd) (Per Alexander, J.).
                                                                 took possession of the land, the third parties' title by adverse
Both parties agree that specific performance will not usually
                                                                 possession ripened. The court held that the vendor was not
be ordered for the vendor unless he has legal title to the
                                                                 precluded from bringing an action for specific performance,
property at the time of trial. E. g., Buhler v. McIntire,
                                                                 despite the loss of title to the land, because the vendee was
365 S.W.2d 237, 239 (Tex.Civ.App. Austin 1963, writ ref'd
                                                                 responsible for the loss of title through adverse possession.
n.r.e.); Clifton v. Charles, 53 Tex.Civ.App. 448, 116 S.W.
                                                                 In Manley v. Holt, supra, the vendee expressly assumed the
120, 122 (1909, writ ref'd). Appellee maintains, however,
                                                                 obligation to pay the vendor's creditors. Foreclosure resulted
that an exception to these rules applies if the vendor loses
                                                                 when the vendee failed to make these payments. The Holt
title after the closing date but prior to trial and the vendor's
                                                                 court also held that the vendor was not precluded from
loss was due to a contingency, known to both parties at the
                                                                 bringing an action for specific performance because the loss
time of contract, which the vendee caused or could have
                                                                 of title was caused by the vendee's failure to carry out his
prevented. In this respect, appellee argues that Henry S.
                                                                 obligations.
Miller Company failed to close the sale and refused to make
a cash payment to appellees which was due at the closing.
                                                                  [3] The contract before us in this case does not contain
Appellee claims that this payment was designed to provide
                                                                 any provision obligating the vendee to satisfy the vendor's
the funds required to prevent foreclosure and that Miller also
                                                                 creditors or otherwise prevent the vendor's loss of title.
failed to take any other steps to prevent the foreclosure. Thus,
                                                                 Consequently, vendor was not relieved of the requirement
appellee argues that these failures on appellant's part directly
                                                                 that he hold title at the time of the trial of his specific
caused the foreclosure, and therefore appellee falls within the
                                                                 performance action. Since appellee did not hold title, the
exception to the requirement that a vendor seeking specific
                                                                 trial court's judgment for specific performance was error.
performance must hold title at the time of trial. In support of
                                                                 Accordingly, the judgment of the trial court is reversed. In
its position, appellee relies on Fant v. Howell, 410 S.W.2d
                                                                 the interest of justice, we remand rather than render, so that
294 (Tex.Civ.App. Austin 1966, writ dismd.), and Manley
                                                                 plaintiff may plead and prove whatever damages *493 that
v. Holt, 161 S.W.2d 857 (Tex.Civ.App. Amarillo 1942, writ
                                                                 he may have. Morrow v. Shotwell, 477 S.W.2d 538, 542
ref'd w.o.m.).
                                                                 (Tex.1972).
These cases do not support the proposition that a vendor
seeking specific performance will be excused from holding
                                                                    All Citations
title at the time of trial if the vendee Could have prevented
the vendor's loss of title. They stand for the significantly        587 S.W.2d 491

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               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               2
Hudson v. Wakefield, 711 S.W.2d 628 (1986)


                                                                     substantially the same as those involved in the
                                                                     first appeal.
                     711 S.W.2d 628
                 Supreme Court of Texas.                             125 Cases that cite this headnote
         Robert HUDSON, et al., Petitioners,
                      v.                                       [3]   Appeal and Error
       Marion WAKEFIELD, et al., Respondents.                           Scope and Extent of Review
                                                                     Appeal and Error
             No. C–4463. | June 25, 1986.                               Directions in Remittitur
            | Rehearing Denied July 16, 1986.
                                                                     When Supreme Court remands case and limits
Purchaser sought specific performance of contract for sale           subsequent trial to particular issue, trial court
of property. Following judgment in favor of vendors, the             is restricted to determination of that particular
Court of Appeals, 635 S.W.2d 216, affirmed. The Supreme              issue, and, in subsequent appeal, instructions
Court, 645 S.W.2d 427, reversed and remanded. The District           given to trial court in former appeal will be
Court, Freestone County, Bournais, J., entered judgment in           adhered to and enforced.
favor of vendors after allowing trial amendment. The Waco
                                                                     53 Cases that cite this headnote
Court of Appeals, Tenth Supreme Judicial District, affirmed.
The Supreme Court, Gonzalez, J., held that Supreme Court's
reversal of initial summary judgment had not precluded         [4]   Appeal and Error
amendment to assert additional defense.                                  Extent of Review Dependent on Nature of
                                                                     Decision Appealed from
Affirmed.                                                            Appeal and Error
                                                                        Nature or Subject-Matter in General
                                                                     On review of summary judgment, appellate
 West Headnotes (5)                                                  courts are limited in consideration of issues and
                                                                     facts; movant is not required to assert every
                                                                     theory upon which he may recover or defend,
 [1]    Appeal and Error                                             but nonmovants are required, in written answer
            Former Decision as Law of the Case in                    or response to motion, to expressly present to
        General                                                      trial court all issues that would defeat movants'
        Appeal and Error                                             rights to summary judgment, and, failing to do
           As Law of the Case                                        so, nonmovants cannot later assign the issues as
        “Law of the case” doctrine is principle under                error on appeal.
        which questions of law decided on appeal to
                                                                     12 Cases that cite this headnote
        court of last resort will govern case throughout
        its subsequent stages.
                                                               [5]   Appeal and Error
        184 Cases that cite this headnote                               Amendments as to Pleadings and Parties
                                                                     Reversal of summary judgment granted in favor
 [2]    Appeal and Error                                             of vendors on the basis of breach of contract
            Former Decision as Law of the Case in                    by purchasers did not preclude vendors from
        General                                                      making trial amendment on remand in order to
        Doctrine of law of the case only applies to                  assert defense of fraud in the inducement.
        questions of law, to questions of fact, and does
                                                                     28 Cases that cite this headnote
        not necessarily apply when either issues or
        facts presented at successive appeals are not




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       1
Hudson v. Wakefield, 711 S.W.2d 628 (1986)


                                                                     The trial court then rendered judgment non obstante veredicto
Attorneys and Law Firms                                              for the sellers. In an unpublished opinion, the court of appeals
                                                                     affirmed the judgment of the trial court. We affirm the
*629 John W. Berkel, Houston, for petitioners.
                                                                     judgment of the court of appeals.
Keils and Fulcher, W.A. Keils, Jr., Teague, for respondents.
                                                                     The question is whether, under the “law of the case” doctrine,
                                                                     our remand of the cause to the trial court to determine
                                                                     whether “the return of the earnest money check because of
                           OPINION
                                                                     insufficient funds was such a material breach of the contract
GONZALEZ, Justice.                                                   as to warrant sellers' repudiation of the same” precludes
                                                                     sellers' trial amendment and submission of issues on a theory
This case involves the refusal of a bank to honor a check given      of fraudulent inducement which would defeat the existence of
as earnest money under a contract for the sale of land. The          a valid contract. Purchasers argue that when we remanded the
issue presented is whether, under the doctrine of the “law of        case, the existence *630 of a valid contract became the “law
the case,” our “limited remand” of this cause precluded the          of the case;” therefore, the only issue which could be decided
assertion of additional related legal theories or defenses.          on remand was whether the contract breach was material.

Robert Hudson and Andy Wright (Purchasers) sued to enforce
specific performance of a contract for the sale of real
property owned by Marion and Jean Wakefield (Sellers).                                      Law of the Case
In the original proceeding, the trial court granted sellers'
                                                                      [1] The “law of the case” doctrine is defined as that
motion for summary judgment on the grounds that the
                                                                     principle under which questions of law decided on appeal
instrument on which specific performance was sought never
                                                                     to a court of last resort will govern the case throughout
attained the status of a contract because the check for earnest
                                                                     its subsequent stages. Trevino v. Turcotte, 564 S.W.2d 682,
money was returned due to insufficient funds. The court of
                                                                     685 (Tex.1978); Governing Bd. v. Pannill, 659 S.W.2d 670,
appeals affirmed, holding that a condition precedent under the
                                                                     680 (Tex.App.—Beaumont 1983, writ ref'd n.r.e.); Kropp v.
contract was that purchasers fulfill the requirements of the
                                                                     Prather, 526 S.W.2d 283 (Tex.Civ.App.—Tyler 1975, writ
earnest-money provision. 635 S.W.2d 216. We reversed the
                                                                     ref'd n.r.e.). By narrowing the issues in successive stages
judgments of the lower courts and remanded, holding that,
                                                                     of the litigation, the law of the case doctrine is intended to
as a matter of law, the earnest-money provision was only a
                                                                     achieve uniformity of decision as well as judicial economy
covenant. We then remanded the cause to the trial court to
                                                                     and efficiency. Dessommes v. Dessommes, 543 S.W.2d 165,
determine whether “the return of the earnest money check
                                                                     169 (Tex.Civ.App.—Texarkana 1976, writ ref'd n.r.e.). The
because of insufficient funds was such a material breach of
                                                                     doctrine is based on public policy and is aimed at putting
the contract as to warrant sellers' repudiation of same.” 645
                                                                     an end to litigation. See Barrows v. Ezer, 624 S.W.2d 613,
S.W.2d 427, 431 (Tex.1983).
                                                                     617 (Tex.App.—Houston [14th Dist.] 1981, no writ); Elliott
                                                                     v. Moffett, 165 S.W.2d 911 (Tex.Civ.App.—Texarkana 1942,
On remand, the case was fully litigated to a jury. Prior to
                                                                     writ ref'd w.o.m.).
submission of the charge, the trial court allowed sellers to file
a trial amendment which asserted fraud in the inducement.
                                                                      [2] The doctrine of the law of the case only applies to
Purchasers objected to the trial amendment and to the court's
                                                                     questions of law and does not apply to questions of fact.
submission of issues thereon. The record, however, fails to
                                                                     Barrows, 624 S.W.2d at 617; Kropp, 526 S.W.2d at 285.
contain a statement of facts so that we cannot determine if
                                                                     Missouri K. & T. Ry. Co. v. Redus, 55 Tex.Civ.App. 205,
purchasers objected to evidence of fraudulent inducement or
                                                                     118 S.W. 208 (Dallas 1909, writ ref'd). Further, the doctrine
if it was tried by consent. That court also allowed purchasers
                                                                     does not necessarily apply when either the issues or the
to file a trial amendment alleging a new theory dealing with
                                                                     facts presented at successive appeals are not substantially
ratification. The trial court then submitted several issues to the
                                                                     the same as those involved on the first trial. Barrows, 624
jury. Upon motion, the trial court disregarded two of the jury's
                                                                     S.W.2d at 617; Kropp, 526 S.W.2d at 285; Ralph Williams
findings: one, that sellers had ratified the contract; and two,
                                                                     Gulfgate Chrysler Plymouth, Inc. v. State, 466 S.W.2d 639
that there had been no breach of contract by the purchasers.
                                                                     (Tex.Civ.App.—Houston [14th Dist.] 1971, writ ref'd n.r.e.).



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               2
Hudson v. Wakefield, 711 S.W.2d 628 (1986)


Thus, when in the second trial or proceeding, one or both of          Tex. 618, 358 S.W.2d 557, 562 (1962). Thus, the context of a
the parties amend their pleadings, it may be that the issues          summary judgment proceeding is distinguishable from a full
or facts have sufficiently changed so that the law of the             trial on the merits.
case no longer applies. See Rose v. Baker, 143 Tex. 202,
183 S.W.2d 438 (1944); Seydler v. Keuper, 133 S.W.2d 189              The distinction between a summary judgment and a trial on
(Tex.Civ.App.—Austin 1939, writ ref'd); Kropp, 526 S.W.2d             the merits in regard to the law of the case doctrine was made
at 286.                                                               in Pannill, where the court noted:

                                                                                   Also, it is apparent that the record
                                                                                   presented on this third appeal, being
                       Limited Remand                                              an appeal after a full and lengthy trial
                                                                                   on the merits with the jury acting as
 [3] When this court remands a case and limits a subsequent
                                                                                   a finder of facts, differs in a very
trial to a particular issue, the trial court is restricted to a
                                                                                   material sense from the prior limited
determination of that particular issue. Wall v. East Texas
                                                                                   appeal. There is no error in the action
Teachers Credit Union, 549 S.W.2d 232 (Tex.Civ.App.—
                                                                                   of the trial court in declining to follow
Texarkana 1977, writ ref'd); McConnell v. Wall, 67 Tex. 352,
                                                                                   the “law of the case” as pronounced
5 S.W. 681 (1887). Thus, in a subsequent appeal, instructions
                                                                                   by another Court of Civil Appeals on a
given to a trial court in the former appeal will be adhered
                                                                                   vastly different record.
to and enforced. Wall v. Wall, 143 Tex. 418, 186 S.W.2d 57
(1945, opinion adopted); Dessommes, 543 S.W.2d at 169. In             659 S.W.2d at 681. In the case at hand, the trial amendments
interpreting the mandate of an appellate court, however, the          by purchasers and sellers changed both the scope and nature
courts should look not only to the mandate itself, but also to        of the lawsuit.
the opinion of the court. Wells v. Littlefield, 62 Tex. 28 (1884);
Seale v. Click, 556 S.W.2d 95, 96 (Tex.Civ.App.—Eastland              Purchasers argue that our remand language established the
1977, writ ref'd n.r.e.). In this regard, we have observed that       law of the case as to the existence of a valid contract.
“the cases are rare and very exceptional in which this court          Therefore, they contend the trial court erred in allowing
is warranted in limiting the issues of fact, in reversing and         seller's trial amendment and issues asserting fraud in the
remanding a case where the trial has been by jury; and to             inducement. We disagree.
authorize such interpretation, it must clearly appear from the
decision that it was so intended.” Cole v. Estell, 6 S.W. 175,         [5] In this case, sellers moved for summary judgment,
177 (Tex.1887). See Price v. Gulf Atlantic Life Ins., 621             asserting breach of contract by purchasers as a defense.
S.W.2d 185, 187 (Tex.Civ.App.—Texarkana 1981, writ ref'd              In summary judgment proceedings, the movant must
n.r.e.).                                                              conclusively establish the essential elements of his asserted
                                                                      theories of recovery or defense. City of Houston v. Clear
 [4] A critical factor in our determination of this case is that in   Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979).
the first appeal we reviewed a summary judgment. On review            Breach of contract may have been the only theory which
of summary judgments, the appellate courts are limited in             sellers believed they could conclusively establish. In regard
their considerations of issues and facts. In such a proceeding,       to this theory, we held, on a single question of law (condition
the movant is not required to assert every theory upon which          or covenant), that one of the terms of the contract was a
he may recover or defend. 1 Thus, when a case comes *631              covenant; therefore, a fact question existed and summary
up for a trial on the merits, the parties may be different,           judgment was improper. Our holding in the first appeal,
the pleadings may be different, and other causes of action            however, did not preclude sellers from asserting other
may have been consolidated. See Governing Bd. v. Pannill,             defensive theories, including those attacking the validity of
659 S.W.2d 670, 680–81 (Tex.App.—Beaumont 1983, writ                  the contract, at a subsequent trial on the merits. Therefore,
ref'd n.r.e.). Other distinctions may be drawn; for instance, in      in light of the proceeding in which the question first arose,
reviewing the evidence to determine whether there are any             the trial court properly allowed sellers to assert the defense of
fact issues in dispute, the appellate court must review the           fraud in the inducement.
evidence in the light most favorable to the party opposing
the motion for summary judgment. Gaines v. Hamman, 163


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                3
Hudson v. Wakefield, 711 S.W.2d 628 (1986)


                                                                  The judgment of the court of appeals is affirmed.
The court of appeals correctly determined purchaser's
remaining points of error dealing with conflicting jury
findings and the propriety of submitting certain issues on
                                                                  All Citations
fraud.
                                                                  711 S.W.2d 628


Footnotes
1      It is important to note, that non-movants are required, in a written answer or response to motion, to expressly present
       to the trial court all issues that would defeat the movants right to a summary judgment, and failing to do so, they cannot
       later assign them as error on appeal. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 679 (Tex.1979).


End of Document                                               © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             4
Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)


                                                                          additional terms as inducement for optionee to
                                                                          exercise option did not terminate option.
                      428 S.W.2d 92
                  Supreme Court of Texas.                                 5 Cases that cite this headnote
                HUMBLE OIL & REFINING
               COMPANY et al., Petitioners,                       [3]     Specific Performance
                          v.                                                  Options
                WESTSIDE INVESTMENT                                       Where optionee, prior to expiration of option,
               CORPORATION, Respondent.                                   communicated its unconditional exercise of
                                                                          option to optionor, it was entitled to specific
               No. B—572. | May, 1, 1968.                                 performance of option and contract for sale even
           |    Rehearing Denied May 1, 1968.                             though it had previously advised optionor of
                                                                          additional terms which it claimed optionor had
Action for specific performance of real estate contract. The              agreed to as inducements to optionee exercising
37th District Court, Bexar County, Eugene C. Williams,                    options.
J., granted defendant's motion for summary judgment and
plaintiff appealed. The San Antonio Court of Civil Appeals                1 Cases that cite this headnote
of the Fourth Supreme Judicial District, 419 S.W.2d 448,
affirmed and error was brought. The Supreme Court,
                                                                  [4]     Judgment
Smith, J., held that where optionee, prior to expiration of
                                                                              Brokers or agents, cases involving
option, communicated its unconditional exercise of option to
optionor, it was entitled to specific performance, even though            Where option contract provided that landowner
it had previously advised optionor of additional inducements              was to pay all brokerage fees and designated
to its exercise of the option.                                            certain realty company which was not party to
                                                                          litigation as broker, claim of employee of realty
Specific performance action severed and judgments of trial                company that he was procuring cause of sale and
court and Court of Civil Appeals reversed and judgment                    entitled to 60% of commission created issues of
rendered; judgments of trial court and Court of Civil                     fact precluding grant of summary judgment.
Appeals in agent's action for commission reversed and cause
                                                                          1 Cases that cite this headnote
remanded.



 West Headnotes (4)                                              Attorneys and Law Firms

                                                                 *92 Frank L. Heard, Jr., Houston, Lagerquist, Shaw &
 [1]    Vendor and Purchaser                                     Davis, San Antonio, for petitioners.
            Revocation, rescission, or other termination
        Mere fact that parties may choose to negotiate           Pat Legan Johnson & Christopher, San Antonio, for
        before accepting an option does not mean that            respondent.
        option contract is repudiated.
                                                                 Opinion
        6 Cases that cite this headnote
                                                                 SMITH, Justice.

 [2]    Vendor and Purchaser                                     Petitioner, Humble Oil & Refining Company, 1 filed this
            Revocation, rescission, or other termination         suit on February 10, 1965, against Westside Investment
        Letter which was written by optionee who                 Corporation 2 seeking a judgment commanding specific
        had paid valuable consideration for option and           performance based on a written option and contract for the
        which recited that optionor had agreed to some           sale of real estate. Petitioner, Marvin H. Mann, 3 a realtor, as



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           1
Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)


a third-party plaintiff, filed a plea in intervention, seeking a   Bexar County, Texas, granted in Option and Purchase
judgment for $1260.00 against Westside as brokerage charges        Contract dated April 5, 1963. As additional inducement for
in connection with the transaction. Westside, Humble and           Humble to exercise its option to purchase, you have agreed
Mann each filed a motion for *93 summary judgment. The             that all utilities (gas, water, sewer and electricity) will be
court granted Westside's motion and overruled the motions of       extended to the property prior to the closing of the transaction.
Humble and Mann. The court of civil appeals affirmed. 419          The contract of sale is hereby amended to provide that Seller
S.W.2d 448. We reverse the judgments of the courts below.          shall extend all utility lines to the property before the date of
We hold that Humble is entitled to specific performance of         closing.
the option contract and render judgment for Humble. We hold
that a material issue of fact exists as to whether Mann is         ‘Please sign and return one copy of this letter in the space
entitled to a brokerage commission and remand that portion         indicated below to signify your agreement to the amendment
of the case to the district court for trial.                       to the purchase contract.’

The facts, most of which are either stipulated or established
by affidavits, are these:                                          The May 14th communication provided, in part, as follows:
                                                                   ‘Humble * * * hereby notifies you of its intention to exercise
On April 5, 1963, Westside as seller and Humble as buyer           the option granted in option and purchase contract dated
agreed and entered into a written contract whereby Westside        April 5, 1963, covering Lots 19, 20, 21, 22 and 23, Block
gave and granted to Humble an exclusive and irrevocable            2, Lackland Heights Subdivision in or near the City of San
option to purchase for a consideration of $35,000.00 a tract of    Antonio, Bexar County, Texas. The exercise of said option is
land situated outside of the city limits of San Antonio, Bexar     not qualified and you may disregard the proposed amendment
County, Texas, being all of lots 19, 20, 21, 22 and 23 of Block    to the contract suggested in letter of May 2, 1963. * *
2, Lackland Heights Subdivision.                                   *’ (Emphasis added.)

The option contract was supported by a consideration. The
contract provided that Humble might exercise the option by         We conclude from this record that the parties are in agreement
giving notice at any time prior to 9:00 p.m. on the 4th day        that Humble's letter of May 14, 1963, and the payment of
of June, 1963, and by paying to Westside at the time of such       earnest money within 10 days thereof was in law a timely
notice or within ten (10) days following such notice the sum       exercise of the option to purchase Unless Humble's letter of
of $1750.00 as earnest money. This sum of money, together          May 2, 1963, terminated and rendered unenforceable *94
with the sum of Fifty Dollars ($50.00) as consideration paid at    the option contract. The narrow question to be determined
the time of the execution of the option contract, made a total     is whether or not the letter of May 2, 1963, constitutes a
of $1800.00 paid by Humble, leaving a balance of $33,200.00        rejection of the option contract. If it does, the trial court
yet to be paid as purchase money in accordance with the            properly granted Westside's motion for summary judgment
option contract.                                                   and the court of civil appeals correctly affirmed such
                                                                   judgment.
On May 14, 1963, within the time period provided for in
the option contract, Humble paid the above mentioned sum           Westside contends that Humble's letter of May 2nd was a
of $1750.00 to the designated escrow agent, Commercial             conditional acceptance which amounted in law to a rejection
Abstract & Title Company.                                          of the option contract. Westside argues that the letter of May
                                                                   2nd ‘clearly evidences Humble's intent to accept the offer
Westside admits in its pleadings that it entered into the
                                                                   Only if Westside would agree to an amendment to the terms
option contract with Humble, but contends that the option
                                                                   of its original offer.’ (Emphasis added.) It further argues that
agreement was ‘rejected, repudiated, and terminated by
                                                                   Humble's letter of May 14, 1963, reflects that Humble itself
Humble.’ Westside contends that summary judgment proof of
                                                                   understood that its letter of May 2, 1963, contained a qualified
rejection of the option contract is contained in letters written
                                                                   acceptance, and did not form a contract. The basis for this
by Humble to Westside on May 2, 1963, and May 14, 1963.
                                                                   conclusion is the sentence in the May 14 letter which reads:
The pertinent portion of the May 2nd letter reads:
                                                                   ‘The exercise of said option is not qualified and you may
‘Humble Oil & Refining Company hereby exercises its option
                                                                   disregard the proposed amendment to the contract suggested
to purchase Lots 19, 20, 21, 22 and 23, Block 2, Lackland
Heights Subdivision, in or near the City of San Antonio,


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              2
Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)


in letter dated May 2, 1963, from the undersigned. * * *’ We          nor conduct establish an intention to rescind or abandon the
cannot agree with Westside's contentions.                             rights under the option. * * * At most it was a non-acceptance
 [1] The mere fact that the parties may choose to negotiate           of an offer to enter into a new contract on the same terms
before accepting an option does not mean that the option              except for a reduction in price. * * * Nowhere *95 does it
contract is repudiated. As stated in James on Option Contracts        appear that the lessee waived his rights under the option to
s 838:                                                                purchase.’ Supra at 909.
‘It is laid down in the law of offers that a qualified or
conditional acceptance is a rejection of the offer. It is clearly      [2] [3] We hold that Humble's letter of May 2, 1963, did
established by the decisions that a qualified or conditional          not terminate the option contract. Humble, for a valuable
acceptance of an offer does not raise a contract because the          consideration, purchased the right to keep the option contract
minds of the parties do not meet in agreement upon the same           open for the time specified, and the right to create a contract
terms. It is said that such an acceptance is a counter-proposal       of purchase. Although Humble did have the right to Accept
for a new contract, to give legal life to which requires the          or Reject the option in the sense that it was free to take
assent or acceptance of the other party. It is in this sense that a   the action required to close the transaction, Humble was not
qualified or conditional acceptance is a rejection of the offer       foreclosed from negotiating relative to the contract of sale
first made because the original negotiations are dropped and          as distinguished from the option. The option, considered as
negotiations for a new and different contract begun.                  an independent completed agreement, gave the optionee the
                                                                      right to purchase the property within the time specified. The
‘An option is a contract, the negotiations for the making of          option contract bound Humble to do nothing but granted it the
which are concluded by the execution and delivery of the              right to accept or reject the option in accordance with its terms
option. The minds of the parties have met in agreement,               within the time and in the manner specified in the option.
the distinctive feature of which is that the optionor, for a          Westside was bound to keep the option open and could not act
consideration, binds himself to keep the option open for              in derogation of the terms of the option. By the letter of May
election by the optionee, for and during the time stipulated,         2, 1963, Humble did not surrender or reject the option. The
or implied by law.                                                    option to purchase was still a binding obligation between the
                                                                      parties when Humble exercised it on May 14, 1963. See Best
‘Under an option, the act necessary to raise a binding promise        Building Co. v. Sikes, 394 S.W.2d 57 (Tex.Civ.App.—1965,
to sell, is not, therefore, an acceptance of the offer, but rather    writ ref'd n.r.e.); Harper v. Runner, 85 Neb. 343, 123 N.W.
the performance of the condition of the option contract. If           313 (1909); McCormick v. Stephany, 61 N.J.Eq. 208, 48 A.
this is true, then the rule peculiar to offers to the effect that a   25 (1900); Cerbo v. Carabello, 376 Pa. 571, 103 A.2d 908
conditional acceptance is, in itself, in every case, a rejection      (1954); James on Option Contracts s 838; 8A Thompson on
of the offer, is not applicable to an option contract, supported      Real Property s 4446; 1 Corbin on Contracts s 91; 1A Corbin
by a consideration and fixing a time limit for election.’             on Contracts s 264.


                                                                      Our holding falls within the rule stated in 1 Corbin on
The case of Cerbo v. Carabello, 376 Pa. 571, 103 A.2d 908             Contracts s 91. According to Corbin:
(1954), is to the same effect. It involved an option contract                   ‘If the original offer is an irrevocable
supported by a consideration wherein a lessor granted a lessee                  offer, creating in the offeree a ‘binding
an option to purchase real estate for $11,500.00 during a                       option,’ the rule that a counter offer
stated term. Before the expiration of the term, the lessee                      terminates the power of acceptance does
sought unsuccessfully to obtain a reduction of the proposed                     not apply. Even if it is reasonable
sale price to $11,000.00; however, prior to the expiration                      to hold that it terminates a revocable
date, the lessee exercised the option. The Court, in overruling                 power, it should not be held to terminate
lessor's contention that the negotiations instituted by lessee                  rights and powers created by a contract.
resulted in a termination of the option, said:                                  A ‘binding option’ is such a contract
‘It is true that parties to a written contract may abandon,                     (usually unilateral); and an offer in
modify or change it by words or conduct, Elliott v. Linquist,                   writing, that allows a time for acceptance
356 Pa. 385, 388, 52 A.2d 180, 169 A.L.R. 1369. But the                         (either definite or reasonable) and that is
difficulty with defendants' position is that neither the words


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              3
Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92 (1968)


                                                                 Westside does not deny these facts, the summary judgment
         irrevocable by virtue of a statute, is itself
                                                                 proofs on Mann's claim for commissions do not establish that
         a unilateral contract. A counter offer by
                                                                 he is entitled to a summary judgment. Westside has agreed
         such an offeree, or other negotiation not
                                                                 to pay only 6% Commission of the gross sales price. Since
         resulting in a contract, does not terminate
                                                                 Clarence Jones Realty is not a party to this suit, we cannot
         the power of acceptance.'
                                                                 hold in this Court that an issue of fact does not exist relative
                                                                 to Mann's entitlement to 60% Of the real estate commission.
Westside relies upon such cases as Beaumont v. Prieto,
249 U.S. 554, 39 S.Ct. 383, 63 L.Ed. 770 (1919); State
                                                                 The parties have stipulated that Ray Ellison and Boyce
v. Clevenger, 384 S.W.2d 207 (Tex.Civ.App.—1964, writ
                                                                 Gaskin are the successors in interest to all rights of Westside
ref'd n.r.e.); Liquids Dispatch Line v. Texas Power & Light
                                                                 Investment Corporation and are subject to the duties and
Co., 6 S.W.2d 169 (Tex.Civ.App.—1928, writ ref'd); and
                                                                 obligations of Westside under the contract here involved.
Seeburg v. El Royale Corporation, 54 Cal.App.2d 1, 128 P.2d
                                                                 Therefore, for all of the reasons herein stated, we enter the
362 (1942). These cases are distinguishable in that they are
                                                                 following judgment:
factually different. They either show a mere offer, no stated
term for the option to remain open, or no consideration for      (1) The cause of action between Humble and Westside is
the option.                                                      severed from the cause of action between Mann and Westside.
 [4] On the basis of the undisputed facts herein discussed,      The judgments of the trial court and the court of civil appeals
we hold that Humble's motion for summary judgment praying        as to Westside and Humble are reversed and judgment is here
for specific performance of the contract should have been        rendered that Westside and its successors specifically perform
granted. We turn now to a consideration of Mann's motion         the contract of sale and that Westside and its successors
for summary judgment. The option contract contains a             properly execute and deliver to Humble a general warranty
provision whereby Westside agreed to pay all brokerage fees      deed conveying the land involved to Humble and, further that
in connection with the transaction and to indemnify and save     Westside and its successors deliver to Humble an owner's
Humble harmless against any and all claims for such charges.     policy of insurance for the sum of $35,000.00 as provided
Clarence Jones Realty was designated as the broker and not       in the contract, such delivery to be made contemporaneously
Mann. Westside agreed to pay Clarence Jones Realty a 6%          with the payment of $33,200.00, the balance of the purchase
Commission of the gross sales price when and if the sale         money provided for in the contract of sale.
should be finally completed. Clarence Jones Realty is not
a party to this suit. Mann alleged in his petition and in his    (2) We reverse the judgments of the trial court and the court of
affidavit in support of his motion for summary judgment          civil appeals in favor of Westside against Mann and remand
that he was the procuring cause of the execution of the          the cause of action between Mann and Westside to the district
contract; he was a licensed real estate salesman; he was         court for a new trial.
associated with Clarence Jones Realty and participated in
                                                                 (3) All costs are adjudged against Westside Investment
the negotiations leading to the execution of the option *96
                                                                 Corporation and its successors.
contract between Westside and Humble; he was no longer
associated with Clarence Jones Realty, however, he had, at
                                                                 All Citations
all time an agreement with Jones that he was to receive and
was entitled to ‘60% Of the real estate agent's commission       428 S.W.2d 92
provided for in the contract of April 5, 1963.’ Although


Footnotes
1      Humble Oil & Refining Company, Petitioner, herein referred to as Humble.
2      Westside Investment Corporation, Respondent, herein referred to as Westside.
3      Marvin H. Mann, Petitioner, herein referred to as Mann.


End of Document                                             © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            4
In re Hecht, 213 S.W.3d 547 (2006)


                                                                       Supreme Court performs a de novo review
                                                                       of decision by State Commission on Judicial
                     213 S.W.3d 547
                                                                       Conduct.
                 Special Court of Review
             Appointed by the Supreme Court.                           1 Cases that cite this headnote
             In re Honorable Nathan HECHT,
               Texas Supreme Court Justice.                      [2]   Judges
                                                                           Evidence
             No. A–2006–1.      |   Oct. 20, 2006.                     State Commission on Judicial Conduct has the
                                                                       burden of proof by a preponderance of the
Synopsis
                                                                       evidence, as is applicable to the trial of civil
Background: The State Commission on Judicial Conduct
                                                                       actions generally. V.T.C.A., Government Code
issued public admonition of Supreme Court justice for
                                                                       § 33.034(f).
statements in support of United States Supreme Court
nominee.                                                               2 Cases that cite this headnote


                                                                 [3]   Judges
Holdings: A Special Court of Review appointed by the                       Evidence
Supreme Court, Fitzgerald and Mazzant, JJ., held as a matter
                                                                       State Commission on Judicial Conduct must
of first impression that:
                                                                       prove each element of a charge by a
                                                                       preponderance of the evidence.
[1] Commission failed to prove that justice authorized the
public use of his name endorsing nominee when justice spoke            1 Cases that cite this headnote
to media about nominee;

[2] to violate prohibition against authorizing the public use    [4]   Judges
of name endorsing another candidate for any public office,                 Standards, canons, or codes of conduct, in
the judge must give permission for others to publicly use the          general
judge's name in endorsements of the candidate;                         State Commission on Judicial Conduct failed to
                                                                       prove that Supreme Court justice authorized the
[3] justice's statements about nominee did not amount to               public use of his name endorsing United States
endorsing her;                                                         Supreme Court nominee when justice spoke to
                                                                       media about nominee; justice had no control
[4] canon that prohibited a judge from lending the prestige of         or authority over what the media broadcast or
judicial office to advance the private interests of others did         printed, and Commission presented no evidence
not apply.                                                             that justice authorized the media to use his
                                                                       name publicly endorsing nominee. V.T.C.A.,
                                                                       Government Code Title 2, Subtitle G App. B,
Dismissed.                                                             Code of Jud.Conduct, Canon 5(2).

Ann Crawford McClure, J., concurred in judgment and filed              Cases that cite this headnote
opinion.
                                                                 [5]   Judges
                                                                           Standards, canons, or codes of conduct, in
 West Headnotes (25)                                                   general
                                                                       Canon that prohibits a judge from authorizing the
                                                                       public use of his or her name endorsing another
 [1]    Judges
                                                                       candidate for any public office does not prohibit
            Reference and review
                                                                       a judge from endorsing another candidate;


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         1
In re Hecht, 213 S.W.3d 547 (2006)


        modification of the canon by deleting “endorse”               legislative history, the objective sought, and the
        and inserting “authorize” and the concomitant                 consequences that would flow from alternate
        shift in meaning signaled that the Texas Supreme              constructions.
        Court intended to confine the restriction to a
        prohibition of a judge's authorization of the                 Cases that cite this headnote
        public use of his or her name endorsing a
        candidate. V.T.C.A., Government Code Title 2,          [10]   Statutes
        Subtitle G App. B, Code of Jud.Conduct, Canon                      Grammar, spelling, and punctuation
        5(2).
                                                                      Statutes
        Cases that cite this headnote                                      Context
                                                                      When interpreting a statute, courts read words
                                                                      and phrases in context and construe them
 [6]    Judges
                                                                      according to the rules of grammar and
            Standards, canons, or codes of conduct, in
                                                                      common usage. V.T.C.A., Government Code §
        general
                                                                      311.011(a).
        In discharging judicial responsibilities, a judge
        must be governed by the rule of law, conduct a                Cases that cite this headnote
        fair and impartial hearing, and dispense justice
        as well as equity under the law, according to the
                                                               [11]   Statutes
        particular facts and circumstances presented in
                                                                           Plain Language; Plain, Ordinary, or
        each individual case.
                                                                      Common Meaning
        Cases that cite this headnote                                 Statutory words are given their ordinary
                                                                      meaning.

 [7]    Statutes                                                      Cases that cite this headnote
             Questions of law or fact
        Statutory construction is a question of law for the
                                                               [12]   Statutes
        court.
                                                                           Dictionaries
        Cases that cite this headnote                                 Legal or other well-accepted dictionaries are a
                                                                      method of determining the ordinary meaning of
                                                                      certain words in a statute.
 [8]    Statutes
             Intent                                                   Cases that cite this headnote
        The primary rule in statutory interpretation is that
        a court must give effect to legislative intent.
                                                               [13]   Statutes
        1 Cases that cite this headnote                                    Superfluousness
                                                                      In construing a statute, courts give effect to all its
                                                                      words and, if possible, do not treat any statutory
 [9]    Statutes
                                                                      language as mere surplusage.
             Construction based on multiple factors
        Statutes                                                      Cases that cite this headnote
             Legislative History
        Statutes                                               [14]   Judges
             Construction in View of Effects,                             Standards, canons, or codes of conduct, in
        Consequences, or Results                                      general
        When determining legislative intent, courts look              To violate canon that prohibits a judge from
        to the language of the statute, as well as its                authorizing the public use of his or her name



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             2
In re Hecht, 213 S.W.3d 547 (2006)


        endorsing another candidate for any public                    When the liberty interest is the right to core
        office, the judge must give permission for others             political speech, construction of a statute must be
        to publicly use the judge's name in endorsements              quite strict.
        of the candidate. V.T.C.A., Government Code
        Title 2, Subtitle G App. B, Code of Jud.Conduct,              2 Cases that cite this headnote
        Canon 5(2).
                                                               [19]   Judges
        Cases that cite this headnote
                                                                          Standards, canons, or codes of conduct, in
                                                                      general
 [15]   Statutes                                                      Canon that prohibits a judge from authorizing
             Language                                                 the public use of his or her name endorsing
        Statutes                                                      another candidate for any public office must
             Construction in View of Effects,                         be strictly construed in favor of judge since
        Consequences, or Results                                      it implicates liberty interest of free expression.
        The language and legal effect of a statute may                V.T.C.A., Government Code Title 2, Subtitle G
        require a court to construe it strictly.                      App. B, Code of Jud.Conduct, Canon 5(2).

        Cases that cite this headnote                                 Cases that cite this headnote


 [16]   Statutes                                               [20]   Judges
             Liberal or strict construction                               Standards, canons, or codes of conduct, in
                                                                      general
        To construe a statute strictly means applying
        a limited, narrow, or inflexible reading and                  Endorsing in canon that prohibits a judge from
        application of the statute.                                   authorizing the public use of his or her name
                                                                      endorsing another candidate for any public office
        Cases that cite this headnote                                 meant more than support, that is, more than
                                                                      spoken praise as applied to Supreme Court
                                                                      justice's statements in support of United States
 [17]   Constitutional Law
                                                                      Supreme Court nominee. V.T.C.A., Government
            Certainty and definiteness; vagueness
                                                                      Code Title 2, Subtitle G App. B, Code of
        Constitutional Law
                                                                      Jud.Conduct, Canon 5(2).
            Penalties, fines, and sanctions in general
        Statutes                                                      Cases that cite this headnote
             Liberal or strict construction; rule of lenity
        A strict construction of a statute must be applied     [21]   Judges
        to two classes of statutes: (1) those that authorize              Standards, canons, or codes of conduct, in
        a penalty and (2) those that infringe upon private            general
        property or liberty interests; thus, a statute that           Supreme Court justice's statements that United
        falls within one of these categories must be                  States Supreme Court nominee “would make a
        couched in such explicit terms that the party                 good justice” and had a “sterling character,” and
        upon whom the statute is to operate may, with                 that her nomination was “good” and “solid” did
        reasonable certainty, ascertain what the statute              not amount to endorsing within the meaning of
        requires to be done and when it must be done.                 canon that prohibits a judge from authorizing the
                                                                      public use of his or her name endorsing another
        1 Cases that cite this headnote
                                                                      candidate for any public office; the statements
                                                                      reflected descriptions of nominee's background,
 [18]   Constitutional Law                                            justice's perception of nominee's personal views
            Speech, press, assembly, and petition                     on various subjects, and his favorable opinions



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          3
In re Hecht, 213 S.W.3d 547 (2006)


        about nomination to the bench, they were no
        more than support or praise, and they did not           [24]    Judges
        constitute a request or appeal for others to                        Standards, canons, or codes of conduct, in
        support nomination and were consistent with                     general
        right to respond to misrepresentations. V.T.C.A.,               A “private interest” within the meaning of canon
        Government Code Title 2, Subtitle G App. B,                     that prohibits a judge from lending the prestige
        Code of Jud.Conduct, Canon 5(2).                                of judicial office to advance the private interests
                                                                        of the judge or others is a personal or individual
        Cases that cite this headnote                                   advantage or benefit gained by use of judicial
                                                                        office. V.T.C.A., Government Code Title 2,
 [22]   Judges                                                          Subtitle G App. B, Code of Jud.Conduct, Canon
            Standards, canons, or codes of conduct, in                  2(B).
        general
                                                                        Cases that cite this headnote
        Canon that prohibits a judge from authorizing the
        public use of his or her name endorsing another
        candidate for any public office should permit a         [25]    Judges
        judge to respond to any untruthful or inaccurate                    Standards, canons, or codes of conduct, in
        statements, thereby affording a judge able and                  general
        willing to do so an effective and timely avenue                 Supreme Court justice's public statements in
        of recourse to correct misrepresentations in a                  support of United States Supreme Court nominee
        public forum; a construction of this provision                  were permitted by canons as legitimate responses
        that bars a judge from publicly responding to                   to misrepresentations, expressions of views
        misrepresentations absent express permission to                 on political matters, statements that promoted
        do so leaves a judge vulnerable to potentially                  public confidence in the competence of the
        inaccurate and untruthful attacks without any                   judiciary, and statements which involved the
        effective remedy and deprives the public of                     law, the legal system, and the administration
        correct and accurate background information                     of justice. V.T.C.A., Government Code Title 2,
        on judicial candidates and nominees. V.T.C.A.,                  Subtitle G App. B, Code of Jud.Conduct, Canons
        Government Code Title 2, Subtitle G App. B,                     2, 4, 5(1)(ii), (2),.
        Code of Jud.Conduct, Canon 5(2).
                                                                        Cases that cite this headnote
        Cases that cite this headnote


 [23]   Judges
            Standards, canons, or codes of conduct, in         Attorneys and Law Firms
        general
                                                               *550 Jackson Walker, L.L.P., Charles L. BabCock,
        Canon that prohibited a judge from lending the         Houston, for Petitioner.
        prestige of judicial office to advance the private
        interests of others did not apply to Supreme           Seana Willing, Executive Director, State Com'n on Judicial
        Court justice's support for United States Supreme      Conduct of Austin, TX, Mark Greenwald, San Antonio, for
        Court nominee; life tenure and the power and           The Commission.
        prestige of the office were public interests, rather
        than private interests. V.T.C.A., Government           Before    Justices    FITZGERALD, 1 McCLURE, 2                 and
        Code Title 2, Subtitle G App. B, Code of                            3
                                                               MAZZANT .
        Jud.Conduct, Canon 2(B).

        Cases that cite this headnote
                                                                                         OPINION




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             4
In re Hecht, 213 S.W.3d 547 (2006)


                                                                   endorsing and supporting, terms it used interchangeably,
Opinion by Justices FITZGERALD and MAZZANT.                        and proceeded to devote substantially all of its efforts to
                                                                   determining the penalty to be imposed. This Court performs
                               I.                                  a de novo review. We consider the evidence presented before
                                                                   us (which differs markedly in some respects from evidence
This case focuses on whether the Texas Code of Judicial            presented to the commission), we review Canons 5(2) and
Conduct, the judicial “rules of the road,” so to speak, prohibit   2B, with our starting point being the determination of the
a Texas state judge from speaking out favorably in behalf of       meaning of pivotal terms, such as “authorized,” “endorsing,”
a close friend nominated to the United States Supreme Court.       and “private interests” (rather than assuming certain of these
This case hinges on the meaning of words in this Code and          terms can be used interchangeably), 4 and we decide whether
what words were spoken by the judge. This case involves a          the judge's public statements violated Canons 5(2) and 2B.
composite of two different political systems for the selection
of judges. In Texas, we have an elective process, whereas
in the federal system, we have a nomination-confirmation
process.                                                                                         II.

                                                                   The Preamble to the Texas Code of Judicial Conduct
We recognize at the outset a considerable hurdle must be
                                                                   provides:
overcome: the Texas Code is decidedly deficient in a pivotal
area important in this case, that is, providing definitive           Our legal system is based on the principle that an
meanings to words in the political arena, words such as              independent, fair and competent judiciary will interpret and
“authorized,” “endorsing,” and “private interests.” We are all       apply the laws that govern us. The role of the judiciary is
familiar with certain axioms in particular disciplines, some         central to American concepts of justice and the rule of law.
of which capsulize the core of the undertaking. For example,         Intrinsic to all sections of this Code of Judicial Conduct
in real estate, the appropriate axiom is “location, location,        are the precepts that judges, individually and collectively,
location.” In music, “practice.” In law, “definitions.” The          must respect and honor the judicial office as a public
relevant provisions of the Texas Code, Canons 5(2) and 2B,           trust and strive to enhance and maintain confidence in our
quite candidly, lack definitive meaning.                             legal system. The judge is an arbiter of facts and law for
                                                                     the resolution of disputes and a highly visible symbol of
The political processes offer a unique twist. The state judge        government under the rule of law....
is up for re-election *551 and is in a political campaign.
The state judge speaks of his friend, the nominee, whose             The Code [of Judicial Conduct] is intended ... to state basic
nomination is pending before the Senate Judicial Committee           standards which should govern the conduct of all judges
of the United States Congress. In this federal process, the          and to provide guidance to assist judges in establishing
public expects a thorough examination of the background,             and maintaining high standards of judicial and personal
qualifications, and experience of the nominee in public,             conduct.
and most assuredly, at the Senate committee hearings. The
Senate committee fully intended to call the state judge as         TEX.CODE JUD. CONDUCT, Preamble, reprinted in TEX.
a witness during the confirmation hearings, and the state          GOV'T CODE ANN., tit. 2, subtit. G app. B (Vernon 2005).
judge fully intended to testify to the same statements before      The Preamble reminds us of the high ideals and noble
the committee which are at issue here. No one claims such          principles this Court is called upon to apply. This case
statements would have violated the Texas Code of Judicial          presents substantial issues of first impression. First, we must
Conduct. Had the confirmation proceeded as scheduled and           determine whether public statements of a judge supporting
the state judge testified, it is highly doubtful we would be       a nominee to the United States Supreme Court violate the
considering any of these matters, anonymous complaint or           Texas Code of Judicial Conduct, specifically Canons 2B
not.                                                               and 5(2). If so, we must determine whether the Texas Code
                                                                   abridges the Petitioner's freedom of speech guaranteed by the
 [1] We also recognize the commission's approach and this          First Amendment to the United States Constitution. However,
Court's approach are substantially different. The commission,      because we conclude Petitioner did not violate the Canons,
according to the evidence, assumed the Code prohibited             *552 we do not address the constitutional question. 5



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In re Hecht, 213 S.W.3d 547 (2006)




                                                                                                IV.
                              III.
                                                                   The parties entered into a written “Parties' Stipulations
The events leading to the public admonition revolve around         of Fact” (hereafter “Stipulation”). At the hearing before
President George W. Bush's nomination of Harriet Miers             this Special Court of Review, the commission called one
to the United States Supreme Court in October 2005 and             witness, Petitioner; the remainder of its presentation centered
statements of the Honorable Nathan Hecht, Texas Supreme            around documentary evidence, including news stories, public
Court Justice, (hereafter “Petitioner”) to the news media          admonishments relative to other judges bearing generally
concerning her nomination.                                         on the two Canons at issue, several volumes of committee
                                                                   hearings involving the current Task Force on the Code of
On October 14, the commission voted to initiate an                 Judicial Conduct and its recommendations, several videos,
investigation of Petitioner based on the October 12 complaint      and the Stipulation. The commission presented no expert
and, on its own motion, an article published on October 6          testimony related to whether Petitioner violated the Code or
in The New York Times. On October 17, 2005, the State              whether the Code was constitutional under Republican Party
Commission on Judicial Conduct received a confidential             v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694
complaint about Petitioner based on the October 10                 (2002).
article in the Texas Lawyer newspaper. The commission
informed Petitioner of the investigation and requested that        Petitioner's testimony will be detailed below. In addition,
he answer a questionnaire about the news articles and his          Petitioner presented, without objection by the commission,
actions preceding and during Miers' nomination. Petitioner         the expert testimony of former Chief Justice Tom Phillips
cooperated with the commission and provided detailed               through his affidavit; the testimony of Judge Jim Parsons and
responses to the questions. Petitioner voluntarily appeared        Judge Monica Gonzalez; the expert testimony of Professor
at a hearing before eight 6 members of the commission.             Geoffrey Hazard and Blake Tartt by stipulation; Senator
                                                                   Arlen Specter's oral deposition; official transcripts from
The commission voted 7 and issued its Public Admonition,
                                                                   numerous Senate confirmation hearings *554 of past United
containing its findings of fact and conclusions of law. 8 The      States Supreme Court Justices; and copies of the Codes of
commission determined Petitioner violated *553 Canons              Judicial Conduct from many states.
2B and 5(2) of the Texas Code of Judicial Conduct. See
TEX.CODE JUD. CONDUCT, Canon 2B (“A judge shall                    The evidence shows Petitioner and Miers became close
not lend the prestige of judicial office to advance the private    friends beginning in 1976 when they practiced in the same law
interests of the judge or others....”), & Canon 5(2) (“A judge     firm, Locke Purnell. Petitioner left the firm in 1981 to become
shall not authorize the public use of his or her name endorsing    a district court judge. He subsequently served on the appellate
another candidate for any public office....”). 9                   bench, first on the Fifth District Court of Appeals at Dallas,
                                                                   and then the Texas Supreme Court, his current position. It
Petitioner requested de novo review of the public admonition       is undisputed that Petitioner's record is unblemished. 10 The
rendered by the commission. Texas Supreme Court Chief              Stipulation recites that Petitioner “has never been sanctioned
Justice Wallace Jefferson appointed, by random selection,          by the State Commission on Judicial Conduct.”
this panel to the Special Court of Review to review the
commission's decision. See TEX. GOV'T CODE ANN. §                  Miers became head partner of Locke Purnell, and eventually
33.034(c) (Vernon 2004). This Court subsequently conducted         became White House Counsel to President Bush. She also
an evidentiary hearing. See id. § 33.034(e) (review “is by trial   served as president of the State Bar of Texas and as a
de novo as that term is used in the appeal of cases from justice   member of the Dallas City Council. Petitioner and Miers
to county court”). Following the presentation of evidence and      have remained close friends through the succeeding thirty-
arguments, the commission sought a public admonition, and          five years, including regularly attending the same church and
Petitioner requested dismissal of the sanction imposed on          going to dinners and social occasions together.
him.
                                                                   Besides being a long-time, close friend of Miers, Petitioner
                                                                   was also a friend of White House Deputy Chief of


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In re Hecht, 213 S.W.3d 547 (2006)


Staff, Karl Rove. On October 1, 2005, two days before             2005. 14 These were the only news articles presented at the
Miers' nomination, Rove and Petitioner had a telephone            commission's *557 hearing. Evidence of additional articles
conversation, and Rove told him Miers might be nominated          and interviews were presented before this Court. Rather
to fill *555 retiring Justice Sandra Day O'Connor's place on      than selecting “representative statements” from these sources,
the Supreme Court. Rove asked Petitioner if he would agree        which are often redundant, and quoting them verbatim,
to speak with Dr. James Dobson (the founder of Focus on the       we choose a more succinct method, excerpting from the
Family, a conservative religious organization that emphasizes     commission's brief the primary statements it asserts violate
family values) about Miers' faith. Petitioner agreed to speak     Canons 2B and 5(2):
to Dr. Dobson, and he told Rove he was willing to speak to
the media about Miers as he considered himself one of the
most knowledgeable people, if not the most knowledgeable            For the most part, Petitioner provided reporters and
person, about Miers' personal and professional beliefs and          interviewers with factual information about Miers'
accomplishments.                                                    background and experience, including information about
                                                                    her views on religion and abortion and his own personal
Out of an abundance of caution, Petitioner consulted first          relationship with her. However, beyond the factual
with former Texas Supreme Court Chief Justice Tom                   information, Petitioner repeatedly expressed his opinion
Phillips, considered a legal scholar and knowledgeable and          that the Miers' appointment was “great,” “solid,” “strong,”
experienced with respect to the Code of Judicial Conduct.           and that after the American people had been given a
Petitioner also consulted with former Texas Supreme Court           chance to review her record, they were “going to herald
Justice Priscilla Owen, 11 a friend with similar experience         this nomination as a good one.” When asked about
involving the Code of Judicial Conduct. Both assured                the opposition to Miers' nomination during an interview
Petitioner that the statements in question did not violate the      reported by the Washington Post, Petitioner replied that he
Code.                                                               believed that Miers' detractors were “going to be happy as
                                                                    clams” after they learned more about her. When asked by
Between Miers' nomination on October 3 and the                      another interviewer about the need to prove the President's
announcement of her withdrawal on October 27, Petitioner            “case” in favor of the Miers' nomination, Petitioner agreed
responded to more than 120 requests for media interviews.           that a “case has to be made,” but went on to claim that a
Petitioner appeared on television news programs, and he             “case has been made in Texas for the last 30–plus years.
was quoted or referenced in many newspaper and internet             We think of her as a hero down here already.” Petitioner
news articles. Petitioner's comments included discussions           went on to predict that during the confirmation process,
of his personal relationship with Miers, her professional           Senators would be “convinced that this is the right person
background and accomplishments, her conservative political          for the job.” Tellingly, in one interview with an ABC news
philosophy, her attendance and participation at an evangelical      reporter, Petitioner expressly opined that Miers would be
Christian church, and her pro-life and anti-abortion views. He      a “great justice.”
expressed his opinion in a variety of ways that she would be
                                                                       On a more personal note, Petitioner acknowledged
a “great” Justice of the Supreme Court. Some news articles
                                                                       publicly that he had a close personal relationship
also reported that Petitioner said President Bush had known
                                                                       with Miers, and frequently spoke of his “admiration”
Miers for many years and that conservatives had no need to
                                                                       for Miers, describing her in various interviews as
be concerned that she was an unknown entity. Petitioner was
                                                                       being “remarkable,” “charming,” “gracious,” “solid,”
continuously identified as a close personal friend of Miers and
                                                                       “strong,” “sterling,” and “stellar.”
as a Justice of the Texas Supreme Court.
                                                                  Former Chief Justice Phillips, whose extensive curriculum
                                                                  vitae was admitted, furnished an affidavit in support of
Much of the commission's evidence consisted of media
reports between October 3 and 27. The Texas Lawyer                Petitioner's position. 15
published an article on October 10, 2005 about Petitioner's
and other present and former Texas Supreme Court                   *559 Judge Jim Parsons testified he was a district judge in
                                                                  Palestine and a long time Democrat. He did not believe Canon
Justices' participation in supporting the Miers nomination. 12
                                                                  5(2)'s restrictions on endorsements applied outside partisan
Although *556 Petitioner was never interviewed, 13 The            electoral politics, and he viewed the public statements about
New York Times published an article on October 6,


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In re Hecht, 213 S.W.3d 547 (2006)


Miers' nomination as “an administration of justice issue,”                   have made favorable comments in
particularly at the level involving a nominee to the United                  support of the nominees....
States Supreme Court, not a matter of partisan politics. 16

Senator Arlen Specter, the Chairman of the Senate Judiciary
                                                                                               V.
Committee of the United States Congress, testified by
deposition that the committee would have considered Miers'        [2]    [3] The Texas Constitution and Government Code
nomination to the United States Supreme Court had it not         do not set forth expressly the commission's burden of
been withdrawn. If the Miers nomination had gone forward,        proof. The parties assert and we agree that the commission
his chief counsel would have recommended asking Petitioner       has the burden of proof and that the standard is by a
to testify before the committee and the Senator would have       preponderance of the evidence, as is applicable “to the trial
honored this recommendation. Senator Specter testified that      of civil actions generally.” TEX. GOV'T CODE ANN. §
frequently, judges appear and testify voluntarily in hearings    33.034(f) (Vernon 2004); In re Davis, 82 S.W.3d 140, 142
involving nominees to the United States Supreme Court. The       (Tex.Spec.Ct.Rev.2002); In re Bell, 894 S.W.2d 119, 123
Senator saw no difference between speaking at the committee      (Tex.Spec.Ct.Rev.1995); In re Jimenez, 841 S.W.2d 572, 579
hearing and speaking informally to the press. He also stated     (Tex.Spec.Ct.Rev.1992). Thus, the commission must prove
that had Miers' nomination gone forward, his interest in         each element of a charge by a preponderance of the evidence.
Petitioner's testimony would have been based on Petitioner's
personal and deep knowledge of Miers' background, not his
position as a Texas Supreme Court Justice.
                                                                                              VI.
The parties stipulated that Geoffrey C. Hazard, Jr., Professor    [4] The commission's first charge alleges that Petitioner
of Law at the University of Pennsylvania Law School, would       violated Canon 5(2) when he “authorized the public use of
testify Petitioner's speech                                      his name and title to endorse his close friend, Harriet Miers,
                                                                 a candidate for public office.” The question presented is
   *560 did not violate Canon 2B or 5(2) of the Texas
                                                                 whether the commission proved by a preponderance of the
  Code of Judicial Conduct, and that [Petitioner] had a
                                                                 evidence that Petitioner authorized the public use of his name
  First Amendment right to engage in the speech which is
                                                                 endorsing another candidate, Miers, for public office. We
  subject of the censure by the State Commission on Judicial
                                                                 hold the commission did not.
  Conduct.

  He would further say that judges talk to the media and         Until 1974, there was no Code of Judicial Conduct in Texas.
  public about nominees to the federal bench, and he is not      In 1974, the Texas Supreme Court enacted the initial Code
  aware of any judge who has been sanctioned by a state or       of Judicial Conduct, which contained an “endorsement”
  federal committee or by a court for making comments to         prohibition:
  the press or public about a nominee to the federal bench.
                                                                             A judge or candidate for election
                                                                             to judicial office should not: ... (b)
The commission further stipulated that Blake Tartt would
                                                                             make political speeches for a political
testify:
                                                                             organization or candidate or publicly
            [H]e is a former member of the                                   endorse a candidate for public office.
            Commission on Judicial Conduct, and
                                                                 TEX.CODE JUD. CONDUCT, Canon 7A(1)(b), 37 TEX.
            a former president of the State Bar of
                                                                 B.J. 853 (1974).
            Texas, and he has served on numerous
            ABA committees, which have vetted
                                                                 In 1976, the Texas Supreme Court removed the endorsement
            nominees for the federal bench, and in
            performing those tasks has frequently                prohibition from the Code. 17 In 1980, the Committee on
            sought the comments of judges about                  Judicial Ethics 18 issued an opinion in answer to the question:
            the nominees. Many of these judges                   “May a judge endorse a specific candidate or candidates?”
                                                                  *561 The opinion stated the Code did not “specifically


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In re Hecht, 213 S.W.3d 547 (2006)


prohibit a judge from supporting a candidate or candidates.”      In essence, Petitioner explained that the purpose of inserting
After reviewing the provisions of Canon 2, the opinion            the “authorization” language into Canon 5(2) was to provide
concluded:                                                        “cover” for judges to refuse to authorize endorsements of
                                                                  partisan elected candidates. 21

   The Committee is of the opinion that endorsing a candidate
                                                                  A Task Force has proposed certain amendments to the
   or candidates is within the discretion of a judge provided
                                                                  Code of Judicial Conduct. One proposed amendment to the
   the nature and type of endorsement does not contravene
                                                                  language at issue in Canon 5(2) provides:
   Canon 1, Canon 2A and Canon 2B of the Code of Judicial
   Conduct.                                                                   In order for a judge or judicial
   Comm. on Jud. Ethics, State Bar of Tex., Op. 53A (1980).                   candidate to both appear to be and,
In 1990, the Texas Supreme Court amended Canon 7(3) as                        in fact, be independent of political
follows:                                                                      influence, a judge or judicial candidate
                                                                              shall not endorse another candidate
            A judge or judicial candidate shall
                                                                              for any public office and shall not
            not authorize the public use of his or
                                                                              authorize his or her name to be used
            her name endorsing another candidate
                                                                              in a manner where it *563 reasonably
            for any public office, except that a
                                                                              appears that the judge has endorsed
            candidate may indicate support for a
                                                                              another candidate for public office,
            political party.
                                                                              except that either may indicate support
TEX.CODE JUD. CONDUCT, Canon 7(3), 53 TEX. B.J.                               for a political party. A judge or judicial
                                                                              candidate may attend political events
240–41 (1990) (emphasis added). 19 Today, this provision
                                                                              and express his or her views on
(hereafter, “authorization” provision) is found in Canon 5(2)
                                                                              political matters in accord with this
and provides in pertinent part: “A judge or judicial candidate
                                                                              Canon, Canon 2 and Canon 3B(10).
shall not authorize the public use of his or her name endorsing
another candidate for any public office, except that either       Final Report and Recommendations of the Supreme Court's
may indicate support for a political party.” TEX.CODE JUD.        Task Force on the Code of Judicial Conduct, p. 21
CONDUCT, Canon 5(2). Petitioner, who was on the Texas             (Jan.2005) (emphasis added). However, the Task Force's
Supreme Court in 1990, testified that the “authorization”         recommendation does not contain definitions of “endorse”
provision was generated at the request of the judges. In
                                                                  and “authorize.” 22
response to questions by the commission, Petitioner provided
significant insights about the circumstances leading to the
                                                                  We recognize it is integral to the commission's position
creation of the “authorization” provision: 20                     that the “authorization” provision of Canon 5(2) be read
                                                                  and interpreted to prohibit a judge from “endorsing” or
                                                                  “supporting” another candidate. The commission's first
   *562 The problem, the reason that 5(2) was proposed
                                                                  charge contains no factual allegations Petitioner “authorized”
  in the first place, the judges were concerned that county
                                                                  the public use of his name endorsing Miers' nomination
  officials were muscling them into endorsements that they
                                                                  to the United States Supreme Court. The commission's
  didn't want to make. And they said, look, you've got to
                                                                  evidence focused exclusively on establishing Petitioner had
  endorse me for, let's say a district judge, you have to
                                                                  supported Miers' nomination. The commission urged this
  endorse me for County Commissioner. The district judge
                                                                  Court to hold that as Petitioner was a sitting Justice on the
  didn't want to do it, but he didn't have any way of saying
                                                                  Texas Supreme Court and made public statements to the
  no. If he said no, then he was afraid of what was going
                                                                  news media supporting Miers' nomination, Petitioner was
  to happen to him in the budgeting process. So he wanted
                                                                  guilty of endorsing another candidate, in violation of the
  cover for that. So that's why the judges came to us back in
                                                                  “authorization” provision of Canon 5(2).
  ′88 and said, we're tired of getting hammered on here, and
  we want an excuse that we can hold up and say, we don't
                                                                  The commission primarily relies upon its own Public
  have to do this any more.
                                                                  Statement PS–2000–2. 23 This Public Statement firmly



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In re Hecht, 213 S.W.3d 547 (2006)


espoused a broad view of the term “authorize.” See PUBLIC           impartial hearing, and dispense justice as well as equity under
STATEMENT, No. PS–2000–2 (Comm'n Jud. Conduct Mar.                  the law, according to the particular facts and circumstances
24, 2000). The commission essentially declared “personally          presented in each individual case. 25
publishing an endorsement of another candidate for public
office” was synonymous with “giving permission to or                We therefore undertake to construe and apply the language in
‘authorizing’ the candidate or a third party to use the judge's     dispute in Canon 5(2) consistent with “rules of reason” to the
name in such a public endorsement.” Id. The commission              facts presented. Our analysis should focus upon key language
took the position that no distinction was to be made “between       and its relationship to the entire Code.
acting on one's own behalf and empowering another to act
on one's behalf as [Canon 5(2) ] necessarily encompasses             [7]     [8]      [9]    [10]      [11]    [12]      [13]    Statutory
the broadest definition of the term ‘authorize.’ ” Id. The          construction is a question of law for the court. Johnson
commission cited no legal precedent.                                v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989).
                                                                    The primary rule in statutory interpretation is that a court
 [5]   Thus, according to this Public Statement, the                must give effect to legislative intent. Crown Life Ins.
commission concluded that the “authorization” provision of          Co. v. Casteel, 22 S.W.3d 378, 383 (Tex.2000). When
Canon 5(2) prohibited a judge from “endorsing” another              determining legislative intent, we look to the language of
candidate. Before this Court, the commission took the               the *565 statute, as well as its legislative history, the
additional step *564 of defining “endorse” as “support.” 24         objective sought, and the consequences that would flow
Its pleadings and evidence demonstrate the commission               from alternate constructions. Id. When interpreting a statute,
uses these terms interchangeably and treats them as being           we read words and phrases in context and construe them
synonymous. In effect, the commission has reinserted the            according to the rules of grammar and common usage. TEX.
heretofore rejected “endorsement” prohibition into Canon            GOV'T CODE ANN. § 311.011(a) (Vernon 2005). Words
5(2), thereby recasting the meaning of the “authorization”          are given their ordinary meaning. Fitzgerald v. Advanced
provision. In so doing, the commission has entirely ignored,        Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex.1999).
if not dismissed, the importance of the pivotal term                Legal or other well-accepted dictionaries are a method of
“authorized” in its pleadings, its evidence, and its arguments.     determining the ordinary meaning of certain words. See
                                                                    Pratt–Shaw v. Pilgrim's Pride Corp., 122 S.W.3d 825, 833
The issue before us is the construction of the “authorization”      (Tex.App.-Dallas 2003, pet. denied). In construing a statute,
provision of Canon 5(2), including examining the meaning of         we give effect to all its words and, if possible, do not
“authorize.” In our analysis of this issue, this Court recognizes   treat any statutory language as mere surplusage. Cont'l Cas.
the wisdom and value of the cautionary mandate incorporated         Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393,
within Canon 8A:                                                    402 (Tex.2000). This Court must give effect to the word
                                                                    “authorize” to prevent it from being surplusage. See Meritor
             The Sections are rules of reason,                      Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 89 (Tex.2001).
             which should be applied consistent                     We may not disregard, discount, or dismiss this language and
             with constitutional requirements,                      its impact.
             statutes, other court rules and
             decisional law and in the context of all               If the supreme court had intended by its 1990 amendments
             relevant circumstances.                                to reinstate the 1974 “endorsement” prohibition, it would
                                                                    have done so, but it did not. Instead, it used substantially
TEX.CODE OF JUD. CONDUCT, Canon 8A (emphasis
                                                                    different language by adding the “authorization” provision.
added). This provision also encourages “reasonable and
                                                                    We conclude the Texas Supreme Court intended for the
reasoned application of the text.” Id. Accordingly, we
                                                                    1990 amendment inserting the “authorization” provision
endeavor to construe Canon 5(2) as written, in accordance
                                                                    into the Canon governing political activity to effect a
with the rules of reason.
                                                                    substantial change, not simply a technical refinement,
                                                                    from the “endorsement” prohibition. See Gold v. City of
 [6] We also recognize our judicial system is based upon
                                                                    Coll. Station, 40 S.W.3d 637, 649 (Tex.App.-Houston [1st
the cornerstones of integrity, impartiality, fairness, and
                                                                    Dist.] 2001, pet. granted, judgm't vacated w.r.m. by agr.)
independence. In discharging judicial responsibilities, the
                                                                    (“Moreover, the fact that the legislature enacts an amendment
judge must be governed by the Rule of Law, conduct a fair and


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In re Hecht, 213 S.W.3d 547 (2006)


indicates that it thereby intended to change the original          were at issue. One prohibited “permitting his or her name
act by creating a new right or withdrawing an old one.”).          to be used in connection with any activity of a political
Such a significant modification in terminology (deleting           organization”; the other prohibited “publicly endorsing or
“endorse” and inserting “authorize”) and the concomitant           publicly opposing (other than by running against) another
shift in meaning certainly signals that the Texas Supreme          candidate for public office.” Id. at 1289 n. 2. The New York
Court intended to confine the restriction to a prohibition of      Code clearly distinguished between a judge permitting the
a judge's authorization of the public use of his or her name       use of his name and a judge endorsing another candidate.
endorsing a candidate.                                             The plain language of the New York Code provisions shows
                                                                   that one relates only to the use of the judge's name and the
 [14] In determining what constitutes a judge's authorizing        other to “endorsing.” The former provision, however, does
the public use of his or her name endorsing a candidate for        not encompass the latter. The New York Code's prohibition
any public office, we examine a recent incident involving          relating to the use of a judge's name is similar to the Texas
such conduct. A judge's act of giving a candidate express          Code's “authorization” provision.
permission to include the judge's name on a publicly
distributed list of persons endorsing the candidate would           *567 In 1989, the Committee on Judicial Ethics
violate Canon 5(2). See Public Admonition of Justice of the        recommended to the Texas Supreme Court that the Code
Peace Torres, No. 00–0689–JP (Comm'n Jud. Conduct Aug.             be amended to specifically prohibit a judge or a candidate
16, 2000). Any other fact scenario must be analogous to            for election to judicial office from publicly endorsing a
this situation to constitute a violation of Canon 5(2). That       candidate for public office. As previously noted, in 1990, the
is, the facts must show the judge gave permission for others       Texas Supreme Court amended the Texas Code to add the
to publicly use the judge's name in endorsements of the            “authorization” provision but did not add a prohibition on
candidate.                                                         “endorsing” per se.

Several other states' Code provisions treat the use of a judge's   The recommendation of the recent Task Force proposes
name separately from endorsing or making public statements.        amending Canon 5(2) by prohibiting “authorizing” and
In the Oregon Code of Judicial Conduct, JR 4–101(1) and (3)        “endorsing” as separate acts. The recommendation does not
of Oregon's Code provide, in part, that:                           equate “authorize” and “endorse.” It does not propose to
                                                                   subsume the meaning of “authorize” into the meaning of
             [a] judge shall not knowingly (1) make                “endorse.” It does not eliminate the former in favor of the
             a public statement in support of the                  latter. Instead, it clearly identifies each as a separate act, and
             election or defeat of any candidate for               it prohibits each act. Thus, the recommendation of the recent
             a nonjudicial public office ..., or (3)               Task Force reinforces our interpretation of Canon 5(2).
             lend the judge's name in support of
             an action, by any person or group,                    The Texas Supreme Court defines “authorized” as follows:
             to elect or defeat any candidate for a                “The primary meaning of ‘authorize’ is to empower, or give
             nonjudicial public office.... 26                      a right to act.” Caller Times Publ'g Co. v. Chandler, 134 Tex.
                                                                   1, 7, 130 S.W.2d 853, 856 (1939); see Cox, Inc. v. Humble
OR.CODE JUD. CONDUCT JR 4–101(1), (3). Oregon's                    Oil & Ref. Co., 16 S.W.2d 285, 286 (Tex. Comm'n App.1929,
Code provisions, which apply to *566 candidates for                judgm't adopted) (same). Other courts have defined the
nonjudicial offices, distinguish between public statements         empowerment of authorization as referring to future conduct.
supporting or opposing a candidate and lending the judge's         For example, in Gray v. Gill, 125 Misc. 70, 210 N.Y.S.
name supporting such candidates. The “authorization”               658, 660 (N.Y.Sup.Ct.1925), “authorize” was defined as “to
provision of the Texas Code and the “lending” provision of         permit a thing to be done in the future.” The court contrasted
the Oregon Code address the same conduct, albeit in different      the term with “approve,” which it defined as “to ratify or
words.                                                             confirm a thing already done, or to sanction a thing that may
                                                                   be done in the future....” Id. (emphasis added). Thus, as the
In In re Raab, 100 N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d        Gray court observed, “After the act, one may not authorize
                                                                   it, although he may approve it.” Id. “Authorize,” therefore,
1287 (2003), 27 several sections of the New York Code
                                                                   has an accepted legal meaning. The term “authorize” is
of Judicial Conduct related to prohibited political activity


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             11
In re Hecht, 213 S.W.3d 547 (2006)


also defined to mean “to give legal authority; to empower”         in Canon 5. The Code of Judicial Conduct in its past and
and “to formally approve, to sanction.” BLACK'S LAW                present forms, the Task Force Recommendations, 31 and the
DICTIONARY 143 (8th ed.2004). These legal definitions              relevant statutes fail to define “endorse.” The commission's
of “authorize” essentially require that the authorization be       judicial disciplinary proceedings, the advisory opinions of the
express and refer to conduct or actions to be taken in the         Committee on Judicial Ethics, and the few available decisions
future. The language of giving legal authority, empowering,        of the Texas courts also fail to define “endorse” under Canon
formally approving, requiring, and sanctioning all necessitate     5(2). Absent any definition of the term “endorsing,” we are
affirmative actions on the part of the authorizor. Thus, it is     presented with the task of statutory interpretation.
not sufficient under Canon 5(2) for a judge simply to speak;
the judge must affirmatively “authorize the use of his name,”
                                                                   The commission's brief 32 essentially contends Petitioner's
that is, expressly permitting the use of his name in the future.
                                                                   public statements provided more than “factual information
The commission's interpretation has deviated from the plain
                                                                   about Miers' background and experience.” Specifically,
meaning of the “authorization” provision in Canon 5(2). The
                                                                   the commission stated: “[Petitioner's] praise of Miers'
commission's interpretation does not merely take a broad
                                                                   ‘sterling’ character and his opinion that she would make
view of “authorize,” it eliminates this element entirely.
                                                                   ‘a great justice,’ and his repeated public statements that
                                                                   her nomination was ‘good’ and ‘solid,’ certainly sound like
When the commission called Petitioner as its only witness,
                                                                   approval and support of the President's nomination.” In a
the commission never asked Petitioner if he “authorize[d]
                                                                   footnote, the commission refers us Merriam–Webster OnLine
the public use of his ... name endorsing” Miers' nomination.
                                                                   Dictionary's definition of “endorse”: “[T]o approve openly,
In addition, the commission failed to question Petitioner
                                                                   especially: to express support or approval of publicly and
about this matter at the hearing before the commission.
                                                                   definitely [as in] endors[ing] a mayoral candidate.” The
The commission's questions to Petitioner recognized he
                                                                   commission's ultimate argument is that “endorsement” is
had no control or authority over what the media broadcast
                                                                   equivalent to “support,” and it is undisputed that Petitioner
or printed. 28 In the media interviews, Petitioner could           supported Miers.
anticipate the use of his *568 name as the person being
interviewed, if the media chose to identify him. However,          Petitioner served the commission with an interrogatory
having reviewed Petitioner's statements, we do not find any        asking the commission to explain what constitutes an
evidence that he authorized the media to use his name publicly     “endorsement.” In its response, the commission stated the
endorsing Miers. 29 Any argument that Petitioner impliedly         term was not defined in the Code and should be given
authorized the public use of his name endorsing Miers              its “ordinary and reasonable meaning” as contained in
would be futile and unavailing. 30 We therefore conclude           the American Heritage Dictionary of the *569 English
the commission failed to prove by a preponderance of the           Language, Fourth Edition, 2000, “which defines ‘endorse’ ”
evidence that Petitioner authorized the public use of his name     as: “to give approval of or support to, especially by public
endorsing Miers.                                                   statement; sanction: endorse a political candidate.”

                                                                   With respect to the commission's position equating “support”
                                                                   and “endorse” and its assertion that Canon 5(2) embraces a
                             VII.                                  blanket prohibition of endorsing, we consider two advisory
                                                                   opinion from the Committee on Judicial Ethics. The
While we have rejected the commission's argument that
                                                                   committee's opinion No. 2 contain the following question and
Canon 5(2) prohibits “endorsing,” we conclude that, even
                                                                   answer:
under its construction, the commission failed to prove by a
preponderance of evidence that Petitioner's public statements        QUESTION: May a Texas judge privately introduce
endorsed Miers.                                                      candidates for judicial office to his friends and recommend
                                                                     that such friends vote for such candidates?
Again, the first task is to define the key term. We,
therefore, focus on a definition of “endorsing.” The Code            ANSWER: It is the opinion of the Committee on Judicial
provides no definition. The commission concedes there is             Ethics that a Texas judge would not violate the Code of
no definition or consensus as to the meaning of “endorse”            Judicial Conduct by privately introducing candidates for



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           12
In re Hecht, 213 S.W.3d 547 (2006)


  judicial office to his friends and recommending that such
  friends vote for such candidates.                                Ohio's Canon 7(B)(2)(b) prohibits a judge or judicial
                                                                   candidate from publicly endorsing or opposing a candidate
Comm. on Jud. Ethics, State Bar of Tex., Op. 2 (1975). In its      for another public office. OHIO CODE JUD. CONDUCT,
opinion No. 13, the committee stated,                              Canon 7(B)(2)(b). The Ohio Board of Commissioners
                                                                   referred to a dictionary for broad direction in defining
  QUESTION: May a district judge introduce a candidate
                                                                   the term “endorsing.” The Ohio Board ultimately defined
  for the state Legislature to his personal friends and
                                                                   “endorsement” as: “to give approval of or support to.” Ohio
  recommend that such friends vote for such candidate?
                                                                   Bd. of Comm'rs on Grievances & Discipline, Op. 89–15 (Apr.
  ANSWER: The Committee on Judicial Ethics is of the               10, 1992) (citing WEBSTER'S II NEW RIVERSIDE UNIV.
  opinion that the question should be answered in the              DICTIONARY (1984)).
  affirmative. In Opinion Number 2 this Committee held
  that a Texas judge would not violate the Code of Judicial        The definitions provided by two leading dictionaries,
  Conduct by privately introducing candidates for judicial         however, require more than mere support. Webster's
  office to his friends and recommending that such friends         International Dictionary defines “endorse” as “to express
  vote for such candidates. The Committee now reaffirms            definite approval or acceptance of,” “support or aid
  that opinion and extends its scope so that henceforth it will    explicitly by or as if by a signed statement,” “vouch
  be applicable to all candidates for public office.               for,” and “underwrite.” WEBSTER'S THIRD NEW INT'L
                                                                   DICTIONARY 749 (1981). The Oxford English Dictionary
Comm. on Jud. Ethics, State Bar of Tex., Op. 13 (1976).            defines “endorse” as “[t]o write on the back of something,”
                                                                   “[t]o confirm, sanction, countenance, or vouch for
These ethics opinions are noteworthy for several reasons.          (statements, opinions, acts, etc.; occasionally persons) as by
These opinions do not conclude that “endorsing,” as a matter       an endorsement,” and “[t]o declare one's approval of.” 5
of principle, is evil, corrupt, ill-advised, undignified, or       THE OXFORD ENGLISH DICTIONARY 233 (2d ed.1989).
inherently injudicious. Both opinions hold “endorsing” is          Even the commission's proffered definition of “endorse”
acceptable conduct within certain boundaries. These holdings       from the Merriam–Webster's Online Dictionary indicates
are consistent with, if not as expansive as, the new draft rules   the term involves more than mere support: “to express
of the American Bar Association's joint commission 33 and          support or approval of publicly and definitely <endorse
a significant number of state Codes throughout the country         a mayoral candidate>.” MERRIAM–WEBSTER ONLINE
that expressly permit judges to endorse other candidates in        DICTIONARY, http://www.m-w.com/dictionary/endorse.
certain circumstances 34 or *570 which have no express
                                                                   North Carolina's definition of “endorse”—requiring more
prohibitions. 35                                                   than mere support—is consistent with these definitions. North
                                                                   Carolina's Code of Judicial Conduct, the only Code that
In addition, these ethics opinions contradict the assertion that   we determined actually defined “endorsing,” provides that a
the “authorization” provision of Canon 5(2) constitutes a          judge who is a candidate may endorse a candidate for judicial
blanket prohibition, banning a judge from endorsing another        office. N.C.CODE JUD. CONDUCT, Canon 7B(2). The
candidate. These opinions only limit “endorsing” in scope.         North Carolina Code of Judicial Conduct defines “endorse”
In effect, these opinions approve the practice of “endorsing”      as follows:
by allowing a judge to introduce a candidate to personal
friends *571 and recommend to friends that they vote for             knowingly and expressly request, appeal or announce
                 36                                                  publicly, orally or in writing, whether in person or through
the candidate.
                                                                     the press, radio, television, telephone, Internet, billboard or
The text of Canon 5(2), the lack of any definition of                distribution and circulation of printed materials, that other
the term “endorse,” and the problematic ethical opinions             persons should support a specific individual in his efforts
provide marginal guidance. A survey of the respective Codes          to be elected to public office.
of a majority of states shows that they prohibit either
                                                                   N.C.CODE JUD. CONDUCT, Canon 7A(3) (emphasis
“endorsing” 37 or “endorsing and opposing,” 38 but for the
                                                                   added). 39 North Carolina has recognized *572 “endorsing”
most part these state Codes fail to define “endorse.”
                                                                   as a term of art within the political process.


                   © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         13
In re Hecht, 213 S.W.3d 547 (2006)


                                                                  the Canon must be strictly construed in favor of Petitioner.
Although Eu v. San Francisco County Democratic Central            See Mo., K. & T. Ry. Co., 100 Tex. at 424, 100 S.W. at 767.
Committee, 489 U.S. 214, 109 S.Ct. 1013, 103 L.Ed.2d 271
(1989), is frequently relied upon in First Amendment cases       The commission and the Ohio Board define “endorsing” as
for a number of significant principles, it is important in       meaning “support”; other prominent dictionary definitions
this case because of the basis for its decision, a statutory     and the North Carolina Code of Judicial Conduct define
provision of an election code. The former provision of the       “endorsing” as meaning more than just support. This latter
California Elections Code at issue in Eu v. San Francisco        definition constitutes a “limited, narrow, and inflexible
County Democratic Central Committee, 489 U.S. 214, 109           reading and application” of the term “endorsing” in Canon
S.Ct. 1013, 103 L.Ed.2d 271 (1989), stated in part that the      5(2) of the Code. The former interpretation encompasses
official governing bodies of the political parties “shall not    Petitioner's statements; the latter does not. We do not
endorse, support, or oppose, any candidate for nomination by     propose to construct our own definition of “endorsing.” We
that party for partisan office in the direct primary election.”  do, however, recognize the necessity of first establishing
Id. at 217, 109 S.Ct. 1013 (emphasis added). This election        *573 the meaning of “endorsing” before we can proceed
code clearly distinguished between “endorse” and “support”       to determine whether Petitioner's statements constitute
because the use of both terms would be redundant.                “endorsing.” This step is fundamental, particularly when the
                                                                 only definition specifically mandated by a state Code, that of
 [15] [16] [17] [18] The language and legal effect ofNorth Carolina, which in turn is based upon the American
a statute may require a court to construe it “strictly.” To      Bar Association's Model Code of Judicial Conduct, would not
construe a statute strictly means applying a limited, narrow,    prohibit Petitioner's statements.
or inflexible reading and application of the statute. Cain v.
State, 882 S.W.2d 515, 519 (Tex.App.-Austin 1994, no writ).       [20] Accordingly, we interpret “endorsing” under the
A strict construction of a statute must be applied to two        circumstances of this case to mean more than support, that is,
classes of statutes: those that authorize a penalty and those    more than spoken praise.
that infringe upon private property or liberty interests. Id.
A statute that falls within one of these categories must be      Petitioner testified his public statements, while obviously
couched in such explicit terms that the party upon whom the      supportive, principally dealt with factual background and did
statute is to operate may, with reasonable certainty, ascertain  not urge the public to “get behind” the nominee, particularly
what the statute requires to be done and when it must be done.   because the situation involved a nomination to the federal
Mo., K. & T. Ry. Co. v. State, 100 Tex. 420, 424, 100 S.W.       bench, not a candidate running in a contested election.
766, 767 (1907). If such explicit terms are not present, there
is no opportunity for a person charged with the duty to protect  The federal judicial-selection process focuses only on the
himself by the performance of it according to the law. Id.       individual nominated for the judicial position. The inquiry
When the liberty interest is the right to core political speech, carefully examines the nominee's character, credentials,
that construction must be quite strict.                          qualifications, and experience. The process encourages and
                                                                 invites public comment from prominent members of the
 [19] The commission alleged that Petitioner violated Canon community, including the judiciary. Public statements made
5(2) when he made certain statements in support of Harriet       about the nominee are not intended to give an individual an
Miers, a United States Supreme Court nominee at the              advantage over another because there is only one nominee.
time. Debate on the qualifications of candidates for public      Senator Specter testified that the Senate Judiciary Committee
office is at the core of our electoral process and of First      would have requested Petitioner to appear and testify at
Amendment freedoms. Eu, 489 U.S. at 223, 109 S.Ct. 1013.         hearings on Miers' nomination. Petitioner testified he would
The Supreme Court has recognized repeatedly that debate on       have repeated the same public statements at issue here at such
the qualifications of candidates is integral to the operation    a hearing. 40
of the system of government established by the Constitution.
Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 46 L.Ed.2d 659   Petitioner touched on this aspect again when he testified
(1976) (per curiam). Because the authorization provision of      that “of course you're endorsing in the sense that you're
Canon 5(2) implicates the liberty interest of free expression,   supportive, but that's not what the canon means.” He stated his
                                                                  intent was to get the truth out because much of the information



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In re Hecht, 213 S.W.3d 547 (2006)


being published about Miers was negative and untrue. He             the authorization provision minimizes Canon 5(2)'s provision
declined the commission's invitation to describe his support        empowering a judge to speak on political matters.
as “go, Harriet, go, she is my pick,” instead emphasizing
he predominantly conveyed information *574 about her                Canon 5(1)(ii) prohibits misrepresentations. Petitioner took
personal and professional background, the type of cases             the position that he “was uniquely situated to get the truth
she handled (general business litigation from contracting           out about Harriet [Miers].” He described the times as truly
disputes to antitrust and securities), and the positions she took   “chaotic” and that “the publicity coming out about Harriet
when a Dallas City Council member or State Bar of Texas             Miers [was] negative,” “false,” and “untrue.” He perceived
President. He stressed that he intended to accurately relate her    that “more information” needed to be developed about her
qualifications.                                                     background. His public statements were “truthful” on matters
                                                                    “of enormous concern to the American public.” Petitioner
Petitioner further testified he was present during the              was also “worried” that if he did not speak up, it could
discussions that took place when the Canons were amended            be perceived that he knew something that would hurt her
in 1990: “[T]here was not the slightest thought that it would       nomination, which was false.
ever apply to comments made in respect to a nomination to
the United States Supreme Court. That was not a concern, it          [22] Canon 5(2) should permit a judge to respond to any
never crossed anybody's mind, and it hasn't since until this        untruthful or inaccurate statements, thereby affording a judge
case.” The amendment concerned providing “cover” for the            able and willing to do so an effective and timely avenue
judges under totally different circumstances.                       of recourse to correct misrepresentations in a public forum.
                                                                    Otherwise, this provision provides minimal utility at such a
 [21] The commission highlights statements by Petitioner            critical juncture. A construction of this provision that bars a
that Harriet Miers “would make a good justice,” has a               judge from publicly responding to misrepresentations absent
“sterling character,” and her nomination was “good” and             express permission to do so leaves a judge vulnerable to
“solid.” These and other statements reflect that Petitioner         potentially inaccurate and untruthful attacks without any
provided descriptions of Miers' background, his perception          effective remedy and deprives the public of correct and
of her personal views on various subjects, and his favorable        accurate background information on judicial candidates and
opinions about Miers' nomination to the bench. They do not          nominees. A reasonable construction of this provision affords
constitute “endorsing” in that they are no more than support        an immediate and practical method to counter public attacks
or praise, and they do not constitute a request or appeal for       and criticisms and protects the public's right to truthful and
others to support her nomination.                                   important information, particularly as to a nominee to the
                                                                    United States Supreme Court. In addition, the purposes of the
Our conclusion is reinforced by examining Petitioner's public       Code are promoted and enhanced, not hindered and frustrated.
statements in the context of several relevant provisions            This provision should not censor or silence a judge.
of the Canons. 41 The Preamble and Canon 2 stress the
need for a competent judiciary and maintaining public               The American Bar Association Model Code of
confidence. Petitioner made a number of remarks which               Judicial Conduct and other state Codes make ample
asserted Miers' character, experience, and career reflected the     provision enabling a judicial candidate to respond to
type of competence necessary on the bench. His remarks were         misrepresentations. The ABA Model Code of Judicial
designed to instill public confidence in the Miers nomination.      Conduct includes a comment addressing “false information”
                                                                    stating, “Where false information concerning a judicial
Canons 3B(10), 4B(1), and 5(2) encourage participation by           candidate is made public, a judge or another judicial
judges in the legal system, the administration of justice, and      candidate having knowledge of the facts is not prohibited by
the political process. Petitioner's public *575 statements          Section 5A(1) from making the facts public.” ABA MODEL
concerning Miers' nomination detailed her personal life, her        CODE JUD. CONDUCT, Canon 5A(1), Commentary
positions on various sensitive issues, her professional career,     (2004). This comment or a variation of this comment
her character, and her work ethic. It is undisputed that Canon      has been included in the Codes of Judicial Conduct of
5(2) permits a judge to speak out “on political matters.”           several states including Alaska, Florida, Idaho, Indiana,
Petitioner's statements were within the boundaries of these         Kansas, Kentucky, Mississippi, Nebraska, Nevada, North
Canons. The commission's interpretation and application of          Dakota, South Carolina, South Dakota, and Tennessee. We



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In re Hecht, 213 S.W.3d 547 (2006)


conclude Petitioner's public statements are consistent with        males for DWI. The judge's communications followed a
a judge's right, if not his responsibility, to respond to          telephone conversation in which the policeman criticized the
misrepresentations.                                                judge's dismissal of a suit against an Hispanic male for DWI
                                                                   as a “[expletive deleted] ... decision.” Id. at 573–74. The
We conclude the commission's efforts to postulate judicial         Special Court of Review determined that the judge's actions,
misconduct by showing a state appellate judge made public          including one of the letters and later “media interviews”
statements about a pending nominee to the United States            stemming from the letters and the judge's testimony in a
Supreme Court, in the commission's words, “endorsing,”             lawsuit as to the truthfulness of the policeman, were to
under the particular facts and circumstances of this case,         advance the public interest. Id. at 579. The court reasoned
severely strain a reasonable construction of the Texas Code        that all these communications dealt with the policeman's
and are without merit.                                             “alleged crimes,” not with his “private insulting remarks,”
                                                                   and were, therefore, motivated by public interest. Id. at 580.
We conclude the commission has failed to prove by a                The court considered a “matter of public interest” to be “one
preponderance of the evidence that Petitioner endorsed Miers.      that affected his [i.e., the policeman's] performance of duty.”
We conclude under the particular circumstances *576                Id. at 580. In considering a second letter in which the judge
presented that Petitioner complied with the spirit and letter      did not mention possible crimes and public misconduct but
of the Texas Code of Judicial Conduct. Accordingly, we             instead referred to the judge taking “particular offense” to the
conclude Petitioner is not guilty of violating Canon 5(2).         comment, the court concluded the letter was not written to
                                                                   retaliate. Id. at 581. Instead, the court concluded that, even
                                                                   if the judge had a “personal motive of retaliation,” it was
                                                                   not convinced by a preponderance of the evidence that his
                             VIII.
                                                                   personal motive “exceeded the public motive of disciplining
 [23] The commission's second charge alleges: “[Petitioner]        a police officer reasonably suspected of major crimes and
lent the prestige of his judicial office to advance the private    minor bad manners.” Id.
interests of his close friend, Harriet Miers in violation of
Canon 2B of the Texas Code of Judicial Conduct.” We                Thus, the focus of the Jimenez court was on the public interest
conclude Canon 2B is inapplicable to the conduct at issue.         of the policeman's performance of his duties as a police
                                                                   officer, not the judge's private interest in retaliating against an
Canon 2 is entitled: “Avoiding Impropriety and the                 ill-mannered individual. *577 See id. at 580. The Jimenez
Appearance if Impropriety in All of the Judge's Activities.”       court also recognized a balancing between private and public
TEX.CODE JUD. CONDUCT, Canon 2. Canon 2B of the                    motivation. See id. at 581. Finally, the Jimenez court stressed
Code provides, in relevant part: “A judge shall not lend the       the commission never alleged any of the judge's statements
prestige of judicial office to advance the private interests of    were false in any respect.
the judge or others....” TEX.CODE JUD. CONDUCT, 2B. 42
                                                                    [24] A legal dictionary defines “private” in part as
The second charge was limited to the private interests of
                                                                   “[r]elating to or belonging to an individual, as opposed to the
“others,” namely, Miers.
                                                                   public or the government.... Confidential; secret.” BLACK'S
We first address whether Canon 2B applies to the conduct at        LAW DICTIONARY 1233 (8th ed.2004). 43 While not
issue in this case. In so doing, our inquiry focuses again on a    defining “private interests,” the Texas Attorney General has
definition, this time, of the term “private interests.” The Code   decided that the phrase “does not include candidacy.” Op.
of Judicial Conduct does not contain a definition of “private      Tex. Att'y Gen. No. LO–89–21 (1989). In addition, the
interests.”                                                        Supreme Court of Washington, reviewing the same language,
                                                                   discussed the type of conduct to which Canon 2B is directed,
In re Jimenez, 841 S.W.2d 572 (Tex.Spec.Ct.Rev.1992),              emphasizing “the judge's use of his or her office to obtain
provides some guidance. In that case, the commission, after        a financial or other advantage, either for himself or herself
finding the judge had a private interest in retaliating against    personally or for a third party.” In re Sanders, 135 Wash.2d
a policeman, privately admonished the judge for violating          175, 955 P.2d 369, 376 (1998). We conclude that a private
Canon 2B for making statements accusing a policeman                interest pursuant to Canon 2B is a personal or individual
of perjuring himself and selectively prosecuting Hispanic          advantage or benefit gained by use of judicial office.



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In re Hecht, 213 S.W.3d 547 (2006)


                                                                                friendly or less friendly, or those kinds
The commission asserts that a benefit of office, life tenure,                   of things. It's not—the idea that by
as well as power and prestige, constitute “private interests”                   speaking in favor of someone who
under Canon 2B. We disagree. Although the position of                           is trying to get confirmed, and has
Supreme Court Justice comes with life tenure and as well                        already been nominated to the U.S.
as a guaranteed salary, see U.S. CONST. art. III, § 1, those                    Supreme Court, that that somehow
factors are not necessarily private interests. Rather, they                     advances a private interest, no one
are the perquisites of the public office. Lifetime tenure and                   would have ever thought that. If you
guaranteed salary safeguard the judiciary from interference                     made a list—this canon is old, so if
from the other branches of government and promote judicial                      you made a list a long time ago and
independence; thus, they are public, rather than private,                       said, check off the ten things this is
interests.                                                                      supposed to stop, and one of them
                                                                                was keeping people from promoting
The argument that the benefits of public office are private                     nominees to the U.S. Supreme Court,
interests presumes that candidates seek office for selfish                      nobody would check that off....
reasons rather than from a noble sense of duty. The suggestion
that a public office is a private interest implies that all         Canon 2B prohibits a judge from using the prestige of
public officers, whether legislative, executive, or judicial, are   judicial office to pursue “private interests” such as using the
corrupt. This Court soundly rejects any such suggestion.            position of judge to extort a financial benefit, to retaliate
                                                                    against another, or to obtain preferential treatment for the
The evidence before us, including numerous transcriptions
                                                                    judge or another person. 46 Such conduct is *579 generally
of congressional hearings, clearly demonstrates candidates
                                                                    perpetrated in secret or in a clandestine manner. The conduct
seeking federal judicial positions are driven by the desire and
                                                                    at issue, however, is the public dissemination of information
passion to engage in public service and promote the rule of
                                                                    about Miers in a political context. The record does not even
law in a meaningful capacity. Furthermore, all of the expert
                                                                    intimate that Petitioner engaged in any surreptitious conduct.
witness testimony, most of which was stipulated to by the
commission, opined that Petitioner's conduct did not advance
                                                                    We hold Canon 2B was not intended to apply and does not
the private interests of Miers. Under the facts presented, we
                                                                    apply to the conduct at issue in the political environment
are convinced this level of dedication and commitment is best
                                                                    described. 47 Under these circumstances, we can hardly
described as one of public, not private, interest. 44
                                                                    conclude that Petitioner's public statements would have
                                                                    constituted an advancement of Miers' “private interests.”
 *578 Moreover, the view that seeking these perquisites as a
                                                                    Accordingly, we find Petitioner not guilty of the charge of
private interest, that is, viewing candidacy for this office as a
                                                                    violating Canon 2B by lending the prestige of his judicial
private interest, contradicts the Attorney General's decision in
                                                                    office to advance Miers' private interests.
LO–89–21 and would equate a judge's promotion of his or her
own candidacy as a violation of Canon 2B. This interpretation
would also prohibit a judge from appearing on his or her own
behalf at a political event, conduct expressly permitted under                                   IX.
             45
Canon 5(2). In short, we agree that “private interests ... do       Analysis of the public statements in relation to the Texas
not include candidacy.” Op. Tex. Att'y Gen. No. LO–89–21.           Code of Judicial Conduct has been seriously hampered
                                                                    by the complete lack of definitions of critical terms in
Petitioner testified about the purpose of Canon 2B:                 the Code. Terms such as “authorized,” “endorsing,” and
                                                                    “private interests” are pivotal to the provisions in which they
             [T]he purpose for 2B is to keep judges
                                                                    appear, but the Code does not provide a specific meaning
             from calling the district attorney,
                                                                    for the terms. This void fosters ambiguity and confusion
             trying to get him to go easy on their
                                                                    in interpretation and application. There is no bright line
             kid, or the neighbor's kid, or trying to
                                                                    of demarcation between acceptable and prohibited conduct.
             get the county commissioners to give
                                                                    We decline to come down on the side of condemnation
             a contract to somebody that's more



                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          17
In re Hecht, 213 S.W.3d 547 (2006)


in the face of what we perceive as undeniably obvious:
the ambiguity, confusion, and apparent contradictions in
                                                                 McCLURE, J., concurring.
the content, interpretation, and application of the Canons.
Perhaps an event such as the case before us will precipitate
a fresh approach and renewed efforts to clearly delineate the    ANN CRAWFORD McCLURE, Justice, concurring.
meaning of such key terms and thereby clearly define what        “Thirty-seven hundred judges want to know what to do.”
conduct is acceptable and what is not.                           With these words, the Examiner for the Commission has
                                                                 asked us to clearly draw the lines and articulate the boundaries
We have resolved the meaning of “authorized” by referring        of the Texas Code of Judicial Conduct. At the outset, let me
to the Webster's International and the Oxford English            dispel any notion that this court of review is about politics.
dictionaries. We conclude Canon 5(2), the “authorization”        Politics may well have initiated the debate. It plays no role
provision, does not prohibit “endorsing”; rather, the words      in the resolution. The three members of this panel are not
mean what they say: the “authorization” provision prohibits      affiliated with the same political party. But as judges, we
a judge from authorizing the public use of his name              unanimously agree that we must preserve the independence,
endorsing another candidate. We cannot conclude a violation      integrity, and impartiality of the judiciary. I don't believe that
of the “authorization” provision occurred without any            Justice Hecht, a well-respected member of the state's highest
evidence Petitioner “authorized” *580 the use of his name        civil court, would contend otherwise. How we do that within
“endorsing” “another candidate for any public office,” Harriet   the confines of the canons and the constitution is the issue.
Miers.                                                           If we as judges do not honor and respect the office and the
                                                                 public trust, we can hardly expect lawyers and litigants to do
Although we have not resolved the meaning of “endorsing,”        so. Nor can we expect the recurrent attacks on the judiciary
we conclude there are alternative, reasonable definitions of     to subside.
“endorsing” and that, even if we accepted the commission's
interpretation of Canon 5(2) as prohibiting “endorsing,”         The majority perceives no violation of either Canon 5(2) or
a strict construction of “endorsing” means a narrower            Canon 2B. I disagree. But because I believe the canons in
construction than just broad support, and, therefore, does not   issue are unconstitutional, I concur in the judgment.
encompass Petitioner's public statements. The commission
failed to prove Petitioner's public statements “endorsed”
Miers. Thus, we cannot conclude Petitioner violated Canon
                                                                                           CHARGE I
5(2) by “endorsing.”

 [25] We also conclude Petitioner's public statements are,                       THE “ENDORSE” CLAUSE
under the particular facts presented, permitted by the
                                                                 Charge I alleges that Justice Hecht authorized the public use
Canons because they qualify as legitimate responses to
misrepresentations (Canon 5(1)(ii)), expressions of views        of his name and title to support 1 or endorse his close friend,
on political matters (Canon 5(2)), statements that promote       Harriet Miers, a candidate for public office, which actions
public confidence in the competence of the judiciary, and        constituted willful and/or persistent violations of Article V,
statements which involve the law, the legal system, and the      Section 1–a(6) of the Texas Constitution and Canon 5(2) of
administration of justice (Preamble, Canons 2 & 4).              the Texas Code of Judicial Conduct. Canon 5(2) provides:


Finally, we conclude Canon 2B does not apply to the political
                                                                   A judge or judicial candidate shall not authorize the public
conduct at issue, and, therefore, no violation can be found.
                                                                   use of his or her *581 name endorsing another candidate
                                                                   for any public office, except that either may indicate
Accordingly, we conclude the commission has failed to meet
                                                                   support for a political party. A judge or judicial candidate
its burden of proving Petitioner violated the Canons, we
                                                                   may attend political events and express his or her views
dismiss the commission's public admonition, and we find him
                                                                   on political matters in accord with this Canon and Canon
not guilty of the charges.
                                                                   3B(10).
                                                                   TEX.CODE JUD. CONDUCT, Canon 5(2), reprinted in
                                                                   TEX. GOV'T.CODE ANN., tit. 2, subtit G, app. B (Vernon


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In re Hecht, 213 S.W.3d 547 (2006)


  2005). We must determine (1) whether Miers was “a                context. He concedes that although a “judge commenting
  candidate;” (2) whether Justice Hecht “endorsed” her; and        favorably on the proposed appointment may be said to be
  (3) whether he authorized the public use of his name and         ‘endorsing’ the person in the dictionary sense of ‘giving
  office in doing so. The answer to all three of these inquiries   support,’ the judge is not engaging in the electoral political
  is a resounding, “Yes.”                                          process that Canon 5(2) is aimed at.” Petitioner's Brief at 18.
                                                                   I must conclude that Justice Hecht “endorsed” for the same
                                                                   reasons I conclude that Miers was a “candidate.” And in his
                  Was Miers a Candidate?
                                                                   brief, even he candidly admits:
Justice Hecht argues that while Miers was a nominee for a
                                                                                The information [Justice Hecht]
lifetime appointment to the United States Supreme Court, she
                                                                                provided about Miers' experience
was not a candidate for a public office within the meaning
                                                                                and qualifications certainly supported
of Canon 5(2). He contends that the prohibition relates only
                                                                                and thus ‘endorsed’ her nomination
to endorsement of a political candidate for an elected office
                                                                                among those who valued the kind
and does not prohibit him from expressing his support of
                                                                                of background she had, although the
a person seeking an appointed judicial position. The Code
                                                                                information was undoubtedly received
of Judicial Conduct does not define the term “candidate”
                                                                                negatively among those who did not.
and it does not have a specialized meaning; therefore, it
should be given its ordinary meaning. TEX.GOV'T CODE               Petitioner's Brief at 19.
ANN. § 312.002 (Vernon 2005). Webster defines “candidate”
as “one that aspires to or is nominated or qualified for           Justice Hecht gave numerous media interviews in which he
an office, membership, or award.” Webster's Ninth New              was identified as a *582 justice on the Texas Supreme Court.
Collegiate Dictionary 201 (9th ed.1987). The Examiner              He provided factual information about Miers' experience
references the Merriam–Webster Online Dictionary, which            and background. In some of the interviews, he offered
defines “candidate” as “[o]ne that aspires to or is nominated      his personal opinion that Miers' nomination would be
or qualified for an office, membership, or award.” See http://     “good for the country,” that she would make a “good
www. merriamwebster.com/dictionary/candidate. Even the             justice,” that she would be “a conservative judge” and
current version of the Texas Election Code makes no                “a strict constructionist.” He also described her as “pro-
distinction between persons who take affirmative action for        life.” Reasonable minds could differ as to whether these
the purpose of gaining nomination to public office and those       comments constitute an endorsement. The majority concludes
who take affirmative action for the purpose of election to         that “endorsing” must mean more than “spoken praise.” It
public office. TEX.ELEC.CODE ANN. § 251.001 (Vernon                suggests that Justice Hecht's comments did not constitute a
Supp.2006). More à propos to our discussion, however, is           request or an appeal to others to support her nomination. I
the definition contained in the American Bar Association           respectfully disagree.
Model Code of Judicial Conduct. “Candidate” is defined as
“a person seeking selection for or retention in judicial office    The Stipulation of Facts reveals that Former White House
by election or appointment.” MODEL CODE OF JUDICIAL                Deputy Chief of Staff Karl Rove spoke with Justice Hecht
CONDUCT, Preamble and Canons 5A, 5B, 5C, and 5E.                   on Saturday, October 1, 2005, and asked whether he [Justice
Finally, the record reveals that Justice Hecht himself has         Hecht] would be willing to provide factual information to Dr.
referred to nominees for various federal courts, including
                                                                   James Dobson 2 and “others who might ask” about Miers'
the United States Supreme Court, as “candidates,” just as he
                                                                   background in general and her religious views in particular.
considers a position on the United States Supreme Court to
                                                                   Justice Hecht agreed to do so. In a later conversation, Justice
be “a public office.”
                                                                   Hecht agreed to respond to media calls referred to him by the
                                                                   White House, and he agreed to make daily reports to White
                                                                   House staff concerning the types of questions he had been
              Did Justice Hecht's Comments                         asked.
              Constitute An “Endorsement”?
                                                                   President Bush announced Miers' nomination on Monday
Justice Hecht contends that just as “candidate” refers to the      morning, October 3. That afternoon, someone from Rove's
elective process, so does “endorsing” as used in the same          office called Justice Hecht to advise him that he had been


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            19
In re Hecht, 213 S.W.3d 547 (2006)


invited to participate in a conference call of the Arlington        and even applying the interpretation that the majority has
Group. Justice Hecht had not heard of the group but learned         adopted, I conclude that Justice Hecht endorsed Miers. 5
that it was composed of conservative religious leaders. He
agreed to participate, and called in at the appointed time. Dr.
Dobson, who participated in the call, later told the press that                Did Justice Hecht Authorize the
he had been assured by Rove that Miers was an evangelical                    Public Use of His Name and Office?
Christian but that he did not get reassurances about how she
                                                                  I also disagree with the majority as to whether Justice Hecht
would vote on Supreme Court issues. Examiner's Exhibit 17.
                                                                  authorized the public use of his name and office. As I
                                                                  have already mentioned, the White House sought his help
Within the first two days following the announcement,
                                                                  in reassuring Dr. Dobson, the Arlington Group, and other
Justice. received nearly 100 media calls and within a week,
                                                                  religious conservatives that Miers was pro-life and a strict
by his own count, he had responded to some 120 requests for
                                                                  constructionist. The White House wanted to refer media calls
interviews. Included in the record are videotapes, DVDs, and
                                                                  to him and asked him to report daily on the types of questions
transcripts from various networks, including Supreme Court
                                                                  he was asked. He expressly agreed. These are facts to which
Watch [C–SPAN], FOX News Sunday [FOX], Hardball
                                                                  Justice Hecht has stipulated. Examiner's Exhibit 2, The New
with Chris Matthews [MSNBC], and The Situation Room
                                                                  York Times article, reported that “[t]he Republican National
[CNN]. The New York Times hailed Justice Hecht as Miers'
                                                                  Committee put him on at least one conference call with
“Spokesman” in an October 6 article. 3 Examiner's Exhibit 2.      evangelical pastors and conservative organizers. Progress for
And he himself joked during an interview that he was a “PR        America, a group that promotes President Bush's agenda,
office for the White House.” Examiner's Exhibit 1.                has also been working to make Justice Hecht available
                                                                  for interviews.” While Justice Hecht complained to another
On October 10, Texas Lawyer reported that Justice Hecht           reporter that the Times article was misleading, he sought no
categorized his “mission” as filling in the gaps about Miers'     retraction.
background and countering “some conservatives' skepticism
about her qualifications.” Examiner's Exhibit 1. 4 He told         *584 The majority contends that a violation of Canon
 *583 reporters that conservatives should “rest easy” about       5(2) requires proof that the judge gave permission for
Miers' nomination. Id. Examiner's Exhibit 3 is a story from       others to publicly use the judge's name in endorsements
The Dallas Morning News. It begins:                               of the candidate. The record shows precisely that. Justice
                                                                  Hecht appeared on several television programs to debate
                                                                  conservatives who opposed Miers' nomination, clearly
  Like an author on a radio talk-show blitz, Texas Supreme        articulating the difference between legal issues and personal
  Court Justice Nathan Hecht worked the phones Tuesday
                                                                  viewpoints 6 . The following exchange occurred during an
  on a mission authorized at the highest levels of the White
                                                                  interview with Chris Wallace of FOX News Sunday:
  House: lending his conservative stamp of approval to
  Harriet Miers, his long time friend, churchmate and fellow
  Dallas lawyer.                                                    Chris Wallace: Does she regard abortion as murder?
  Justice Hecht never sought a retraction of these or
  other media reports. He voluntarily participated in                  Justice Hecht: Well, I don't know that we've ever talked
  rallying public support for Miers' nomination and in                 in exactly those terms. But she is pro-life. I mean, you
  convincing conservative religious leaders that she was               press around it all you can, but she is pro-life, and she
  an acceptable candidate. He spoke about her religious                has been for 25 years.
  beliefs and convictions, her faith, and her pursuit of deeper
  meaning and greater purpose through evangelical Christian            Q: If she does believe that, Justice, how could she
  teachings. In responding to a media report that he had               possibly vote to uphold Roe v. Wade 7 , if she believes
  “embarked on a media blitz,” Justice Hecht quipped that              that abortion is murder?
  he “embarked, the same way a fishing boat embarks
  into a tsunami.” Little wonder that he characterized his          A: Because it's easy. Legal issues and personal issues are
  experience as “seismic.” Based upon the record before us,         just two different things. Judges do it all the time. In fact, a
                                                                    judge is going to take an oath that says I'm going to judge



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In re Hecht, 213 S.W.3d 547 (2006)


  rightly in cases, which means that you have to set aside
  your personal views in deciding the case. And if you don't            “If you have somebody like Nathan Hecht, whose anti-
  do that, you're either a bad believer in your views, a bad            choice, right-wing credentials are so solid, and he says
                                                                        you're going to like her, she's one of us, that sends a
  judge or both. 8
                                                                        pretty clear signal to that wing of the Republican Party,”
                                                                        said Sarah Wheat, executive director of NARAL Pro–
  Gary Bauer 9 : Look, I'm confused here. I can't tell whether
                                                                        Choice Texas.
  Judge Hecht is arguing that [Miers] is going to overturn Roe
  or she's not going to overturn Roe. If he wants to reassure        Examiner's Exhibit 3. All of this evidence leads me
  his fellow pro-life conservatives, that's the last argument he     to conclude that Justice Hecht expressly and quite
  should be making, the argument that he just made.                  affirmatively authorized the public use of his name and
Examiner's Exhibit 10. Justice Hecht responded similarly to          office to sell the Miers' nomination.
Chris Matthews and Pat Buchanan 10 on MSNBC's Hardball
with Chris Matthews:
                                                                                           CHARGE II


  Chris Matthews: Karl Rove gave you the OK to begin                              THE “PROMOTE” CLAUSE
  giving interviews like this. And we very much appreciate,
  Justice, you coming on, because no one else can talk about       Charge II alleges that Justice Hecht lent the prestige of his
  her from that Texas perspective, that longtime perspective.      judicial office to advance the private interests of his close
  Are you surprised Karl Rove has basically unleashed              friend, Harriet Miers, which actions constituted willful and/
  people to come out and talk about her, that they're not more     or persistent violations of Article V, Section 1–a(6) of the
  careful about making sure there's less talked about her than     Texas Constitution and Canon 2B of the Texas Code of
  more?                                                            Judicial Conduct. Canon 2B states in pertinent part: “A judge
                                                                   shall not lend the prestige of judicial office to advance the
     Justice Hecht: You know, I really don't know the history      private interests of the judge or others....” TEX.CODE JUD.
     on that. And I don't know what their usual policies           CONDUCT, Canon 2B, reprinted in TEX. GOV'T CODE
     are....But I'm happy that people are, because I think there   ANN., tit. 2, subtit G, app. B (Vernon 2005).
     is going to be a *585 pretty solid consensus of view
     from people talking about her.

                                                                    Did Justice Hecht's Conduct Promote a Private Interest?
                           *****
                                                                   Justice Hecht contends, and the Examiner concedes, that the
  Pat Buchanan: The president has asked us to elevate a            nomination of Harriet Miers to the United States Supreme
  blank slate to the Supreme Court to sit opposite people          Court and the ensuing debate over her qualifications were
  like Roberts and Scalia, when we have outstanding jurists        matters of public concern. But the sanction imposed requires
  who have taken a stand, been cut and blooded for their           a finding that Justice Hecht's very public conduct promoted
  beliefs. And so, I think this is why she has got to sell         Miers' very private interests. The Examiner counters that
  herself to the country, to the conservative movement and         there is a real and personal private interest at stake—that of
  Republican Party. And if she does not, Chris, I would urge       political ambition—including a candidate's desire for lifetime
  conservatives to recommend a no-vote on this, if she does        tenure, prestige, and power, which motivates a candidate to
  not persuade that committee that she is Supreme Court            seek a life-time appointment to the federal bench in the first
  material.                                                        place. Examiner's Brief at 9.
  Examiner's Exhibit 13. The New York Times article
  reported that “[w]hen the White House named Harriet E.           The Commentary to the ABA Model Code indicates that a
  Miers for a seat on the United States Supreme Court this         judge may participate in only a limited fashion in the process
  week, Republicans turned to Justice Nathan L. Hecht of           of judicial selection. “Judges may participate in the process of
  the Texas Supreme Court to make her case.” Examiner's            judicial selection by cooperating with appointing authorities
  Exhibit 2. Following suit, The Dallas Morning News wrote:        and screening committees seeking names for consideration,
                                                                   and by responding to official inquiries concerning a person



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            21
In re Hecht, 213 S.W.3d 547 (2006)


being considered for a judgeship.” MODEL CODE OF                   to use, his position as a judge, and a Texas Supreme Court
JUDICIAL CONDUCT, Canon 2B, cmt. Justice Hecht could               justice in particular, to influence, sway, and convince public
have answered inquiries from the White House regarding             opinion and conservatives who questioned the President's
his knowledge of Miers, and he could have testified at the         decision to nominate Miers. Examiner's Brief at 14. Because
Senate confirmation hearing, *586 since that proceeding            the Examiner proved these facts by a preponderance of the
obviously constitutes an official inquiry about the person         evidence, I agree.
being considered for a judgeship. 11 But his activities went
beyond the limited participation contemplated by the canon
and its commentary. I do not question Justice Hecht's loyalty               WERE THE VIOLATIONS WILLFUL?
to and friendship with Miers. He considered himself a
“central repository of information” about her. That's precisely    The Commission must prove by a preponderance of
the point. He spoke because of his personal and private            the evidence that Justice Hecht willfully committed the
relationship with her. He spoke because the candidate was          charged violations. In re Davis, 82 S.W.3d 140, 142
“Harriet,” not former State Bar of Texas President Miers, not      (Tex.Spec.Ct.Rev.2002); see TEX GOV'T CODE ANN. §
former Locke Liddell & Sapp managing partner Miers, not            33.001(b)(2)(Vernon 2004); see also In re Bell, 894 S.W.2d
former Dallas City Councilwoman Miers. If the candidate had        119, 131 (Tex.Spec.Ct.Rev.1995). Willful conduct requires
been a different former bar president or a different firm leader   a showing of intentional or grossly indifferent misuse of
or a different city representative whom he had known in years      judicial office, involving more than an error of judgment or
past, he may well have spoken privately to individuals vetting     lack of diligence. Davis, 82 S.W.3d at 148; Bell, 894 S.W.2d
the candidate or agreed to testify during Senate confirmation      at 126. A judge need not have formed the specific intent to
proceedings. But he would have been more circumscribed in          violate the Code; as long as he intended to engage *587
his comments. He wouldn't have jumped on board the “media          in the conduct for which he is disciplined, he is guilty of
train” and he wouldn't have joked about running “PR for the        a willful violation of the Code. See In re Barr, 13 S.W.3d
White House.” These events happened because they involved          525, 539 (Tex.Rev.Trib.1998, pet.denied). There is no dispute
“Harriet.”                                                         whatsoever that Justice 2 intended to engage in the conduct
                                                                   for which he is disciplined. Although he defines willful as,
                                                                   “you know it's wrong and you do it anyway,” he also testified
                                                                   that “if I had it to do over again, I'd do it again.” In my view,
            Did Justice Hecht Lend the Prestige
                                                                   the evidence supports a finding that Justice Hecht willfully
           of His Office to Promote that Interest?
                                                                   violated the canons.
The evidence supports a finding that Justice Hecht lent
the prestige of his judicial office to advance Miers' private
interests in violation of Canon 2B. I must reject his argument            ARE THE CANONS CONSTITUTIONAL?
that he was contacted by the media not because of his position
as a justice on the Texas Supreme Court but because of his         I turn now to the broader constitutional concerns. Justice
thirty-year relationship with Miers. That may well have been       Hecht challenges the constitutionality of Canon 5(2) (the
the motivation behind press inquiries. But every time the          endorse clause), both facially and as applied to him. Similarly,
media carried the story, the “source” was clearly identified,      he challenges Canon 2B (the promote clause) as applied. Both
captioned, and addressed as “Justice Hecht.”                       complaints allege the canons violate the First Amendment.
                                                                   Citing Republican Party of Minnesota v. White, 536 U.S. 765,
In a public statement issued in 2000, the Commission               122 S.Ct. 2528, 153 L.Ed.2d 694 (2002) (White I ), he argues
cautioned Texas judges that “it is virtually impossible for        that these provisions do not withstand strict scrutiny analysis.
a judge, at least in the eyes of the public, to separate           The first issue is whether strict scrutiny analysis applies.
himself or herself from the judicial office; therefore it is
immaterial to the issue of misconduct that a judge does not
use his judicial title or refer to his judicial position in a
                                                                                    Does Strict Scrutiny Apply?
public endorsement of a candidate for public office.” Public
Statement PS–2000–2. The Examiner argues in its brief that         In White I, the Supreme Court applied the strict scrutiny
contrary to his claims, Justice Hecht used, and allowed others     analysis because the intermediate court of appeals had done


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            22
In re Hecht, 213 S.W.3d 547 (2006)


so and the parties did not dispute the issue. White I, 536 U.S.   Determining which tier applies requires a court to determine
at 774, 122 S.Ct. 2528. Some legal scholars suggest that the      whether a regulation is content-neutral or content-based. See
political activity canons should not be subjected to a strict     Barber, 111 S.W.3d at 93. This is often not a simple task. Id. A
scrutiny analysis. See J.J. Gass, After White: Defending and      content-neutral regulation generally must be both viewpoint
Amending Canons of Judicial Ethics, Judicial Independence         neutral and subject-matter neutral. Id., see Hill v. Colorado,
Series, Brennan Center for Justice at NYU School of Law at        530 U.S. 703, 722–23, 120 S.Ct. 2480, 147 L.Ed.2d 597
p. 18 (2004). The First Amendment forbids the government          (2000). As the Supreme Court has stated, “[r]egulation of
to regulate speech in ways that favor some viewpoints or          the subject matter of messages, though not as obnoxious as
ideas at the expense of others. Members of City Council v.        viewpoint-based regulation, is also an objectionable form of
Taxpayers for Vincent, 466 U.S. 789, 804, 104 S.Ct. 2118,         content-based regulation.” Barber, 111 S.W.3d at 93, quoting
80 L.Ed.2d 772 (1984); Texas Department of Transportation         Hill, 530 U.S. at 723, 120 S.Ct. 2480.
v. Barber, 111 S.W.3d 86, 92 (Tex.2003). But the Supreme
Court also has recognized that the First Amendment does not       To be viewpoint neutral, a regulation must not be based on
guarantee the right to communicate one's views at all times       the ideology of the message. Barber, 111 S.W.3d at 93. The
and places or in any manner. Heffron v. International Society     prohibitions contained in the canons are not based on ideology
for Krishna Consciousness, Inc., 452 U.S. 640, 647, 101 S.Ct.     since they restrict all speech by a judge or judicial candidate
2559, 69 L.Ed.2d 298 (1981); Barber, 111 S.W.3d at 92.            endorsing another candidate. To be subject-matter neutral, a
Both written and oral expression may be subject to reasonable     regulation must not be based on the topic of the message.
time, place, and manner restrictions. Clark v. Community for      While viewpoint neutral, the canons are not subject-matter
Creative Non–Violence, 468 U.S. 288, 293, 104 S.Ct. 3065,         neutral as they are certainly based on topic.
82 L.Ed.2d 221 (1984); Barber, 111 S.W.3d at 92. When
reviewing regulations on speech, we engage in a two-tier          I thus conclude that the proper test to determine the
analysis. Barber, 111 S.W.3d at 92.                               constitutionality of the canons is strict scrutiny. Under
                                                                  the strict scrutiny analysis, any restriction on the right of
For the higher tier, “regulations that suppress, disadvantage,    political speech requires a three-pronged analysis: (1) were
or impose differential burdens upon speech because of its         the statements core political speech? (2) is there a compelling
content,” the court applies “the most exacting scrutiny.”         state interest to prohibit that speech? and (3) is the canon
Barber, 111 S.W.3d at 92, quoting Turner Broadcasting             narrowly tailored to serve that interest? White I, 536 U.S. at
System, Inc. v. FCC, 512 U.S. 622, 642, 114 S.Ct. 2445,           775, 122 S.Ct. 2528 Brown v. Hartlage, 456 U.S. 45, 54, 102
129 L.Ed.2d 497 (1994). Such content-based regulations are        S.Ct. 1523, 71 L.Ed.2d 732 (1982).
presumptively invalid, R.A.V. v. City of St. Paul, 505 U.S.
377, 382, 112 S.Ct. 2538, 120 L.Ed.2d 305 (1992), and they
can withstand strict scrutiny only if precisely drawn to serve
                                                                                 What Does White Really Say?
a compelling state interest. Consolidated Edison Company of
N.Y., Inc. v. Public Service Commission, 447 U.S. 530, 540,       In Republican Party of Minnesota v. White, 536 U.S. 765, 122
100 S.Ct. 2326, 65 L.Ed.2d 319 (1980); Barber, 111 S.W.3d         S.Ct. 2528, 153 L.Ed.2d 694 (2002) (White I ), the United
at 92–93. For the lower tier, “regulations that are unrelated     States Supreme Court considered whether the Minnesota
to the content of speech,” the court applies an “intermediate     Code of Judicial Conduct violated a judicial candidate's First
level of scrutiny.” Barber, 111 S.W.3d at 93, quoting Turner      Amendment rights by prohibiting him from announcing his
Broadcasting, 512 U.S. at 642, 114 S.Ct. 2445. Content-
                                                                  views on disputed legal or political issues. 12 Many states,
neutral regulations are valid provided they are narrowly
                                                                  including Texas, had canons which are generically referred to
tailored to *588 serve a substantial governmental interest,
                                                                  as “announce” clauses:
and they do not unreasonably limit alternative channels for
communicating the information. City of Renton v. Playtime
Theatres, Inc., 475 U.S. 41, 47, 106 S.Ct. 925, 89 L.Ed.2d 29       [I]t is clear that the announce clause prohibits a
(1986); Clark, 468 U.S. at 293, 104 S.Ct. 3065; Taxpayers for       judicial candidate from stating his views on any specific
Vincent, 466 U.S. at 808, 104 S.Ct. 2118; Heffron, 452 U.S.         nonfanciful legal question within the province of the court
at 647–48, 101 S.Ct. 2559; Barber, 111 S.W.3d at 93.                for which he is running, except in the context of discussing




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            23
In re Hecht, 213 S.W.3d 547 (2006)


  past decisions—and in the latter context as well, if he
  expresses the view that he is not bound by stare decisis.        The majority concluded that the goal of “impartiality” could
  White I, 536 U.S. at 773, 122 S.Ct. 2528.                        be compelling depending upon the definition assigned. While
                                                                   it rejected a definition of “impartiality” as meaning a lack

                          The Facts                                of preconception regarding legal matters 13 , it accepted the
                                                                   definition of promoting the state's interest in electing judges
Gregory Wersal first ran for the Minnesota Supreme                 who are not biased against or in favor of a particular party.
Court in 1996. He identified himself as a member of the            Because Minnesota had not demonstrated that the announce
Republican Party, attended and spoke at party meetings,            clause served that interest, the canon was not narrowly
sought its endorsement, and personally solicited campaign          tailored to achieve that goal. “[E]ven if the First Amendment
contributions. He distributed literature criticizing *589          allows greater regulation of judicial election campaigns than
several decisions of the court on issues such as crime, welfare,   legislative election campaigns, the announce clause still
and abortion. As a result of this literature, a complaint was      fails strict scrutiny because it is woefully underinclusive,
filed with the Minnesota Lawyers Professional Responsibility       prohibiting announcements by judges (and would-be judges)
Board. The Board ultimately dismissed the complaint, but           only at certain times and in certain forms.” Id. at 783, 122
Wersal withdrew as a candidate because he feared that other        S.Ct. 2528 (Emphasis in original). The court left unanswered
complaints might jeopardize his law license.                       whether the definition could include the characteristic of
                                                                   open-mindedness 14 , but other courts have found that open-
Wersal ran again in 1998. This time, he asked the Board            mindedness can be a *590 compelling state interest. See
for an advisory opinion regarding the announce clause. The         Kansas Judicial Watch v. Stout, 440 F.Supp.2d 1209, 1230
Board expressed significant doubts about the constitutionality     (D.Kan.2006), citing North Dakota Family Alliance, Inc.
of the canon, but it did not specifically answer his questions     v. Bader, 361 F.Supp.2d 1021, 1040 (D.N.D.2005); Family
because he had not submitted a list of the “announcements”         Trust Foundation of Ky., Inc. v. Wolnitzek, 345 F.Supp.2d
he wished to make. Wersal responded with a lawsuit against         672, 695 (E.D.Ky.2004); In re Watson, 100 N.Y.2d 290, 794
the Board and Suzanne White in her capacity as chair, seeking      N.E.2d 1, 763 N.Y.S.2d 219 (N.Y.2003).
a declaration that the announce clause violates the First
Amendment. Other plaintiffs, including the Republican Party        White I caught the judiciary off guard. Justice Hecht captured
of Minnesota, alleged that the announce clause prevented           the sentiment when he testified, “I would say that White
their membership from learning Wersal's views on various           case was a bombshell when it hit and that I certainly wasn't
legal issues. The district court determined that the announce      expecting it.” Few of us were.
clause did not violate the First Amendment and the Eighth
Circuit affirmed.

                                                                                             White II

                           White I                                 The Supreme Court remanded to the Eighth Circuit
                                                                   for consideration of the constitutional viability of the
The Supreme Court swiftly determined that a candidate's            “partisan activities” clause and the “solicitation” clause.
statements regarding his or her own views on political             Republican Party of Minnesota v. White, 416 F.3d 738
or legal issues is protected speech. The court struggled           (8th Cir.2005) (White II ). Pursuant to the Minnesota Code
a bit with an analysis of Minnesota's compelling state             of Judicial Conduct, a judge or judicial candidate may
interest. Minnesota purportedly enacted the announce clause        not identify himself or herself as a member of a political
to promote the impartiality of the judiciary and the appearance    organization; attend political gatherings; or seek, accept,
of impartiality. The Eighth Circuit agreed that these were         or use endorsements from a political organization. The
sufficiently compelling. The same justifications were argued       solicitation clause prohibits a candidate from personally
to the Supreme Court. Although “impartiality” was used             soliciting or accepting campaign contributions, although the
throughout the Eighth Circuit's opinion, the briefs, the           candidate may establish committees to conduct campaigns,
Minnesota Code of Judicial Conduct and the ABA Model               and solicit contributions and public support from attorneys.
Code, the high court pointedly noted that “none of these           The committees shall not seek, accept, or use political
sources bothers to define it.” Id. at 775, 122 S.Ct. 2528.         endorsements or disclose to the candidate the identity of


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In re Hecht, 213 S.W.3d 547 (2006)


contributors. Relying heavily upon White I, the Eighth Circuit
held both clauses to be constitutionally infirm.

                                                                     Were Justice Hecht's Statements Core Political Speech?
The court first addressed the partisan activities clause,
focusing upon the fact that the canon treated political parties     The Examiner contends that the canons do not encroach
differently than special interest groups. Id. at 753 n. 7. The      on Justice Hecht's right to engage in core political speech.
court viewed the clause in the context of the state's interest in   It claims that White I extends only to a judge's comments
ensuring unbiased judges. “[T]he underlying rationale for the       or opinions in connection with his or her own campaign.
partisan-activities clause—that associating with a particular       Because Justice Hecht was speaking about Miers' beliefs
group will destroy a judge's impartiality—differs only in form      and values rather than his own, the Examiner argues that no
from that which purportedly supports the announce clause—           political speech was abridged:
that expressing one's self on particular issues will destroy
a judge's impartiality.” Id. at 754 (Emphasis in original). In                   It is not disputed that [Justice Hecht]
other words, “the Supreme Court's analysis of the announce                       shared with reporters and interviewers
clause ... is squarely applicable to the partisan-activities                     some of his own personal views
clause.” Id. While a judicial candidate could not consort with                   on issues such as abortion and
a political party, the candidate could align with a special                      gay marriage while discussing the
interest group, such as the National Rifle Association, the                      Miers' nomination. However, [Justice
National Association for Women, the Christian Coalition, the                     Hecht] has never been sanctioned
NAACP, or the AFL–CIO.                                                           for making those statements, nor has
                                                                                 he been charged in this proceeding
             A judicial candidate's stand, for                                   with violating any provision of the
             example, on the importance of the                                   Texas Code of Judicial Conduct by
             right to keep and bear arms may                                     telling reporters those views. To
             not be obvious from her choice of                                   the contrary ... [Justice Hecht] was
             political party. But, there can be little                           sanctioned for assisting Miers and her
             doubt about her views if she is a                                   candidacy by publicly expressing what
             member of or endorsed by the NRA.                                   he believed were Miers' views on
             Yet Canon 5 is completely devoid of                                 disputed political and legal matters.
             any restriction on a judicial candidate
             attending or speaking to a gathering of                Examiner's Brief at 18 (Emphasis in original). Applying this
             an interest group; identifying herself                 analytical construct, the Examiner then concludes that Justice
             as a member of an interest group;                      Hecht's oratory “was simply the expression of a personal
             or seeking, accepting, or using an                     opinion for which he was not entitled to any heightened First
             endorsement from an interest group.                    Amendment protection.” Id., citing Scott v. Flowers, 910 F.2d
                                                                    201 (5th Cir.1990).
White II, 416 F.3d at 760. Consequently, the partisan activities
clause was underinclusive.                                          In Scott, the Fifth Circuit addressed the First Amendment
                                                                    in the context of a civil rights action brought by a Texas
The solicitation clause suffered the same fate. Minnesota           justice of the peace challenging a public reprimand by the
argued that keeping judicial candidates from soliciting             Commission. The reprimand stemmed from an open letter
campaign funds served its interest in an impartial judiciary by     written by Judge Scott to county officials attacking the district
preventing undue influence. But a number of other scenarios         attorney's office and the county court at law for dismissing
would allow a candidate “to stumble onto the names of               the majority of traffic ticket appeals. Characterizing the
contributors” since campaign finances are reported, publicly        communications as “insensitive,” the Commission found
available, and widely disseminated. Id. at 766.                     the judge's conduct to be inconsistent with the proper
                                                                    performance of his duties as a justice of the peace and served
 *591 Bearing in mind the teachings of White I, look now            to cast public discredit upon the judiciary. He was warned to
to the three prongs of a strict scrutiny analysis with regard to    be more restrained and temperate in the future.
Justice Hecht's statements.


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In re Hecht, 213 S.W.3d 547 (2006)


Judge Scott ultimately filed suit against the members of the
Commission, both individually and in their official capacities,
                                                                                            Preamble
claiming that his letter and comments to the press were
protected speech for which he could not constitutionally be         Our legal system is based on the principle that an
subjected to discipline. The district court granted summary         independent, fair and competent judiciary will interpret and
judgment in favor of the Commission.                                apply the laws that govern us....

The Fifth Circuit began by noting that public employees           Canon 1. Upholding the Integrity and Independence of
occupy a unique position in First Amendment jurisprudence.        the Judiciary
Scott, 910 F.2d at 210. While they do not shed constitutional
                                                                     An independent and honorable judiciary is indispensable
protections when they enter the workplace, their rights must
                                                                     to justice in our society. A judge should participate in
be balanced against the interests of the state in promoting
                                                                     establishing, maintaining and enforcing high standards of
the efficiency of the public services it performs through its
                                                                     conduct, and shall personally observe those standards so
employees. Id., citing Pickering v. Board of Educ., 391 U.S.
                                                                     that the integrity and independence of the judiciary is
563, 568, 88 S.Ct. 1731, 1734, 20 L.Ed.2d 811 (1968). In
                                                                     preserved.
Pickering, the court adopted a two-step approach to evaluate
                                                                     TEX.CODE JUD. CONDUCT, Preamble and Canon 1,
claims of First Amendment violations by public employees.
                                                                     reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit G,
First, the court must determine in light of the content, form,
                                                                     app. B (Vernon 2005).
and context of the speech in question, whether it addresses a
                                                                  In the wake of White I, the Texas Supreme Court created the
matter of legitimate public concern. Scott, 910 F.2d at 211,
                                                                  Task Force of the Code of Judicial Conduct to “review [the
citing Pickering, 391 U.S. at 571, 88 S.Ct. 1731. If so, the
                                                                  Texas Code of Judicial Conduct] to ensure that the integrity
court must then “balance the employee's first amendment
                                                                  and independence of our judiciary is preserved.” Order
rights against the governmental employer's countervailing
                                                                  Creating Task Force on Code of Judicial Conduct, Misc.
interest in promoting the efficient performance of its normal
                                                                  Docket No. 03–9148 (August 22, 2003). The court asked the
 *592 functions.” Scott, 910 F.2d at 211. If not, the inquiry
                                                                  Task Force to “make recommendations to th[e] Court for
must end. The court ultimately determined that Scott's letters
                                                                  revisions required by law, to make suggestions on improving
and comments were not simply an expression of the judge's
                                                                  the effectiveness of existing cannons [sic] and to suggest other
personal opinion, but addressed matters of legitimate public
                                                                  modifications consistent with the Code's broad purpose of
concern. Id.
                                                                  upholding the integrity, independence and competence of the
                                                                  judiciary.” Id. The final report and recommendations were
I first question the continued viability of Scott inasmuch as
                                                                  delivered in January 2005. The Task Force recommended
a judge's ability to offer personal opinions or viewpoints has
                                                                  adding the word “impartial” to both the Preamble and Canon
since been found to be protected speech. Nevertheless, like
                                                                  1 “to underscore the compelling state interest of judicial
the Fifth Circuit, I find the content, form, and context of
Justice Hecht's speech to be a matter of legitimate public        impartiality.” 15 This recommendation has yet to be adopted,
concern and accordingly, I move to the balancing test, which      although the Texas “announce clause” was repealed. 16
requires that we balance his First Amendment rights against
the state's countervailing interest.                               *593 Nevertheless, the state has a compelling interest
                                                                  in preserving the independence and integrity of the Texas
                                                                  judiciary and in maintaining public confidence in our court
           Is There a Compelling State Interest?                  system. White I, 536 U.S. at 793, 122 S.Ct. 2528 (Kennedy,
                                                                  J., concurring)(nothing in the court's opinion should be
Justice Hecht maintains that the Examiner has failed to           read to cast doubt on the fact that judicial integrity is
articulate that compelling interest. He refers to discovery       a “state interest of the highest order”); In re Raab, 100
requests which the Examiner pointedly refused to answer. Yet      N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d 1287, 1290
I believe that the canons themselves identify the compelling      (N.Y.2003) (preserving the impartiality and independence of
state interests:                                                  the judiciary and maintaining public confidence in the courts
                                                                  are compelling state interests).




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In re Hecht, 213 S.W.3d 547 (2006)


                                                                  Court. He was censured by the New York Judicial Conduct
                                                                  Commission for engaging in improper political activity in
            Are the Canons Narrowly Tailored?
                                                                  the course of a judicial campaign. The New York Code
A narrowly tailored restriction is one that actually advances     of Judicial Conduct prohibits judges and judicial candidates
the state's interest (is necessary), does not sweep too broadly   from (1) participating in any political campaign for any office
(is not overinclusive), does not leave significant influences     or permitting his or her name to be used in connection with
bearing on the interest unregulated (is not underinclusive),      any activity of a political organization; (2) publicly endorsing
and could be replaced by no other regulation that could           or publicly opposing (other than by running against) another
advance the interest as well with less infringement of speech     candidate for public office; *594 (3) making speeches on
(is the least-restrictive alternative). White II, 416 F.3d at     behalf of a political organization or another candidate; (4)
751. “In short, the seriousness with which the regulation of      attending political gatherings; and (5) soliciting funds for,
core political speech is viewed under the First Amendment         paying an assessment to, or making a contribution to a
requires such regulation to be as precisely tailored as           political organization or candidate. Raab, 793 N.E.2d at 1290,
possible.” Id. (Emphasis in original).                            citing 22 NYCRR 100.5(A)(1)(c), (d), (e), (f), (g), (h). The
                                                                  Code allows an incumbent or candidate to participate in his
                                                                  or her own campaign for elective judicial office.

                         Canon 5(2)                               Judge Rabb complained that the rules were both
                                                                  underinclusive and overinclusive. The court rejected his
                   (The Endorse Clause)                           argument, focusing on the “critical” difference between
                                                                  conduct integral to a judicial candidate's own campaign and
The Examiner argues that White I addressed only the issue         activity in support of other candidates or party objectives.
of a judicial candidate's right to announce his or her own        Raab, 793 N.E.2d at 1292. The court concluded that by
views on disputed legal or political issues. The opinion “did     participating in the phone bank and candidate screening,
not concern itself with whether the First Amendment protects      Judge Rabb “went beyond what was necessary or integral to
a judicial candidate's right to endorse other candidates for      his own judicial races.” Id. at 1293.
public office” and consequently, does not apply to this
case. Examiner's Brief at 16. Cautioning that the opinion         In response to the Examiner's argument that Raab is
is now four years old, the Examiner explains that in the          controlling, Justice Hecht recounts the differences between
intervening period, no court has held that a canon prohibiting    the New York and Texas canons. Texas judges can (1)
endorsements violates the First Amendment. Instead, it            affiliate with a political party; (2) attend political events;
continues, the only court to address the issue concluded that     (3) express views on political matters; (4) contribute to
an endorsement prohibition is constitutional. See In re Raab,     political campaigns of other candidates; and (5) criticize a
793 N.E.2d at 1289.                                               candidate for public office. He points to the ability of Texas
                                                                  judges to criticize other candidates and compares Canon 5(2)
State District Judge Ira Rabb admittedly called prospective       with the New York Code of Judicial Conduct and the ABA
voters urging their support for a legislative candidate,          Model Code. Both New York and the ABA prohibit a judge
although he did not give his name or identify himself as a        from either publicly endorsing or publicly opposing another
judge. His purpose was to garner goodwill with the Working        candidate. The Examiner responds:
Families Party in hopes that the party would endorse him as
a judicial candidate in his own campaign for the Supreme                       As a matter of clarification, Examiner
Court later that year. Three months later, he attended a                       would point out that [Justice Hecht]
party candidate screening meeting. He was not scheduled                        is mistaken in his view that a judge
to be interviewed, but he sat with members of the party,                       would not be sanctioned under Canon
participated in the interviews, and asked candidates for both                  5(2) for criticizing another candidate.
judicial and non-judicial offices if they would publicize the                  There is simply no authority to
party's endorsement in their campaign literature. Judge Rabb                   support his belief that statements that
was ultimately nominated by the Democratic Party, endorsed                     are critical of another candidate for
by the Working Families Party, and elected to the Supreme                      office, aside from the judge's own
                                                                               opponent, would be treated differently


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In re Hecht, 213 S.W.3d 547 (2006)


            than statements in favor of another                  is to preserve and protect judicial independence, integrity,
            candidate for office.                                and impartiality, it must protect these values from attacks
                                                                 on all fronts. From the standpoint of public perception, one
Examiner's Brief at 26. But the canons do not make               thousand dollars is every bit as compromising as one thousand
that distinction, and the Examiner offers no support for         words.
the commentary. I suspect the 3700 judges who await
this decision would be disquieted to learn that one could                     If the concern is that a judge's
be sanctioned for conduct not delineated in the Code.                         endorsement or support of a candidate
Nevertheless, the Texas canons differ in other material                       for public office will damage
respects.                                                                     that judge's impartiality apparently
                                                                              because she is seen as aligning herself
Members of the Texas judiciary are permitted to provide                       with the candidate's view or ideology,
factual information or favorable comments, either formally or                 that is no less so when a judge
informally, to screening committees, appointing authorities,                  contributes to a candidate's political
and members of the Senate Judiciary Committee. The                            campaign, which is not prohibited.
Examiner concedes this is true. Examiner's Brief at 8, 11. A
judge may privately introduce judicial candidates to friends     Petitioner's Brief at 34. I agree.
and recommend that the friends vote for the candidates. See
OP. TEX. ETHICS COMM'N No. 2 (1975). This liberty of
private introduction and recommendation has been extended                                   Canon 2B
to all candidates for public office. See OP. TEX. ETHICS
COMM'N No. 13 (1976).
                                                                                     (The Promote Clause)
Most significant in my view is the fact that, unlike a member
                                                                 Finally, Justice Hecht challenges the constitutionality of
of the New York judiciary, a Texas judge may put his
                                                                 Canon 2B as applied. Quoting White I, he begins by defining
money where his mouth can't go. Simply stated, a judge
                                                                 terminology. The canon prohibits a judge from lending the
may make campaign contributions to other candidates—
                                                                 prestige of his office to advance the private interests of
including presidential candidates, congressional candidates,
                                                                 another. He defines “prestige” as:
gubernatorial candidates, legislative candidates, county and
municipal candidates, and other judicial candidates. In turn,      1. the power to impress or influence, as because of success,
we may accept contributions from these same sources as well        wealth, etc.
as special interest groups. In his brief, Justice Hecht points
to several members of the Commission who have routinely            2. reputation based on brilliance of achievement, character,
contributed to political campaigns, and he bitingly reveals        etc.
 *595 that one member contributed to Hillary Clinton's
                                                                 Webster's New World Dictionary of the American Language,
campaign only a month before he [Justice Hecht] was
                                                                 Second College Edition (1980). He contends that the
sanctioned:
                                                                 comments of a Texas Supreme Court jurist would hold little
            One wonders how it can be reconciled                 sway with the members of the Senate Judiciary Committee.
            that a political candidate can be                    Petitioner's Brief at 39. But Justice Hecht's assistance was not
            supported by a judge with money, but                 solicited by Karl Rove and the White House to influence the
            not words. What's good for Hillary                   committee. His help was needed to shore up the conservative
            should be good for Harriet. One would                base of the Republican Party to whom many committee
            think.                                               members owed allegiance. The idea was to have a well-
                                                                 respected, influential and conservative jurist reassure the
Petitioner's Brief at 6. His remark is right on the money—       committee members' constituents as a means to obtain Senate
it cannot be reconciled. From this, I conclude that Canon        confirmation. In this context, the promote clause cannot
5(2) is underinclusive, and “woefully” so. Because it cannot     be said to serve the state's interest in preserving judicial
survive strict scrutiny, it is unconstitutional, both facially   independence, integrity and impartiality. Whether Justice
and as applied. If the purpose of the endorsement clause         Hecht's national interviews persuaded individual senators or



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In re Hecht, 213 S.W.3d 547 (2006)


                                                                    concern for the relationship between judicial conduct and
swayed public opinion, his independence and impartiality
                                                                    public perception. Lowery, 999 S.W.2d at 647. “While the
would be called into question only if the individuals, entities,
                                                                    legal profession has historically been considered a noble one,
or affiliates appeared in a case before him. In that instance,
                                                                    modern-day portrayals paint a picture of scorn and ridicule.
recusal would be the least restrictive alternative. Because
                                                                    In the courtroom called the media, in the trial by public
Canon 2B is not narrowly tailored to serve the compelling
                                                                    perception, the image of the judicial system is at an all-time
state interests, it is unconstitutional as applied to Justice
                                                                    low.” Id.
Hecht.

                                                                    I offer two caveats before I close. First, the Commission is
                                                                    charged with enforcing the provisions of the Code of Judicial
                       CONCLUSION                                   Conduct as promulgated by the Texas Supreme Court. I
                                                                    believe it has endeavored to do so in good faith while awaiting
I have previously served as the presiding justice of a formal
                                                                    action by the Supreme Court on the remainder of the Task
review tribunal. In upholding the Commission sanction, I
                                                                    Force's recommendations. Second, the robe means something
wrote for the majority:
                                                                    to me. Every time I slip it on, I remember my oath—a vow “to
             Does the Code of Judicial Conduct                      preserve, protect and defend the constitution and laws of the
             intrude into a judge's private life? Most              United States and of this state.” If ever I look in the mirror and
             definitely. But that is a path chosen                  see a judge who has ruled on the basis of politics, expediency,
             when the decision to seek office is                    or personal gain rather than the rule of law, it is time to remove
             made. A judge must observe the high                    the robe and leave the bench. The citizens of this state deserve
             standards promulgated by the Code of                   nothing less. As for the 3700 judges who want to know what
             Judicial Conduct both on and off the                   to do, it is my fervent hope that each one will pause to consider
             bench in order to maintain the integrity               this: Our ability to speak does not mean that we should speak.
             of the judiciary.                                      I haven't, and I won't.

 *596     In re Lowery, 999 S.W.2d 639, 657
(Tex.Rev.Trib.1998, pet.denied). Though today I strike down         All Citations
the enforcement of portions of the Code, the aspirations live
                                                                    213 S.W.3d 547
on. Judicial accountability arises in part from a justifiable


Footnotes
1      The Honorable Kerry FitzGerald, Justice, Court of Appeals, Fifth District of Texas at Dallas: Presiding Justice of the
       Special Court of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random
       selection.
2      The Honorable Ann McClure, Justice, Court of Appeals, Eighth District of Texas at El Paso: Justice of the Special Court
       of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random selection.
3      The Honorable Amos Mazzant, Justice, Court of Appeals, Fifth District of Texas at Dallas: Justice of the Special Court
       of Review, appointed by Chief Justice Wallace B. Jefferson, Texas Supreme Court, by a process of random selection.
4      If we had determined Petitioner violated the Canons, we would have undertaken a constitutional analysis. The commission
       assumed the Canons were constitutional and proceeded accordingly.
5      We are mindful of the Supreme Court's principle of avoiding constitutional questions where possible. See Ashwander v.
       Tenn. Valley Auth., 297 U.S. 288, 346–48, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring). Two iterations of
       this principle apply here: “It is not the habit of the [C]ourt to decide questions of a constitutional nature unless absolutely
       necessary to a decision of the case” and “The Court will not pass upon a constitutional question although properly
       presented by the record if there is also present some other ground upon which the case may be disposed of.” Id. at 347,
       56 S.Ct. 466. These principles apply to federal courts. See Secretary of State v. Joseph H. Munson Co., 467 U.S. 947,
       972, 104 S.Ct. 2839, 81 L.Ed.2d 786 (1984) (citing Ashwander, 297 U.S. at 346, 56 S.Ct. 466, for constitutional decision-
       avoidance principles, and stating “We may require federal courts to follow those rules, but we have no power to impose
       them on state courts.”). But our Texas Supreme Court applies the same principle of avoiding constitutional questions
       where possible as expressed in Ashwander. See, e.g., In re B.L.D., 113 S.W.3d 340, 349 (Tex.2003) (“As a rule, we only



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In re Hecht, 213 S.W.3d 547 (2006)


       decide constitutional questions when we cannot resolve issues on nonconstitutional grounds.”), Bradley v. State ex rel.
       White, 990 S.W.2d 245, 247 (Tex.1999) (same). The constitutional decision-avoidance principle is a “traditional policy” of
       the courts and “was conceived out of considerations of sound judicial administration.” Alma Motor Co. v. Timken–Detroit
       Axle Co., 329 U.S. 129, 142, 67 S.Ct. 231, 91 L.Ed. 128 (1946). Thus, in view of our disposition of the issues relative to
       Canons 5(2) and 2B, we do not analyze or decide Petitioner's constitutional arguments based upon content and viewpoint
       restrictions. See Republican Party v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002); Rosenberger v.
       Rector & Visitors of Univ. of Va., 515 U.S. 819, 115 S.Ct. 2510, 132 L.Ed.2d 700 (1995).
6      The Texas Constitution states that the commission consists of thirteen members. TEX. CONST. art. V, § 1–a(2). Judge
       Monica Gonzales, the chairman of the commission during these events, testified that three of the positions were vacant
       and two members recused themselves from the proceedings.
7      Judge Gonzales testified she could not remember the vote tally for finding Petitioner violated the Canons and imposing
       the admonition. She testified that the commission's deliberations were concerned with the level of sanction to impose, not
       whether Petitioner violated the Canons. “All I remember, if there was any discussion at all, it had more to do with what level
       of sanction, not whether or not there was a violation of the canon. I don't remember that being a major discussion at all.”
8      The commission's conclusions and findings were based on The New York Times and the Texas Lawyer articles only.
9      The commission's conclusion stated:
           The Commission concludes from the facts and evidence presented that [Petitioner] allowed his name and title to
           be used by the press and the White House in support of his close friend, Harriet Miers, a nominee for the office of
           United States Supreme Court Justice. Such public support by a judicial official elected to the highest court in Texas,
           in the eyes of the public and the rest of the judiciary, would be construed as an endorsement of Miers' candidacy,
           as those terms are commonly used and understood. Because the Commission views Miers' desire for a lifetime
           appointment to the United States Supreme Court to be a private interest, the efforts of Petitioner in promoting his
           friend's candidacy by responding to media inquiries and assisting the White House in its efforts to convince powerful
           special interest groups to support her candidacy, constituted an improper use of his office and position to promote
           Miers' private interest.
         Citing Republican Party v. White, 536 U.S. 765, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002), and In Re Raab, 100
         N.Y.2d 305, 763 N.Y.S.2d 213, 793 N.E.2d 1287, 1291 (2003), the commission rejected Petitioner's argument that
         the application of Canons 2B and 5(2) infringed his First Amendment right to freedom of speech. The commission
         then stated,
           Based on the circumstances surrounding this matter, the Commission concludes that [Petitioner's] actions on behalf
           of Harriet Miers constituted persistent and willful violations of Canons 2B and 5(2) of the Texas Code of Judicial
           Conduct.
10     The Stipulation and Petitioner's Trial Exhibit No. 1 reflect Petitioner's service record in more detail:
           [Petitioner] is the Senior Justice of the Supreme Court of Texas, having been elected in 1988 and re-elected in 1994
           and 2000. He is the senior Texas appellate judge in active service.
           Throughout his service on the Court, [Petitioner] has overseen revisions to the rules of administration, practice, and
           procedure in Texas courts. In 2000, he was appointed by the Chief Justice of the United States to the Advisory
           Committee on Civil Rules for the Judicial Conference in the United States.
           [Petitioner] began his judicial service in 1981, when he was appointed to the 95th District Court in Dallas County. He
           was elected to that bench in 1982 and re-elected in 1984. In 1986 he was elected to the Court of Appeals for the
           Fifth District of Texas at Dallas, where he served until he was elected to the Supreme Court.
           Before taking the bench, [Petitioner] was a partner in the Dallas law firm of Locke Purnell Boren Laney & Neely
           (now Locke Liddell & Sapp). He joined that firm in 1976 and practiced mainly in the area of general business and
           commercial litigation.
           [Petitioner] received a B.A. degree with honors in philosophy from Yale University in 1971. He attended Southern
           Methodist University School of Law as a Hatton W. Sumners Scholar, and received his J.D. degree cum laude in
           1974. He was elected to Order of the Coif and served as an editor for the Southwestern Law Journal. Following law
           school, he served as a law clerk to the Hon. Roger Robb, Circuit Judge, U.S. Court of Appeals for the District of
           Columbia Circuit. He also served in the U.S. Naval Reserve Judge Advocate General Corps, achieving the rank of
           Lieutenant. He was honorably discharged from military service in 1979.
           [Petitioner] is licensed to practice in Texas and the District of Columbia. He is a member of the American Bar
           Association, the District of Columbia Bar Association, the State Bar of Texas, the Dallas Bar Association, and the
           Austin Bar Association. He is also a member of the American Law Institute, a fellow in the American Bar Foundation,



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              30
In re Hecht, 213 S.W.3d 547 (2006)


            a life fellow in the Texas Bar Foundation, and a founding fellow of the Dallas Bar Foundation. He received the
            Outstanding Young Lawyer Award from the Dallas Association of Young Lawyers in 1984, the Southern Methodist
            University School of Law Distinguished Alumni Award for Judicial Service in 2000, and the Hatton W. Sumners
            Foundation Distguished Public Service Award in 2004. He has taught as an Adjunct Professor at the University of
            Texas School of Law.
            [Petitioner] is a member of the Texas Philosophical Society. He attends the Cornerstone Christian Church of Dallas,
            where he is a pianist, organist, and teacher.
11     Justice Owen now sits on the United States Court of Appeals for the Fifth Circuit.
12     The Texas Lawyer article states, in part:
            “I'm a PR office for the White House,” [Petitioner] says jokingly about the 120 press interviews he estimates he did
            the week of October 3 to discuss Miers....
            Media outlets reported that [Petitioner] and Miers dated on and off over the years, but [Petitioner] doesn't like that
            characterization. “Dating to me sounds like what you did in high school,” [Petitioner] says. “We saw one another and
            went to dinner. We were good, closely connected friends then, and we are now.”
            [Petitioner] says he called White House Deputy Chief of Staff Karl Rove ... to see if it was OK for him to speak with
            the media. [Petitioner] says his mission is clear: to fill in the gaps about Miers' background and to counter some
            conservatives' skepticism about her qualifications to be a U.S. Supreme Court justice.
            [Petitioner] ... relays an anecdote about Miers and himself from the 1980s: One evening, he and Miers had attended
            a lecture together at the Valley View Christian Church in North Dallas, where they were members. After that lecture,
            Miers shared with [Petitioner] her belief that life begins at conception and abortion is wrong. By repeating that story
            to reporters nationwide, [Petitioner] ... says he's not saying that he knows how Miers would decide any particular
            case that might come before her as a justice. But he says he knows she opposes abortion.
            [Petitioner] says conservatives should rest easy about Miers' nomination and should not draw comparisons between
            Bush's nomination of Miers and President George H.W. Bush's 1990 nomination of Justice David Souter, whose
            slim record held no indication of his eventual liberal leanings on the court. “I have the utmost respect for President
            Bush No. 41, but I doubt he could have picked Justice Souter out of a lineup the day before he appointed the
            man,” [Petitioner] says. “By contrast, Harriet and the president have worked together hand and glove for 10 years.
            He's called her for legal advice, he's called her for campaign advice, he's called her to vet judicial appointments.
            And he knows her as well as you could know anybody. And he's stood there and watched. You can never be totally
            sure, particularly concerning someone who has been given a lifetime appointment. But the difference between that
            situation and this one is night and day.”
13     Petitioner testified he was not interviewed for the story and that it was written without any input from him.
14     The New York Times article states:
           But she [Miers] still felt something was missing in her life, and it was after a series of long discussions—rambling
           conversations about family and religion and other matters that typically stretched from early evening into the night
           —with [Petitioner], a junior colleague at the law firm, that she made a decision that many of the people around her
           say changed her life.
           “She decided that she wanted faith to be a bigger part of her life,” [Petitioner], who now serves on the Texas Supreme
           Court, said in an interview. “One evening she called me to her office and said she was ready to make a commitment”
           to accept Jesus Christ as her savior and be born again, he said. He walked down the hallway from his office to hers,
           and there amid the legal briefs and court papers, Ms. Miers and Petitioner “prayed and talked,” he said.
           To persuade the right to embrace Ms. Miers's selection despite her lack of a clear record on social issues,
           representatives of the White House put [Petitioner] on at least one conference call with influential social conservative
           organizers on Monday to talk about her faith and character.
           Ms. Miers sometimes attended Mass at St. Jude Chapel in downtown Dallas, but before embracing evangelical
           Protestantism, her experience with religion was lukewarm and her attendance sporadic, [Petitioner] said.
           A close relationship with [Petitioner]—also a longtime member of Valley View—who frequently appears with Ms.
           Miers at social functions in Washington and in Texas, has been a steady feature of her life for nearly 30 years.
           [Petitioner] is known as one of the most conservative members of the Republican-dominated Texas Supreme Court.
           Newspapers in Texas have reported that [Petitioner] and Ms. Miers were romantically involved, and when asked in
           an interview whether that was still the case, [Petitioner] responded that they were close, without going into great
           detail. “She works in Washington, I work in Austin,” [Petitioner] said. “We have dinner when she's here; if she invites
           me to Washington I happily go. We talk on the phone all the time.”



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In re Hecht, 213 S.W.3d 547 (2006)


            [Petitioner] and Ms. Miers spoke on Sunday evening, but she did not tell him about the pending announcement that
            she had been offered the nomination, he said. “She's a stickler for the rules,” he said. He never asked Ms. Miers
            how she would vote on the issue of abortion if it came before the Supreme Court, he said. “She probably wouldn't
            answer, she wouldn't view it as appropriate.”
            “Yes, she goes to a pro-life church,” [Petitioner] said, adding, “I know Harriet is, too.” The two attended “two or three”
            anti-abortion fund-raising dinners in the early 1990's, he said, but added that she had not otherwise been active in
            the anti-abortion movement. “You can be just as pro-life as the day is long and can decide the Constitution requires
            Roe” to be upheld, he said.
            Apart from the questions about abortion and other issues Ms. Miers will face in confirmation hearings, the strong
            tie she and [Petitioner] have to their church is undergoing a test. The congregation at Valley View is in the middle
            of a schism, and Mr. [Petitioner] said he and Ms. Miers are siding with the splinter groups that are forming a new
            church under Valley View's longtime pastor, Ron Key.
15     Affidavit of Thomas R. Phillips:
            My name is Thomas R. Phillips. I have personal knowledge of the facts stated in this affidavit.
            I served as Chief Justice of the Supreme Court of Texas from January 4, 1988, until I retired on September 3, 2004.
            One of the administrative duties of the Supreme Court is the promulgation of the Code of Judicial Conduct. While
            I was Chief Justice, the Supreme Court completely revised the Texas Code of Judicial Conduct on one occasion
            and made discrete changes and additions several additional times. In each instance, I presided over that process
            and took a very active role in the Court's efforts.
            Over the years, I believe that I have developed an expertise in the Code. I have spoken on judicial speech under
            the ABA Model Code and various state Codes on many occasions including to the Washington Judicial Conference
            in Tacoma and to the entire Conference of Chief Justices. As a part of my efforts to reform judicial selection and
            enhance judicial independence, I frequently participated in commissions and task forces that explored, among other
            things, the balance between a judge's right (and occasionally obligation) to speak on matters of public concern versus
            the public's right to a court system which is and is seen as being impartial and unbiased. I explored such issues
            in some detail in the 2001 National Summit on Judicial selection, of which I was one of two co-convenors, and in
            my service on the American Bar Association's Commission on 21st Century Judiciary in 2002–03 and its Judicial
            Selection and Judicial Campaign Committee in 2001–03.
            Even though I have now returned to private practice, I remain interested in and involved in issues of judicial speech.
            Most significantly, I am counsel of record for the State of Minnesota on petition to the United States Supreme Court
            for writ of certiorari in Republican Party v. White, 416 F.3d 738 (8th Cir.2005), a case involving the constitutionality
            of certain restrictions on political speech by judges and judicial candidates. I am also a lifetime member of the
            Conference of Chief Justices, a member of the National Advisory Counsel of the American Judicature Society, and
            will soon begin serving on the Lawyers' Committee of the National Center for State Courts. Each of these groups
            is particularly interested in judicial speech issues.
            I have read the response of [Petitioner] to the Letter of Inquiry in Nos. 06–0129–AP and 06–0130–AP before the
            Texas Commission on Judicial Conduct. In my opinion, his actions referred to in the Letter of Inquiry and described
            in the response, taken in connection with the nomination of Harriet Miers to be an Associate Justice of the United
            States Supreme Court, did not violate Canon 2(B) or Canon 5(2) of the Texas Code of Judicial Conduct. This affidavit
            is based on the Letter of Inquiry and [Petitioner's] response.
            Canon 5(2) states in relevant part: “A judge or judicial candidate shall not authorize the public use of his or her name
            endorsing another candidate for any public office....” In my opinion, Harriet Miers was not “another candidate for ...
            public office” within the meaning of Canon 5(2). By “another candidate,” the Canon refers to a candidate like “[a]
            judge or judicial candidate,” that is, a political candidate for elected office. Ms. Miers was President Bush's nominee
            for a judicial position subject only to confirmation by the United States Senate. Furthermore, in commenting on Ms.
            Miers's background and experience, [Petitioner] was not “endorsing” her but was responding to legitimate press
            inquiries about her background and qualifications, matters of intense national interest and importance.
            Canon 2(B) states in relevant part: “A judge shall not lend the prestige of judicial office to advance the private interests
            of the judge or others ...” In my opinion, in commenting on Harriet Miers's qualifications to sit on the Supreme Court
            of the United States, [Petitioner] was not lending the prestige of his office in any respect. He was asked to comment,
            not because he is a judge, but because he has a long, close, public relationship with Ms. Miers. This is demonstrated,
            I think, by the fact that none of [Petitioner's] current colleagues on the Court were asked to make any comments
            about Ms. Miers during the confirmation process. The issue was not whether a judge [Petitioner] thought Ms. Miers



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In re Hecht, 213 S.W.3d 547 (2006)


           was qualified for the position to which the President had nominated her, but whether [Petitioner], Harriet's friend, had
           unique information that would help the American public and, ultimately, the nation's 100 Senators decide whether
           she was qualified.
           In legal parlance, [Petitioner] did not “thrust himself into the vortex” of this controversy. His extremely close
           relationship with Ms. Miers was well known in legal circles throughout Texas and in Washington, D.C. When reporters
           began searching for photographs of the significant milestones in Ms. Miers' professional career, [Petitioner] was
           invariably accompanying her or pictured very close by. There is simply no way he could have avoided being deluged
           with questions, and no way that his failure to cooperate with the press and with others could have been construed
           an anything other that a deliberate obstruction of the public's right to know about the President's appointee.
           Nor was [Petitioner] in any way advancing his own private interests. His comments were about Ms. Miers, not
           himself. He never identified himself as a candidate for elected office or otherwise sought to draw attention to his own
           credentials and talents, as considerable as those are.
           Moreover, because [Petitioner's] unique position, his statements about Ms. Miers' background and qualifications
           were not necessarily made to advance Ms. Miers' interests. As I have stated, his long and close friendship with Ms.
           Miers gave him an overriding responsibility to help the American public become better acquainted with her. What
           he said in his various interviews was no doubt viewed favorably by some and unfavorably by others; his comments
           worked to help her nomination in some quarters and worked to hinder it in others.
           Thus, the circumstances in which [Petitioner] found himself were highly unusual, perhaps unique in the history of
           the American judiciary. After all, [Petitioner] has not made a single public statement about Judge Alito or any prior
           Supreme Court nominee, nor, I suspect has he ever been asked to do so. But even if he had not been so close to
           Ms. Miers, and even if she had not been a nominee for perhaps the most powerful governmental body in the world, I
           do not believe that his actions in speaking frankly and favorably about someone he knew would violate the Code of
           Judicial Conduct. Judges are frequently asked to introduce speakers or help present awards to people. In so doing,
           they inevitably must detail the subject's accomplishments and extol their virtues. I gave dozens of such speeches
           during my judicial service, sometimes in praise of individuals who were at the time candidates for higher office. For
           example, I gave farewell tributes in public ceremonies in the House of Representatives Chamber when Justices
           Cornyn and Abbott resigned from the Texas Supreme Court to stand for election as Attorney General. I did not
           endorse either person, but my remarks were intended to be laudatory and might have swayed a voter who chanced
           to be present. [Petitioner], as the senior justice of the state's highest court and as a gifted speaker, is frequently
           asked to make public remarks about a judge, a lawyer, or a community leader. I suspect that every judge in Texas
           has done likewise at some point or another during their tenure in office. As long as the judge does not make such
           remarks with the primary purpose of political gain for himself or the honoree, I do not think such conduct can be
           taken to violate the Texas Code of Judicial Conduct.
           Finally, regardless of how the literal words of our Code might be interpreted, there are also larger constitutional
           questions at stake. In my opinion, [Petitioner's] actions described in the Letter of Inquiry and his response were
           protected by the First Amendment to the United States Constitution and by article I, section 8 of the Texas
           Constitution. His comments were directed to core issues of public importance. As such, his speech was protected
           under the rational set forth by the Supreme Court in Republican Party of Minnesota v. White, 536 U.S. 765, 122
           S.Ct. 2528, 153 L.Ed.2d 694 (2002).
16     Judge Parsons was also aware of the amicus curiae briefs filed by parties which he perceived might normally have
       competing interests. We have been assisted by briefs filed by the following: Texans for Lawsuit Reform; Donna G.
       Davidson and Tina J. Benkiser, Chairman of the Republican Party of Texas, on behalf of the Republican Party of Texas;
       a group of Texas lawyers including Travis E. Vanderpool, William Stephen Boyd, Orrin L. Harrison, Robert W. Jordan,
       Timothy W. Mountz, Joseph D. Jamail, Jr., Charles W. Schwartz, George E. Bowles, Jerry K. Clements, Michael M.
       Boone, Brian D. Melton, John L. Estes, Robert A. Wooldridge, George W. Bramblett, Jr., S. Michael McColloch, Wayne
       Fisher, Larry P. Boyd, and R. Jack Ayres; and The ACLU Foundation of Texas.
17     40 TEX. B.J. 131 (1977); see Op. Tex. Att'y Gen. No. LO–89–21 (1989).
18     The Judicial Section of the State Bar of Texas created the Committee on Judicial Ethics in 1974. ROBERT P. SCHUWERK
       & LILLIAN B. HARDWICK. HANDBOOK OF TEXAS LAWYER AND JUDICIAL ETHICS S § 21.02 (Tex. Practice Series
       2005). The committee issues advisory opinions. Both the committee and the commission agree the advisory opinions
       are not binding. Id. The commission rigidly adheres to the committee's advisory opinions. Id. The committee also does
       not knowingly make comments on pending or impending proceedings before the commission. Id.




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19     This provision was relocated twice, first in 1994 to Canon 5(3) and then in 2002 to Canon 5(2). TEX.CODE JUD.
       CONDUCT, Canon 5(3), 57 TEX. B.J. 1080 (1994); 65 TEX. B.J. 798 (2002). The language of this provision, however,
       remains unchanged from 1990.
20     Petitioner was the only witness called to testify about this provision. During his testimony, he responded to the suggestion
       of the commission's attorney that Canon 5(2)'s purpose was to eliminate corruption.
          Q. In canon 5(2) part of the reason that was created, Canon 5(2), you were talking earlier about being muscled or
            hustled into cross endorsing each other. It sounds to me like that's some sort of an anti corruption statute that goes
            to corruption.... [I]sn't there a quid pro quo problem that 5(2) addresses, where you do me a favor, and then one day
            I'll come to you and I'll ask a favor, and I better get it paid back. Isn't that part of what 5(2) was trying to address
            when it was created?
          A.... [T]hat may have been a small part of it, the cross, but this canon was brought to the Court by the judges, which is
            a very unusual thing, because judges don't like the canons, generally speaking, not for more of them, but for less of
            them, but they were for this one because they wanted—the principal reason was they wanted an excuse to give the
            mayor of the City Council person, mostly the county commissioners, so that they didn't get tangled up in politics.
            But it wasn't really corruption, it was just that the commissioners said, you know, I expect your endorsement. If you
            didn't give it, you were afraid what was going to happen to you at budget time. You're always fearful of what's going
            to happen to you at budget time. So it was not a corruption thing.
            I'm not aware of a corruption problem. I'm just not aware.
          Q. It's just a question I have regarding how the—how this was tailored. The question was, there does appear to be a
            fear about quid pro quo stopping this type of pressure on the judges regarding quid pro quo endorsements.
          A. I'm just not aware of the trading part. It was more, you give it to me or else I'm not going to give you what you want,
            your telephone budget, or your pencil budget is not—it's just what the Court is trying to use to operate. But there were
            problems, primarily it was in the country, although occasionally there would be problems in the more urban areas.
            But that was principally what—that's one of the problems. People bring you language, and it's aimed at a particular
            circumstance, or even class of circumstances, but then the language can be used in circumstances that you don't
            immediately envision in ways that were never intended, and that's the problem you have there.
          Petitioner testified further on this subject on examination by the commission:
          Q. Do you believe that Ms. Miers was a candidate for public office in the sense of—that it was intended by the Texas
            Supreme Court in this canon?
          A. No.
          Q. And why not?
          A. Well, because this canon, again as I said earlier, and Judge Parsons reiterated, is getting at the kind of
            entanglements, I wouldn't call it corruption, I suppose maybe there could be a case like that, but mostly it's the
            entanglements that you get into when you're getting involved in other people's elections.
            And especially, well, no, not especially. I was going to say especially when they're in another branch. But the whole
            problem here was that judges were being asked to get involved in other people's races, and there was no way that
            you can get tangled up in endorsing a nominee for the Supreme Court of the United States. There's no entanglement
            to get into. There is no question. I'm not likely to be partial or impartial because of that endorsement, or any statement
            made in connection with that nomination. It just doesn't have any application in that situation.
21     In effect, in 1990, members of the judiciary sought relief from a pressing political quagmire. On occasions, politically
       connected candidates would flex their “muscle” in order to “persuade” or pressure a judge to let the candidates show the
       judge as an endorser in an unrelated political contest. According to the conventional wisdom at the time, who better to
       show on a list of prominent endorsements than “the respected local judge.” The supreme court acceded to the request,
       creating the “authorization” prohibition. The amendment addressed the specific problem head on by providing a safe
       harbor for the judge. The judge could now “reluctantly” decline to let a politically connected candidate use his name
       endorsing the candidate without fear of reprisal. The judge need only cite the “authorization” prohibition in the Code to
       resolve what could otherwise become a delicate and politically sensitive dilemma. Thus, the “authorization” prohibition
       had absolutely nothing to do with “endorsing,” that is, making supportive political statements. Rather, it addressed a
       different situation: “cover.” The provision centered on customary “endorsements” so familiar to the voting public, that is,
       a compilation of well-known and respected persons who consented to the use of their names supporting a particular
       candidate.
          Petitioner's testimony went unchallenged by the commission.




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22     The Task Force members' statements, while not precedential, are enlightening because they addressed—and failed to
       resolve—the very issues facing the Court today. They expressed grave concern that there is no definition for “endorsing”
       within the Texas canons and case law.
23     The commission was established by the Texas Constitution, article V, section 1–a(2). The constitution empowered the
       commission, inter alia, to discipline or censure any Justice or Judge for “willful or persistent violation of rules promulgated
       by the Supreme Court of Texas, incompetence in performing the duties of the office, willful violation of the Code of Judicial
       Conduct, or willful or persistent conduct that is clearly inconsistent with the proper performance of his duties or casts
       public discredit upon the judiciary or administration of justice.” TEX. CONST. art. V, § 1–a(6). Clearly, the commission is
       the entity charged with enforcement of the Code. In addition, article V, section 1–a(10) provides:
             [T]he Commission may issue a public statement through its executive director or its Chairman at any time during
             any of its proceedings under this Section when sources other than the Commission cause notoriety concerning a
             Judge or the Commission itself and the Commission determines that the best interests of a Judge or of the public
             will be served by issuing the statement.
          TEX. CONST. art. V, § 1–a(10) (emphasis added).
24     The commission filed a First Amended Charging Document, stricken by this Court on other grounds, which alleged in
       part that Petitioner “authorized the public use of his name and title to ‘support or endorse’ his close friend, Harriet Miers,
       a candidate for public office....”
25     The commission, during its closing presentation, inexplicably injected the concept of “assembly line justice.” The
       commission initially argued this Court should find Petitioner violated the Code. While skeptical of Petitioner's challenges
       of the Code, the commission acknowledged lurking problems and sought judicial assistance in interpreting the Code
       provisions at issue. The commission then argued: “The sad reality of this case is Petitioner, at the day of his hearing,
       was merely next. The worst thing you can be in a government proceeding is next, merely next in a series of others that
       were prosecuted for similar violations.” The commission asked this Court to give it guidance, and, in the event it found
       the Code unconstitutional, to strike it down, in order that the commission could “get on with the business of regulating
       the rest of the conduct of the judges in the State.” Counsel for Petitioner replied that Petitioner should not be treated as
       “merely next” as if within an “assembly line.” He asserted that the commission totally ignored Canon 8 and the rules of
       reason, and that Petitioner was “being sanctioned for speaking truthful speech on a matter of public importance that is
       core speech in our democracy....” Assembly line justice is a close cousin to no justice at all, and is, in reality, an absurd
       oxymoron. Assembly line justice should be foreign to a judge's vocabulary and an extinct concept in our democracy.
26     In its entirety, JR 4–101 provides:
             A judge shall not knowingly (1) make a public statement in support of the election or defeat of any candidate for
             a nonjudicial public office or to promote or influence the passage or defeat of laws or regulations at any level of
             government, or (2) contribute or solicit funds services or property to elect or defeat any candidate for a nonjudicial
             public office or to promote or influence the passage or defeat of laws or regulations at any level of government, or (3)
             lend the judge's name in support of an action, by any person or group, to elect or defeat any candidate for a nonjudicial
             public office or to promote or influence the passage or defeat of laws or regulations at any level of government,
             if in doing (1), (2) or (3) above, the judge:
             (A) Creates a reasonable doubt about the judge's impartiality toward persons, organizations or factual issues that
             would likely come before the court on which the judge serves, including, but not limited to, circumstances that require
             the judge's disqualification under JR2–106.
             (B) Supports in the judge's official capacity, a cause other than one pertaining to the legal system, legal education,
             the improvement of the law, the integrity of the judicial process, the administration of justice, or court administration,
             including judicial benefits. This subsection does not limit the ability of a judge to join, pay dues to, and participate in
             activities of any professional association or organization, which activities may include lobbying for judicial benefits
             such as salary and retirement.
             (C) Represents that the judge making the public statement speaks on behalf of the judicial branch of government
             unless the judge has been authorized to do so.
          OR.CODE JUD. CONDUCT JR 4–101.
27     The conduct in question included “an improper contribution” and “actively campaign[ing] for a legislative candidate by
       participating in a phone bank and assist[ing] Working Families Party officials at a candidate screening meeting by
       questioning other judicial and nonjudicial candidates on behalf of the party.” Raab, 763 N.Y.S.2d 213, 793 N.E.2d at 1293.
       Several of the relevant canons included: “Prohibited political activity shall include: ... (c) engaging in any partisan political
       activity (except as to own campaign); (d) participating in any political campaign for any office or permitting his or her name



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In re Hecht, 213 S.W.3d 547 (2006)


       to be used in connection with any activity of a political organization; (e) publicly endorsing or publicly opposing (other
       than by running against) another candidate for public office; (f) making speeches on behalf of a political organization or
       another candidate; and (g) attending political gatherings.” Id. at 1289 n. 2. Both the conduct and the relevant provisions of
       the New York Code are clearly distinguishable from Petitioner's conduct and the Texas Code. The commission extracted
       from this case an excerpt referring to political corruption. We observe that there is not even a hint of corruption in the
       case before us. In fact, the commission admitted that it did not contend the statements at issue were false or deceptive.
28     The commission's attorney asked Petitioner,
          Q. Now, when you were giving these interviews, you knew you couldn't control what they would write about?
          A. Absolutely.
       ***
          Q....When it goes out, it's out, you cannot control the media, right?
          A. Absolutely.
29     While the commission listed members of the news media as potential witnesses, none were called. The commission
       called no witnesses other than Petitioner.
30     We do not suggest the commission advanced this position. As previously noted, the commission cast a blind eye to the
       “authorized” requirement and never proffered any argument or evidence on this subject.
31     The Task Force hearings on the Code also reflect some insightful remarks and observations of distinguished Professor
       Laycock and Dean Attanasio as to the broad nature of the term “endorse” and what, if any, distinctions can be drawn
       between “support” and “endorse.” Their concerns, shared by other members of the committee, related to interpreting the
       language in order to conform to the rules, and to determining whether the terminology would pass constitutional muster.
32     The commission's brief provides this Court with approximately one page of analysis on its position.
33     We take notice that “[i]n late January 2005, the American Bar Association's joint commission released new draft rules on
       political activity by judges and judicial candidates which is covered in Canon 5 of the existing code. The draft revisions
       specifically address the activities of candidates seeking judicial office in partisan public elections.” The new draft rules
       permit candidates to “publicly endorse or oppose candidates running for other judgeships in the same judicial office.”
       N.D. Family Alliance, Inc. v. Bader, 361 F.Supp.2d 1021, 1041 n. 2 (D.N.D.2005).
34     The Code of Judicial Conduct in a number of states permit endorsing. For example,
         In California, Canon 5A(2) provides:
             5A. Judges and candidates for judicial office shall not ... (2) make speeches for a political organization or candidate
             for nonjudicial office or publicly endorse or publicly oppose a candidate for nonjudicial office;
         the comment to Canon 5A states that:
             Under this Canon, a judge may publicly endorse another judicial candidate. Such endorsements are permitted
             because judicial officers have a special obligation to uphold the integrity and impartiality of the judiciary and are in a
             unique position to know the qualifications necessary to serve as a competent judicial officer.
         In addition, Canon 5C states:
             Candidates for judicial office may speak to political gatherings only on their own behalf or on behalf of another
             candidate for judicial office.
         CAL.CODE JUD. CONDUCT, Canons 5A(2) & cmt., 5C.
         Idaho's Code of Judicial Conduct states:
             (1) A judge or a candidate subject to public election may, except as prohibited by law:
             (a) when a candidate for election ...
             (iv) publicly endorse or publicly oppose other candidates for the same judicial office in a public election in which the
             judge or judicial candidate is running.
         IDAHO CODE JUD. CONDUCT, Canon 5C(1)(a)(iv).
         In Illinois, Canon 7B states:
             (1) A judge or candidate may, except as prohibited by law: ...
             (b) when a candidate for public election ...
             (iv) publicly endorse or publicly oppose other candidates in a public election in which the judge or judicial candidate
             is running.
         ILL.CODE OF JUD. CONDUCT, Canon 7B(1)(b)(iv).
         In Kansas, Canon 5C states:
             (1) A judge or a candidate subject to public election may, except as prohibited by law: ...
             (b) when a candidate for election ...



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In re Hecht, 213 S.W.3d 547 (2006)


             (iv) publicly endorse or publicly oppose other candidates for the same judicial office in a public election in which the
             judge or judicial candidate is running.
          KAN.CODE JUD. CONDUCT, Canon 5C(1)(b)(iv).
          In Maine, Canon 5(C)(2)(d) states:
             A candidate for election or reelection as judge of probate may, while a candidate, publicly endorse or publicly oppose
             any candidate for public office.
          ME.CODE JUD. CONDUCT, Canon 5(C)(2)(d).
          Michigan's Code of Judicial Conduct provides that:
             (2) A judge or candidate for judicial office may: ...
             (a) attend political gatherings;
             (b) speak to such gatherings on the judge's own behalf or on behalf of other judicial candidates....
          MICH.CODE OF JUD. CONDUCT, Canon, 7A(2)(a), (b).
          In North Carolina, a judge or judicial candidate may:
             (2) if [a judge] is a candidate, endorse any individual seeking election to any office or conduct a joint campaign with
             and endorse other individuals seeking election to judicial office, including the solicitation of funds for a joint judicial
             campaign....
          N.C.CODE JUD. CONDUCT, Canon 7B(2).
          In North Dakota, the commentary to Canon 5 states that the “canons do not prohibit candidates from campaigning on
          their own behalf or from endorsing or opposing candidates for a position on the same court for which they are running.”
          N.D.CODE OF JUD. CONDUCT, Canon 5A, Commentary, para. 4.
          In Pennsylvania, Canon 7A states:
             (2) Judges holding an office filled by public election between competing candidates, or a candidate for such office,
             may, only insofar as permitted by law, attend political gatherings, speak to such gatherings on their own behalf when
             they are a candidate for election or reelection, or speak on behalf of any judicial candidate for the same office, identify
             themselves as a member of a political party, and contribute to a political party or organization.
          PA.CODE JUD. CONDUCT, Canon 7A(2) (emphasis added).
          In Tennessee,
             [a] judge, subject to retention election, may, at any time, publicly endorse or oppose a judge standing for retention
             or a candidate for appointment to the court of which the judge is a member.
          TENN.CODE OF JUD. CONDUCT, Canon 5D.
          Vermont has a similar provision which states that a candidate for election or reelection as judge of probate or assistant
          judge may, while a candidate “publicly endorse or publicly oppose any candidate for the same office.” VT.CODE OF
          JUD. CONDUCT, Canon 5C(2).
35     For example: Alabama and Oregon. The Oregon Code prohibits a judge from making public statements and lending the
       judge's name in relation to other candidates who are running for nonjudicial office, but makes no mention of a similar
       prohibition with respect to candidates for judicial office. OR.CODE OF JUD. CONDUCT, JR 4–101 to 4–104.
36     In a less populated area, everyone in the community may qualify as the judge's “friend.” In a larger area, even given that
       the audience may initially be limited to several thousand persons, the post-endorsement wave of activity by the judge's
       friends generated by the initial endorsement may well increase exponentially to very sizeable numbers.
37     For example, Arizona, Colorado, Connecticut, Georgia, Massachusetts, New Hampshire, New Jersey, New Mexico, North
       Carolina, Pennsylvania, and Utah.
38     For example, Arkansas, Delaware, Florida, Hawaii, Indiana, Kansas, Kentucky, Louisiana, Minnesota, Nebraska, Nevada,
       New York, Ohio, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, and Wyoming.
39     North Carolina's Code of Judicial Conduct also defines “candidate,” limiting its meaning to “a person actively and publicly
       seeking election to judicial office.” N.C.CODE JUD. CONDUCT, Canon 7A(1). Had the Texas Supreme Court defined
       “candidate,” “endorse,” and other terms in the Texas Code of Judicial Conduct, many of the questions before us would
       not have arisen.
40     Our review of a portion of the evidence shows numerous statements made by prominent jurists before the Senate
       Judiciary Committee supporting previous judicial nominees to the United States Supreme Court. Utah State Judge
       Lindberg described her “enthusiastic support” for Judge Roberts nomination as Chief Justice and went into detail about his
       “towering intellectual skills and engaging personality.” Judge Klein, Presiding Justice of the California Court of Appeals,
       spoke in behalf of Judge O'Connor, whom she found “exceptionally well qualified” as well as “brilliant, fair, pragmatic....”
       She described her integrity as being “above reproach,” and emphasized she was moderate and “gracious” and had “every



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 37
In re Hecht, 213 S.W.3d 547 (2006)


       potential for becoming an outstanding Supreme Court Justice.” United States District Judge Jack Tanner described Judge
       Thomas as “well qualified to become an Associate Justice” and “the best man for the job.” United States District Judge
       “endorse[d] wholeheartedly the nomination[s]” of Judge Powell and William Rehnquist. He praised Mr. Rehnquist for his
       academic achievements and professional skills and “could find no one that [he] would recommend more highly.” United
       States Court of Appeals Judge Barry, of the Third Circuit in Pennsylvania, said Judge Alito was “a man of remarkable
       intellectual gifts” and “impeccable legal credentials” who would make a “marvelous and distinguished” Associate Justice.
          A careful review of the public statements of judges who appeared before a Senate Judiciary Committee shows each
          witness' testimony more often than not “endorsed,” by any definition, the nominee.
          According to Professor Hazard, whose testimony was stipulated to by the commission: “[J]udges talk to the media and
          public about nominees to the federal bench, and he is not aware of any judge who has been sanctioned by a state or
          federal committee or by a court for making comments to the press or public about a nominee to the federal bench.”
41     The Preamble of the Code stresses the principle that “an independent, fair and competent judiciary will interpret and apply
       the laws that govern us.” It also emphasizes judges “must respect and ”the judicial office as a “public trust.” TEX.CODE
       JUD. CONDUCT, Preamble.
          Canon 1 states: “A judge should participate in establishing, maintaining, and enforcing high standards of conduct,
          and should personally observe those standards so that the integrity and independence of the judiciary is preserved.
          The provisions of this Code are to be construed and applied to further that objective.” TEX.CODE JUD. CONDUCT,
          Canon 1.
          Canon 2 states a judge must “act at all times in a manner that promotes public confidence in the integrity and impartiality
          of the judiciary.” Id. Canon 2. Canon 3B(10) states in part that a judge is not prohibited from “making public statements
          in the course of their official duties or from explaining for public information the procedures of the court.” TEX.CODE
          JUD. CONDUCT, Canon 3B(10).
          Canon 4B(1) states that a judge may “speak, write, lecture, teach and participate in extra-judicial activities concerning
          the law, the legal system, the administration of justice and non-legal subjects, subject to the requirements of this
          Code....” TEX.CODE JUD. CONDUCT, Canon 4B(1).
          Canon 5(1)(ii) states: “A judge ... shall not: ... knowingly or recklessly misrepresent the identity, qualifications, present
          position, or other fact concerning the candidate or an opponent....” TEX.CODE JUD. CONDUCT, Canon 5(1)(ii). Canon
          5(2), in its entirety, states:
             A judge or judicial candidate shall not authorize the public use of his or her name endorsing another candidate for
             any public office, except that either may indicate support for a political party. A judge or judicial candidate may attend
             political events and express his or her views on political matters in accord with this Canon and Canon 3B(10).
          TEX.CODE JUD. CONDUCT, Canon 5(2).
42     In its entirety, Canon 2B provides:
             A judge shall not allow any relationship to influence judicial conduct or judgment. A judge shall not lend the prestige
             of judicial office to advance the private interests of the judge or others; nor shall a judge convey or permit others to
             convey the impression that they are in a special position to influence the judge. A judge shall not testify voluntarily
             as a character witness.
          TEX.CODE JUD. CONDUCT, Canon 2B.
43     Rather than focusing on a definition of “private interest,” the commission argues from the position that Canon 2B, like
       Canon 5(2), prohibits a judge from publicly endorsing other candidates. However, we have already concluded Petitioner's
       conduct did not violate the “authorization” provision of Canon 5(2).
44     We are aware the commission, in its brief identified Miers' “private interests” under Canon 2B as:
             political ambition, including but not limited to a candidate's desire for lifetime tenure, prestige, and power, which
             motivates a candidate to seek a life-time appointment to the federal bench in the first place and there is no position
             more prestigious, more powerful, or more remarkable and exclusive than justice of the United States Supreme Court.
          The commission must prove, not just allege or argue, Petitioner lent the prestige of his judicial office “to advance the
          private interests” of Harriet Miers. Even if we assumed Canon 2B applied, we would reject the commission's position.
          The United States Constitution sets forth the length of the term of a Justice of the United States Supreme Court life
          tenure. In essence, the commission singled out part of a constitutional provision and, without any evidentiary support,
          argues it politically motivated Miers to seek the nomination. The commission further argues the power and prestige of
          the judicial position drove Miers to seek the nomination. This argument is likewise unsubstantiated by any evidence and
          is entirely speculative. We conclude it is spurious. The uncontroverted evidence shows Miers never sought, suggested,
          aspired to, or requested the nomination. She “dreaded” the idea but acceded to the President's request. Miers was



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In re Hecht, 213 S.W.3d 547 (2006)


          prompted to accept the nomination in the public interest, in effect, to further serve. The flaw in the commission's position
          is that it assumes but does not prove political ambition. The commission has failed to even attempt to provide a scintilla
          of evidence of Miers' political ambition, and thus, failed to prove Petitioner advanced Miers' “private interests.”
          Even if pursuing the nomination at the President's request is some evidence Miers' political ambition to a seat on the
          Supreme Court, Jimenez recognizes a balancing between such private motivation and the public interest. See Jimenez,
          841 S.W.2d at 581. The commission offered no argument or evidence that Miers' private interest, that is, her “political
          ambition,” outweighed the public interest under Jimenez, and our review of the evidence shows no such imbalance.
45     The North Carolina Code recognizes this inherent problem and permits the judge to endorse his own candidacy. The
       North Carolina Code specifically excepts the judge “so long as he does not expressly endorse a candidate (other than
       himself ) for a specific office....” N.C.CODE JUD. CONDUCT, Canon 7B(1) (emphasis added).
46     See In re Davis, 82 S.W.3d 140, 150 (Tex.Spec.Ct.Rev.2002) (using position of judge to retaliate against an assistant
       district attorney); Public Reprimand of Ken Reilly, Municipal Court Judge, No. 04–0360–MU (Comm'n Jud. Conduct Nov.
       2, 2004) (part-time municipal judge who served one-half day per month advertised his public-speaking private business,
       which was his primary occupation, with statements like “Bring ‘The Judge’ to your next meeting as a keynoter”); Public
       Reprimand and Order of Additional Education of Santos Benevides, Justice of the Peace, No. 04–0513–JP (Comm'n
       Jud. Conduct Nov. 2, 2004) (judge ordered felon arrestee released on personal recognizance bond because arrestee
       was son of 25–year acquaintance of judge); Public Admonition of Alonzo Villarreal, Justice of the Peace, No. 04–
       0285–JP (Comm'n Jud. Conduct June 25, 2004) (judge contacted municipal judge about another person's traffic ticket;
       when municipal judge said that was inappropriate use of judicial office, judge said “we judges help each other”); Public
       Admonition of Jose Canales, Justice of the Peace (Comm'n Jud. Conduct June 27, 2003) (judged telephoned another
       judge to obtain favorable treatment for county official's daughter on traffic citation pending in other judge's court); Public
       Admonition of Frederick Edwards, District Court Judge (Comm'n Jud. Conduct Apr. 12, 2001) (using position as judge
       in attempt to avoid arrest and prosecution for driving while intoxicated); Public Reprimand of Marvin Mitchell, Former
       Justice of the Peace (Comm'n Jud. Conduct Aug. 18, 2000) (judge telephoned girls on probation in his court for truancy
       and engaged in explicit sexual conversations); Public Admonition of Don Jarvis, County Court at Law Judge (Comm'n
       Jud. Conduct Oct. 22, 1999) (judge became romantically involved with married woman who had matters pending in the
       judge's court); Private Admonition of a County Court at Law Judge, (Comm'n Jud. Conduct Mar. 6, 2006) (state judge
       used official court letterhead to write letter to federal judge requesting leniency in sentencing state judge's relatives);
       Private Reprimand of a Justice of the Peace, (Comm'n Jud. Conduct July 14, 2004) (judge instigated groundless criminal
       investigation of constable who tried to serve papers on judge's son).
47     We note Canon 5 is entitled: “Refraining From Inappropriate Political Activity” and does specifically apply to political
       statements. See TEX.CODE JUD. CONDUCT, Canon 5.
1      Canon 5(2) does not expressly utilize the term “support” but “endorse” is commonly defined as meaning “to give support
       or approval to; sanction”. Webster's New Universal Unabridged Dictionary 600 (2nd Ed.1972).
2      James C. Dobson, Ph.D., is founder and chairman of Focus on the Family, a non-profit conservative religious organization
       that emphasizes family values.
3      The Times article is captioned, “Texas Justice, With Ties to Bush and His Supreme Court Choice, Serves as Her
       Spokesman.” It offers the following reason: “For the right audiences, Justice Hecht, 55, is known as one of the most
       conservative jurists on the Texas Supreme Court....He has become so well known in his home state that this year he
       was named by Texas Monthly as one of 25 most powerful people in Texas politics.”
4      Exhibit 1 is the Texas Lawyer article that formed the basis for the complaint received by the Commission. The majority
       correctly explains that the Commission's conclusions and findings were based on the Texas Lawyer and The New York
       Times articles only. Since this Special Court of Review is a de novo proceeding, additional media reports were introduced
       into evidence and are part of the record before us.
5      Justice Hecht also takes issue with the fact that other members of the judiciary spoke publicly about Miers without
       facing judicial sanctions. It is true that United States Supreme Court Justice Antonin Scalia, United States District
       Judge Ed Kinkeade of the Northern District of Texas, Justice Elizabeth Lang–Miers of the Court of Appeals for the Fifth
       District of Texas, and State District Judge Jim Parsons all publicly supported Miers and spoke well of her credentials
       and qualifications. Of course, the Texas Canons of Judicial Conduct do not apply to federal judges. TEX.CODE JUD.
       CONDUCT, Canon 6A, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit G, app. B (Vernon 2005). And the mere fact
       that other state judges felt unencumbered by the canons neither justifies nor condones their conduct, nor does it lead me
       to the conclusion that Justice Hecht did not violate them. Sardino v. State Commission on Judicial Conduct, 58 N.Y.2d
       286, 291, 448 N.E.2d 83, 85, 461 N.Y.S.2d 229, 231 (N.Y.1983) (each judge is personally obligated to act in accordance



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In re Hecht, 213 S.W.3d 547 (2006)


       with the standards of judicial conduct; if a judge disregards or fails to meet these obligations, the fact that others may
       be similarly derelict can provide no defense). I offer no opinion on the stipulated fact that the Commission has filed no
       charges against any of these individuals. Nor do I address the apparently contested issue of whether the Commission
       could sua sponte investigate their conduct in the absence of a complaint.
6      “[E]very good judge is fully aware of the distinction between the law and a personal point of view.” Republican Party of
       Minnesota v. White, 536 U.S. 765, 798 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002) (Kennedy, J., concurring).
7      Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973).
8      In a separate interview with The Dallas Morning News, Justice Hecht explained the distinction further. “The mistake is
       trying to extrapolate from those personal principles, even if they're extremely important to a person, into how you're going
       to decide a case.” According to the article, Justice Hecht “noted that Justice Antonin Scalia, one of the Supreme Court's
       most conservative justices, wrote an opinion declaring a free-speech right to burn an American Flag. ‘Can you imaging
       [sic] Justice Scalia burning a flag? It's not going to happen,’ he said. ‘But what does the Constitution say, can you do it
       or not? Yes, the Constitution says you can do it.’ ” Examiner's Exhibit 3.
9      Gary Bauer is the president of the American Values Group and is a former presidential candidate.
10     Pat Buchanan is an NBC political analyst and a former presidential candidate.
11     Justice Hecht was, in fact, contacted by staff attorneys for the Senate Judiciary Committee, who asked him to testify at
       Miers' confirmation hearing. He was out of the office at the time of the call, and Miers had withdrawn her nomination
       before he could return it.
12     The court emphasized that the “announce” clause is much broader than the “pledges or promises” clause, which
       separately prohibits judicial candidates from making pledges or promises of conduct other than the faithful and impartial
       performance of judicial duties, a prohibition on which it expressed no view. White I, 536 U.S. at 770, 122 S.Ct. 2528.
13     Writing for the majority, Justice Scalia opined that when a case turns on a legal issue on which the judge as a judicial
       candidate has taken a particular stand, the party advocating the opposing viewpoint is likely to lose, but not because of
       bias against that party or favoritism toward the other. “Any party taking that position is just as likely to lose.” White I, 536
       U.S. at 776–77, 122 S.Ct. 2528 (Emphasis in original).
14     “Open-mindedness” demands that a judge be willing to consider views that oppose his preconceptions and remain open
       to persuasion. This seeks to guarantee each litigant “not an equal chance to win the legal points in the case, but at least
       some chance of doing so.” White I, 536 U.S. at 778, 122 S.Ct. 2528 (Emphasis in original).
15     In both White I and White II, the term “impartiality” was used interchangeably with “independence.” See White I, 536 U.S.
       at 775 n. 6, 122 S.Ct. 2528; White II, 416 F.3d at 753.
16     As a member of the Supreme Court, Justice Hecht participates in decisions concerning amendments to the Code of
       Judicial Conduct. For many years, he served as the court's liaison to the Supreme Court Rules Advisory Committee. After
       White I, he concurred in the repeal of the Texas announce clause. Writing separately, he predicted the instant debate:
       “It is less clear whether other Code provisions relating to judicial speech—Canon 3(B)(10) and the remainder of Canon
       5—are likewise infirm.... Therefore I join in the code amendments approved today although I remain in doubt whether
       they are sufficient to comply with the First Amendment.” Statement of Justice Hecht Concurring in the Amendments to
       the Texas Code of Judicial Conduct Approved August 21, 2002, Misc. Docket No. 02–9167.


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

                                                                        of the right on the same terms and conditions
                                                                        offered by or to a bona fide purchaser.
                    400 S.W.3d 644
                Court of Appeals of Texas,                              Cases that cite this headnote
                          Tyler.

              Ben JARVIS, Appellant                               [2]   Contracts
                        v.                                                  Options; rights of first refusal
 Robert J. PELTIER, and Calvin C. Smith, Appellees.                     The holder of a right of first refusal has no right
                                                                        to compel or prevent a sale.
       No. 12–12–00180–CV.           |   April 24, 2013.
                                                                        Cases that cite this headnote
Synopsis
Background: Owner of middle tract of land brought action
against owner of neighboring eastern- and western-tracts          [3]   Contracts
who sold his tracts to purchaser despite agreement between                  Options; rights of first refusal
middle-tract owner and eastern- and western-tracts owner that           An “option” is a privilege or right that the owner
was labeled an option agreement. The District Court, Smith              of the property gives another to buy certain
County, Jack Skeen, J., entered summary judgment in favor               property at a fixed price within a certain time.
of eastern- and western-tract owner and purchaser. Middle-
tract owner appealed.                                                   Cases that cite this headnote


                                                                  [4]   Contracts
Holdings: The Court of Appeals, James T. Worthen, C.J.,                     Options; rights of first refusal
held that:                                                              By acquiring an option to purchase property, the
                                                                        holder of the option purchases the right to compel
[1] ownership of tracts in severalty and right of first refusal         a sale of the property on stated terms before the
were consideration for partition;                                       expiration of the option.

                                                                        Cases that cite this headnote
[2] agreement did not violate the rule against perpetuities;

[3] failure of holder of right of first refusal to exercise the   [5]   Appeal and Error
right within 30 days after he learned of sale was excused by               Cases Triable in Appellate Court
his inability to obtain reasonable disclosure of sale; and              Court of Appeals reviews the trial court's
                                                                        summary judgment de novo.
[4] holder established right to judgment as a matter of law.
                                                                        Cases that cite this headnote

Reversed, rendered, and remanded.
                                                                  [6]   Appeal and Error
                                                                           Judgment
                                                                        Court of Appeals reviews the evidence presented
 West Headnotes (31)
                                                                        in motion for traditional summary judgment
                                                                        and response in the light most favorable to the
 [1]    Contracts                                                       party against whom the summary judgment was
            Options; rights of first refusal                            rendered, crediting evidence favorable to that
                                                                        party if reasonable jurors could, and disregarding
        A right of first refusal or preemptive right
                                                                        contrary evidence unless reasonable jurors could
        to purchase requires the owner of the subject
                                                                        not.
        property to offer the property first to the holder




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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

                                                                   The resultant holding in severalty of each party
        Cases that cite this headnote                              to a partition is a benefit accruing to each, and
                                                                   alone constitutes sufficient consideration for the
 [7]    Appeal and Error                                           partition.
            Particular orders or rulings reviewable in
                                                                   Cases that cite this headnote
        general
        Appeal and Error
           Rendering Final Judgment                         [12]   Partition
                                                                        Agreements as to partition
        When both sides move for summary judgment
        and the trial court grants one side's motions and          Vendor and Purchaser
        denies the other side's, Court of Appeals reviews              Requisites and validity
        the summary judgment evidence presented                    The consideration for the privilege of purchasing
        by both sides and determines all questions                 property under a right of first refusal is not
        presented; Court then renders the judgment that            separate from the consideration for the partition
        the trial court should have rendered.                      of real property.

        Cases that cite this headnote                              Cases that cite this headnote


 [8]    Contracts                                           [13]   Partition
            Necessity in general                                        Agreements as to partition
        Consideration is a fundamental element of every            Vendor and Purchaser
        valid contract.                                                Requisites and validity
                                                                   Where an agreement to partition real property
        Cases that cite this headnote
                                                                   and a right of first refusal constitute one contract,
                                                                   the provisions of which are interdependent, the
 [9]    Contracts                                                  consideration for the partition will also support
            Nature and Elements                                    the right of first refusal.
        “Consideration” is defined as either a benefit
                                                                   Cases that cite this headnote
        to the promisor or a loss or detriment to the
        promisee.
                                                            [14]   Partition
        Cases that cite this headnote                                   Agreements as to partition
                                                                   Ownership of tracts of real property in severalty
 [10]   Partition                                                  and right of first refusal in agreement, which
             Operation and Effect                                  was labeled an option agreement, constituted
        Partition                                                  consideration for partition.
             Actual Partition
                                                                   Cases that cite this headnote
        In a partition, each cotenant receives a specific
        share of property and holds it to the exclusion
        of the other cotenants who formerly had equal       [15]   Perpetuities
        rights to possession with him.                                 Creation of Future Estates in General
                                                                   Agreement between neighboring landowners
        Cases that cite this headnote                              that was labeled an option agreement, but
                                                                   was actually an agreement for the right of
 [11]   Partition                                                  first refusal, did not violate the rule against
             Agreements as to partition                            perpetuities.




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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797


        Cases that cite this headnote                         [21]   Contracts
                                                                         Options; rights of first refusal

 [16]   Contracts                                                    A transfer in violation of the preemptive right
            Options; rights of first refusal                         to purchase is equivalent to a declaration by
                                                                     the owner that he intends to sell the property;
        A right of first refusal is essentially a dormant
                                                                     consequently, when the rightholder learns of a
        option.
                                                                     sale in violation of his right, he again has the
        Cases that cite this headnote                                opportunity to elect to purchase or decline to
                                                                     purchase within the time frame specified in the
                                                                     contract creating the right of first refusal.
 [17]   Contracts
            Options; rights of first refusal                         Cases that cite this headnote
        A right of first refusal requires the owner, before
        selling the property to another, to offer the         [22]   Contracts
        property to the rightholder on the same terms or                 Options; rights of first refusal
        conditions specified in the offer by or to a bona
                                                                     The holder of right of first refusal does not have
        fide purchaser.
                                                                     a duty to act in order to exercise his preferential
        Cases that cite this headnote                                purchase right unless and until he receives a
                                                                     reasonable disclosure of the terms of the sale.

 [18]   Contracts                                                    Cases that cite this headnote
            Alternative stipulations and options
        A property owner who grants a right of first          [23]   Vendor and Purchaser
        refusal has an initial duty to make a reasonable                 Requisites and validity
        disclosure of the offer's terms.
                                                                     The new property owner who has purchased
        Cases that cite this headnote                                the property from a vendor, despite vendor
                                                                     having given right of first refusal, has a duty to
                                                                     make reasonable disclosure of the terms of the
 [19]   Contracts                                                    purchase to holder of right.
            Options; rights of first refusal
        When the property owner expresses its intention              Cases that cite this headnote
        to sell, the owner of right of first refusal must,
        in compliance with the terms of the right, elect      [24]   Specific Performance
        to either purchase the property or decline to                    Necessity
        purchase it and allow the owner to sell it to
                                                                     Where a defendant has openly and avowedly
        another.
                                                                     refused to perform his part of the contract for
        Cases that cite this headnote                                right of first refusal or declared his intention
                                                                     not to perform it, the rightholder need not make
                                                                     tender of payment of the consideration before
 [20]   Contracts
                                                                     bringing suit for specific performance.
            Alternative stipulations and options
        A purchaser from a seller who has given a right              Cases that cite this headnote
        of first refusal to buy takes the property subject
        to that right.                                        [25]   Specific Performance
                                                                         Necessity
        Cases that cite this headnote
                                                                     Where a defendant has openly and avowedly
                                                                     refused to perform his part of the contract for


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

        right of first refusal or declared his intention              the holder of the right is a breach of contract
        not to perform it, a tender of consideration is               for which the remedy of specific performance is
        excused in action for specific performance where              available.
        the property owner intentionally avoids giving
        the rightholder an opportunity of making it.                  Cases that cite this headnote

        Cases that cite this headnote
                                                               [30]   Specific Performance
                                                                          Purchasers in general
 [26]   Vendor and Purchaser                                          When a purchaser who has knowledge of the
            Exercise                                                  right of first refusal purchases real property,
        Failure of holder of right of first refusal to                he stands in the shoes of the original seller
        exercise the right with 30 days after he learned              when specific performance is sought and may be
        of sale was excused by his inability to obtain                compelled to convey title to the first purchaser.
        reasonable disclosure of the terms under which
        vendor sold the property.                                     Cases that cite this headnote

        Cases that cite this headnote
                                                               [31]   Judgment
                                                                          Sales cases in general
 [27]   Contracts                                                     Holder of right of first refusal established right
            Grounds of action                                         to judgment as a matter of law as required for
        To prove a breach of contract claim, the                      summary judgment in action against vendor and
        following elements must be satisfied: (1) there               purchaser, where holder and vendor had a valid
        was a valid contract, (2) the plaintiff performed             option agreement that required vendor to first
        or tendered performance, (3) the defendant                    offer the property to holder upon receiving an
        breached the contract, and (4) the plaintiff was              offer that vendor would accept, vendor received
        damaged as a result of the breach.                            an offer and sold the property to purchaser,
                                                                      holder was ready, willing, and able to purchase
        Cases that cite this headnote                                 the property under the same terms, purchaser
                                                                      brought the property with notice of the recorded
 [28]   Specific Performance                                          option agreement, and holder attempted to learn
            Nature and grounds of duty of plaintiff                   the terms of the sale from vendor and purchaser,
                                                                      but neither provided him with the requested
        Specific Performance
                                                                      information prior to the suit.
            Necessity
        To prove that plaintiff performed or tendered                 Cases that cite this headnote
        performance as required to recover for breach of
        contract, a party seeking specific performance of
        a contract for the sale of real property must prove
        only that he is ready, willing, and able to pay       Attorneys and Law Firms
        the agreed price for the property and perform the
        essence of the agreement and offer to do so.          *647 M. Keith Dollahite, Tyler, for Ben E. Jarvis.

        Cases that cite this headnote                         Gregory S. Porter, Houston, Charles H. Clark, Tyler, for
                                                              Robert J. Peltier.
 [29]   Specific Performance                                  Vance L. Metcalf, Billy D. Anderson, Tyler, for Calvin C.
            Options                                           Smith.
        A sale or transfer of property burdened by a
        right of first refusal without making an offer to     Panel consisted of WORTHEN, C.J., GRIFFITH, J., and
                                                              HOYLE, J.


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797


                                                                      For and in consideration of the premises and a part of
                                                                      the consideration of the partition deed this date executed
                         OPINION
                                                                      by Ben E. Jarvis and myself, [sic] I have granted and do
JAMES T. WORTHEN, Chief Justice.                                      hereby gran[t] unto Ben E. Jarvis an option to purchase
                                                                      the 4.041 acre tract in the T. Coulter Survey, Smith
 **1 Ben Jarvis appeals the summary judgment granted in               County, Texas which was set aside to me by deed from
favor of Robert J. Peltier, Sr. and Calvin C. Smith. In two           Ben E. Jarvis.
issues, Jarvis contends the trial court improperly granted
Peltier's and Smith's motions for summary judgment and                The terms of the option are that if I desire to sell the
denied Jarvis's competing motion for summary judgment. We             property and I have an offer I would accept, I will submit
reverse, render in part, and remand in part.                          the offer to Ben E. Jarvis, who shall have thirty days
                                                                      from the date of the submission of the offer to accept.
                                                                      If he does not accept within said 30 day period, I will
                                                                      complete the sale to the other party who made the offer.
                      BACKGROUND                                      Dated this the 11th day of March 1998.
Jarvis and Smith were cotenants in a twelve acre tract in                  /s/ Calvin C. Smith
Smith County, with Jarvis owning an undivided two-thirds
interest *648 and Smith owning an undivided one-third                      CALVIN C. SMITH
interest. Jarvis owned two acres in fee simple adjoining the
east side of the twelve acre tract that he and Smith jointly          THE STATE OF TEXAS
owned. Jarvis proposed to Smith that they partition the twelve
                                                                      COUNTY OF SMITH
acre tract, with Jarvis receiving the eight contiguous acres
adjoining his two acre tract, and Smith receiving the four            This instrument was acknowledged before me on this the
westernmost acres. Jarvis also informed Smith that if they            11th day of March, 1998 by CALVIN C. SMITH.
could not reach an agreement, he planned to ask the court to
divide the property for them.                                         (NOTARY SEAL)

Smith made a counterproposal to Jarvis that he would                       /s/ Tara L. Nowlin
partition the twelve acre tract without going to court if he
                                                                            Notary of Public, State of Texas
could have the middle four acres of the tract. Jarvis would
                                                                 On December 17, 2007, Smith entered into a contract
then have the western four acres as well as the eastern four
                                                                 of sale with Peltier in which he agreed to sell his four
acres of the tract. Smith explained that he wanted the middle
                                                                 acre tract to Peltier for $80,000.00. Peltier received a title
four acres because he had already been farming that tract.
                                                                 policy commitment issued by First American Title Insurance
Jarvis accepted Smith's proposal with the condition that he be
                                                                 showing on its Schedule B as an exception from coverage
given an “option” to purchase Smith's four acre tract if and
                                                                 the “[t]erms of that certain option by and between Calvin C.
when Smith decided to sell it.
                                                                 Smith and Ben E. Jarvis as recorded in volume 5039, page 22,
                                                                 Official Public Records, Smith County, Texas.” On January
On March 11, 1998, Jarvis and Smith exchanged deeds to
                                                                 17, 2008, Smith executed a deed conveying the property to
carry out their partition agreement. Additionally, on the same
                                                                 Peltier for $80,000.00.
day, Smith signed the following document: 1
                                                                  **2 In late January 2010, Jarvis learned that Smith had sold
                                                                 the four acre tract to Peltier. He immediately sent both the
  OPTION
                                                                 following letter:
     THE STATE OF TEXAS
                                                                                        January 29, 2010
     COUNTY OF SMITH
                                                                    *649 Mr. Calvin C. Smith

                                                                   819 Lyons Ave.


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

                                                                  for attorney's fees. Jarvis filed a traditional motion for
  Tyler, Texas 75701                                              summary judgment in which he argued that, as a matter
                                                                  of law, his option was enforceable and he was entitled
  Mr. Robert J. Peltier, Sr.
                                                                  to summary judgment enforcing the option and awarding
  P.O. Box 7028                                                   him attorney's fees from Peltier and Smith. In the same
                                                                  motion, he argued that Peltier and Smith were not entitled
  Tyler, Texas 75711                                              to summary judgment on their affirmative defenses. Without
                                                                  specifying its reasons, the trial court granted Peltier's and
       Re: 4.037 acres, Tobias Coulter Survey                     Smith's summary judgment motions, including Smith's claim
                                                                  for attorney's fees, and denied Jarvis's motion. This appeal
  Gentlemen:
                                                                  followed.
  This last week we discovered that Calvin C. Smith and
  wife, Jimmye Ruth Smith executed a deed to Robert J.
  Peltier, Sr. dated January 14, 2008, covering 4.037 acres in
                                                                                        THE “OPTION”
  the Tobias Coulter Survey, A–199 Smith County, Texas.
                                                                  Initially, we note that the parties disagree about the effect
  Attached hereto is a copy of the Option from Calvin C.
                                                                  of the document (the “option agreement”) Smith signed on
  Smith to me dated March 11, 1998 as recorded in Volume
                                                                  March 11, 1998. Jarvis contends it gave him a “right of first
  5039, Page 22 of the Smith County Official Records.
                                                                  refusal” if Smith decided to sell his four acre tract. Peltier
  This was the first notice I have had of the above mentioned     and Smith contend that, according to the plain language of the
  deed.                                                           document, Jarvis acquired an ordinary option to purchase the
                                                                  four acre tract. Because “right of first refusal” and “option”
  I have talked to Mr. Peltier regarding the price he paid to     have distinct meanings, we must first decide which applies in
  Mr. Smith. He declined to tell me the sales price.              this case.

  It would be appreciated of [sic] both of you would contact       **3 [1] [2] A right of first refusal or preemptive right
  me regarding this matter. At this time, I would like to         to purchase requires the owner of the subject property to
  exorcise [sic] the option.                                      offer the property first to the holder of the right on the same
                                                                  terms and conditions offered by or to a bona fide purchaser.
  I will need a copy of the cancelled check, closing statement
                                                                  Tenneco, Inc. v. Enterprise Prods. Co., 925 S.W.2d 640,
  and title policy before declining or accepting any offer.
                                                                  644 (Tex.1996); *650 City of Brownsville v. Golden Spread
  If I do not receive the information requested within 10 days    Elec. Co-op., Inc., 192 S.W.3d 876, 880 (Tex.App.-Dallas
  from your receipt of this letter, I will forward this to my     2006, pet. denied). The holder of a right of first refusal has
  attorney with instructions to file suit to enforce my option.   no right to compel or prevent a sale. Hicks v. Castille, 313
                                                                  S.W.3d 874, 881 (Tex.App.-Amarillo 2010, pet. denied).
       Yours very truly,
                                                                   [3]    [4] An option, on the other hand, is a privilege or
       /s/ Ben E. Jarvis                                          right that the owner of the property gives another to buy
                                                                  certain property at a fixed price within a certain time. Casa
       Ben E. Jarvis
                                                                  El Sol–Acapulco, S.A. v. Fontenot, 919 S.W.2d 709, 717
Neither Smith nor Peltier provided the requested information      n. 9 (Tex.App.-Houston [14th Dist.] 1996, writ dism'd). By
on the 2008 sale of the four acres. Consequently, Jarvis filed    acquiring an option to purchase property, the holder of the
suit against both of them.                                        option purchases the right to compel a sale of the property
                                                                  on stated terms before the expiration of the option. Id.;
Peltier filed a traditional motion for summary judgment           Riley v. Campeau Homes (Tex.), Inc., 808 S.W.2d 184, 188
asserting three affirmative defenses, and Smith adopted           (Tex.App.-Houston [14th Dist.] 1991, writ dism'd).
Peltier's motion. Later, Smith filed his own traditional
motion for summary judgment in which he asserted the              In this case, the option agreement states that Jarvis is granted
same affirmative defenses, but added a claim against Jarvis       an “option to purchase” the four acre tract. But the option



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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

agreement does not give Jarvis a right to compel Smith to sell       that affirmative defense. See Randall's Food Mkts., Inc. v.
the property and does not state a fixed purchase price for the       Johnson, 891 S.W.2d 640, 644 (Tex.1995). Once the movant
property. See Fontenot, 919 S.W.2d at 717 n. 9; Riley, 808           has established a right to summary judgment, the burden
S.W.2d at 188. Nor does it specify a fixed expiration date.          shifts to the nonmovant to respond to the motion *651
See Fontenot, 919 S.W.2d at 717 n. 9; Riley, 808 S.W.2d at           and present to the trial court any issues that would preclude
188. Instead, the option agreement states that if Smith desires      summary judgment. See City of Houston v. Clear Creek Basin
to sell the property and has an offer he would accept, he            Auth., 589 S.W.2d 671, 678–79 (Tex.1979).
will submit the offer to Jarvis, who would then have thirty
days “to accept.” This language creates a preemptive right            [5] [6] We review the trial court's summary judgment de
to purchase in the event Smith should decide to sell. See            novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656,
Tenneco, Inc., 925 S.W.2d at 644. Accordingly, we conclude           661 (Tex.2005). We review the evidence presented in the
that the option agreement is, in substance, a right of first         motion and response in the light most favorable to the party
refusal. See id.; Sanchez v. Dickinson, 551 S.W.2d 481, 483,         against whom the summary judgment was rendered, crediting
484 (Tex.Civ.App.-San Antonio 1977, no writ) (holding that,          evidence favorable to that party if reasonable jurors could,
based on language, “Option Contract of Purchase” was right           and disregarding contrary evidence unless reasonable jurors
of first refusal).                                                   could not. See City of Keller v. Wilson, 168 S.W.3d 802, 827
                                                                     (Tex.2005).

                                                                      [7] When, as here, both sides move for summary judgment
  SUMMARY JUDGMENT—OPTION AGREEMENT
                                                                     and the trial court grants one side's motions and denies
In his first issue, Jarvis contends the trial court improperly       the other side's, we review the summary judgment evidence
granted Peltier's and Smith's summary judgment motions,              presented by both sides and determine all questions presented.
and should have granted Jarvis's summary judgment motion.            Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
Peltier and Smith contend that summary judgment in their             S.W.3d 844, 848 (Tex.2009). We then render the judgment
favor was proper. In their motions, Peltier and Smith raised         that the trial court should have rendered. Id.
affirmative defenses asserting that (1) the option agreement
was not supported by consideration, (2) the option agreement
                                                                     Lack of Consideration
violated the rule against perpetuities, and (3) Jarvis failed to
                                                                     Peltier and Smith first contend that the trial court correctly
comply with the option agreement. However, their arguments
                                                                     granted summary judgment in their favor because they
in their summary judgment motions and on appeal are based
                                                                     established that the option agreement between Smith and
on their contention that Jarvis acquired an ordinary option
                                                                     Jarvis was not supported by consideration.
to purchase the property. We have concluded that Jarvis
acquired a right of first refusal. Therefore, we resolve Peltier's
                                                                      [8] [9] [10] [11] Consideration is a fundamental element
and Smith's issues on appeal by applying the law pertaining
                                                                     of every valid contract. Critchfield v. Smith, 151 S.W.3d
to rights of first refusal.
                                                                     225, 233 (Tex.App.-Tyler 2004, pet. denied). Consideration
                                                                     is defined as either a benefit to the promisor or a loss or
Standard of Review                                                   detriment to the promisee. N. Natural Gas Co. v. Conoco,
 **4 The standard for reviewing a traditional summary                Inc., 986 S.W.2d 603, 607 (Tex.1998). In a partition, each
judgment is well established. See Provident Life & Accident          cotenant receives a specific share of property and holds it to
Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex.2003); Sysco          the exclusion of the other cotenants who formerly had equal
Food Servs. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994);             rights to possession with him. Garza v. Cavazos, 148 Tex.
Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49                 138, 221 S.W.2d 549, 552 (1949). The resultant holding of
(Tex.1985). The movant for traditional summary judgment              each in severalty is a benefit accruing to each, and alone
has the burden of showing that there is no genuine issue of          constitutes sufficient consideration for the partition. Hamilton
material fact and that it is entitled to judgment as a matter        v. Keller, 148 S.W.2d 1011, 1014 (Tex.Civ.App.-Eastland
of law. TEX.R. CIV. P. 166a(c); Nixon, 690 S.W.2d at 548.            1941, no writ).
A defendant must establish each element of an affirmative
defense when it moves for summary judgment based on                   [12] [13] The consideration for the privilege of purchasing
                                                                     property under a right of first refusal is not separate from


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

the consideration for the partition of real property. See Riley,      and Smith refused to provide him with the terms of their sale,
808 S.W.2d at 188. Where an agreement to partition real               he never had the opportunity to comply. He also argues that
property and a right of first refusal constitute one contract,        his duty to strictly comply with the option agreement was
the provisions of which are interdependent, the consideration         excused.
for the partition will also support the right of first refusal. See
Henderson v. Nitschke, 470 S.W.2d 410, 414 (Tex.Civ.App.-              [16] [17] [18] [19] A right of first refusal is essentially a
Eastland 1971, writ ref'd n.r.e.).                                    dormant option. A.G.E., Inc. v. Buford, 105 S.W.3d 667, 673
                                                                      (Tex.App.-Austin 2003, pet. denied). It requires the owner,
 **5 [14] In this case, Jarvis told Smith that he wanted              before selling the property to another, to offer the property
the eight contiguous acres adjoining his two acre tract,              to the rightholder on the same terms or conditions specified
and would file a partition suit if he and Smith could not             in the offer by or to a bona fide purchaser. See Tenneco,
reach an agreement. Smith wanted the middle four acres                Inc., 925 S.W.2d at 644; City of Brownsville, 192 S.W.3d
because he farmed it. Jarvis agreed to Smith's proposal on            at 880. The property owner has an initial duty to make
the condition that he be granted an “option” to purchase              a reasonable disclosure of the offer's terms. McMillan v.
the middle four acres. The option agreement states that it            Dooley, 144 S.W.3d 159, 174 (Tex.App.-Eastland 2004, pet.
is a part of the consideration for the partition. Thus, the           denied). When the property owner expresses its intention to
agreement to partition real property and the option agreement         sell, the rightholder must, in compliance with the terms of
constitute one contract, and its provisions are interdependent.       the right, elect to either purchase the property or decline to
See id. As such, the resulting ownership of the tracts in             purchase it and allow the owner to sell it to another. See
severalty constituted consideration for partition as well as          Buford, 105 S.W.3d at 673.
the March 11, 1998 option agreement. See Hamilton, 148
S.W.2d at 1014. Accordingly, we hold that Peltier and                  **6 [20] [21] [22] [23] A purchaser from a seller who
Smith failed to establish their right to summary judgment on          has given a right of first refusal to buy takes the property
their affirmative defense of lack of consideration. Therefore,        subject to that right. See Sanchez, 551 S.W.2d at 485. A
summary judgment in their favor on this ground was                    transfer in violation of the preemptive right is equivalent to a
improper.                                                             declaration by the owner that he intends to sell the property.
                                                                      Martin v. Lott, 482 S.W.2d 917, 922 (Tex.Civ.App.-Dallas
                                                                      1972, no writ). Consequently, when the rightholder learns of
 *652 Rule Against Perpetuities                                       a sale in violation of his right, he again has the opportunity to
 [15] Peltier and Smith next contend that the trial court             elect to purchase or decline to purchase within the time frame
correctly granted summary judgment in their favor because             specified in the contract creating the right of first refusal. See
they established that the option agreement violated the rule          Buford, 105 S.W.3d at 673. The rightholder does not have a
against perpetuities. We have concluded, however, that the            duty to act in order to exercise his preferential purchase right
option agreement is, in substance, a right of first refusal.          unless and until he receives a reasonable disclosure of the
In Texas, a preferential right to purchase or a right of first        terms of the sale. See McMillan, 144 S.W.3d at 174. The new
refusal does not violate the rule against perpetuities. Cherokee      property owner has a duty to make reasonable disclosure of
Water Co. v. Forderhause, 641 S.W.2d 522, 526 (Tex.1982).             the terms of the purchase to the rightholder. See Buford, 105
Therefore, the option agreement in this case does not violate         S.W.3d at 673.
the rule against perpetuities. See id. Consequently, Peltier and
Smith failed to establish their right to summary judgment on           [24]    [25] Where a defendant has openly and avowedly
their affirmative defense that the option agreement violates          refused to perform his part of the contract or declared
the rule against perpetuities. Thus, summary judgment in their        his intention not to perform it, the rightholder need not
favor on this ground was improper.                                    make tender of payment of the consideration before bringing
                                                                      suit. SeeChambers v. Hunt Petroleum Corp., 320 S.W.3d
                                                                      578, 583 (Tex.App.-Tyler 2010, no pet.). Moreover, a
Noncompliance with Option Agreement
                                                                      tender of consideration is excused where the property owner
Finally, Peltier and Smith argue that the trial court correctly
                                                                      intentionally avoids giving the rightholder an opportunity of
granted summary judgment in their favor because Jarvis
                                                                      making it. Id.
failed to comply with the terms of the option agreement when
he attempted to enforce it. Jarvis responds that because Peltier


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

 *653 Here, Smith failed to comply with the option
agreement by not informing Jarvis of Peltier's offer and then       Here, Jarvis argued that he was entitled to summary
selling the property to Peltier. Once Jarvis learned of the sale,   judgment enforcing the option agreement as a matter of
which was approximately two years after it was completed, he        law. Specifically, he argued that Smith breached the option
contacted Peltier and Smith in an attempt to learn the terms of     agreement by selling the four acre tract to Peltier without
the sale and exercise his right of first refusal. Neither Peltier   first submitting Peltier's offer to Jarvis. He contended further
nor Smith provided Jarvis with the information he requested,        that the right of first refusal was enforceable against Peltier
and he filed suit against them. Ultimately, Jarvis learned the      because the four acre tract was burdened by the option
terms of the sale by conducting discovery in his suit.              agreement, which created a right of first refusal, when Peltier
                                                                    acquired the property.
 [26] Nevertheless, Peltier and Smith argue that Jarvis is not
entitled to enforce his right of first refusal because he did not  [31] Jarvis's summary judgment evidence consists of Jarvis's
exercise it within thirty days after he learned of the sale. They correspondence with Smith relating to the proposed partition;
assert that Jarvis's right matured into an enforceable option     the deeds partitioning the original twelve acre tract between
once he learned of the sale and that he was then required         Jarvis and Smith; the option agreement; the real estate
to act in strict compliance with its terms. However, upon         contract, title policy commitment, closing documents, and
learning of the sale, Jarvis was unable to obtain reasonable      warranty deed relating to Smith's sale of the four acre tract
disclosure of the terms under which Peltier purchased the         to Peltier; Jarvis's letter to Peltier and Smith after he learned
property. Therefore, he was prevented from exercising his         of the sale of the property to Peltier; excerpts from the
right of first refusal within thirty days after he learned of the depositions *654 of Jarvis and Smith; and Jarvis's affidavit.
sale. See Chambers, 320 S.W.3d at 583. This excused his           This evidence conclusively shows that (1) Smith and Jarvis
failure to act. See id. Accordingly, we hold that Peltier and     had a valid option agreement, which required Smith to first
Smith did not establish their right to summary judgment on        offer the property to Jarvis upon receiving an offer Smith
their affirmative defense that Jarvis failed to comply with the   would accept; (2) Smith received an offer to purchase from
option agreement. Thus, summary judgment in their favor on        Peltier and sold the property to Peltier without first offering
that ground was improper.                                         the property to Jarvis on the same terms; (3) Jarvis has at all
                                                                  times been ready, willing, and able to purchase the property
                                                                  on the same terms under which Smith sold it to Peltier;
Jarvis's Motion for Summary Judgment                              (4) Peltier acquired the property from Smith with notice of
 **7 [27] [28] [29] To prove a breach of contract claim, the recorded option agreement; and (5) Jarvis attempted to
the following elements must be satisfied: (1) there was a valid   learn the terms of the sale from both Peltier and Smith, but
contract, (2) the plaintiff performed or tendered performance,    neither Peltier nor Smith provided him with the requested
(3) the defendant breached the contract, and (4) the plaintiff    information prior to his filing suit. Therefore, we conclude
was damaged as a result of the breach. Critchfield, 151           that Jarvis established a right to summary judgment as a
S.W.3d at 233. Regarding the second element, a party seeking      matter of law that the option agreement was enforceable
specific performance of a contract for the sale of real property  against Peltier and Smith. Thus, the burden shifted to Peltier
must prove only that he is ready, willing, and able to pay the    and Smith to present to the trial court any issues that
agreed price for the property and perform the essence of the      would preclude summary judgment. See City of Houston, 589
agreement and offer to do so. Riley, 808 S.W.2d at 188. A         S.W.2d at 678–79.
sale or transfer of property burdened by a right of first refusal
without making an offer to the holder of the right is a breach     **8 In their responses to Jarvis's summary judgment motion,
of contract for which the remedy of specific performance is       Peltier and Smith raised the three affirmative defenses that
available. Id.                                                    they relied on in their motions for summary judgment.
                                                                    We have held that Peltier and Smith did not establish
 [30] When a purchaser who has knowledge of the right of            their affirmative defenses and therefore were not entitled to
first refusal purchases real property, he stands in the shoes       summary judgment as a matter of law. We also hold that the
of the original seller when specific performance is sought          assertion of these same affirmative defenses was insufficient
and may be compelled to convey title to the first purchaser.        to preclude summary judgment in Jarvis's favor.
Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d 518, 527
(Tex.App.-Amarillo 1998, pet. denied).


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
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Peltier refers us to his argument in the trial court that Jarvis     (Tex.App.-Houston [14th Dist.] 2003, pet. denied). An award
failed to comply with the terms of the option agreement when         of reasonable attorney's fees to a party recovering on a claim
he attempted to exercise it and requested documentation for          founded on a written or oral contract is mandatory under
the terms of the sale that was not mentioned in the option           Texas law. Jackson Law Office, P.C. v. Chappell, 37 S.W.3d
agreement. He argues that this “called into question” whether        15, 23 (Tex.App.-Tyler 2000, pet. denied). But Section
Jarvis was in fact “ready, willing, and able to perform” the         38.001(8) does not authorize recovery of attorney's fees by
option agreement and created a fact issue for the jury. We           a defendant who only defends against a plaintiff's claim and
have already addressed Peltier's argument regarding Jarvis's         presents no claim of his own. Thottumkal v. McDougal, 251
noncompliance with the option agreement and concluded that           S.W.3d 715, 719 (Tex.App.-Houston [14th Dist.] 2008, pet.
strict compliance was excused. And we do not agree that              denied).
Jarvis's request for documentation of the terms of the sale
creates a fact issue for the jury. Moreover, “[w]hen the seller       **9 The Declaratory Judgment Act provides in pertinent
has conspicuously breached the contract, it is only necessary        part that “[a] person ... whose rights, status, or other legal
that the purchaser be ready and willing, and offers to perform       relations are affected by a ... contract ... may have determined
within his pleadings.” Abraham Inv. Co., 968 S.W.2d at               any question of construction or validity arising under the ...
527. It is sufficient for the purchaser to plead that he “is         contract ... and obtain a declaration of rights, status, or
ready, able and willing” to perform. Burford v. Pounders,            other legal relations thereunder.” TEX. CIV. PRAC. &
145 Tex. 460, 199 S.W.2d 141, 145 (1947). Jarvis included            REM.CODE ANN. § 37.004(a) (West 2008). The court may
this language in his first amended petition, in his motion           award costs and reasonable and necessary attorney's fees as
for summary judgment, and in his affidavit submitted as              are equitable and just in a declaratory judgment action. TEX.
summary judgment evidence. Therefore, he has satisfied this          CIV. PRAC. & REM.CODE ANN. § 37.009 (West 2008).
requirement.

                                                                     Analysis
Conclusion                                                           Jarvis sought a summary judgment for attorney's fees against
Peltier and Smith failed to establish their right to summary         Peltier and Smith. Peltier responded that Jarvis was not
judgment on their affirmative defenses as a matter of law.           entitled to recover attorney's fees against him because the
They also failed to include any matters in their responses to        lawsuit was a breach of contract suit between Jarvis and
Jarvis's motion for summary judgment that would preclude             Smith. Therefore, Peltier urged, any claim for declaratory
summary judgment in Jarvis's favor. Therefore, the trial court       relief was an impermissible attempt to recover attorney's fees.
erred in granting Peltier's and Smith's motions for summary          Smith filed his own response that did not address attorney's
judgment and denying Jarvis's motion. Jarvis's first issue is        fees, and also adopted Peltier's response to the extent it
sustained.                                                           did not “conflict with [Smith's] position.” He later filed a
                                                                     supplemental motion for summary judgment in which he
                                                                     sought attorney's fees from Jarvis. The trial court granted
                                                                     summary judgment for Smith's attorney's fees, denied Jarvis's
    SUMMARY JUDGMENT—ATTORNEY'S FEES
                                                                     summary judgment motion for attorney's fees, and ordered
In his second issue, Jarvis contends that the trial court erred in   Jarvis to pay $32,800 to Smith for attorney's fees through trial
awarding Smith his attorney's fees from Jarvis, and denying          and on appeal.
Jarvis his attorney's fees from Peltier and Smith.

                                                                     1. Breach of Contract
 *655 Applicable Law                                                 Smith cited Texas Civil Practice and Remedies Code Section
A person may recover reasonable attorney's fees, in addition         38.001 in support of his request for attorney's fees. But Smith
to the amount of a valid claim and costs, if the claim is            only defended against Jarvis's breach of contract claim; he
“for an oral or written contract.” TEX. CIV. PRAC. &                 did not present his own breach of contract claim. Section
REM.CODE ANN. § 38.001(8) (West 2008). A “valid claim”               38.001(8) does not authorize recovery of attorney's fees by
under this statute is not limited to an action for monetary          a defendant who only defends against a plaintiff's claim.
damages and may include an action for specific performance.          Thottumkal, 251 S.W.3d at 719. And even if attorney's fees
Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287              were available for successfully defending against a breach of


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Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

contract claim, we have held that the trial court erroneously    doing so, and therefore his failure to act was excused. He also
granted Smith's motion for summary judgment against Jarvis.      implicitly argues that he still has an opportunity to exercise
Therefore, Smith is no longer a prevailing party. Because        his right of first refusal. See Buford, 105 S.W.3d at 673. These
Smith did not establish that he was entitled to summary          allegations relate to the enforceability of the option agreement
judgment as a matter of law for attorney's fees under Section    against Peltier.
38.001(8), summary judgment for attorney's fees based on
that section was improper.                                       In paragraph 9, Jarvis requested a declaratory judgment “that
                                                                 the Option is valid and enforceable; that Peltier acquired the
                                                                 property from [Smith] subject to the Option; that Jarvis is
2. Declaratory Judgment                                          entitled to enforce the Option; and that Peltier must convey
Smith also asserted that Texas Civil Practice and Remedies       the property to Jarvis on the same terms as Peltier acquired
Code Section 37.009 supports summary judgment for his            the property.” This request for relief also relates to the
attorney's fees. Jarvis contended in the trial court, and        enforceability of the option against Peltier and is consistent
continues to argue here, *656 that he did not sue Smith          with the allegations in paragraph 8.
under the Declaratory Judgment Act. Smith maintains that
paragraph 9 in Jarvis's first amended petition and the prayer    In Jarvis's prayer, he requested “declaratory relief as specified
for relief, when read together, mandate a contrary conclusion.   [in paragraph 9].” Based upon our reading of paragraphs 1
To resolve the question, we consider Jarvis's prayer for         through 9 and our consideration of the prayer in that context,
relief in the context of the language in the entire body of      we hold that Jarvis's request for declaratory relief pertains
the petition, rather than along with paragraph 9 only. See       to Peltier only and that the only claim Jarvis alleged against
Denver City Indep. Sch. Dist. v. Moses, 51 S.W.3d 386,           Smith was for breach of contract. Accordingly, we further
391–92 (Tex.App.-Amarillo 2001, no pet.); In re City of          hold that Smith did not establish that he was entitled to
Dallas, 977 S.W.2d 798, 804 (Tex.App.-Fort Worth 1998,           summary judgment as a matter of law for attorney's fees under
orig. proceeding).                                               Section 37.009, and summary judgment for attorney's fees
                                                                 under that section was improper.
 **10 In paragraphs 1 through 7 of his petition, Jarvis
alleged a breach of contract claim against Smith for selling
the four acre tract to Peltier without first offering it to      Jarvis's Attorney's Fees
Jarvis as required by the option agreement. As part of           We have held that the trial court should have denied Smith's
paragraph 7, Jarvis alleged that he “does not have an adequate   motion for summary judgment on his affirmative defenses
remedy at law and is entitled to the equitable remedy of         and granted Jarvis's motion for summary judgment on his
specific performance. Accordingly, Jarvis requests an order      breach of contract claim against Smith. Therefore, Jarvis was
compelling Smith to specifically perform his obligations as      successful on his breach of contract claim against Smith and
provided in the Option.”                                         is entitled to recover attorney's fees from Smith. SeeTex.
                                                                 Civ. Prac. & Rem.Code Ann. § 38.001(8); *657 Chappell,
Peltier was not a party to the option agreement, but Jarvis      37 S.W.3d at 21. Because the award of Jarvis's attorney's
sought to enforce the option agreement against him as well.      fees against Smith is mandatory, we conclude that remand is
Accordingly, in paragraph 8, Jarvis alleged that (1) his         appropriate. See Chappell, 37 S.W.3d at 21.
duty to act under the option agreement was never triggered
because Smith never submitted Peltier's offer to Jarvis as        **11 Peltier argues that Jarvis cannot recover attorney's
required by the terms of the option agreement; (2) after         fees against him because Jarvis “simply [added] a claim for
discovering Smith's sale to Peltier, Jarvis wrote a letter to    declaratory relief to a breach-of-contract claim for which
Smith and Peltier attempting to learn the terms on which         fees would not otherwise be permitted.” In MBM Financial
Peltier purchased the property; (3) Smith and Peltier did        Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660
not provide the terms of sale; and (4) Smith's failure to        (Tex.2009), cited by Peltier, the appellee asserted claims for
comply with the option agreement by submitting the offer to      breach of contract, fraud, and declaratory relief against the
Jarvis excused any alleged noncompliance by Jarvis. By these     appellant. Id. at 663. After a bench trial, the appellee was
allegations, Jarvis in effect asserts that, even though he did   awarded money damages on its breach of contract claim
not exercise his right of first refusal within the time frame    and attorney's fees under Section 38.001. Id. Ultimately,
provided in the option agreement, he was prevented from          the supreme court rendered judgment that the appellee take


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           11
Jarvis v. Peltier, 400 S.W.3d 644 (2013)
2013 WL 1755797

                                                                        When declaratory relief is requested and the trial court awards
nothing as damages on its breach of contract claim and held
                                                                        attorney's fees to the party who prevailed in the trial court,
that the attorney's fee award could not be affirmed based on
                                                                        we may remand upon reversal of the trial court's judgment for
Chapter 38 of the civil practice and remedies code. Id. at
666. The court further concluded that attorney's fees could not         reconsideration of attorney's fees in light of our disposition
                                                                        on appeal. See Coghill v. Griffith, 358 S.W.3d 834, 841
be awarded under the Declaratory Judgment Act because the
                                                                        (Tex.App.-Tyler 2012, pet. denied). Under the facts presented
declarations in the judgment duplicated issues already before
                                                                        here, we conclude that remand is appropriate. See id.
the court. Id. at 671.That is not the case here.

                                                                         **12 Jarvis's second issue is sustained.
Jarvis's breach of contract claim was based on Smith's failure
to offer the four acre tract to Jarvis, as required by the option
agreement, before selling it to Peltier. A favorable judgment
on this claim allows Jarvis to enforce the option agreement                                      DISPOSITION
against Smith. Peltier correctly points out that “a subsequent
purchaser stands in the shoes of the original seller when               Because we have sustained Jarvis's two issues against both
specific performance is sought and may be compelled to                  Smith and Peltier, we reverse the judgment against Jarvis.
convey title to the first purchaser.” Abraham Inv. Co., 968             We render judgment granting Jarvis's request for specific
S.W.2d at 527. But specific performance against Peltier is              performance of the option agreement against Smith and
available only upon Jarvis's showing that Peltier purchased             Peltier. Specifically, with respect to Peltier, we render
the property from Smith with knowledge of Jarvis's right                judgment declaring that (1) the *658 option agreement dated
of first refusal and that Jarvis's right is enforceable against         March 11, 1998, between Calvin C. Smith and Ben E. Jarvis is
Peltier despite his failure to exercise it in accordance with the       enforceable against Peltier; (2) Peltier acquired the four acre
terms of the option agreement. This proof was not necessary             tract subject to the option agreement; (3) Jarvis is entitled to
for Jarvis to prevail on his breach of contract claim against           enforce the option agreement; and (4) Peltier must convey
Smith. Therefore, unlike the appellee in MBM Financial                  the property to Jarvis on the same terms as Peltier acquired
Corp., Jarvis's declaratory judgment claim does not merely              the property from Smith. We render judgment that Smith
duplicate issues already before the court. See MBM Fin.                 take nothing for his claim of attorney's fees against Jarvis.
Corp., 292 S.W.3d at 671.                                               And finally, we sever the issue of Jarvis's attorney's fees and
                                                                        remand this cause to the trial court for further proceedings to
A declaratory judgment was an appropriate vehicle for                   determine the amount of attorney's fees Jarvis is entitled to
establishing the enforceability of the option agreement                 recover from Peltier and Smith under Texas Civil Practice and
against Peltier. SeeTEX. CIV. PRAC. & REM.CODE ANN.                     Remedies Code Sections 37.009 and 38.001(8) and 37.009.
§ 37.009; MBM Fin. Corp., 292 S.W.3d at 671. Because
we have held that Jarvis was entitled to summary judgment
                                                                        All Citations
on his claim for declaratory relief against Peltier, an award
of attorney's fees in Jarvis's favor may be equitable and               400 S.W.3d 644, 2013 WL 1755797
just. SeeTEX. CIV. PRAC. & REM.CODE ANN. § 37.009.


Footnotes
1       After Jarvis filed suit, Smith stated that he did not specifically recall signing the option, but he did not deny that he signed it.


End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                    12
Jones v. Kelley, 614 S.W.2d 95 (1981)




                                                                        [2]   Frauds, Statute Of
     KeyCite Yellow Flag - Negative Treatment                                     Separate Writings
Distinguished by Speedemissions, Inc. v. Bear Gate, L.P.,   Tex.App.-
                                                                              Where property was listed by real estate agent
Hous. (1 Dist.), April 4, 2013
                                                                              as one tract, where purchasers intended to
                       614 S.W.2d 95                                          purchase entire tract, and where both earnest
                   Supreme Court of Texas.                                    money contracts referred to financing agent
                                                                              which was involved in transaction only as means
          Eugene C. JONES et ux., Petitioners,                                of achieving financing of purchase, two earnest
                          v.                                                  money contracts, application and contract for
        Jared L. KELLEY, Sr. et al., Respondents.                             sale of financing agent, and vendor's affidavit
                                                                              could be construed together as one contract for
            No. B-9739. | March 4, 1981.                                      conveying entire tract of land and to provide
           | Rehearing Denied April 15, 1981.                                 description sufficient to satisfy statute of frauds.
                                                                              V.T.C.A. Bus. & C. § 26.01(b)(4).
Vendors of land appealed from judgment entered in the
District Court, Jefferson County, Thomas A. Thomas, J.,                       14 Cases that cite this headnote
decreeing specific performance of certain earnest money
contract for sale of vendor's land. The Court of Civil
                                                                        [3]   Frauds, Statute Of
Appeals, 602 S.W.2d 573, affirmed, and vendor appealed
                                                                                  Sufficiency in General
judgment requiring specific performance, and purchaser
appealed denial of attorney fees. The Supreme Court, Spears,                  Frauds, Statute Of
J., held that: (1) two earnest money contracts, financing                         Writings Connected by Internal Reference
agent's application and contract for sale, and vendor's                       For conveyance or contract of sale to meet
affidavit could be construed together as one contract; (2)                    requirements of statute of frauds, it must, insofar
four instruments construed together satisfied statute of frauds;              as property description is concerned, furnish
(3) there were pleadings to support jury's award of attorney                  within itself or by reference to other identified
fees; and (4) letter sent by financing agent to vendor                        writings then in existence, means or data by
and telephone conversation between vendor and purchaser                       which particular land to be conveyed may be
establish presentment entitling purchaser to attorney fees.                   identified with specific certainty. V.T.C.A., Bus.
                                                                              & C. § 26.01(b)(4).
Judgment affirmed as reformed.
                                                                              22 Cases that cite this headnote
Campbell, J., dissented and filed opinion in which Greenhill,
C. J., and Pope, J., joined.                                            [4]   Frauds, Statute Of
                                                                                  Sufficiency in General
                                                                              Where vendors intended to sell entire 116
 West Headnotes (10)                                                          acre tract which was all land vendor
                                                                              owned in specified county, where vendors
                                                                              recited in affidavit, which was one document
 [1]     Contracts                                                            consummating transaction, that they were
             Construing Instruments Together                                  owners of such property conveyed by deed
         Separate instruments or contracts executed at the                    to them, and metes and bounds description
         same time, for same purpose, and in course of                        of property was in evidence, and where plat
         same transaction are to be considered as one                         showing location within larger 116 acre tract
         instrument, and are to be read and construed                         of 36 acres to be conveyed to financing agent
         together.                                                            was in evidence, 36 acres from larger tract
                                                                              was sufficiently located at time of signing, and
         72 Cases that cite this headnote                                     description of entire property to be conveyed was



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 1
Jones v. Kelley, 614 S.W.2d 95 (1981)


        sufficient to satisfy statute of frauds. V.T.C.A.,
        Bus. & C. § 26.01(b)(4).                              [9]     Costs
                                                                          Contracts
        6 Cases that cite this headnote                               Under statute requiring presentation of claim to
                                                                      opposing party prior to recovery of attorney fees
 [5]    Reformation of Instruments                                    in suit on written contract, no particular form
            Matter of Description                                     of presentment is required. Vernon's Ann.Civ.St.
                                                                      art. 2226.
        Where there was no mutual mistake as to
        identity of subject property, only as to acreage,             84 Cases that cite this headnote
        reformation of number of acres involved, which
        was supported by jury finding, was proper.
                                                              [10]    Specific Performance
        Cases that cite this headnote                                     Costs
                                                                      Where vendor admitted he received letter from
 [6]    Costs                                                         purchaser's financing agent stating that purchaser
            Form and Requisites of Application in                     intended to go through with transaction, and
        General                                                       where telephone conversation between vendor
                                                                      and purchaser made it clear that purchasers were
        Where purchasers' amended petition in specific
                                                                      insisting that sale go through and were in process
        performance suit specifically plead that
                                                                      of contacting attorney, necessary presentment to
        purchasers made demand on vendors to convey
                                                                      recovery of attorney fees was established in suit
        subject property more than 30 days preceding
                                                                      for specific performance of written contract for
        the filing of action, but that said land was not
                                                                      sale of land. Vernon's Ann.Civ.St. art. 2226.
        conveyed, pleadings supported jury's award of
        attorney fees. Vernon's Ann.Civ.St. art. 2226.                2 Cases that cite this headnote

        8 Cases that cite this headnote


 [7]    Costs                                                Attorneys and Law Firms
            Contracts
        Necessary requisite for recovery of attorney fees    *96 Provost, Umphrey, Doyle & McPherson, Steven M.
        in suit on written contract is presentment of        Rienstra, Port Arthur, for petitioners.
        contract claim to opposing party and failure
                                                             Hebinck & Associates, Bernard L. Hebinck, Houston, for
        of that party to tender performance. Vernon's
                                                             respondents.
        Ann.Civ.St. art. 2226.
                                                             Opinion
        38 Cases that cite this headnote
                                                             SPEARS, Justice.
 [8]    Costs
                                                             This is a suit for specific performance to convey real estate.
            Contracts
                                                             Buyers, Jared L. Kelley and Olga Kelley and the Texas
        Purpose of requirement in suit based on written      Veterans Land Board, brought suit against sellers, Eugene
        contract for presentation of claim is to allow       Jones and Della Mae Jones, for specific performance of two
        person against whom it is asserted an opportunity    earnest money contracts for the sale of a tract of land in Shelby
        to pay claim within 30 days after they have notice   County. Trial was to a jury, and based upon its findings,
        of claim without incurring obligation for attorney   judgment was entered for the Kelleys decreeing specific
        fees. Vernon's Ann.Civ.St. art. 2226.                performance. The trial court, however, granted that portion of
                                                             the Joneses' motion for judgment notwithstanding the verdict
        61 Cases that cite this headnote
                                                             denying the Kelleys recovery of attorney's fees. The court



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          2
Jones v. Kelley, 614 S.W.2d 95 (1981)


of civil appeals affirmed the judgment of the trial court.         tract they owned in Shelby County to the Kelleys. The
602 S.W.2d 573. Both parties have filed applications in this       relevant portions of the documents may be summarized as
court. The Joneses' application attacks the judgment requiring     follows:
specific performance. The Kelleys' application complains
of the failure of the court of civil appeals to hold that            1. An earnest money contract wherein Jones agrees to
presentment of their claim was made, entitling them to the           sell to Kelley, for the sum of $400 per acre, in cash, the
attorney's fees found by the jury.                                   premises described as the property “(l)ying and situated
                                                                     in the State of Texas, County of Shelby, and described as
We reform the judgment of the court of civil appeals to              follows:”
provide for the recovery by the Kelleys of attorney's fees in
                                                                                  “36 acres out of the W. W. Wagstaff
the amount determined by the jury. In all other respects the
                                                                                  Survey, A-796 in Shelby County,
judgment is affirmed.
                                                                                  Texas.”

Three issues are presented: (1) whether the four documents           This contract acknowledged that the “(p)urchaser has made
consummating the sale of the subject property may                    application to purchase through Texas Veteran Land Board
be construed together as one contract; (2) whether the               and has been assigned # 03147.”
description of the property contained in the four documents if
they are construed together is sufficient to satisfy the statute     This contract also provides “(s)eller to furnish current
of frauds, Tex.Bus. & Com.Code Ann. s 26.01(b)(4); and (3)           survey by registered Surveyor as required by Veteran Land
whether presentment of the Kelleys' claim was established as         Board.”
a matter of law entitling the Kelleys to the jury's award of
attorney's fees.                                                     2. An earnest money contract wherein Jones agrees to sell
                                                                     to Kelley the premises described as:
The Joneses owned a 116 acre tract of land in Shelby
                                                                       “91.55 Acres out of the W. W. Wagstaff Survey A-796
County. 1 They listed the tract for sale with a real estate            and D. G. Green Survey A-263, in Shelby County,
agency specifying that the purchase price was to be paid either        Texas” for a consideration of $400 per acre, with a cash
in “cash or G.I.”. Mr. Kelley, a veteran, secured the aid of the       payment of $5,493, and “(p)urchaser to make Note and
Texas Veterans *97 Land Board to assist him in purchasing              Deed of Trust in favor of Seller” for the balance of the
the property. The Joneses cooperated with the Kelleys in the           purchase price.
financing arrangements with the Veterans Land Board.
                                                                     This contract provides that “(s)eller to furnish current
Their agreement was to sell the entire 127.55 acre tract and         survey by certified Surveyor,” and further that “(t)his
consisted of two earnest money contracts between the Joneses         contract to be closed in conjunction with 36 Ac Vet Land
and the Kelleys, the Veterans Land Board Application and             Bd contract # 03147.”
Contract for Sale, and the Joneses' affidavit. Under one of the
                                                                     3. “Application and Contract of Sale Texas Veterans' Land
earnest money contracts, the parties agreed that the contract
                                                                     Program,” providing that, with reference to the 36 acre
was assignable by the Kelleys to the Veterans Land Board
                                                                     tract, Jones “shall attach hereto a field note description of
which would take title to 36 acres of the Joneses' property in
                                                                     the above referenced property ....”
its name for cash. The Board would then resell that 36 acres to
the Kelleys under the provisions of the Texas Veterans Land          4. “Affidavit of Seller Veterans Land Board of Texas”
Act, art. 5421m Tex.Rev.Civ.Stat.Ann. The Joneses would              wherein Jones aver that they were the sellers of the
sell the remainder of the property, 91.55 acres, directly to the     described 36 acre tract, and that such tract “is a part
Kelleys for cash plus a note executed by the Kelleys, the note       of 127.55 acres that I purchased from C. Balsimo on
to be secured by a Deed of Trust lien on the 91 acres. The           May 1970 for a total consideration of $10,000.00 .... A
Joneses would not retain any title or security interest in the       surveyor field note description of an access easement is
land conveyed directly to the Veterans Land Board.                   being furnished.”

The Kelleys were the grantees in both earnest money
contracts in which the Joneses agreed to convey the entire



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            3
Jones v. Kelley, 614 S.W.2d 95 (1981)


The Kelleys, in relying upon their agreement with the Joneses,       for member banks' employees. The trustee was to acquire life
expended $6,181.40 for survey fees, escrow payments, and             insurance on each participant from participating bank funds.
fees and payments to the Veterans Land Board.                        Southern Life issued individual life insurance policies on each
                                                                     employee. Southern Life asserted that it had not violated any
The Jones couple later refused to convey the property. On            group insurance law because individual policies had been
September 7, 1977, the Joneses sent a letter to the Veterans         issued. This court held that the insurance policies, the trust
Land Board advising them that they would not go through              agreement, and the agreement between Great Southern and
with the sale. The Veterans Land Board replied, by letter            the Bankers Association must be construed together. We
to the Joneses, that the Kelleys intended to go through with         stated: “All of the instruments were a necessary part of the
the sale. Further, an uncontroverted transcript of a telephone       same transaction, without any one of which the transaction
conversation appears in the record between Mrs. Kelley and           was not complete.” In the present suit the transaction is the
Mr. Jones in which Mrs. Kelley repeatedly told Mr. Jones of          sale of the entire tract. Without the Veterans Land Board
her determination to go through with the sale.                       financing referred to in the contracts, the sale of the entire
                                                                     tract would not be complete.
The Joneses contend that the description of the acreage in
the earnest money contracts does not satisfy the statute of          In Veal v. Thomason, supra, separate oil and gas leases were
frauds, Tex.Bus. & Com.Code Ann. s 26.01(b)(4). *98                  involved covering a group of contiguous tracts of land owned
Specifically, they argue that there were two separate and            by the various lessors in severalty. Each instrument contained
distinct conveyances involved, and neither the 36 acre               recitals showing that the execution of similar leases by other
tract to be conveyed to the Veterans Land Board nor the              lessors was contemplated by the parties, and the several leases
remaining acreage were sufficiently described. It is conceded,       were held to constitute but one contract just as though all of
however, that if the documents are construed together as one         the lessors had signed the same piece of paper.
contract there is an adequate description of the property. 2
If the transaction consisted of two separate transactions, the       Although admitting that the documents were executed as
property description is inadequate as to both tracts and the         part of one transaction, the Joneses argue that the purpose
transaction fails.                                                   in executing the documents was not the same. The Joneses
                                                                     urge a distinction in that the 36 acre tract was to be sold for
 [1] We hold that the four instruments may be construed              cash while as to the remaining acreage, the Joneses were to
together and thus the description satisfies the statute of frauds.   retain a substantial security interest *99 in the property. In
The general rule is that separate instruments or contracts           Miles v. Martin, supra, we said that the principle of construing
executed at the same time, for the same purpose, and in the          contracts together was a “device for ascertaining and giving
course of the same transaction are to be considered as one           effect to the intention of the parties and cannot be applied
instrument, and are to be read and construed together. Miles         arbitrarily and without regard to the realities of the situation.”
v. Martin, 159 Tex. 336, 321 S.W.2d 62, 65 (1959); Veal              Id. 321 S.W.2d at p. 65.
v. Thomason, 138 Tex. 341, 159 S.W.2d 472, 475 (1942);
Braniff Inv. Co. v. Robertson, 124 Tex. 524, 81 S.W.2d 45, 50         [2] Looking at the complete transaction it was the clear
(1935); Libby v. Noel, 581 S.W.2d 761, 764 (Tex.Civ.App.             intent of both the Joneses and the Kelleys that the execution of
El Paso 1979, writ ref'd n. r. e.).                                  the four documents was for the primary purpose of conveying
                                                                     all the subject property to the Kelleys. The property was listed
The courts have construed contracts and instruments together         by the real estate agent as one tract and the Kelleys intended
in various situations in order to ascertain the intent of the        to purchase the entire tract. Financing through the Veterans
parties. Several decisions indicate that instruments may be          Land Board was only a means of achieving this objective. The
construed together or treated as one contract even though they       Veterans Land Board was only interested in aiding Kelley,
are not between the same parties. See Miles v. Martin, supra.        a veteran, in his purchase of the property and not in any
In Board of Insurance Commissioners v. Great Southern                acquisition of its own. The Joneses and Mr. Kelley executed
Life Ins. Co., 150 Tex. 258, 239 S.W.2d 803 (1951), Texas            the Veterans Land Board documents at the Joneses' daughter's
Bankers Association entered into a trust agreement with              home in Sheldon. Both of the earnest money contracts refer to
Houston Bank and Trust Company. The agreement provided               the Veterans Land Board. The execution of four documents in
for the establishment of a pension trust and retirement plan         this instance was only a means of accomplishing the singular



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 4
Jones v. Kelley, 614 S.W.2d 95 (1981)


and primary purpose of conveying the Joneses' entire tract to      of the four documents consummating this transaction, the
the Kelleys.                                                       Joneses recited that they were the owners of the property
                                                                   conveyed by deed from C. Balsimo to Jones and the metes
Since we have determined that the four documents must be           and bounds description of this property is in evidence. There
construed together as one contract we need to determine            is direct evidence that the Joneses actually chose the 36 acres
whether the property description contained in these four           to be conveyed to the Veterans Land Board. Both Kelley and
documents satisfies the statute of frauds.                         Harmon, the real estate agent, testified that Jones aided in
                                                                   outlining with a yellow pen marker the 36 acres and placing
 [3] For a conveyance or contract of sale to meet the              the easements on a plat at the time of the signing of the
requirements of the statute of frauds, it must, insofar as the     Veterans Land Board documents on May 1, 1977. This plat
property description is concerned, furnish within itself or        showing the location of the 36 acres within the larger 116 acre
by reference to other identified writings then in existence,       tract and containing calls for course and distance of the 36
the means or data by which the particular land to be               acres, *100 is in evidence and clearly and easily locates the
conveyed may be identified with specific certainty. Morrow         exact 36 acres referred to. A complete and accurate survey of
v. Shotwell, 477 S.W.2d 538, 539 (Tex.1972); Wilson v.             the 36 acres with minor changes and field notes was made a
Fisher, 144 Tex. 53, 188 S.W.2d 150, 152 (1945).                   week later on May 8, 1977 and was sent in attached to the
                                                                   Veterans Land Board Contract and Application, document
In Kmiec v. Reagan, 556 S.W.2d 567 (Tex.1977), this court          No. 3 above. As mentioned, the Joneses signed this document
stated: “(w)hen the grantor is stated to be the owner of the       along with all the others. Thus, it is clear the 36 acres from
property to be conveyed and it is proved that the grantor          the larger tract was sufficiently located by the plat before
owns only a single tract answering the description, the            the parties at the time of signing. When the instruments are
land is identified with reasonable certainty.” Id. at 569. In      construed together, the description of the entire property to
Pickett v. Bishop, 148 Tex. 207, 223 S.W.2d 222 (1949), the        be conveyed is sufficient to satisfy the statute of frauds.
question concerned the sufficiency of a property description       Further, the reformation of the number of acres involved,
contained in a memorandum. The body of the memorandum              being supported by the jury finding, was proper. There was
describes the land as “my property described on the opposite       no mutual mistake as to the identity of the subject property,
side hereof.” The reverse side of the memo contained an            only in the acreage.
inadequate description. This court held that phrases such
as “my property,” “my land,” or “owned by me,” are                  [6] We turn now to the third issue involved in this case
sufficient when it is shown by extrinsic evidence that the party   attorney's fees. The court of civil appeals held that the
owns only one tract of land answering the description. We          Kelleys did not plead or point to any evidence of presentment.
explained this holding by stating:                                 The Kelleys' Third Amended Petition specifically pleads:
                                                                   “plaintiffs Kelley made demand on defendants to convey the
             The stated ownership of the property is               property made the subject of this lawsuit more than 30 days
             in itself a matter of description which               preceding the filing of this action, but said land was not
             leads to the certain identification of                conveyed ....” Thus, there were pleadings to support the jury's
             the property and brings the description               award of attorney's fees.
             within the terms of the rule that the
             writing must furnish within itself, or                 [7] We turn now to the question concerning presentment of
             by reference to some other extrinsic                  the contract claim. Article 2226, Tex.Rev.Civ.Stat.Ann., as
             writing, the means or data by which                   amended in 1979, provides for the recovery of a reasonable
             the particular land to be conveyed may                amount as attorney's fees in addition to one's claim and costs,
             be identified with reasonable certainty.              for the successful prosecution of a suit founded on a written
             Id. at 224.
                                                               contract. 3 A necessary requisite for the recovery of attorney's
                                                               fees is the presentment of the contract claim to the opposing
 [4] [5] It is undisputed that the jury found that the Joneses party and the failure of that party to tender performance. The
intended to sell the entire 116 acre tract which the evidence  statute further provides that it is to “be liberally construed to
shows was all the land the Joneses owned in Shelby County.     promote its underlying purposes.”
In the Joneses' affidavit to the Veterans Land Board, one



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            5
Jones v. Kelley, 614 S.W.2d 95 (1981)


 [8] [9] The purpose of the requirement for presentation
of a claim is to allow the person against whom it is asserted         The first contract, summarized in the Court's opinion, is
an opportunity to pay a claim within 30 days after they               to convey 36 acres for cash to the Veterans Land Board.
have notice of the claim without incurring an obligation for          The second is to convey 91.55 acres to the Kelleys. In this
attorney's fees. No particular form of presentment is required.       transaction the Kelleys were to make a $5,493.00 down
Huff v. Fidelity Union Life Ins. Co., 158 Tex. 433, 312               payment and the balance was to be evidenced by a promissory
S.W.2d 493, 500 (1958); Hudson v. Smith, 391 S.W.2d 441,              note secured by a Deed of Trust.
452 (Tex.Civ.App. Houston 1965, writ ref'd n. r. e.).
                                                                      A Veterans Land Board sale is not a method of financing as to
Various forms of presentment have been held to be sufficient          the Joneses. It is a cash sale, conveyed to the Veterans Land
to support an award of attorney's fees under art. 2226. In            Board of Texas (VLB) by general warranty deed. The VLB
Huff v. Fidelity Union Life Ins. Co., supra, both oral and            enters into a contract for deed with the veteran purchaser.
written demands were held to be sufficient. In Welch v.               We have two contracts to convey two tracts of land to two
Gammage, 545 S.W.2d 223, 226 (Tex.Civ.App. Austin 1977,               purchasers with two deeds, one to the VLB and one to the
writ ref'd n. r. e.), the court held that the request for admission   Kelleys. We must determine if the property descriptions are
and its response in which the party admitted he refused to            sufficient to enforce each of these conveyances.
pay a claim were sufficient as presentment. Finally, in King
Optical v. Auto. Data Processing, etc., 542 S.W.2d 213,               The Statute of Frauds, Section 26.01 of the Business and
217 (Tex.Civ.App. Waco 1976, writ ref'd n. r. e.), the court          Commerce Code, provides:
held that an oral request for payment met the presentment
requirement of art. 2226.                                             Section 26.01. Promise or Agreement Must be in Writing.

 [10] The letter sent by the Veterans Land Board to the                 (a) A promise or agreement described in Subsection (b)
Joneses and the transcript of the telephone conversation                   of this section is not enforceable unless the promise or
between Mrs. Kelley and Mr. Jones establish presentment as                 agreement, or a memorandum of it, is
a matter of law. Mr. Jones admitted he received the letter, and
                                                                            (1) in writing; and
the contents of the letter and the telephone transcript were
never controverted. During the telephone conversation Mrs.                  (2) signed by the person to be charged with the promise
Kelley made it very clear that the Kelleys were insisting that              or agreement or by someone lawfully authorized to sign
the sale go through and were in the process of contacting an                for him.
attorney. 4
                                                                        (b) Subsection (a) of this section applies to
 *101 The judgment of the court of civil appeals is reformed
                                                                        ....
to provide for attorney's fees in the amount found by the jury,
and as reformed is affirmed.                                                (4) a contract for the sale of real estate;

                                                                      This Court has held that the writing must furnish within itself,
                                                                      or by reference to some other existing writing, the means
Dissenting opinion by CAMPBELL, J., in which
                                                                      or data by which the particular land to be conveyed may be
GREENHILL, C. J., and POPE and BARROW, JJ., join.
                                                                      identified with reasonable certainty. U. S. Enterprises, Inc. v.
                                                                      Dauley, 535 S.W.2d 623 (Tex.1976); Williams v. Ellison, 493
CAMPBELL, Justice, dissenting.                                        S.W.2d 734 (Tex.1973); Morrow v. Shotwell, 477 S.W.2d
I dissent.                                                            538 (Tex.1972); Wilson v. Fisher, 144 Tex. 53, 188 S.W.2d
                                                                      150 (1945).
The facts of this case are a classic example of what the Statute
of Frauds was intended to prevent. The problem is whether             The two earnest money contracts provide: “Seller to furnish
the cumulative property descriptions in the four separate             current survey by registered surveyor ....” It is undisputed
instruments are sufficient to enforce the two earnest money           that a current survey did not exist when these contracts were
contracts.                                                            signed. The field note description, subsequently attached



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                6
Jones v. Kelley, 614 S.W.2d 95 (1981)


                                                                                 Green survey A-263 in Shelby County,
to Instrument No. 3, cannot be considered because it was
                                                                                 Texas.”
not “some other existing writing” as required by U. S.
Enterprises, Inc. v. Dauley, supra, Williams v. Ellison, supra,    This contract is lacking for the same reason as the 36
Morrow v. Shotwell, supra, Wilson v. Fisher, supra, and            acre contract. Additionally, this 91.55 acre tract lies in two
Hobbs v. Bass, 279 S.W.2d 480 (Tex.Civ.App. Texarkana              surveys, Wagstaff and Green, and the 36 acre tract was to be
1955, writ ref'd n. r. e.).                                        taken only from the Wagstaff survey.

Instruments 1, 3 and 4 refer only to the VLB sale. The third       As evidenced by the two earnest money contracts, the Joneses
instrument, the application and contract for sale, provides no     and Kelleys contracted for two separate conveyances. There
assistance. The only description is “36 acres located in W. W.     is no way to determine which 36 acres will go to the VLB
Wagstaff survey, A-796 Shelby County, Texas 12 miles N.            without lien or to which portion the Joneses are to retain
(direction) from Center (County Seat), Texas ....” The fourth      their lien. These factors are highly significant to the VLB
instrument, Affidavit of Seller Veterans Land Board, states        and to the Joneses. The VLB application and contract of sale
that the 36 acres is a part of 127.55 acres that the Joneses       provide that if the 36 acres does not abut on a public road the
purchased from C. Balsimo in May 1970. This Court has              seller will provide a usable easement to a public road. The
held such a description to be insufficient. In Smith v. Sorelle,   Kelleys attempted to show that the 36 acres was to have been
126 Tex. 353, 87 S.W.2d 703 (1935), we held that a deed            at the back side of the farm and not abutting on a public road.
purporting to convey *102 land, which describes it only by         However, no attempt was made to provide a description of
quantity and as being part of a larger tract, with nothing to      the easement. Whether the land on which the Joneses were
identify what specific portion of the larger tract is intended     to retain a lien abutted on a public road and whether the land
to be conveyed, is invalid for uncertainty of description. In      was to be encumbered with an easement would be decisive
Pfeiffer v. Lindsay, 66 Tex. 123, 1 S.W. 264 (1886), this          to them.
Court held the following description to be insufficient:
                                                                   The four instruments fail to provide sufficient description to
             “(F)ifty acres of the J. M. Moss
                                                                   comply with the Statute of Frauds.
             survey, abstract No. 462, situated near
             the town of Burlington, in Montague
             county, Texas.”
                                                                   GREENHILL, C. J., and POPE and BARROW, JJ., join in
The second contract, the earnest money contract between the        this dissenting opinion.
Joneses and the Kelleys, described the land to be conveyed to
the Kelleys as follows:                                            All Citations

             “91.55 acres out of the W. W.                         614 S.W.2d 95
             Wagstaff survey A-796 and D. G.


Footnotes
1      The land was originally thought to contain 127.55 acres, but was determined by the jury to contain 116 acres. There is
       no dispute over the actual acreage found by the jury nor over the reformation of the contract by the trial court.
2      During oral argument, counsel for the Joneses acknowledged that if the four instruments were construed as one
       transaction, the property description of the entire tract was legally sufficient:
            JUDGE : Would you agree that the court of civil appeals was correct, or would say they were incorrect, in their
            conclusion that you can tell where the property is and what the property is from examination of all four instruments
            with the field notes attached?
            COUNSEL : I concede that if you take their initial conclusion that this is one transaction yes, I concede that the law
            is that that being all the land that my clients owned in Shelby County yes, you can determine from that what land
            you are talking about in total, but you still cannot distinguish what any one of these instruments refers to and I still
            contend .... which 36 or which remainder where it is. And that the terms of the sales are simply different; it's simply
            on its face not a single contract. No, I concede once you reach that point and say, “yes, it's one contract to sell the
            whole farm,” yes, they are absolutely correct on that point.


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Jones v. Kelley, 614 S.W.2d 95 (1981)



3     Section 2 of the 1979 amendatory act provides that the act is remedial in character and is intended to apply to all pending
      actions regardless of the time of institution of the suit. 1979 Tex.Gen.Laws, ch. 314, s 2 at 718.
4     The following is an excerpt from the transcript of the telephone conversation:
           Mrs. Kelley: Well, sir, we are not in anyway going to sell that land to anyone else when we so desparately want it
           for ourselves. Now I am going to tell you, we have contacted a lawyer and you will be hearing from him. The Land
           Board is notified of the facts that you are trying to back out of the deal, and we will not in any way give up this piece
           of land. We have too much money invested in it now.


End of Document                                                © 2015 Thomson Reuters. No claim to original U.S. Government Works.




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                8
Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


                                                                             Presumptions and burden of proof
                     416 S.W.3d 618                                     Statutory presumption under Texas Residential
                Court of Appeals of Texas,                              Construction Commission Act (TRCCA) that
                  Houston (1st Dist.).                                  recommendation of a third-party inspector
                                                                        constitutes a rebuttable presumption of the
       Gary JONES and Carolyn Jones, Appellants                         existence or nonexistence of a construction
                         v.                                             defect did not relieve homeowners of their
                PESAK BROTHERS                                          burden, as plaintiffs, to prove that builder should
           CONSTRUCTION, INC., Appellee.                                be held liable for the substandard grading and
                                                                        the resulting damage; presumption established
       No. 01–12–00535–CV.           |   Sept. 10, 2013.                only that the grading was defective, not that
                                                                        builder had assumed responsibility to perform
Synopsis                                                                the grading. V.T.C.A., Property Code § 426.008.
Background: Homeowners sued their builder for breach
of a construction contract, express and implied warranties,             Cases that cite this headnote
negligent construction of the home, and for violations of the
Texas Deceptive Trade Practices Act. The 2nd 25th District
                                                                  [2]   Contracts
Court, Colorado County, William C. Kirkendall, J., entered a
                                                                            Presumptions and burden of proof
take-nothing judgment, in accordance with the jury's verdict,
and homeowners appealed.                                                Under     Texas     Residential     Construction
                                                                        Commission       Act     (TRCCA),       statutory
                                                                        presumption regarding the existence of a
                                                                        construction defect does not have the same
Holdings: The Court of Appeals, Jane Bland, J., held that:              meaning as the existence of a defendant's liability
                                                                        for a construction defect. V.T.C.A., Property
[1] evidence supported jury's verdict for builder on                    Code § 426.008.
homeowners' breach-of-contract and breach-of-warranty
claims stemming from improper grading;                                  Cases that cite this headnote

[2] jury's decision not to assign fault to builder for
                                                                  [3]   Appeal and Error
homeowners' Deceptive Trade Practices Act (DTPA) claims,
                                                                             Great or overwhelming weight or
stemming from improper grading, was not against the great
                                                                        preponderance
weight and preponderance of the evidence;
                                                                        When a party attacks the factual sufficiency of
                                                                        an adverse finding on an issue on which she
[3] builder owed no independent legal duty not to negligently
                                                                        has the burden of proof, she must demonstrate
inflict emotional distress in performing under the construction
                                                                        on appeal that the adverse finding is against the
contract with homeowners; and
                                                                        great weight and preponderance of the evidence.
[4] trial court did not err in refusing to submit homeowners'           1 Cases that cite this headnote
negligent undertaking claim to the jury as a separate cause of
action against builder.
                                                                  [4]   Contracts
                                                                            Express warranties
Affirmed.                                                               Contracts
                                                                            Nature and Form of Remedy
                                                                        Although breach of warranty and breach of
 West Headnotes (22)                                                    contract are distinct causes of action, an express
                                                                        warranty comprises part of the basis of the
                                                                        bargain and thus is contractual in nature.
 [1]    Contracts



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


                                                                   charged, but the document signed by the person
        Cases that cite this headnote                              to be charged must plainly refer to the other
                                                                   writing.
 [5]    Contracts
                                                                   Cases that cite this headnote
            Acts or Omissions Constituting Breach in
        General
        Contracts                                           [9]    Antitrust and Trade Regulation
            Warranties                                                  Construction, renovation, improvement, and
                                                                   repair
        Both breach-of-contract and breach-of-warranty
        claims involve a party seeking damages based               Antitrust and Trade Regulation
        on an opponent's failure to uphold its end of the              Weight and sufficiency
        bargain.                                                   Jury's decision not to assign fault to builder
                                                                   for homeowners' Deceptive Trade Practices
        Cases that cite this headnote                              Act (DTPA) claims, stemming from improper
                                                                   grading, was not against the great weight and
 [6]    Contracts                                                  preponderance of the evidence; reference to
             Sufficiency of evidence as to building                compliance with building codes did not appear
        contracts                                                  in the construction agreement and, as a result,
                                                                   could not be attributed to builder so as to
        Contracts
                                                                   impose liability as a matter of law, certificate
            Building contracts
                                                                   of completion did not specifically address the
        Evidence supported jury's verdict for builder
                                                                   grading work, disclaimer at the bottom of the
        on homeowners' breach-of-contract and breach-
                                                                   house plans, stating that any engineering aspects
        of-warranty claims stemming from improper
                                                                   to be specified to actual site and construction
        grading; homeowner told builder that he would
                                                                   conditions, was from the plan designer and
        take responsibility for grading the property,
                                                                   meant only that the home was not designed for
        as well as for installing the sidewalks, patio,
                                                                   any particular lot or its conditions. V.T.C.A.,
        driveway, and landscaping, builder's willingness
                                                                   Bus. & C. § 17.50(a)(1, 3).
        to repair the grading defects did not constitute
        an admission of liability, and task of resolving           Cases that cite this headnote
        the conflicting evidence as to who should have
        graded the land belonged to the jury.
                                                            [10]   Action
        Cases that cite this headnote                                   Nature of Action
                                                                   If the defendant's conduct gives rise to liability
                                                                   because it breaches an agreement between the
 [7]    Contracts
                                                                   parties, the plaintiff's claim ordinarily sounds
             Matters annexed or referred to as part of
                                                                   only in contract.
        contract
        Documents incorporated into a contract by                  1 Cases that cite this headnote
        reference become part of that contract.

        1 Cases that cite this headnote                     [11]   Action
                                                                        Nature of Action
                                                                   In determining whether the plaintiff may recover
 [8]    Contracts
                                                                   on a tort theory, if the damages sought are only
             Matters annexed or referred to as part of
                                                                   loss or damage to the subject matter of the
        contract
                                                                   contract, the cause of action is ordinarily on the
        Unsigned paper may be incorporated by
                                                                   contract.
        reference into a paper signed by the person to be



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


                                                                     Negligent undertaking liability requires the
        1 Cases that cite this headnote                              presence of the following specific duty
                                                                     predicates: (1) defendant undertook to perform
 [12]   Negligence                                                   services that it knew or should have known
            Voluntarily Assumed Duty                                 were necessary for the plaintiffs' protection, (2)
                                                                     defendant failed to exercise reasonable care in
        Absent a duty to act independently of the promise
                                                                     performing those services, and either (3) third
        made, failure to perform on a promise will not
                                                                     party charged with protecting the plaintiffs relied
        give rise to a cause of action for negligence.
                                                                     upon the defendant's performance, or (4) the
        1 Cases that cite this headnote                              defendant's performance increased the plaintiffs'
                                                                     risk of harm.

 [13]   Negligence                                                   Cases that cite this headnote
            Necessity and Existence of Duty
        If no legal duty exists, neither does a cause of
                                                              [17]   Negligence
        action for negligence.
                                                                         Voluntarily Assumed Duty
        1 Cases that cite this headnote                              Negligence
                                                                         Breach of Duty

 [14]   Damages                                                      As with a simple negligence claim, a negligent
                                                                     undertaking claim requires proof that the
           Breach of Contract or Warranty
                                                                     defendant owed the plaintiff a legal duty and
        Dead Bodies
                                                                     violated it.
            Civil liabilities
        Certain “special relationships,” including a                 1 Cases that cite this headnote
        very limited number of contracts dealing with
        intensely emotional noncommercial subjects
                                                              [18]   Negligence
        such as preparing a corpse for burial, may give
                                                                         Liabilities relating to construction,
        rise to a legal duty to avoid causing mental
                                                                     demolition and repair
        anguish.
                                                                     Because homeowners did not show a separate
        Cases that cite this headnote                                undertaking from the construction contract itself,
                                                                     or any increased risk of harm separate from the
                                                                     performance under the contract, the trial court
 [15]   Damages
                                                                     did not err in refusing to submit homeowners'
           Particular cases
                                                                     negligent undertaking claim to the jury as a
        Builder owed no independent legal duty not                   separate cause of action against builder.
        to negligently inflict emotional distress in
        performing under the construction contract with              1 Cases that cite this headnote
        homeowners, and homeowner's heart attack was
        not a foreseeable result of any allegedly defective
                                                              [19]   Evidence
        performance of the construction contract that
                                                                         Cause
        would otherwise give rise to a legal duty.
                                                                     Because builder owed homeowners only the
        Cases that cite this headnote                                contractual duties arising under the construction
                                                                     agreement, the trial court acted within its
                                                                     discretion in excluding causation testimony from
 [16]   Negligence
                                                                     homeowner's treating cardiologist, stating that
            Voluntarily Assumed Duty
                                                                     stress from the foundation problems caused
        Negligence                                                   homeowner to suffer a heart attack, insofar as
            Voluntarily assumed duties                               it purported to support a negligence cause of


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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


        action; however, trial court allowed the jury to
        consider evidence that homeowner suffered a                     Cases that cite this headnote
        heart attack in connection with the homeowner's
        mental anguish claim.

        Cases that cite this headnote                          Attorneys and Law Firms

                                                               *620 Thomas J. Pearson, Attorney at Law, Houston, TX,
 [20]   Evidence
                                                               Donna C. Kline, Attorney at Law, Montgomery, TX, for
            Physical facts
                                                               Appellants.
        Evidence
            Sources of Data                                    Britton B. Harris, Brett J. Sileo, Harris, Hilburn & Sherer,
        In homeowners' action against builder for              Houston, TX, for Appellee.
        construction defects, expert, who had general
                                                               Panel consists of Justices JENNINGS, BLAND, and
        engineering experience, was qualified to render
                                                               MASSENGALE.
        an opinion relating to the foundation, and
        although expert did not specifically refer to any
        building code provision or address the concrete's
        compressive strength in his testimony, those                                     OPINION
        issues went to the weight of the evidence, not its
                                                               JANE BLAND, Justice.
        admissibility.
                                                               When their newly-constructed house showed signs of
        Cases that cite this headnote
                                                               foundation distress, Gary and Carolyn Jones sued their
                                                               builder, Pesak Brothers Construction Company (Pesak
 [21]   Appeal and Error                                       Brothers), for breach of a construction contract, express and
           Particular types of evidence                        implied warranties, negligent construction of the home, and
        Absent a showing that the trial court's exclusion      for violations of the Texas Deceptive Trade *621 Practices
        of homeowner's notes of his conversations              Act. After a jury trial on the Joneses' claims, the trial court
        with builder, probably caused the rendition of         entered a take-nothing judgment, in accordance with the jury's
        an improper judgment, appellate court would            verdict.
        not disturb the trial court's evidentiary ruling
        in homeowner's action against builder for              On appeal, the Joneses challenge the legal and factual
        construction defects.                                  sufficiency of the evidence supporting the jury's findings.
                                                               They also contend that the trial court erred in refusing to
        1 Cases that cite this headnote                        submit their negligence claim to the jury and by striking their
                                                               sixth amended petition, and they raise challenges to certain
                                                               of the trial court's evidentiary rulings. We hold that sufficient
 [22]   Pleading
                                                               evidence supports the jury's verdict, and the trial court did
            Necessity
                                                               not err in deciding the other challenged rulings. We therefore
        Pleading                                               affirm.
            Affected by time of application in general
        If an amended pleading is filed within seven
        days of trial, leave of court is required, and trial
                                                                                        Background
        court does not abuse its discretion by refusing
        to consider an amended petition filed fewer            In 2006, the Joneses hired Pesak Brothers to build a house
        than seven days before trial if the party fails to     for them on the Joneses' seventy-eight-acre property near
        seek leave of court. Vernon's Ann.Texas Rules          Columbus, Texas. Pesak Brothers referred the Joneses to
        Civ.Proc., Rule 63.                                    Steven Kieschnick, of Kieschnick's Designs in Wood, to
                                                               select a floor plan from several blueprints that he had



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


available. After selecting a plan, the Joneses returned to Pesak   under the construction agreement, and that the Joneses also
Brothers and signed a two-page construction agreement. The         saved money by choosing to grade the property themselves.
agreement specifies the square footage of the living area,
garages, and porches, as well as the materials that Pesak          Pesak Brothers completed construction, and the Joneses
Brothers would use in constructing the home. It itemizes the       closed on the house in December 2006. Pesak presented the
specifications for the foundation, framing, roofing, electrical    Joneses with a final invoice in the amount of $334,839.96.
wiring, insulation, exterior finish, painting, plumbing, floors,   Pesak explained that the amount due exceeded the estimate
doors, windows, interiors, gas outlets, and air conditioning       contained in the agreement because of additional items not
and heating. Pesak Brothers bid $310,000 for the total             accounted for in the original estimate that Pesak Brothers
construction cost, but the agreement explains that the Pesak       provided, at the Joneses' request, during construction. Mr.
Brothers would calculate the amount due based “on a cost           Jones protested that final amount and insisted that he had
plus 10% for operating expenses and liability insurance.” The      agreed to pay no more than $300,000 for the house. Mr. Jones
agreement does not address grading of the land surrounding         told the jury that he suspected that Pesak Brothers had added
the construction site.                                             the “cost plus ten percent” provision after the Joneses signed
                                                                   the agreement. The parties negotiated the claimed overage.
Kieschnick provided a list entitled “[s]pecifications for          Pesak Brothers ultimately agreed with the Joneses to split
the home of Mr. & Mrs. Gary Jones.” The list identifies            the difference in the claimed overage amount and accepted
Kieschnick as a “draftsman and craftsman,” and it reiterates       $20,000 in exchange for signing the certificate of completion.
and elaborates on the construction tasks and items identified      In the certificate, the parties averred:
in the Pesak agreement. Pertinent to this appeal, the list
recites that “[g]eneral notes, all materials and workmanship         1. Improvements Debts or Liens. Except as indicated
should meet or exceed local building code and also                     below, Contractor states that there are no unpaid debts
the Universal Building Code Book. Any changes made                     and OWNER states that he has not received any notices
should be cleared with the homeowner.” Among other                     from any contractors or subcontractors with respect to
things, Kieschnick's list specifies: “Excavation—virgin soil”;         the Project or with respect to any of the following
“Gutters and Downspouts—none”; and “Landscaping—by                     items which may be remaining on the Property: Mirror,
owner.” Kieschnick's list is otherwise silent with respect to          shutters on the front of house, Home Warranty Policy,
the diversion of water outside the home or the grading or other        concrete steps and bonus room as per plans and
improvements to the land. Kieschnick's list is unsigned, and           specifications dated as of March 22, 2006
neither the Pesak agreement nor Kieschnick's list refers to or
                                                                        ....
acknowledges the existence of the other.
                                                                     3. Certificate of Completion. The project has been
Before Pesak Brothers completed its construction, Robert               completed in a good and workman-like manner and in
Pesak and Mr. Jones discussed who would take responsibility            accordance with the plans and specifications approved
for completing the grading near the house and hardscaping              by the Owner. The Contractor has duly paid all bills
on the lot. Pesak asked Mr. Jones “if he wanted [Pesak                 and invoices for any labor and/or materials furnished
Brothers] to do the grading and he said no, that he was                in connection with the Project and has not received
going to.” Mr. Jones owned three pieces of earth-moving                notices of any claim of mechanic's or materialman's liens
equipment—a tractor, a front-end loader, and an excavator.             against the property. The OWNER has fully accepted the
He had gained experience using them to clear over 200 fallen           completed Project and has not received notices of any
trees on his Louisiana property following Hurricane Katrina,           kind of any claim of mechanic's or materialman's liens
and he enjoyed moving soil around on his property with                 against the property.
them. Mr. Jones told Pesak that he would contract directly
with Sanchez Construction to install the concrete driveway,        The evidence is uncontested that, other than the typical
patio, and sidewalks surrounding the house. Mr. Jones              grading that builders perform in the course of constructing
acknowledged that, by contracting with Sanchez directly            the home, neither Pesak Brothers nor its subcontractors
for the hardscaping, the Joneses avoided the “cost plus ten        graded the site before the parties executed the certificate of
percent” that Pesak Brothers *622 would have charged               completion.




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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


In January 2007, around the same time that the Joneses moved       windows and doors to stick or drag and cracks in the sheetrock
into the house, Sanchez added a sidewalk on the north side of      and brick veneer.
the house, a driveway on the east side, and a patio on the south
side. Mr. Jones used his front-end loader to contour the land      In a July 7, 2008 letter to the Joneses' attorneys, Pesak
around the house. Mr. Jones also attempted to divert water         Brothers offered to make Brown's suggested repairs without
from the house's foundation by cutting three terraces on the       additional charge and explained how it would remedy each
west side, and he built a stone wall uphill from the house.        defect identified in Brown's report. With respect to the
He conceded that he did not know any particular grading            foundation issues identified in Brown's report, Pesak Brothers
requirements, such as the degree of slope, to use.                 proposed to grade the area on the west side of the home to
                                                                   the proper five percent slope to divert the water from the
In February, Mr. Jones called Pesak to report that he              foundation and repair cracks and other cosmetic distress. The
had found cracks in the exterior mortar. Pesak told Mr.            Joneses, who had instituted this lawsuit several days before
Jones to add soil around the foundation. Eventually, cracks        receiving the letter, did not accept Pesak Brothers' offer.
appeared in the inside walls, and windows and doors began
to stick. According to Pesak, Mr. Jones's failure to grade the     Mr. Jones suffered a heart attack in December 2008. The
foundation soon after Pesak Brothers completed construction        Joneses amended their pleadings to include, as part of their
caused this damage. Pesak also testified that the placement        DTPA claim, allegations that Pesak Brothers' conduct caused
of the sidewalks, patio, and driveway prevented adequate           Mr. Jones's heart attack and that he was entitled to damages
grading around the home. He explained that the *623                for his physical injury and mental anguish.
hardscaping around the house acted like a dam: instead of
diverting rainwater away from the foundation, it detoured the      At the close of the Joneses' case in chief, Pesak Brothers
water flow around the foundation until it settled underneath       moved for a directed verdict on the Joneses' negligence claim.
the west side.                                                     The trial court took the motion under advisement, telling the
                                                                   parties it would decide the issue before submitting the charge
The Joneses hired engineer Gary Boyd, who prepared a report        to the jury. At the charge conference, the trial court declined
in January 2008 concluding that the foundation slab was            the Joneses' proposed submission of a negligence claim. The
tilting, or “heaving,” and stating that it was his “professional   jury found that Pesak Brothers was not liable for the Joneses'
recommendation that proper drainage be established adjacent        remaining contract, DTPA, and breach of warranty claims.
to the foundation sufficient to satisfy the International
Residential Code [IRC] Building Requirements.”

                                                                                             Discussion
The Joneses initiated an administrative complaint against
Pesak Brothers with the now-defunct Texas Residential              I. Evidentiary Sufficiency
                                       1
Construction Commission (TRCC). TRCC sent its own
inspector, John Brown, to investigate. He concluded in April       A. Legal sufficiency of the evidence supporting the
2008 that the surrounding soil had not been properly graded        jury's adverse findings *624 on the Joneses' breach-of-
and that, as a result, the foundation had experienced post-        contract and breach-of-warranty claims
construction differential movement that had damaged the            According to the Joneses, the TRCC inspector's report
house.                                                             created a presumption that Pesak Brothers had breached
                                                                   both the contract and warranties of good and workmanlike
Brown also opined that the areas enclosed by the sidewalk          construction, and thereby shifted the burden of proof
should be “filled and graded to provide a drainage slope away      to Pesak Brothers to show that the inspector's findings
from the foundation.” Brown identified nineteen construction       were inconsistent with applicable building and performance
defects in the house. These included wiring problems and a         standards. Because of the inspector's report, the Joneses
leak in the septic tank fill line, but of paramount concern was    contend, the evidence conclusively established Pesak
the failure to provide an adequate slope around the foundation     Brothers' liability. Though the jury found to the contrary, the
away from the house to protect the foundation from damage          Joneses are entitled to reversal and rendition of the judgment
due to surface drainage. He concurred with Boyd that the           in their favor if they have established Pesak Brother's liability
lack of proper grading resulted in heaving, which caused the       as a matter of law. See Dow Chem. Co. v. Francis, 46



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


S.W.3d 237, 241 (Tex.2001) (explaining that a party attacking
legal sufficiency of adverse finding on an issue on which
                                                                                     1. Standard of review
party bears burden of proof “must demonstrate on appeal
that the evidence establishes, as a matter of law, all vital       [3] The Joneses next challenge the factual sufficiency of
facts in support of the issue,” and that party may prevail        the evidence supporting the jury's findings in response to the
on appeal only if no evidence supports finding and “the           Joneses' breach of contract, breach of warranty, and DTPA
contrary proposition is conclusively established”); see also      liability issues. “When a party attacks the factual sufficiency
City of Keller v. Wilson, 168 S.W.3d 802, 815–16 (Tex.2005)       of an adverse finding on an issue on which she has the burden
(explaining nature of conclusive evidence).                       of proof, she must demonstrate on appeal that the adverse
                                                                  finding is against the great weight and preponderance of the
[1]   In the trial court, the parties agreed that a presumption   evidence.” Dow Chem. Co., 46 S.W.3d at 242. In reviewing
created by the TRCCA applied to their dispute. 2 The court        the record under this standard, we consider and weigh all
therefore instructed the jury, congruent with the former          of the evidence; we set aside a verdict only if the evidence
statute, that                                                     is so weak or if the finding is so against the great weight
                                                                  and preponderance of the evidence that it is clearly wrong
                                                                  and unjust. Id. We must “detail the evidence relevant to the
   in any action involving a construction defect brought          issue” and “state in what regard the contrary evidence greatly
   after a recommendation of a third-party inspector or           outweighs the evidence in support of the verdict.” Id. (quoting
   ruling by a panel of state inspectors on the existence         Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986)).
   of the construction defect or its appropriate repair, the      The jury is the sole judge of the witnesses' credibility, and it
   recommendation or ruling shall constitute a rebuttable         may choose to believe one witness over another; a reviewing
   presumption of the existence or nonexistence of a              court may not impose its own opinion to the contrary. City of
   construction defect or the reasonable manner of repair of      Keller, 168 S.W.3d at 819. Because it is the jury's province
   the construction defect.                                       to resolve conflicting evidence, we must assume that jurors
 [2] The Joneses point to the instruction, coupled with the       resolved all conflicts in harmony with their verdict. Id. at 820.
inspector's report, as conclusively establishing liability. We
disagree with the Joneses' interpretation. “[T]he existence ...   2. Analysis All of the Joneses' causes of action turn on
of a construction defect” does not have the same meaning          whether Pesak Brothers was responsible for the improper
as “the existence of a defendant's liability for a construction   grading and, consequently, for the damage to the foundation
defect.” No party disputed the existence of the construction
                                                                  and other parts of the home. 3 The Joneses' live petition
defect at issue in this case; Pesak Brothers agreed with the
                                                                  alleged that Pesak Brothers:
Joneses that the soil around the house was not properly
graded. Their dispute turned not on whether the grading
was substandard, but instead, on whether Pesak Brothers had         • failed to prepare grading and drainage around the
agreed to grade the Joneses' property in the first place. The         foundation as required by the TRCC;
presumption relied on by the Joneses does not relieve them
of their burden, as plaintiffs, to prove that Pesak Brothers             • represented that the house would be built in a
should be held liable for the substandard grading and the                  workmanlike manner in compliance with accepted
resulting damage. The presumption established only that the                building standards and methods and that it was
grading was defective, not that Pesak Brothers had assumed                 habitable when it had not graded the site to provide
responsibility to perform the grading. We hold that the                    appropriate drainage “that was essential to the
Joneses do not prevail as a matter of law on their breach                  structural integrity of the foundation”; and
of contract and breach of warranty claims, so as to require
reversal of the jury's verdict.                                          • failed to disclose that the “landscaping” referred to in
                                                                            the agreement was actually finish grading that was
                                                                            essential to proper drainage.
*625 B. Factual insufficiency challenge
                                                                    Each of their claims required the Joneses to prove that
                                                                      Pesak Brothers had a duty—whether derived from the
                                                                      contract or imposed by law—to grade the site after



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


     constructing the house. We consider this issue in the      Trico Marine Servs., Inc. v. Stewart & Stevenson Tech. Servs.,
     context of each claim below.                               Inc., 73 S.W.3d 545, 549 (Tex.App.-Houston [1st Dist.] 2002,
                                                                orig. proceeding) (quoting Owen v. Hendricks, 433 S.W.2d
                                                                164, 166 (Tex.1968)). The document signed by the defendant,
  a. Breach-of-contract and breach-of-warranty claims
                                                                however, must plainly refer to the other writing. Id. No
 [4] [5] [6] Although breach of warranty and breach of reference to Kieschnick's list appears in the Pesak Brothers
contract are distinct causes of action, an express warranty     agreement.
comprises part of the basis of the bargain and thus is
contractual in nature. Med. City Dall., Ltd. v. Carlisle Corp., At trial Pesak testified that he had offered to provide the
251 S.W.3d 55, 60 (Tex.2008). Both breach-of-contract           grading work at the cost-plus-ten-percent rate set forth in
and breach-of-warranty claims “involve[ ] a party seeking       the agreement, but Mr. Jones declined the offer. Mr. Jones
damages based on an opponent's failure to uphold its end of     told Pesak that he would take responsibility for grading
the bargain.” Id. (citing U.S. Pipe & Foundry Co. v. City       the property, as well as for installing the sidewalks, patio,
of Waco, 130 Tex. 126, 108 S.W.2d 432, 434 (1937)). We          driveway, and landscaping. The record shows that Mr. Jones
therefore consider the Joneses' factual-sufficiency challenges  complained that Pesak Brother's final invoice on the home
on these issues together.                                       was excessive, even though his complaint was inconsistent
                                                                with the agreement's financial terms. The jury could have
Charge question 1 asked the jury:                               considered the evidence concerning the parties' financial
                                                                discussions to find that the additional cost the Joneses would
    *626 Did Pesak Brothers Construction, Inc. fail to comply   have incurred by having the work performed under the written
   with the material terms of the agreement with Gary and       agreement led to their decision to assume the responsibility
   Carolyn Jones?                                               for the grading, hardscaping and landscaping, which, the jury
                                                                heard, also involves grading the soil around the house to
   In deciding whether the parties reached an agreement,        protect the foundation.
   you may consider what they said and did in light of the
   surrounding circumstances, including any earlier course of   The Joneses contend that Pesak Brothers' July 2008 letter
   dealing. You may not consider the parties' unexpressed       offering to repair defects identified by the state inspector is
   thoughts or intentions.                                      tantamount to an admission that Pesak Brothers had assumed
                                                                 the responsibility to grade at least the western side of the
The charge defined an express warranty as “any affirmation
                                                                 property surrounding the house. The relevant contents of that
of fact or promise made by Pesak Brothers Construction, Inc.
                                                                 letter follow:
that relates to the construction of the home and becomes part
of the basis of the bargain.” The charge explained that an          We have reviewed the inspection report filed by John
implied warranty includes “failing to perform services in a         Brown as part of the TRCC SIRP process. As we have
good and workmanlike manner” or “[s]elling a home that was          stated before, we are very aware of the problems that exist
not suitable for human habitation.” The jury found no breach        with the Jones home and are still willing to fix them, with
of a material term of the agreement, and no failure to comply       the cooperation of the Jones[es].
with a warranty that was producing cause of any damage to
the Joneses.                                                        We have listed each alleged defect from the inspection
                                                                    report and the suggested method of repair:
 [7]    [8] The written construction agreement does not
mention grading. The Joneses assert that Kieschnick's list          # 1 Alleged Defect: Improper grading and drainage around
was part of their agreement with Pesak Brothers through             foundation.
the doctrine of incorporation by reference. We disagree.
                                                                     *627 Repair Method: Pesak Brothers Construction will
“Documents incorporated into a contract by reference become
                                                                    grade the area on the west side of the home to the proper 5%
part of that contract.” In re 24R, Inc., 324 S.W.3d 564,
                                                                    slope to defer water from the foundation. Pesak Brothers
567 (Tex.2010) (orig. proceeding) (citing In re Bank One,
                                                                    Construction did not construct the sidewalks, the driveway,
N.A., 216 S.W.3d 825, 826 (Tex.2007) (orig. proceeding)
                                                                    nor the back porch patio area surrounding the remainder
(per curiam)). “[A]n unsigned paper may be incorporated by
reference into a paper signed by the person to be charged.”



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


  of the home. Therefore, we should not be responsible for        builder to grade the soil to establish a proper slope. Gessner
  those areas.                                                    criticized the quality of the foundation, but he did not attribute
                                                                  the foundation's movement to any of the particular flaws
  ...                                                             he identified relating to its construction; in fact, Gessner
                                                                  specified that he had no opinion about the cause of the
  # 11 Alleged Defect: Cracks in brick on front and west side
                                                                  foundation's movement. Further, although Gessner included
  of house.
                                                                  grading among the requirements for a stable foundation, he
  Repair Method: We agree with [the Boyd's engineer               testified that he did not know who had taken responsibility
  and the TRCC inspector's] observations of the ground            for the grading around the house and that he did not offer any
  “heaving” around the foundation. We also agree to slope         opinion about that issue.
  the area around the foundation on the west side of the
  house to satisfy the IRC [International Residential Code]       The remaining evidence supports a finding that the lack
  Building Code requirements (5% grade slope for the first        of proper grading caused the damage to the home. The
  10 feet around foundation)....                                  TRCC inspector agreed with Boyd's report that the foundation
                                                                  movement resulted directly from the poor drainage around
  We are anxious to make these repairs upon the okay by the       the home, and that the resulting heaving caused the problems
  homeowner, Mr. Gary Jones. We are and have been very            with the windows and doors, as *628 well as the cracks in
  cooperative throughout this whole ordeal and area ready to      the sheetrock and brick veneer.
  settle these problems.
                                                                  The Joneses also direct us to Mr. Jones's testimony, in which
This letter does not render the jury's no-breach findings         he recounted a conversation with Pesak:
against the great weight and preponderance of the evidence.
Pesak Brothers sent the letter, albeit untimely, in connection      Q. During the conversations you had with the Pesak
with the dispute resolution process available under the               Brothers personnel on the west wall, on the west end
TRCCA. Former section 27.004 of the Texas Property Code               of your house, did it become apparent to you, without
gave Pesak Brothers the option to respond to the Joneses'             saying what they said, that they knew that that place
claim with an offer to repair any claimed construction defect         needed to be graded?
and describe in reasonable detail the repairs it would make. If
the claimants received a compliant offer to repair, the statute     A. Yes.
required them either to accept the offer or refuse the offer in
                                                                    Q. And did you ask them to do it?
writing and explain in reasonable detail why they considered
the offer unreasonable. Act of June 15, 2007, 80th Leg., R.S.,      A. I believe I did.
ch. 843 § 3, 2007 Tex. Gen. Laws 1753 (formerly codified at
TEX. PROP.CODE ANN. § 27.004(d)).                                 This testimony contradicts Pesak's testimony that Mr. Jones
                                                                  had refused Pesak's offer to perform the grading. The jury
Pesak Brothers' letter explained that it was in response          reasonably could choose to credit Pesak's testimony over Mr.
to the TRCC's inspection report, and it expressly declared        Jones's testimony on this issue. See Figueroa v. Davis, 318
that it “was ready to settle these problems.” Pesak testified     S.W.3d 53, 60 (Tex.App.-Houston [1st Dist.] 2010, no pet.).
that, when he made the offer to repair, the grading work
would have cost approximately $2,000. Viewed in this              Pesak Brothers' implied warranty obligations to the Joneses
context, the jury reasonably could have rejected the Joneses'     extended to the work within its control. Cf. Centex
contention that Pesak Brother's willingness to repair the         Homes v. Buecher, 95 S.W.3d 266, 274–75 (Tex.2002)
defects constituted an admission of liability.                    (holding that implied warranty of good workmanship can be
                                                                  disclaimed when agreement expressly provides for manner
Next, the Joneses cite the testimony of their engineering         of performance or quality of construction). The Joneses
expert, Thomas Gessner, opining that: (1) under the standard      point to Pesak's lack of familiarity with the IRC provisions
of care for local builders, Pesak Brothers should have had        addressing grading requirements. Whether Pesak knew the
an engineer design the foundation; (2) a properly designed        IRC, however, does not bear on whether Pesak Brothers had
foundation would not have been damaged by soil heaving            the responsibility to perform the grading work.
when it got wet; and (3) the standard of care required the


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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


                                                                  a good and workmanlike manner” constitutes an actionable
The task of resolving the conflicting evidence as to who          misrepresentation, because Pesak failed to complete the
should have graded the land belonged to the jury. Because         grading around the foundation. Before Pesak executed the
some evidence supports the jury's findings, we hold that the      certificate, the parties had discussed the final grading work,
trial court properly entered judgment on the jury's verdict and   and the jury resolved the conflicting evidence on that issue
denied the Joneses' motion for new trial on their breach-of-      in favor of Pesak Brothers. The certificate of completion
contract and breach-of-warranty claims.                           does not specifically address the grading work, and the jury's
                                                                  resolution of the conflicting evidence on that issue supports
                                                                  the conclusion that the certificate of completion does not
                                                                  contain any actionable misrepresentation.
                      b. DTPA claims

 [9] A consumer may bring a DTPA cause of action for              Third, the Joneses contend that Pesak Brothers committed
either a violation of section 17.46(b) of the DTPA (the           a DTPA violation as a matter of law by concealing other
“laundry list”) or for an unconscionable action or course of      foundation problems with the home. This record, however,
action if the violation “constitute[s] a producing cause of       does not support that contention. The Joneses' own foundation
economic damages or damages for mental anguish.” TEX.             expert, Daniel Wick, testified that he did not observe any
BUS. & COM.CODE ANN. § 17.50(a)(1), (3) (West 2011).              issues with the slab other than a slight wave in one area that
The Joneses brought both types of claims, which the jury          was not unusual in construction, and that the issue was so
considered under charge questions 2 and 3.                        insignificant that he did not bother to mention it to Pesak
                                                                  Brothers.
Charge question 2 asked the jury to find whether Pesak
Brothers “engage[d] in any false, misleading, or deceptive        Fourth, the Joneses claim that Pesak Brothers deviated from
act or practice that Gary or Carolyn Jones relied on to their     a disclaimer at the bottom of the house plans, stating that
detriment” and was a producing cause of their damages. The        “any engineering aspects to be specified to actual site and
charge asked the jury to consider whether Pesak Brothers:         construction conditions,” which, they contend, committed
                                                                  Pesak Brothers to hire a foundation engineer. The jury
  a. Represent[ed] that the home as completed had or would        reasonably could have rejected the interpretation that this
     not have had the characteristics that the home did not       language required the builder to hire an engineer. Pesak
     have, or                                                     Brothers explained that the disclaimer is from the plan
                                                                  designer and meant only that the home was not designed for
  b. Represent[ed] that the home was or would be of a             any particular lot or its conditions. The jury was entitled to
     particular quality when it was of another, or                credit that explanation and find that the disclaimer did not
                                                                  constitute an actionable misrepresentation under the DTPA.
  c. Fail[ed] to disclose information about the home that was
     known at the time of the transaction with the intention to
                                                                  Charge question 3 tasked the jury with finding whether
     induce Gary or Carolyn Jones into a transaction that they
                                                                  Pesak Brothers' conduct violated the provision of the DTPA
     otherwise would not have entered into if the information
                                                                  that prohibits unconscionable conduct. See TEX. BUS. &
     had been disclosed.
                                                                  COM.CODE ANN. § 17.50(a)(3). In accordance with the
The jury answered “no.”                                           statute, the charge defined “unconscionable action or course
                                                                  of action” as “an act or practice that, to a consumer's
The Joneses first point to the construction agreement as          detriment, takes advantage of the lack of knowledge, ability,
evidence supporting their DTPA claim because the home did         experience, or capacity of a consumer to a grossly unfair
not comply with any applicable building code. The reference       degree.” The jury found that Pesak Brothers did not engage
to compliance with building codes, however, appears in            in any unconscionable action or course of action that was a
 *629 Kieschnick's list, not in the construction agreement        producing cause of damages to either Mr. or Mrs. Jones. The
and, as a result, cannot be attributed to Pesak Brothers          Joneses' complaints, in the main, are problems that arose from
so as to impose liability as a matter of law. The Joneses         the lack of proper grading. The evidence does not support
further contend that the statement in the certificate of          the conclusion that Pesak Brothers failed to comply with any
completion that Pesak Brothers had completed its work “in         code requirement that produced the foundation's heaving and



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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


movement. We hold that the jury's decision not to assign fault     claim for negligent construction of their home, holding that
to Pesak Brothers for Joneses' DTPA claims is not against the      when the injury is only to the economic loss to the subject
great weight and preponderance of the evidence.                    of the contract itself, the action sounds in contract alone. 711
                                                                   S.W.2d 617, 618 (Tex.1986).

II. Refusal to Submit Negligence Claim                              [10]    [11]     [12]    [13] To distinguish between contract
The Joneses contend that the trial court erred in refusing to      and tort causes of action, we analyze the source of the duty
submit their negligence claim to the jury, effectively granting    and the nature of the remedy. Formosa Plastics Corp. v.
Pesak Brothers' motion for directed verdict on that claim.         Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 45
The Joneses premised their negligence claim on allegations         (Tex.1998) (citing DeLanney, 809 S.W.2d at 494–95). If
that Pesak Brothers failed to act with due care by selecting       the defendant's conduct gives rise to liability because it
a construction site for the house that had serious drainage        breaches an agreement between the parties, the plaintiff's
problems, which it then failed to remedy. In addition to           claim ordinarily sounds only in contract. Id. at 494. In
seeking economic damages, the Joneses sought damages for           determining whether the plaintiff may recover on a tort
Mr. Jones's *630 physical injuries, alleging that the Pesak        theory, if the damages sought are only loss or damage to the
Brothers' negligence caused Jones to suffer his heart attack.      subject matter of the contract, the cause of action is ordinarily
                                                                   on the contract. Id.; Jim Walter Homes, 711 S.W.2d at 618. In
The issue of whether the evidence at trial gives rise to a fact    other words, absent a duty to act independently of the promise
issue for jury determination on the existence of a legal duty,     made, failure to perform on a promise will not give rise to
and for granting or denying a directed verdict, is one of legal    a cause of action for negligence. DeLanney, 809 S.W.2d at
sufficiency. See City of Keller, 168 S.W.3d at 809, 827. We        495 n. 2 (citing W. Keeton, D. Dobbs, R. Keeton & D. Owen,
consider whether there the record contains any evidence of         PROSSER AND KEETON ON THE LAW OF TORTS § 92
probative force to raise a fact issue on the question presented.   at 655 (5th ed. 1984)). If no legal duty exists, neither does
Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681,        a cause of action for negligence. See Centeq Realty, Inc. v.
684 (Tex.2004). We will credit the favorable evidence if           Siegler, 899 S.W.2d 195, 197 (Tex.1995).
reasonable jurors could and disregard the contrary evidence
unless reasonable jurors could not. City of Keller, 168 S.W.3d      [14] [15] The Joneses have not identified any duty that
at 827. “A directed verdict is warranted when the evidence         Pesak Brothers purportedly owed other than the duties
is such that no other verdict can be rendered and the moving       connected with construction of the home, the subject matter
party is entitled, as a matter of law, to a judgment.” Byrd v.     of the contract. Pesak Brothers owed no independent legal
Delasancha, 195 S.W.3d 834, 836 (Tex.App.-Dallas 2006, no          duty “not to negligently inflict emotional distress” *631 in
pet.).
                                                                   performing under the contract. 4 See Temple–Inland Forest
                                                                   Prods. Corp. v. Carter, 993 S.W.2d 88, 91 (Tex.1999); City of
The Joneses rely on the Texas Supreme Court's 1949 decision
                                                                   Tyler v. Likes, 962 S.W.2d 489, 500 (Tex.1997). Mr. Jones's
in Montgomery Ward & Co. v. Scharrenbeck in asserting that
                                                                   heart attack was not a foreseeable result of any allegedly
Pesak Brothers' negligent performance of the construction
                                                                   defective performance of the construction contract that would
contract caused their damages. 146 Tex. 153, 204 S.W.2d 508
                                                                   otherwise give rise to a legal duty. See Snellenberger v.
(1947). In Scharrenbeck, the defendant contracted to repair
                                                                   Rodriguez, 760 S.W.2d 237, 237–38 (Tex.1988) (holding
a water heater, but improper installation caused a fire that
                                                                   that person who ran over child was not liable in negligence
destroyed the plaintiff's home. Id. at 509. The Court held
                                                                   for death of police officer who suffered heart attack after
that the defendant breached its contract by failing to repair
                                                                   controlling crowd around injured child).
the water heater properly, but, because the defendant's error
caused the destruction of the plaintiff's home, the defendant
                                                                    [16]    [17]    [18] The Joneses also sought to hold Pesak
breached a common-law duty as well, allowing for recovery
                                                                   Brothers liable for negligence under a voluntary undertaking
in tort. Id. at 510 (discussed in Sw. Bell Tel. Co. v. DeLanney,
                                                                   theory, because they had taken Pesak's suggestion to build
809 S.W.2d 493, 494 (Tex.1991)).
                                                                   the home on a site downhill from the location they originally
                                                                   considered. The Texas Supreme Court has stated that “one
In Jim Walter Homes, Inc. v. Reed, the Texas Supreme Court
                                                                   who voluntarily undertakes an affirmative course of action for
distanced itself from Scharrenbeck by reversing an award
                                                                   the benefit of another has a duty to exercise reasonable care
for punitive damages made in connection with the Reeds'


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Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


that the other's person or property will not be injured thereby.”   admit evidence for an abuse of discretion. In re J.P.B., 180
Colonial Savs. Ass'n v. Taylor, 544 S.W.2d 116, 119–20 &            S.W.3d 570, 575 (Tex.2005). A court abuses its discretion if
n. 2 (Tex.1976) (citing RESTATEMENT (SECOND) OF                     it acts without reference to any guiding rules or principles.
TORTS § 323 (1965)); Tex. Woman's Univ. v. Methodist                Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682,
Hosp., 221 S.W.3d 267, 283–84 (Tex.App.-Houston [1st                687 (Tex.2002); Downer v. Aquamarine Operators, Inc., 701
Dist.] 2006, no pet.). Undertaking liability requires the           S.W.2d 238, 241–42 (Tex.1985). To show the trial court
presence of the following specific duty predicates:                 abused its discretion, an appellant must demonstrate that: (1)
                                                                    the court erred in not admitting the evidence; (2) the excluded
             (1) [the defendant] undertook to                       evidence was controlling on a material issue dispositive of
             perform services that it knew or                       the case and was not cumulative; and (3) the error probably
             should have known were necessary                       caused rendition of an improper judgment in the case. See
             for the plaintiffs' protection, (2)                    TEX.R.APP. P. 44.1(a) Tex. Dep't of Transp. v. Able, 35
             [the defendant] failed to exercise                     S.W.3d 608, 617 (Tex.2000); Sharma v. Vinmar Int'l, Ltd.,
             reasonable care in performing those                    231 S.W.3d 405, 422 (Tex.App.-Houston [14th Dist.] 2007,
             services, and either (3) [a third                      no pet.). We uphold the trial court's evidentiary ruling if we
             party charged with protecting the                      discern a legitimate basis for it. Owens–Corning Fiberglas
             plaintiffs] relied upon [the defendant's]              Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998).
             performance, or (4) [the defendant's]
             performance increased the plaintiffs'                   [19] The Joneses proffered Dr. Heine's testimony to show
             risk of harm.                                          that the stress from the foundation problems caused Mr. Jones
                                                                    to suffer a heart attack in December 2008. Because Pesak
Torrington Co. v. Stutzman, 46 S.W.3d 829, 838 (Tex.2000).
                                                                    Brothers owed the Joneses only the contractual duties arising
As with a simple negligence claim, a negligent undertaking
                                                                    under the agreement, the trial court acted within its discretion
claim still requires proof that the defendant owed the
                                                                    in excluding Dr. Heine's causation testimony insofar as it
plaintiff a legal duty and violated it. Id. at 837; see
                                                                    purported to support a negligence cause of action. The trial
Entergy Gulf States, Inc. v. Akrotex, Inc., 40 S.W.3d 201,
                                                                    court allowed the jury to consider evidence that Mr. Jones
206 (Tex.App.-Beaumont 2001, no pet.). In arguing for
                                                                    suffered a heart attack in connection with the Joneses' mental
a negligent undertaking claim, the Joneses rely solely on
                                                                    anguish claim. As a result, the trial court's ruling had little, if
Mrs. Jones's testimony that the downhill site presented more
                                                                    any, impact on the judgment. See TEX.R.APP. P. 44.1(a).
problems for the house's foundation than the uphill site would
have presented, and do not point to an injury separate from
                                                                     [20] The Joneses contend that the trial court erred in
the claims arising from the construction of the home. The
                                                                    admitting Kubena's testimony about the effect of trees and
Joneses did not present any testimony to support a finding
                                                                    tree roots on the home's foundation, because Pesak Brothers
that proper final grading would not have corrected for any
                                                                    failed to establish that Kubena was qualified to render an
difference in drainage between the two sites. Because the
                                                                    opinion on that subject matter. The record, however, shows
Joneses have not shown a separate undertaking from the
                                                                    that Kubena had general engineering experience that qualified
construction contract itself, or any increased risk of harm
                                                                    him to render an opinion relating to the foundation, and
separate from the performance under the contract, the trial
                                                                    he testified on that issue in his deposition, relying on soil
court did not err in refusing to submit the Joneses' negligent
                                                                    boring reports showing the presence of tree roots near the
undertaking claim to the jury as a separate cause of action.
                                                                    foundation. Kubena did not specifically refer to any building
                                                                    code provision or address the concrete's compressive strength
III. Evidentiary Complaints                                         in his testimony, but those issues go to the weight of the
The Joneses complain that the trial court erred in excluding        evidence, not its admissibility.
the testimony of Dr. Jon Heine, Mr. Jones's treating
cardiologist and the Joneses' medical expert, and in admitting       [21] With respect to the trial court's exclusion of Mr. Jones's
certain testimony of *632 Mark Kubena, Pesak Brothers'              notes of his conversations with Pesak, the Joneses do not
                                                                    contend that the notes contain evidence that they were not
engineering expert. 5 They also contend that the trial court
                                                                    able to convey through Mr. Jones's testimony, or that the trial
should have admitted Mr. Jones's notes of his conversations
                                                                    court prevented Mr. Jones from using the notes to refresh his
with Pesak. We review a trial court's decision to exclude or


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              12
Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618 (2013)


                                                                      See TEX.R. CIV. P. 63; Mensa–Wilmot v. Smith Int'l, 312
recollection. Absent a showing that the trial court's exclusion
                                                                      S.W.3d 771, 778–79 (Tex.App.-Houston [1st Dist.] 2009, no
of the notes probably caused the rendition of an improper
                                                                      pet.)
judgment, we will not disturb the trial court's evidentiary
ruling. See TEX.R.APP. P. 44.1(a).

                                                                                               Conclusion
IV. Propriety of the Trial Court's Decision to Strike the
Joneses' Sixth Amended Petition                                       Because legally and factually sufficient evidence supports the
 [22] Finally, the Joneses contend that the trial court erred         jury's verdict, we hold that the trial court properly rendered
in denying leave to file their sixth amended petition. The            judgment on it. We further hold that the trial court did not err
record *633 shows that the Joneses filed their sixth amended          in refusing to submit a negligence claim, or in deciding the
petition within seven days before the date of trial and did not       other challenged rulings. We therefore affirm the judgment
seek leave of court. If an amended pleading is filed within           of the trial court.
seven days of trial, leave of court is required. See Houtex
Ready Mix Concrete & Materials v. Eagle Constr. & Envt'l
Servs., L.P., 226 S.W.3d 514, 520 (Tex.App.-Houston [1st              All Citations
Dist.] 2006, no pet.). A trial court does not abuse its discretion
                                                                      416 S.W.3d 618
by refusing to consider an amended petition filed fewer than
seven days before trial if the party fails to seek leave of court.


Footnotes
1      The Texas Residential Construction Commission Act expired September 1, 2009, through application of the Texas Sunset
       Act, when the Legislature abolished the Residential Construction Commission. See Act of June 20, 2003, 78th Leg., R.S.,
       ch. 458, § 1.01, 2003 TEX. GEN. LAWS 1703, 1705 (former TEX. PROP.CODE ANN. § 401.006). During its existence, the
       Commission administered a state-sponsored inspection and dispute resolution process, which a homeowner or builder
       had to invoke before filing suit on an action for damages or other relief arising from a “construction defect.” See Act of
       June 20, 2003, 78th Leg., R.S., ch. 458, § 1.01 (former TEX. PROP.CODE ANN. § 426.005(a)).
2      We express no opinion about the applicability of the TRCCA—in particular, of former section 426.008(a)—to this case.
       See Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Res. Co., 299 S.W.3d 106, 112 (Tex.2009) (“Because
       there was no objection to the charge as submitted, we assume, without deciding, that the instruction was correct and
       measure the evidence by the charge as given.”) (citing Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex.2000) (holding that
       court's charge measures sufficiency of evidence in absence of objection)).
3      The Joneses also alleged that Pesak Brothers made errors in constructing the foundation itself, but the evidence at trial
       did not prove as a matter of law either that Pesak Brothers constructed a faulty foundation or that any error in constructing
       the foundation caused the damages claimed by the Joneses.
4      Certain “special relationships,” including “a very limited number of contracts dealing with intensely emotional
       noncommercial subjects such as preparing a corpse for burial,” may give rise to a legal duty to avoid causing mental
       anguish. City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex.1997); Noah v. UTMB at Galveston, 176 S.W.3d 350, 356
       (Tex.App.-Houston [1st Dist.] 2004, pet. denied). The Joneses do not contend that any such duty existed here.
5      The Joneses also complain about the trial court's evidentiary rulings relating to the testimony of the parties' damages
       experts. Because the record supports the jury's no-liability findings, we do not reach those issues.


End of Document                                                   © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               13
Miller v. Compton, 185 S.W.2d 754 (1945)


                                                                                possession to third person and in refusing to
                                                                                pay balance of rent, but tenant was entitled to
     KeyCite Yellow Flag - Negative Treatment                                   remain in possession until lease was terminated
Distinguished by Comeaux v. Suderman,        Tex.App.-Hous. (14 Dist.),
                                                                                as provided therein.
 July 18, 2002

                     185 S.W.2d 754                                             1 Cases that cite this headnote
        Court of Civil Appeals of Texas, Eastland.
                                                                          [2]   Landlord and Tenant
                            MILLER                                                  Attornment to third person
                              v.
                                                                                Landlord and Tenant
                           COMPTON.
                                                                                     Transfer or Termination of Landlord's
                                                                                Estate
                  No. 2495.       |    Feb. 9, 1945.
                                                                                A sale of reversion by landlord does not
Appeal from District Court, Knox County; Lewis M.                               terminate tenancy or affect tenant's rights or
Williams, Judge.                                                                obligations, but tenant becomes in contemplation
                                                                                of law the tenant of purchaser, and may attorn to
Suit by J. E. Miller against Bob Compton to recover rent under                  him.
a written lease, wherein the defendant filed a cross-action to
recover damages accruing by reason of having to surrender                       Cases that cite this headnote
possession of leased land. Judgment for the defendant, and
the plaintiff appeals.                                                    [3]   Vendor and Purchaser
                                                                                    By tenant
Judgment reversed and rendered.
                                                                                Where tenant was in actual possession of land for
                                                                                grazing purposes, purchaser thereof was deemed
                                                                                to have notice of tenant's rights under lease
 West Headnotes (11)                                                            and could not claim standing of an innocent
                                                                                purchaser.

 [1]      Landlord and Tenant                                                   Cases that cite this headnote
              Surrender, forfeiture, or waiver
          Landlord and Tenant                                             [4]   Landlord and Tenant
              Effect                                                                Tenant's Notice of Intention to Quit
          Landlord and Tenant                                                   Landlord and Tenant
              Sufficiency                                                            Transfer or Termination of Landlord's
          Landlord and Tenant                                                   Estate
               Transfer or Termination of Landlord's                            A provision of lease requiring tenant to give
          Estate                                                                possession within 30 days after sale of land and
          Landlord and Tenant                                                   receipt of written notice thereof was for benefit
              Vacation, Surrender, or Abandonment of                            of landlord and could not be availed of by tenant
          Premises                                                              as authority for terminating lease upon being
          Where lease prohibited sale of land by landlord                       informed by purchaser that land had been sold.
          unless tenant had been given opportunity to
                                                                                Cases that cite this headnote
          purchase and gave tenant 30 days to vacate after
          receipt of written notice of sale, information
          obtained by tenant from third person that third                 [5]   Landlord and Tenant
          person had bought leased land and desired                                 Existence, scope, and validity
          possession did not justify tenant in surrendering                     Specific Performance



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                1
Miller v. Compton, 185 S.W.2d 754 (1945)


            Options
                                                              [10]    Landlord and Tenant
       A provision of lease giving tenant option to
                                                                          Continued liability for rent
       purchase demised property is not subject to
       attack on ground that it lacks elements of a                   A tenant's voluntary abandonment of possession
       binding contract, but right conferred thereby may              of leased premises before expiration of term will
       be enforced by suit for specific performance,                  not defeat landlord's right to rental.
       and purchaser of premises may be compelled to
                                                                      1 Cases that cite this headnote
       execute a conveyance to tenant.

       Cases that cite this headnote                          [11]    Landlord and Tenant
                                                                           Particular Grounds of Discharge from
 [6]   Landlord and Tenant                                            Liability
           Conditions precedent                                       Where lease required that landlord before selling
       Under lease reserving to landlord right to sell                leased premises give tenant an opportunity to
       land and terminate lease at end of any rental year             purchase, but tenant relinquished possession to
       on six months' notice, and giving tenant privilege             third person, who claimed to have purchased
       of buying land, option to buy is conditional upon              premises, before tenant was given opportunity to
       landlord's election to terminate lease by making               exercise option to purchase land and failed to do
       a sale, and does not apply to sale made subject to             so, tenant was liable for unpaid rent under lease.
       tenant's rights.
                                                                      Cases that cite this headnote
       1 Cases that cite this headnote


 [7]   Landlord and Tenant
                                                             Attorneys and Law Firms
           Presumptions and burden of proof
       A tenant desiring to escape liability for rent must    *754 C. F. Sentell and John E. Sentell, both of Snyder, for
       show facts leading to conclusion that he has been     appellant.
       released of his obligation.
                                                             M. F. Billingsley, of Munday, and D. J. Brookreson, of
       1 Cases that cite this headnote                       Benjamin, for appellee.

                                                             Opinion
 [8]   Landlord and Tenant
           Cancellation of lease                             LESLIE, Chief Justice.
       Where lease has been abrogated by agreement,
                                                             J. E. Miller instituted this suit against Bob Compton to recover
       tenant may not be held liable thereon because he
                                                             rent under a written contract whereby Miller leased *755 for
       has occupied the premises.
                                                             grazing purposes to Compton for a term of five years 4,160
       Cases that cite this headnote                         acres of land in Knox and Foard Counties. The defendant
                                                             Compton denied liability and alleged the plaintiff breached
                                                             the lease contract, thereby relieving him from any further
 [9]   Landlord and Tenant                                   payments of rent. By way of cross-action defendant Compton
           Failure to give or take possession                sought to recover damages accruing to him by reason of
       The failure of tenant to enter into possession of     having to surrender possession of the leased land and dispose
       leased premises does not relieve him of liability     of many of his cattle at a loss. Further, by way of cross-action,
       for stipulated rental.                                he charged Plaintiff Miller with wrongfully causing a writ
                                                             of attachment to be levied on his property, resulting in both
       Cases that cite this headnote                         actual and exemplary damages. That the affidavit, etc., for the
                                                             writ was false and the proceeding unlawful.



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          2
Miller v. Compton, 185 S.W.2d 754 (1945)


                                                                    placed of record July 21, 1941, in Foard County. J. E. Miller
The trial before the court without a jury resulted in a judgment    testified the transaction was a mortgage to enable him to
for Compton on the ground that said Miller breached the             procure financial assistance through his father, but the finding
contract, relieving him, Compton, from the further payment          of the court is in effect that same was a conveyance of the title
of rents, but the judgment denied Compton any recovery              to the land. Be that as it may, the testimony is undisputed that
for damages by reason of having to dispose of his stock             insofar as that transaction (of July 6th) is concerned, neither
on account of the loss of pasturage and also denied him             of the Millers ever gave any notice nor took any steps to
any recovery of actual or exemplary damages by reason of            dispossess Compton and regain possession of the land as in
wrongful attachment. The plaintiff appeals.                         the lease provided. Both J. E. Miller and Compton so testify.
                                                                    Later the lands, etc., were returned to J. E. Miller.
There are no assignments of error challenging the action of the
court with reference to any phase of Compton's cross-action         Compton testified that just before the November 6, 1941,
and no appeal is prosecuted from that part of the judgment          installment of rent fell due he was told by a party named Davis
denying him recovery of damages. The rights of the litigants        that J. E. Miller had conveyed the land to his father, R. N.
are believed to turn upon the meaning and legal effect of the       Miller, and that prompted by such statement he investigated
following provision in the lease contract as applied to the         and found such deed on the records in Foard County. That
other undisputed facts and testimony in the case:                   immediately thereafter he received from R. N. Miller a letter
                                                                    —postmarked November 8, 1941—confirming the July 6th
‘This lease is made subject to sale at any time during the life
                                                                    conveyance and stating that he desired to sell the land, and
of this lease, and in case of sale lessee agrees to give complete
                                                                    further saying in that letter to Compton:
possession within thirty days after sale has been completed
and receipt of written notice of such sale and demand for           ‘If you would be interested in buying it get in touch with me
possession; however, it is understood and agreed that no sale       right away. I want to give you the first chance to buy, being
of the above described land can be made by lessor, unless           you have it leased * * *.’
and until lessee has been given an opportunity to purchase
the same at the same price and terms, and has refused to so          *756 Compton further testified that after finding said deed
purchase, or failed to so purchase, within ten days after offer     of record and receiving the above letter from R. N. Miller he
has been submitted;                                                 did not pay the installment of rent falling due November 6,
                                                                    1941, and thereafter. When asked about his failure to pay said
‘In case of sale, lessee is to be reimbursed for all unearned       installments of rent, Compton testified:
rental previously paid.’
                                                                    ‘Q. Did you pay him (J. E. Miller) then? If you didn't, why
It is the appellant's contention that said 30 day provision         didn't you? A. Because it was deeded over to his Daddy (R.
contained in the lease contract was for the exclusive use and       N. Miller.)’
benefit of the lessor and owner of the land, and that it could
not be used by the lessee as an excuse for terminating the lease    Further on in his testimony and in response to questions by
as hereinafter stated. That the trial court erred in concluding     his own attorney Compton testified:
that J. E. Miller breached the lease contract in such way as
to relieve Compton of the further payment of rents under the        ‘Q. Would you have given the pasture up down there at all if
original lease contract. Points 1, 4 and 9 are briefed together,    you hadn't thought this fellow Davis had the right to demand
specifically presenting such contention from different angles.      possession of it? A. I sure wouldn't.

The lease was for a definite term of five years from November       ‘Q. Did that cause you the loss you have alleged in your
6, 1939, to November 6, 1944, for the sum of $1700 for the          petition here? A. It sure did.
first year and $1456 each year thereafter, payable in semi-
                                                                    ‘Q. He told you he had bought it (the leased land) and you
annual installments of $728 each in advance. The $1700
                                                                    turned it over to him? A. Yes, sir.
payment and the two $728 payments satisfied the rents under
the contract until November 6, 1941.                                ‘Q. You didn't deal with him until he showed you a written
                                                                    contract? A. That is right.’
July 6, 1940, J. E. Miller conveyed said land to his father, R.
N. Miller. That conveyance was in form a warranty deed and



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               3
Miller v. Compton, 185 S.W.2d 754 (1945)


                                                                  affirms such fact. Therefore, as effecting his right to terminate
Compton also testified that when Davis informed him about         the lease on any such ground, or violation thereof, the rule of
the Miller deed of July 6th, he, Davis, also told him that        law is:
‘he bought the place from Miller's dad.’ That Davis at that
time demanded possession of the land and he yielded same to
him (Davis) about November 25, 1941, for a consideration of       ‘In the absence of any provision to the contrary in the lease,
$200, which was about twice as much as the unearned rental        the established rule is that a sale of the reversion by the
paid in advance. For other reasons for his action in doing        landlord does not terminate the tenancy or affect the tenant's
so, see Compton's testimony above. Compton also testified         rights or obligations. The tenant being in possession at the
that Davis showed him a contract with R. N. Miller for the        time of the sale, the purchaser is deemed to have had notice
purchase of the land. That he did not know what became of the     of his rights under the lease, and hence may not claim
contract, and that he saw no deed whatever from R. N. Miller      the standing of an innocent purchaser. The lessee or tenant
to Davis. That he did not know R. N. Miller's hand writing.       becomes in contemplation of law the tenant of the purchaser,
                                                                  and may attorn to the latter. The purchaser is entitled to
Davis did not appear and testify. His whereabouts were not        enforce the covenants of the lease—or, at any rate, covenants
definitely known, but possibly Mineral Wells. There is no         which ‘run with the land.’ Thus the grantee of the reversion
competent evidence that R. N. Miller ever executed a deed         has a right to declare a forfeiture of the leasehold on proof
to Davis and neither is there any statement, other than that      of a breach of a covenant which was incorporated in the
above and properly objected to, that there was any contract by    lease contract *757 and which in character is a covenant
which R. N. Miller, or anyone else, was to convey said lands      ‘running with the land.” 27 T.J. p. 67, sec. 18; Wilson v. Beck,
to Davis. Henry v. Phillips, 105 Tex. 459, 151 S.W. 533, pt.      Tex.Civ.App., 286 S.W. 315, 321; O'Neil v. Davis, 1 White &
6. Davis' interest in the matter is otherwise unexplained, but,   W.Civ.Cas.Ct.App. § 415; Davidson v. Wallingford, 88 Tex.
as shown by the record, Compton apparently acted in material      619, 32 S.W. 1030; 16 R.C.L. p. 633, sec. 118, et seq.; 35 C.J.
respects on Davis' representations.                               p. 1214, sec. 544; p. 1224, sec. 565; p. 1231, sec. 573.

Compton does not claim that he attempted to communicate           From O'Neil v. Davis, supra, we take the following:
with either R. N. or J. E. Miller concerning such claims and
representations as were made by Davis, or that he otherwise       ‘Where D. leased the pasture from P. for the year, he had a
endeavored to verify the same.                                    legal right to use it during the year, and a sale by P. of the
 [1]    Obviously the transactions with Davis and the             pasture or a portion of it would not destroy or affect D.'s rights
representations by the latter did not, under the circumstances    under the lease. Such sale would pass the land subject to the
of this case, justify Compton in surrendering the possession      right of pasturage in D., and D. being on the land at the time
of the ranch to Davis or in his refusing to pay the balance of    of such sale, and using it for pasturage, the purchaser would
the rent to J. E. Miller, or his order.                           be charged with notice of his rights, and would take the land
                                                                  subject to such rights.’
                                                                   [3] [4] Without doubt Compton was in actual and visible
The original lease was made subject to sale of the land at any    possession and use of said land for grazing purposes at the
time during the life of the lease. The lessee Compton agreed      date of conveyance to R. N. Miller, regardless of whether
to give ‘complete possession within 30 days after the sale has    that was an outright sale by warranty deed or a mortgage in
been completed and receipt of written notice of such sale, and    form of such, as claimed by J. E. Miller. Conceding it to be
demand for possession.’                                           an outright conveyance to R. N. Miller, then he is deemed to
                                                                  have had notice of Compton's rights under the lease, and he,
The manner for terminating the lease by the lessor or owner is
                                                                  Miller, could not claim the standing of an innocent purchaser
thus clearly expressed and is mandatory and in no other way
                                                                  at any time during which the rents are sought to be recovered
could the lessor or owner terminate the lease. Until terminated
                                                                  in this suit. Lester v. Zink, Tex.Civ.App., 154 S.W. 1161.
in the way provided, the lessee was not legally disturbed in
                                                                  However, it conclusively appears that R. N. Miller had at no
his right of occupancy and use of the premises for grazing
                                                                  time made any such claim or that he in any way manifested a
purposes.
                                                                  wish or desire that Compton relinquish to him the possession
 [2] It is undisputed that no 30 day notice of sale, written
                                                                  of the land. To the contrary he sought to interest Compton
notice, or demand for possession based on the conveyance by
                                                                  in the purchase of the same, extending him a preference
J. E. Miller to R. N. Miller was ever given lessee Compton. He


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              4
Miller v. Compton, 185 S.W.2d 754 (1945)


right, as indicated in his above letter. In fact, neither of         court held that the option to buy was conditional upon the
the Millers at any time sought possession of the land by             lessor's electing to terminate the lease by making a sale, and
pursuing the method stated in the lease and providing a way          that it did not apply to a sale which was made subject to the
in which the lessor or owner could do so; and it follows             lessee's rights to the end of his term.’ 27 T.J. p. 65, sec. 16.
that no such provision therein for the benefit of the lessor
or owner was available to the lessee Compton. Martin Weiss           Applying these rules of law to the undisputed facts of the
Co. v. Schwartz, Tex.Civ.App., 295 S.W. 197; Morris v.               case, Compton's possession *758 and rights under the lease
DeWolf, 11 Tex.Civ.App. 701, 33 S.W. 556; Brady v. Nagle,            were never legally impaired or threatened by anything done
Tex.Civ.App., 29 S.W. 943; Collier v. Wages, Tex.Civ.App.,           by the Millers, or either of them, and his abandonment of
246 S.W. 743.                                                        possession of the premises was voluntary on his part and
                                                                     wholly unwarranted in fact or in law. The law afforded him
                                                                     ample means and methods for asserting and establishing his
‘Not infrequently, the duration of the lessee's tenure is in         rights under the terms of the lease if he was longer interested
effect declared to be dependent upon the giving of notice            in them. Compton does not seek specific performance or
by one of the parties. Where the lease provides for notice           otherwise affirmatively assert any rights under the option in
to vacate by the lessor to the lessee, the lessee may not            his favor.
terminate the contract by the giving of notice; the provision         [7] [8] [9] [10] Under the established facts Compton's
is for the lessor's benefit exclusively. ‘There is no authority      liability for the unpaid rents, regardless of the owner at any
in law authorizing the lessee to take advantage of such a            particular time, is reflected by specific rules of law in such
stipulation and appropriate it to his own use in terminating a       cases:
lease contract which he had agreed to and had omitted to have
inserted therein a like provision in his own interest.’ Again,
where a lease contract contains a proviso that on nonpayment         ‘In the case of a dispute as to the liability of the tenant to
of rent the term shall cease, the lessor, and not the lessee,        pay rental, the primary implication is that he is bound by his
has the elective right of determining it upon breach. ‘The           agreement to make payment; and, in order to escape liability,
principle that no man is permitted to take advantage of his          he must show facts which lead to the conclusion that he has
own wrong, prevents the lessee from doing so.’' 27 T.J. p.           been released of his obligation. It has been observed: ‘Where
297, sec. 170, 171.                                                  the rental contract exists by which the tenant is entitled to
 [5] [6] Further, the following rules of law have application        occupy the leased premises for a given term, and by which
under the fact of Compton's undisputed possession of the land        the landlord is entitled to receive a fixed rent for the entire
until he abandoned same:                                             term, the tenant cannot resist the demand for rent unless
                                                                     he shows evidence under paramount title, or that for some
                                                                     reason, recognized by law as sufficient, he was entitled to
‘A provision which is occasionally embodied in leases                and did quit the possession.’ If he relies upon an offer by the
confers upon the lessee an option to purchase the demised            landlord to cancel the lease and release him of liability for the
property. Such a provision is not open to attack on the ground       payment of the stipulated rentals, he must establish that the
that it lacks the elements of a binding contract; and the right      offer was accepted. Of course, the obligation of the lessee to
conferred thereby may be enforced by a suit for specific             pay rental may be contingent.
performance. One who has purchased the premises from the
lessor may be compelled to execute a conveyance to the               ‘If the contract of renting has been abrogated by agreement
lessee; nor can the defendant claim the standing of an innocent      of the parties, the lessee may not be held liable thereon by
purchaser, it seems, the lessee's possession of the property         reason of the fact that he has occupied the premises. The
being notice of the state of the title and the option conferred      circumstance that he has never entered into possession of
by the lease.                                                        the premises does not relieve the lessee of liability for the
                                                                     stipulated rental. ‘It requires no argument to show that a
‘And where a lease contained a proviso reserving to the lessor       tenant is not released from liability upon his express covenant
the right to sell the land and terminate the lease at the end of     to pay rent by mere failure upon his part to accept possession
any rental year on six months' notice and giving the lessee the      of the leased premises.’ Nor may he claim any deduction by
privilege of buying the land at a price to be fixed by the lessor,   reason of the fact that he has not occupied the property during
and which might be bona fide offered by any other party, the         the whole period of the agreed term. And, by abandoning



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                5
Miller v. Compton, 185 S.W.2d 754 (1945)



possession of the premises before the expiration of the term,
the tenant cannot prejudice the landlord's right to recover          No right to avoid the payment of rent accrues to Compton
the full amount of the rental. ‘He cannot defeat the right           by reason of this transaction and he asserts no such rights by
of the landlord to have the rent become due under the                reason of the same. Further notice will not be given to this
terms of the contract by his own voluntary abandonment of            transaction.
the leased premises.’' 27 T.J. p. 85, sec. 28. (Italics ours.)
Sellers v. Radford, Tex.Civ.App., 265 S.W. 413; Ramsey v.            If we are correct in the foregoing conclusions, the evidence
Odiorine, Tex.Civ.App., 210 S.W. 615; Goldman v. Broyles,            establishes Compton's liability for the unpaid rents in suit,
Tex.Civ.App., 141 S.W. 283.                                          with interest thereon from the due date of each installment,
                                                                     and the evidence has been fully developed on said issue.
The testimony further discloses that Miller did not re-enter         The judgment of the trial court will, therefore, be reversed
and take possession of the lands when Compton abandoned              and judgment here rendered in favor of J. E. Miller for said
them, and what has been said demonstrates Compton had no             amounts, and also establishing his rights under the attachment
right to abandon same and did so at his own risk.                    proceeding and replevy bond therein.
 [11] From the record it appears that R. N. Miller reconveyed
said land to J. E. Miller, and on August 23, 1943, also assigned     For the reasons assigned, the judgment of the trial court is
and relinquished to him the unpaid rents provided for in the         reversed and here rendered for plaintiff J. E. Miller as above
original lease. Thereafter, J. E. Miller, finding a bona fide        indicated and left undisturbed in all other respects. It is so
purchaser for the land and consummating a sale thereof at            ordered.
$5.50 per acre gave Compton notice of such prospective sale
to enable him to exercise his option and purchase the land as        All Citations
stipulated for in the original lease. Compton did not exercise
                                                                     185 S.W.2d 754
his option to then purchase the land, and the same was sold
by J. E. Miller to Tom Proctor Hughes, who received a deed
therefor from J. E. Miller on February 15, 1944.

End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                6
Norra v. Harris County, Not Reported in S.W.3d (2008)
2008 WL 564061


                                                             Panel consists of Justices YATES, FOWLER, and
                   2008 WL 564061                            GUZMAN.
     Only the Westlaw citation is currently available.

           SEE TX R RAP RULE 47.2 FOR
     DESIGNATION AND SIGNING OF OPINIONS.                                   MEMORANDUM OPINION

             MEMORANDUM OPINION                              EVA M. GUZMAN, Justice.
              Court of Appeals of Texas,
                                                              *1 This is an appeal from the trial court's award of civil
                Houston (14th Dist.).
                                                             penalties, injunctive relief and attorney's fees in a civil
            Carol Ann NORRA, Appellant                       enforcement proceeding filed by the State of Texas and Harris
                        v.                                   County against the owner of two mobile home parks in Harris
                                                             County. In two issues, appellant, Carol Ann Norra, argues
      HARRIS COUNTY, Texas; Texas Commission
                                                             that the civil penalties assessed against her for numerous
        on Environmental Quality; and Texas
                                                             and repeated violations of the State's public health laws
          Department of Health, Appellees.
                                                             are exemplary damages subject to Chapter 41 of the Texas
                                                             Civil Practice & Remedies Code. She further argues that
        No. 14-05-01211-CV.       |      March 4, 2008.
                                                             her United States constitutional right to due process was
                                                             violated by the imposition of these penalties. She frames these
 West KeySummary                                             arguments as legal sufficiency challenges to the evidence.
                                                             But we conclude that these complaints are not challenges to
                                                             the legal sufficiency of the evidence and are instead legal
 1       Appeal and Error
                                                             arguments that were not presented to the trial court. As such,
            Amount of Recovery or Extent of Relief
                                                             she has failed to preserve error on these challenges, and we
         The owner of mobile home parks failed to            therefore affirm the judgment of the trial court.
         preserve challenge to civil penalties for 15,387
         wastewater and drinking water violations as
         exemplary damages subject to the cap in the
         Texas Civil Practice & Remedies Code or              I. FACTUAL AND PROCEDURAL BACKGROUND
         due process. She failed to make this challenge
                                                             In 2003, appellant Carol Ann Norra owned two mobile home
         to the trial court in a bench trial, and it
                                                             parks in Harris County: (1) North Fork or Reidland Road
         was thus an entirely new legal argument.
                                                             Mobile Home Park, and (2) Lauder Road Mobile Home
         U.S.C.A. Const.Amend. 14; Rules App.Proc.,
                                                             Park. She has owned both properties continuously since at
         Rule 33.1(d).
                                                             least January 1, 1990, with the exception of a brief period
         Cases that cite this headnote                       of time from January 27 to July 6, 2004 when she did not
                                                             own the Lauder Road property. She also owned the drinking
                                                             water and wastewater treatment systems serving these two
                                                             properties during the same time period. On February 27,
                                                             2003, Harris County filed suit against Norra for numerous
On Appeal from the 55th District Court, Harris County,
                                                             violations of the State's drinking water and sanitation statutes.
Texas, Trial Court Cause No.2003-10164.
                                                             The Texas Commission on Environmental Quality (“TCEQ”)
Attorneys and Law Firms                                      and the Texas Department of Health (“TDH”) were joined as
                                                             necessary parties.
Daniel K. Craddock and Darryl Wayne Pruett, for Carol Ann
Nora.                                                        At her bench trial conducted on December 12-13, 2003,
                                                             Norra stipulated to over 15,330 violations regarding the
Grant T. Gurley, Michael R. Hull and Mary Elizabeth Smith,   maintenance and upkeep of the water systems at both
for Harris County, Texas.
                                                             properties. 1 She disputed various other alleged sanitation and



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         1
Norra v. Harris County, Not Reported in S.W.3d (2008)
2008 WL 564061

illegal discharge violations. The State and County presented      33.1(d). The State responds that her complaints are not legal
testimony and exhibits supporting these violations. Norra has     sufficiency issues, but instead unpreserved legal challenges
conceded the sufficiency of the evidence supporting fifty-        that were not asserted in the trial court. We agree.
seven of these sewage and wastewater violations. 2
                                                                  Generally, to preserve a complaint for appellate review, a
On August 25, 2005, the trial court rendered judgment             party must have presented to the trial court a timely request,
awarding civil penalties of $384,460.00 to Harris County          objection, or motion stating the specific grounds for the
and $384,460.00 to the State. The trial court also awarded        desired ruling, if they are not apparent from the context
the State $4,969.00 as an administrative penalty, and             of the request, objection or motion. Tex.R.App. P. 33.1(a).
awarded attorneys' fees of $30,000.00 to Harris County            Subsection (d) of this rule, however, permits a legal or factual
and $114,200.00 to the State, as well as costs and post           sufficiency claim, including complaints that damages are
judgment interest. The trial court further entered a permanent    excessive or inadequate, to be made for the first time on
injunction against Norra with respect to the drinking water       appeal in non-jury cases. Tex.R.App. P. 33.1(d). In a legal
and wastewater treatment systems at both properties. Norra        sufficiency challenge, the party bringing the challenge asserts
requested findings of fact and conclusions of law on              that there is no evidence to support the trial court's findings.
September 12, 2005, which the trial court entered on February     See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005)
8, 2006. Norra timely filed notice of appeal on November 23,      (noting that “no evidence” points challenge the evidence of
2005.                                                             a “vital fact”).

                                                                  Here, to the contrary, Norra does not challenge the
                                                                  trial court's findings. As noted above, Norra stipulated
                 II. ISSUES PRESENTED                             to approximately 15,330 drinking water violations and
                                                                  admits in her briefing that at least fifty-seven sewage and
 *2 In her first issue, Norra asserts that the $768,920 awarded
                                                                  wastewater violations were supported by the evidence. At a
to Harris County and the State as civil penalties are actually
                                                                  minimum, the uncontested evidence supports at least 15,387
exemplary damages under Texas law. She further contends
that Chapter 41 of the Texas Civil Practice & Remedies            violations. 4 Each of these violations is punishable by a $50
Code precludes the award of these “exemplary damages”             to $1,000 fine. SeeTEX. HEALTH & SAFETY CODE ANN.
because no actual damages were awarded in this case as            § 341.048. Under the statute, the trial court could have
required for such an award. In her second issue, Norra asserts    imposed a penalty of between $769,350.00 and $15,387,000.
that because no actual damages were awarded, the award of         See id.Thus, the trial court's award of $768,920.00 in
“civil penalties, i.e., exemplary damages” necessarily exceeds    civil penalties is actually less than that which it could
any constitutionally permissible ratio between actual and         have properly awarded, considering simply the number of
exemplary damages. This lack of a reasonable ratio between        violations. Legally sufficient evidence therefore supports the
actual and exemplary damages, according to Norra, violates        award.
her right to due process of law under the 14th Amendment
to the United States Constitution. The State responds inter        *3 Instead of challenging the legal sufficiency of the
alia that Norra failed to preserve these complaints for appeal    evidence to support the civil penalties, Norra asserts a
because she did not assert these legal arguments in the trial     novel legal basis for avoiding the penalties assessed. She
                                                                  asserts that, although the penalties assessed against her were
court. 3
                                                                  within the scope of those permitted by statute, these civil
                                                                  penalties are exemplary damages, subject to either the cap
                                                                  on exemplary damages in Chapter 41 of the Civil Practice &
                      III. ANALYSIS                               Remedies Code or a due process challenge. For example, in
                                                                  her briefing, Norra states:
Norra frames her challenges to the civil penalties awarded
against her as challenges to the legal sufficiency of the           Ms. Norra contends that the civil penalties awarded against
evidence. She argues that, because this is an appeal from           her are actually exemplary damages, and that Chapter 41
a non-jury case, her complaints may be made for the first           of the Texas Civil Practice and Remedies Code applies to
time on appeal under Texas Rule of Appellate Procedure



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             2
Norra v. Harris County, Not Reported in S.W.3d (2008)
2008 WL 564061

                                                                   Norra has not directed this court to any part of the record
    preclude the award of any exemplary damages against her.
                                                                   in which she notified the trial court of her contention
    This is a legal sufficiency issue....
                                                                   that the civil penalties imposed in this case are actually
                                                                   exemplary damages subject to (a) the cap provided in the
                                                                   Texas Civil Practice & Remedies Code or (b) a due process
                               ...                                 analysis. Further, she has not provided any argument or
                                                                   authority suggesting we may review these issues absent such
    Ms. Norra's argument involves the interpretation of a
    statute.                                                       preservation. 6 SeeTex.R.App. P. 33.1(a). Accordingly, we
                                                                   conclude that, because Norra did not raise her complaints in
                                                                   the trial court, we may not properly address them on appeal.
                               ...

    Ms. Norra contends that the civil penalties awarded
    against her are exemplary damages....                                               IV. CONCLUSION

                                                                   Norra has not established that her challenges to the civil
                               ...                                 penalties assessed against her are based on the sufficiency
                                                                   of the evidence. Further, she has stipulated to over 15,330
    This record shows statutory violations, but no physical
                                                                   drinking water violations and admits in her brief that the
    harm, no injury and no property damage to any actual
                                                                   evidence is sufficient to support an additional fifty-seven
    human being. Since the trial court did not award
                                                                   sewage and wastewater violations in this case. The penalty
    compensatory damages, and the record contains no
                                                                   imposed by the trial court is within the range allowed by
    evidence of any actual damage which could be a basis
                                                                   statute; Norra therefore has no basis to claim that the evidence
    for an award of compensatory damages, it was error for
                                                                   is insufficient. Her challenges to the “legal sufficiency”
    the trial court to award $384,460.00 in civil penalties to
                                                                   of the evidence are instead entirely new legal arguments
    Harris County and also error to award $384,460.00 in civil
                                                                   for avoiding the civil penalties she was assessed. These
    penalties to the State of Texas.
                                                                   legal arguments were not presented to the trial court, and
    (emphasis added). In support of her contention that her due
                                                                   thus have not been preserved for our review. Under these
    process rights were violated by the assessment of these
                                                                   circumstances, we affirm the judgment of the trial court.
    penalties, Norra repeatedly refers to the civil penalties as
    “punitive damages .” Thus, her second issue is premised on
    her argument that the civil penalties assessed in this case    All Citations
    are exemplary or punitive damages. 5
                                                                   Not Reported in S.W.3d, 2008 WL 564061


Footnotes
1        The civil penalty range for each violation is between $50 and $1,000 per day, per violation. SeeTEX. HEALTH & SAFETY
         CODE ANN. § 341.048(b) (Vernon 2001).
2        The civil penalty range for these violations is the same as that for drinking water violations. Id.
3        The State also argues that Chapter 41 of the Civil Practice & Remedies Code is inapplicable in a situation such as
         Norra's, in which penalties and fines have been imposed for statutory violations. The State suggests that the legislative
         history and findings make clear that “Chapter 41 was intended as a tort reform measure and not as a sub silentio repeal
         of penalty statutes.”The State further indicates that Chapter 41 implicates only damages, and “statutory penalties and
         fines are not, and have never been, considered damages.”Additionally, the State emphasizes that the Legislature has
         continued to amend and add new statutes including statutory penalties and fines since Chapter 41 was enacted; thus,
         “reading Chapter 41 to countermand statutes permitting or ordering statutory penalties and fines would be an absurd
         result.”Finally, the State points out that Norra's due process challenge must fail because the seminal case examining
         this issue explicitly applies only to cases involving punitive damages. Indeed, comparing a punitive damages award and
         civil or criminal penalties that could be imposed for comparable misconduct provides an indicium of the excessiveness of
         the punitive damages award because a reviewing court should “accord ‘substantial deference’ to legislative judgments
         concerning appropriate sanctions for the conduct at issue.”BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 583, 116 S.Ct.



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            3
Norra v. Harris County, Not Reported in S.W.3d (2008)
2008 WL 564061

      1589, 1603, 134 L.Ed.2d 809 (1996) (quoting Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257,
      301, 109 S.Ct. 2909, 2934, 106 L.Ed.2d 219 (1989); see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,
      428, 123 S.Ct. 1513, 1526, 155 L.Ed.2d 585 (2003) (“The third guidepost in Gore is the disparity between the punitive
      damages award and the ‘civil penalties authorized or imposed in comparable cases.’ ”). Regardless of the persuasiveness
      of the State's arguments, however, we need not determine whether Chapter 41 applies to an award of civil penalties and
      fines or whether a due process analysis of the ratio of actual to punitive damages is appropriate in this case, because,
      as discussed supra, Norra failed to preserve these complaints for our review.
4     Norra acknowledges as much in her briefing:
            In the trial court, the parties stipulated to in excess of 15,000 drinking water violations by Ms. Norra, that is, violations
            of Chapter 341 of the Texas Health & Safety Code, and the regulations promulgated thereto.The trial court was
            authorized to assess a civil penalty of not less than $50 nor more than $1,000 for each violation.Each day of a
            continuing violation is a separate violation.
            The evidence will also support an inference of approximately fifty-seven sewage and wastewater violations by Ms.
            Norra, for which the trial court was authorized to assess a civil penalty of not less than $50 nor more than $1,000
            for each violation. The civil penalties awarded by the trial court were thus within the scope of the penalties awarded
            by statute.
         (citations omitted, emphasis added).
5     At best, Norra challenges the excessiveness of the award against her. But the standard of review for an excessive
      damages complaint is factual sufficiency of the evidence. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406 (Tex.1998);
      see also Healthcare Ctrs. of Tex., Inc. v. Rigby, 97 S.W.3d 610, 623 (Tex.App.-Houston [14th Dist.] 2002), disapproved
      of on other grounds, Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 853 (Tex.2005). Norra has provided
      no argument or authority regarding the factual sufficiency of the evidence and has thus waived any such challenge.
      SeeTex.R.App. P. 38.1(h); San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 338 (Tex.App.-Houston [14th Dist.]
      2005, no pet.)Moreover, as noted supra, Norra has admitted to sufficient violations to justify the civil penalties assessed
      in this case.
6     “[A]bsent fundamental error, an appellate court has no discretion to reverse an otherwise error-free judgment based on
      a new argument raised for the first time on appeal.”Coleman v. Klöckner & Co. AG, 180 S.W.3d 577, 587 (Tex.App.-
      Houston [14th Dist.] 2005, no pet.).


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                     4
Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)




                   266 S.W.3d 559                             West Headnotes (28)
               Court of Appeals of Texas,
                      Fort Worth.
                                                              [1]      Appeal and Error
   PACIWEST, INC., Appellant and Cross–Appellee,                           Allowance of Remedy and Matters of
                        v.                                             Procedure in General
       WARNER ALAN PROPERTIES, LLC,                                    Court of Appeals reviews a trial court's ruling
         and Warner Alan/Westcliff, Ltd.,                              sustaining or overruling objections to summary
         Appellees and Cross–Appellants.                               judgment evidence for an abuse of discretion.

       No. 2–07–443–CV. | Sept. 11, 2008.                              15 Cases that cite this headnote
        | Rehearing Overruled Oct. 2, 2008.
                                                              [2]      Appeal and Error
Synopsis
                                                                          Abuse of Discretion
Background: Purchaser of commercial real estate brought
suit for specific performance and breach of sales contract             To determine whether a trial court abused
when vendor refused to close transaction. The 96th District            its discretion, Court of Appeals must decides
Court of Tarrant County, Jeff Walker, J., 2007 WL                      whether trial court acted without reference to any
5472774, granted purchaser summary judgment of specific                guiding rules or principles; in other words, Court
performance. Vendor appealed. Purchaser appealed denial of             of Appeals decides whether the act was arbitrary
damages.                                                               or unreasonable.

                                                                       1 Cases that cite this headnote

Holdings: The Court of Appeals, Terrie Livingston, J., held
                                                              [3]      Appeal and Error
that:
                                                                          Abuse of Discretion
                                                                       Merely because a trial court may decide a matter
[1] statements contained in vendor's affidavit were legal
                                                                       within its discretion in a different manner than an
conclusions rather than statements of fact;
                                                                       appellate court would in a similar circumstance
                                                                       does not demonstrate that an abuse of discretion
[2] parties agreed to amendment of contract;
                                                                       has occurred.
[3] purchaser waived provision allowing assumption of                  2 Cases that cite this headnote
existing loan;

[4] purchaser was not barred by clean hands doctrine from     [4]      Judgment
seeking specific performance;                                              Matters of Fact or Conclusions
                                                                       Statements contained in vendor's summary
[5] specific performance was appropriate remedy;                       judgment affidavit, submitted in litigation
                                                                       arising out of commercial real estate transaction,
[6] contract was supported by adequate consideration; and              that parties never agreed on an amendment to
                                                                       the contract and that vendor's understanding was
[7] election of remedies did not preclude award of damages             that amendments must be written, were legal
to purchaser.                                                          conclusions, rather than statements of fact, and
                                                                       were properly excluded.

Affirmed in part, reversed and remanded in part.                       Cases that cite this headnote


                                                              [5]      Contracts


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           1
Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


             Intent of Parties                                         When reviewing a summary judgment, Court of
        Contracts                                                      Appeals takes as true all evidence favorable to
            Necessity of Assent                                        the nonmovant, and indulges every reasonable
                                                                       inference and resolve any doubts in the
        In analyzing contract issues, a determination of
                                                                       nonmovant's favor.
        whether a meeting of the minds has occurred is
        based on an objective standard, and evidence of a              Cases that cite this headnote
        party's subjective belief about what the contract
        says or about whether an amendment occurred is
        not relevant to whether there was a meeting of       [10]      Vendor and Purchaser
        the minds sufficient to amend the contract.                        Modification by Subsequent Agreement
                                                                       Vendor's letter indicating that purchaser could
        2 Cases that cite this headnote                                choose either to assume vendor's note or obtain
                                                                       third party financing for transaction was offer
 [6]    Appeal and Error                                               to purchaser to choose which option it wanted,
            Particular Orders or Rulings Reviewable in                 which purchaser accepted by failing to send in
        General                                                        assumption fees and by sending letter to vendor
                                                                       indicating that it would seek third party financing
        Appeal and Error
                                                                       and would not assume vendor's loan, and once
           Rendering Final Judgment
                                                                       parties agreed to change financing terms, vendor
        When both parties move for summary judgment                    could not unilaterally change them back to
        and the trial court grants one motion and                      terms in original contract, absent purchaser's
        denies the other, the reviewing court should                   agreement.
        review both parties' summary judgment evidence
        and determine all questions presented, and the                 Cases that cite this headnote
        reviewing court should render the judgment that
        the trial court should have rendered.
                                                             [11]      Vendor and Purchaser
        Cases that cite this headnote                                      Conditions and Provisos
                                                                       Provisions in an earnest money contract that
                                                                       provide for termination of a contract if the buyer
 [7]    Judgment
                                                                       is unable to obtain financing are solely for the
            Weight and Sufficiency
                                                                       benefit of the buyer and may be waived by the
        A plaintiff is entitled to summary judgment on                 buyer.
        a cause of action if it conclusively proves all
        essential elements of the claim.                               Cases that cite this headnote

        Cases that cite this headnote
                                                             [12]      Specific Performance
                                                                           Enforcement by Purchaser
 [8]    Judgment
                                                                       Specific Performance
            Weight and Sufficiency
                                                                           Necessity
        A defendant who conclusively negates at least
                                                                       Even a buyer who has not strictly complied
        one essential element of a cause of action is
                                                                       with the financing terms in an earnest money
        entitled to summary judgment on that claim.
                                                                       contract, but who is nevertheless able to meet
        Cases that cite this headnote                                  its obligations to close a transaction, may
                                                                       enforce specific performance against a seller
                                                                       who thereafter refuses to close the transaction
 [9]    Appeal and Error
                                                                       on the ground that the buyer did not obtain the
           Judgment
                                                                       financing on the express terms provided for in
                                                                       the contract.


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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


                                                                       The doctrine of unclean hands operates as a bar
        Cases that cite this headnote                                  to the equitable relief of specific performance.

                                                                       2 Cases that cite this headnote
 [13]   Vendor and Purchaser
            Conditions and Provisos
        Financing provision in contract for sale             [18]      Equity
        of commercial real estate, which permitted                          He Who Comes Into Equity Must Come
        purchaser to assume vendor's loan, was for                     with Clean Hands
        benefit of purchaser, and could be waived by it.               The party claiming unclean hands has the burden
                                                                       to show that it was injured by the other party's
        Cases that cite this headnote                                  unlawful or inequitable conduct.

                                                                       2 Cases that cite this headnote
 [14]   Specific Performance
            Certainty
        A contract is subject to specific performance        [19]      Equity
        if it contains the essential terms of a contract,                   He Who Comes Into Equity Must Come
        expressed with such certainty and clarity that                 with Clean Hands
        it may be understood without recourse to parol                 The clean hands doctrine should not be applied
        evidence.                                                      unless the party asserting the doctrine has been
                                                                       seriously harmed and the wrong complained of
        Cases that cite this headnote                                  cannot be corrected without the application of the
                                                                       doctrine.
 [15]   Specific Performance
                                                                       3 Cases that cite this headnote
            Discretion of Court
        Specific Performance
            Form of Remedy                                   [20]      Equity
                                                                           Nature of Unconscionable Conduct
        Specific performance is an equitable remedy that
        may be awarded at the trial court's discretion                 Even if purchaser's letter requesting price
        upon a showing of breach of contract.                          reduction letter contained intentional falsehoods,
                                                                       clean hands doctrine did not bar purchaser from
        10 Cases that cite this headnote                               obtaining specific performance, since any harm
                                                                       suffered by vendor was due to its insistence
                                                                       that contract had not been validly amended to
 [16]   Specific Performance
                                                                       allow purchaser to purchase the property through
            Inadequacy of Remedy at Law
                                                                       third party financing rather than assumption of
        Specific Performance
                                                                       vendor's loan and by refusing to close unless loan
            Form of Remedy
                                                                       was assumed rather than paid off.
        Specific performance is not a separate cause of
        action, but rather it is an equitable remedy used              1 Cases that cite this headnote
        as a substitute for monetary damages when such
        damages would not be adequate.                       [21]      Deposits and Escrows
                                                                            Performance of Conditions or Occurrence
        5 Cases that cite this headnote
                                                                       of Contingency
                                                                       Before a grantor or obligee may assert any
 [17]   Equity
                                                                       rights under an escrow contract, it must show
             He Who Comes Into Equity Must Come
                                                                       compliance with the conditions of the escrow,
        with Clean Hands
                                                                       either actual performance or an offer to perform




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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


        that was prevented through no fault of the grantor             vendor's loan at closing, purchaser was obligated
        or obligee.                                                    to fund purchase price at closing if it failed
                                                                       to terminate during the bargained-for inspection
        Cases that cite this headnote                                  period, and that obligation was consideration for
                                                                       contract.
 [22]   Contracts
                                                                       Cases that cite this headnote
            Time as of the Essence of the Contract
        An actual tender in strict compliance with
        the provisions of the contract, within the time       [26]     Specific Performance
        allowed by the contract, is always required                         Recovery of Compensation or Damages
        when a contract provides that time is of the                   Instead of Specific Performance
        essence unless it is shown that the defaulting                 The general rule is that damages constitute an
        party (1) prevented actual tender by the party                 alternative remedy available only when specific
        attempting to perform or (2) when the defendant                performance either is not sought or is not
        has repudiated the contract before the time for                available.
        performance.
                                                                       4 Cases that cite this headnote
        1 Cases that cite this headnote

                                                              [27]     Specific Performance
 [23]   Specific Performance                                               Recovery of Damages in Addition to
            Nature and Grounds of Duty of Plaintiff                    Specific Performance
        Upon showing either that the defaulting party (1)              In appropriate circumstances, a court may order,
        prevented actual tender by the party attempting                in addition to specific performance, payment of
        to perform or (2) the defendant has repudiated the             expenses incurred by plaintiffs as a result of
        contract before the time for performance, a party              a defendant's late performance, which are not
        seeking specific performance must only plead                   considered breach of contract damages but are
        and prove that it is ready, willing, and able to               intended to equalize any losses occasioned by the
        perform its part of the contract according to its              delay by offsetting them with money payments.
        terms.
                                                                       1 Cases that cite this headnote
        2 Cases that cite this headnote
                                                              [28]     Election of Remedies
 [24]   Specific Performance                                                Inconsistency of Alternative Remedies
            Necessity                                                  Specific Performance
        Tender otherwise required for specific                             Recovery of Damages in Addition to
        performance of commercial real estate                          Specific Performance
        transaction was excused because vendor clearly                 Purchaser who sought specific performance
        repudiated the contract by not only insisting                  in breach of contract litigation arising out
        that purchaser assume vendor's note after having               of commercial real estate transaction was not
        agreed to all cash sale, but also by sending letter            precluded by election of remedies doctrine from
        indicating that the contract was terminated.                   seeking post-closing damages for lost rental,
                                                                       increased construction costs and increased
        Cases that cite this headnote
                                                                       interest rate on third party financing; such
                                                                       damages were not in the nature of benefit of
 [25]   Vendor and Purchaser                                           the bargain damages, but rather an accounting
            Modification by Subsequent Agreement                       between the parties pending performance of the
        Upon amendment of commercial real estate                       contract.
        contract to provide that purchaser would pay off


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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


                                                                    Fort Worth, Texas. The agreement provided that the purchase
         1 Cases that cite this headnote                            price for the property would be $5,780,000, payable as
                                                                    follows:

                                                                      (a) a portion of the Purchase Price shall be paid by
Attorneys and Law Firms                                               [Warner Alan's] assuming (subject to any limitations
                                                                      on personal liability applicable thereto) the outstanding
*562 Decker, Jones, McMackin, McClane, Hall & Bates;                  principal balance owing on the Closing Date (hereinafter
Mark S. Dugan, Brian K. Yost, and Leslie L. Hunt, Fort                defined) on that certain Promissory Note (the “Note”)
Worth, TX, for Appellant/Cross-Appellee.                              dated October 10, 2002, in the original principal amount of
                                                                      $4,000,000, executed by [Paciwest]....
Carrington, Coleman, Sloman & Blumenthal, L.L.P.; Tim
Gavin, Brett Kutnick, and Tim Chastain, Dallas, TX, for               (b) The balance of the Purchase Price shall be payable at
Appellees/Cross-Appellants.                                           the Closing (hereinafter defined) in immediately available
                                                                      funds.
PANEL: LIVINGSTON, DAUPHINOT, and McCOY, JJ.
                                                                    “Closing” was defined as “9:00 a.m. on the date fifteen (15)
                                                                    days after written approval of [Warner Alan's] assumption of
                          OPINION                                   the Note by [the] Lender.” The contract also provided that
                                                                    closing could be extended if the lender had not timely sent the
TERRIE LIVINGSTON, Justice.                                         title company the signed documents required to evidence the
                                                                    lender's approval of the loan assumption.
                         Introduction
                                                                    Shortly after the parties executed the contract, Ted Broadfoot
This case involves competing motions for summary judgment           and Chris Neill of Warner Alan began discussing with
in a suit over a failed *563 real estate transaction. The           Dziem “Jim” Nguyen of Paciwest the possibility that Warner
trial court granted summary judgment for the purchaser,             Alan would seek third party financing rather than assume
appellee Warner Alan/Westcliff, Ltd. (Westcliff), and               Paciwest's note. On August 6, 2005, Nguyen sent Warner
appellee Warner Alan Properties, LLC (Warner Alan),                 Alan a letter to Neill's attention in which he stated the
Westcliff's predecessor-in-interest in the purchase and sale        following:
contract. It also ordered that Westcliff was entitled to specific
performance of the contract as a remedy for the seller's              I am writing you this letter just want to recap my
default. The seller, appellant Paciwest, Inc., brings three           conversation with you and Ted regarding financing of the
issues on appeal in which it contends that the trial court erred      sale:
by sustaining appellees' objections to Paciwest's summary
                                                                      1) You will run the number[s] and look into the alternative
judgment proof, by denying Paciwest's motion for summary
                                                                      of paying off the existing note including defeasance or
judgment and granting appellees', and by granting appellees'
                                                                      yield maintenance by financing with another third party;
request for specific performance. In a single issue in a
                                                                      and you will decide which way this coming week and will
cross-appeal, appellees contend that the trial court erred
                                                                      send in the 2 assumption fees check of $3,000 each to [the
by determining that they were precluded from recovering
                                                                      lender] then if assumption is still the choice.
damages in addition to specific performance because of the
election of remedies doctrine. We affirm in part and reverse          2) To accommodate that, I will prepare the assumption
and remand in part.                                                   paper to send to [the lender] but will not send in until
                                                                      Wednesday or next Thursday morning....

                                                                      ....
                      Background Facts
                                                                      4) If you choose to assume the note, Parking [repairs] will
On July 28, 2005, Paciwest and Warner Alan entered into
                                                                      have to be done prior to the assumption's approval. Then,
a Purchase Agreement under which Paciwest would sell
                                                                      let me know to what extent you want that done and we will
Warner Alan its interest in the Westcliff Manor Apartments in



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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


  need an *564 addendum to do the repair and increase the                     worth 2.8 million at an 8 percent
  contract price. [Emphasis added.]                                           capitalization rate[.] We are willing
                                                                              to purchase a sizeable portion of the
On August 17, 2005, Neill faxed Nguyen a letter stating,                      upside, but simply cannot put 2[.]5
“Please allow this to serve as notice that we will not be                     million in cash in this deal[.] The
assuming the current ... loan which is in place for Westcliff                 unfortunate reality is that we are at a
Manor. We will be placing new debt on this property through                   point where we can move forward and
La Jolla Bank.” Subsequently, on August 30, 2005, Nguyen                      try to increase funding but the chances
sent a letter to Paciwest's lender, stating, “Please accept                   of that are slim [.] We want to do the
this letter as our intent to pay off Loan 01–0207891 within                   deal but are at the 23rd hour and are
thirty (30) days (by September 30, 2005). At this time we                     running out of options and need some
are requesting payoff information be faxed to (972) 613–                      help from you.
[illegible.].”
                                                                  Nguyen was angry when he received this letter and decided
Nguyen faxed Broadfoot a proposed First Amendment to the          not to go forward with the transaction under any terms other
contract on August 31, 2005. The amendment included the           than those in the original contract; in other words, Paciwest
following terms: (1) Warner Alan would pay, in addition to        would perform its obligations under the contract only if
the purchase price, “all the fees in connection with paying off   Warner Alan was still able to assume Paciwest's note.
the existing note early, including but not limited to the pre-
payment yield maintenance,” (2) Warner Alan's inspection          The next day, September 6, 2005, Broadfoot faxed Nguyen a
period would end at 5 p.m. on September 7, 2005, and              letter with changes to the proposed First Amendment. In the
(3) closing would take place on or before September 30,           cover letter, he noted that the lender had
2005, with the option to extend for an additional fifteen days
upon Warner Alan's depositing an additional, nonrefundable                    indicated that part of prepaying the
earnest money of $10,000. It also included a representation                   notes is paying the accrued interest
that neither party had defaulted under the contract up to that                expense which is a full month
time and a statement that “[a]ll of [Paciwest's] warranty and                 regardless of prepay date. We do
indemnification to [Warner Alan] in the [a]greement with                      not want to double pay interest
respect to the existing Loan documents now becomes null and                   and therefore would not want to
void.”                                                                        close anytime other than month end.
                                                                              Currently, our lender believes they
The next correspondence between the parties occurred on                       will be ready for September 30th,
September 5, 2005, when Neill faxed a letter to Nguyen                         *565 but in case they are not, we
asking for a price reduction of $300,000. In the letter, Neill                would want to extend for 30 days
stated that “the appraiser has indicated that the value is much               instead of 15.
lower than expected and there is a lot of deferred maintenance
                                                                  The only changes marked on the amendment are the addition
outside of our original rehab scope.” Additionally, he noted
                                                                  “to the best of their knowledge” to the end of the provision
that “[t]he occupancy on the property has declined as has
                                                                  in which each party was to acknowledge that there had been
the economic collection” and that the “sizeable drop in
                                                                  no breach or default of the contract, the deletion of the
collections is greatly impacting the value of the property.”
                                                                  provision that Paciwest's representations and warranties in
Neill goes on to state that
                                                                  the agreement about the existing loan documents are null
            [a]ll of these items are causing our                  and void, and the change from fifteen to thirty days on the
            lender to lower the amount they are                   extension date. According to Neill, Warner Alan did not think
            willing to finance[.] While I fully                   an amendment to the contract was necessary, but they “were
            admit that the property is a nice                     trying to be accommodating.”
            property in a good area[,] I also have
            to realistically point out that on paper              Nguyen sent another letter on September 9, 2005, in which
            the property is worth significantly                   he stated that Paciwest could not approve either the price
            less than 5[.]8 million and is in fact                reduction requested by Warner Alan, nor the requested



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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


modifications to the amendment. Thus, Nguyen said, “the            of such projects. They also included an alternative prayer for
contract stands unchanged, as written.” On September 20,           relief for damages only.
2005, Warner Alan's attorneys sent a letter to Paciwest by fax
and certified mail indicating that Warner Alan was “ready,         Appellees filed a traditional motion for partial summary
willing and able to close this transaction on September 30,        judgment on the liability and specific performance issues,
2005” and that Westcliff, 1                                        reserving the damages issues for trial. Paciwest responded
                                                                   and also filed a competing traditional motion for summary
                                                                   judgment that would dispose of all of appellees' claims. The
   the affiliate of [Warner Alan] to which the Contract will       trial court granted appellees' motion, denied Paciwest's, and
   be assigned, will be present at the September 30 closing        ordered the following:
   and will tender full performance of all its obligations under
   the Contract, including but not limited to full payment of        [It is] ORDERED, ADJUDGED, DECREED AND
   the Purchase Price. The Note will be fully discharged out         DECLARED that Warner Alan Properties, LLC has the
   of the sale proceeds and any prepayment penalty will be           right to pay a portion of the purchase price by paying off
   paid by the purchaser. Therefore the net amount received          Paciwest's loan instead of assuming it; and it is further
   by [Paciwest] will be the same as the net amount it would
                                                                     ORDERED,         ADJUDGED,           DECREED     AND
   have received had the Note been assumed.
                                                                     DECLARED that [Paciwest] breached the contract by
On September 28, 2005, Paciwest's attorney sent Warner
                                                                     failing to convey the Westcliff Manor Apartments ... on
Alan a letter indicating that the contract had automatically
                                                                     September 30, 2005; and it is further
terminated by its own terms as of September 26, 2005
because Warner Alan had failed to obtain lender approval to          ORDERED,          ADJUDGED,          DECREED        AND
assume Paciwest's loan. Neill and Broadfoot both attended            DECLARED that the Court GRANTS Warner Alan/
the scheduled closing. Warner Alan wired $5,621,031.91 to            Westcliff, Ltd. specific performance and ORDERS
the title company, representing the purchase price, less the         [Paciwest] to perform the contract and convey the Westcliff
initial escrow deposit of $35,000, rent and tax prorations, and      Manor Apartments ... to Warner Alan/Westcliff, Ltd.; and
a credit for security deposits held by Paciwest. Warner Alan         it is further
also wired an additional $250,000 and had additional funds
available if more money was needed. However, Paciwest did            ORDERED,          ADJUDGED,          DECREED          AND
not attend and refused to close the transaction.                     DECLARED that the only remaining issues to be
                                                                     determined at trial are the amount of [appellees'] damages
Appellees sued Paciwest on October 3, 2005, seeking specific         caused by Paciwest's failure to convey the Westcliff Manor
performance of the contract and a declaratory judgment that          Apartments on September 30, 2005, and the amount of
(1) the contract did not terminate on September 26, 2005             [appellees'] reasonable and necessary attorneys' fees and
or at any other time, (2) appellees are not in breach of the         expenses.
contract, (3) Westcliff can fulfill its obligations under the
contract in an all-cash transaction as opposed to assuming         Thus, after the trial court granted appellees' motion, the
the loan, (4) Paciwest breached and repudiated the contract        only issues remaining for trial were whether appellees were
by refusing to close and treating the contract as terminated,      entitled to damages as well as specific performance of the
and (5) the September 30 closing date was in compliance            contract.
with the contract terms. They also sought attorneys' fees.
Paciwest timely filed an answer. Appellees amended their           Paciwest subsequently objected to appellees' damages expert
petition in March, October, and November 2006 to include           and additionally argued that the contract did not provide for
claims for damages for (1) “the difference in interest rates and   the remedy of damages as well as specific performance but
interest payments caused by [Paciwest's] failure to transfer       rather that the two are mutually exclusive remedies under
the [p]roperty on September 30, 2005,” (2) lost profits,           the contract. The trial court agreed, leaving attorneys' fees as
management fees, and fair rental value of the property since       the only issue to be decided. The parties then entered into a
September 30, 2005, and (3) damages for *566 increases in          stipulation on attorneys' fees.
the cost of repair and improvement projects and the financing
                                                                   The trial court entered a final judgment incorporating all of
                                                                   its rulings and the parties' stipulation on attorneys' fees on


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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


September 28, 2007. Appellees filed a notice of appeal on         Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985), cert.
December 13, 2007, and Paciwest filed a notice of appeal          denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721
on December 21, 2007. The parties later filed an agreed           (1986). Merely because a trial court may decide a matter
motion to realign the parties, which this court granted, making   within its discretion in a different manner than an appellate
Paciwest the appellant and cross-appellee and Warner Alan         court would in a similar circumstance does not demonstrate
and Westcliff appellees and cross-appellants.                     that an abuse of discretion has occurred. Id.

                                                                   [4] Appellees objected to Nguyen's statement that the parties
                                                                  never agreed on an amendment to the contract as being a
                      Issues Presented
                                                                  “legal conclusion.” The trial court agreed. Paciwest contends
In three issues, Paciwest contends that the trial court erred     that the trial court abused its discretion by sustaining this
by sustaining appellees' objections to its summary judgment       objection because it did not sustain its similar objection to
proof, by granting appellees' motion for partial summary          a statement in Broadfoot's affidavit that “[i]n a subsequent
judgment and denying Paciwest's motion for summary                conversation, Mr. Nguyen and I agreed that the closing would
judgment, and by granting appellees' request for specific         take place on September 30, 2005,” or a statement by Neill
performance. In their cross-appeal, appellees contend that        in his affidavit that “Warner Alan and Paciwest orally agreed
the trial court erred by refusing to allow them to recover        that Warner Alan could pay-off Paciwest's Note instead of
incidental damages to compensate for Paciwest's delay in          assuming it.” According to Paciwest, appellees opened the
conveying the property.                                           door to Nguyen's statement by introducing similar testimony
                                                                  by Neill and Broadfoot. Also, they contend that by sustaining
                                                                  appellees' objection but denying Paciwest's, the trial court
                                                                  prevented Paciwest from presenting conflicting evidence on
       Objections to Summary Judgment Evidence                    the matter. We conclude and hold that the trial court did
                                                                  not abuse its discretion by sustaining appellees' objection
Appellees objected to several statements in Nguyen's affidavit
                                                                  to Nguyen's statement as a legal conclusion. Neither Neill's
offered by Paciwest as summary judgment evidence; the trial
                                                                  nor Broadfoot's statements attempt to broadly conclude that
 *567 court sustained some but not all of these objections.
                                                                  an amendment to the contract was or was not reached; they
Specifically, Paciwest complains about the trial court's
                                                                  simply address the underlying facts of what terms were
sustaining appellees' objections to the following statements:
                                                                  specifically agreed upon. In contrast, Nguyen's statement
“There was never an agreement reached between the parties
                                                                  opines that no legally binding amendment was reached.
concerning an amendment to the Contract,” and “It was
                                                                  This is more in the nature of a legal conclusion than a
Paciwest's understanding, which was in accordance with
                                                                  statement of fact. See Brownlee v. Brownlee, 665 S.W.2d 111,
the express terms of the contract, that if an amendment or
                                                                  112 (Tex.1984); Souder v. Cannon, 235 S.W.3d 841, 849
modification was not agreed to in writing that the amendment
                                                                  (Tex.App.–Fort Worth 2007, no pet.).
or modification was not finalized, nor enforceable.”

                                                                   [5] Moreover, we also conclude and hold that the trial court
 [1]    [2]    [3] We review a trial court's ruling sustaining
                                                                  did not abuse its discretion by sustaining appellees' objection
or overruling objections to summary judgment evidence for
                                                                  to Nguyen's statement that Paciwest's understanding was that
an abuse of discretion. Garner v. Fidelity Bank, N.A., 244
                                                                  if an amendment or modification was not in writing, it was
S.W.3d 855, 859 (Tex.App.–Dallas 2008, no pet.); Bd. of
                                                                  not enforceable, and that Paciwest's understanding was in
Trustees of Fire and Police Retiree Health Fund v. Towers,
                                                                  accordance with the terms of the contract. To begin with, the
Perrin, Forster & Crosby, Inc., 191 S.W.3d 185, 192–93
                                                                  part of the statement indicating that Paciwest's understanding
(Tex.App.–San Antonio 2005, pet. denied); see Reynolds v.
                                                                  is in accordance with the contract terms is an impermissible
Murphy, 188 S.W.3d 252, 259–61 (Tex.App.–Fort Worth
                                                                  legal *568 conclusion. See Brownlee, 665 S.W.2d at 112;
2006, pet. denied), cert. denied, ––– U.S. ––––, 127 S.Ct.
                                                                  Souder, 235 S.W.3d at 849. Moreover, as Paciwest pointed
1839, 167 L.Ed.2d 323 (2007). To determine whether a
                                                                  out in its objection to the evidence, Paciwest's subjective
trial court abused its discretion, we must decide whether
                                                                  intent is irrelevant to the issue of whether the parties agreed
the trial court acted without reference to any guiding rules
                                                                  to change the contract terms. A determination of whether a
or principles; in other words, we must decide whether the
                                                                  meeting of the minds has occurred is based on an objective
act was arbitrary or unreasonable. Downer v. Aquamarine



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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


standard; thus, evidence of Nguyen's subjective belief about      Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143
what the contract says or about whether an amendment              S.W.3d 794, 798 (Tex.2004); see Tex.R. Civ. P. 166a(b), (c).
occurred is not relevant to whether there was a meeting of the
minds sufficient to amend the contract. See Cox v. S. Garrett,     [9] When reviewing a summary judgment, we take as true
L.L.C., 245 S.W.3d 574, 579 (Tex.App.–Houston [1st Dist.]         all evidence favorable to the nonmovant, and we indulge
2007, no pet.); Copeland v. Alsobrook, 3 S.W.3d 598, 604          every reasonable inference and resolve any doubts in the
(Tex.App.–San Antonio 1999, pet. denied).                         nonmovant's favor. Mason, 143 S.W.3d at 798. Questions of
                                                                  law are appropriate matters for summary judgment. Rhone–
We overrule Paciwest's third issue.                               Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999);
                                                                  Westchester Fire Ins. Co. v. Admiral Ins. Co., 152 S.W.3d
                                                                  172, 178 (Tex.App.–Fort Worth 2004, pet. denied) (op. on
                                                                  reh'g).
      Competing Motions for Summary Judgment

In its first issue, Paciwest challenges the summary judgment
                                                                  2. Analysis
for appellees, contending that Westcliff is not entitled to
specific performance because (1) the statute of frauds and        a. Appellees' Evidence of Amendment to Contract
section 9.4 of the contract prohibit enforcement of the            *569 Paciwest's first four arguments rest on the assumption
contract under the terms proposed by appellee, (2) the            that there is no evidence showing the parties amended the
trial court disregarded the contract's automatic termination      contract to allow appellees to obtain third party financing
provision and imposed additional obligations on the parties       instead of assuming Paciwest's loan.
that were not included in the original contract, (3) Warner
Alan did not have the unilateral right to change the contract's   The statute of frauds requires a real estate contract to be
payment method from assumption to an all-cash transaction,        in writing and signed by the person against whom it is to
(4) compliance with the contract by Warner Alan was still         be charged. Tex. Bus. & Com.Code Ann. § 26.01(a), (b)
possible once it received notification from Paciwest that the     (4) (Vernon Supp.2008); Chambers v. Pruitt, 241 S.W.3d
contract would not be amended as requested, (5) specific          679, 687 (Tex.App.–Dallas 2007, no pet.). Section 9.4 of the
performance is unavailable to Warner Alan because it has          contract provides that
unclean hands, (6) specific performance is unavailable to
Warner Alan because it did not establish that it properly                       [n]either this Agreement nor any
tendered performance, and (7) the original contract is                          provision hereof may be waived,
neither valid nor enforceable because it is not supported by                    modified, amended, discharged or
consideration and lacks mutuality of obligation.                                terminated except by an instrument in
                                                                                writing signed by the party against
                                                                                which the enforcement of such waiver,
1. Standard of Review                                                           modification, amendment, discharge
 [6] When both parties move for summary judgment and                            or termination is sought, and then
the trial court grants one motion and denies the other,                         only to the extent set forth in such
the reviewing court should review both parties' summary                         instrument.
judgment evidence and determine all questions presented.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661
                                                                  [10] The plain language of Nguyen's August 6, 2005 letter,
(Tex.2005). The reviewing court should render the judgment
                                                                 which was signed by Nguyen and on Paciwest letterhead,
that the trial court should have rendered. Id.
                                                                 indicates that Warner Alan could choose either to assume the
                                                                 loan or obtain third party financing (with payoff of defeasance
 [7] [8] A plaintiff is entitled to summary judgment on a
                                                                 or yield maintenance, in other words, any prepayment
cause of action if it conclusively proves all essential elements
of the claim. See Tex.R. Civ. P. 166a(a), (c); MMP, Ltd.         penalty); 2 Nguyen instructed that Warner Alan should pay
v. Jones, 710 S.W.2d 59, 60 (Tex.1986). A defendant who          the assumption fees if assumption was its choice. It is
conclusively negates at least one essential element of a cause   undisputed that Warner Alan did not pay the assumption fees.
of action is entitled to summary judgment on that claim. IHS     Thus, Nguyen's letter is an offer to Warner Alan to choose
                                                                 which option it wants. See KW Constr. v. Stephens & Sons


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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


Concrete Contractors, Inc., 165 S.W.3d 874, 883 (Tex.App.–        ref'd n.r.e); cf. Potcinske v. McDonald Prop. Invs., 245
Texarkana 2005, pet. denied) (“To prove a valid offer, a party    S.W.3d 526, 530–31 (Tex.App.–Houston [1st Dist.] 2007, no
must show (1) the offeror intended to make an offer; (2)          pet.) (distinguishing Advance Components and holding that
the terms of the offer were clear and definite; and (3) the       analysis of materiality of financing provisions for purposes
offeror communicated the essential terms of the offer to the      of contract enforcement differs from analysis for purposes of
offeree.”).                                                       contract formation).

Warner Alan accepted that offer not only by failing to send        [13] Here, a reading of the entire contract shows that the
in the assumption fees but also by sending a written letter to    financing provision, although negotiated, was for Warner
Paciwest on August 17, 2005 indicating that it would seek         Alan's benefit and Warner Alan waived its rights involving
third party financing and it would not assume Paciwest's          assumption of Paciwest's loan. The August 17, 2005 letter
loan. 3 Thus, the parties agreed in writing that Warner Alan      indicating that Warner Alan chose to pay off the loan
would no longer be obligated to assume Paciwest's existing        rather than assume it, the September 6, 2005 letter enclosing
note. Once the parties agreed to change the financing terms,      changes to the proposed amendment and indicating that
Paciwest could not unilaterally change them back to the terms     Warner Alan wanted the option to extend for thirty days
in the original contract without evidence that Warner Alan        to minimize interest payments, and the September 20, 2005
subsequently agreed that the original terms of the contract       letter indicating that Warner Alan was ready to pay the
would be effective. There is no such evidence in the summary      purchase price and any prepayment penalty at closing all
judgment record.                                                  indicate Warner Alan's intention to waive the benefit of
                                                                  the assumption financing provisions, including the automatic
In addition, Warner Alan's letters referencing a September        termination provision.
30 closing, along with *570 Nguyen's August 30 letter to
Paciwest's lender, show an agreement by the parties to close     Paciwest claims that the financing provisions in the contract
no later than September 30. See EP Operating Co. v. MJC          could not be to appellees' benefit only because other
Energy Co., 883 S.W.2d 263, 266 (Tex.App.–Corpus Christi         provisions of the contract were dependent upon them and
1994, writ denied). Moreover, a September 30 closing—two         because an all-cash transaction would work a detriment to
months after the effective date of the contract that originally  Paciwest in that it would not receive its tax and insurance
called for lender approval of a loan assumption—would not        reserves from the lender until up to seven days after closing,
have been unreasonable and, thus, could be implied. See          rather than at closing from the purchaser, as was contemplated
O'Farrill Avila v. Gonzalez, 974 S.W.2d 237, 244 (Tex.App.–      between the parties in the contract. However, there is no
San Antonio 1998, pet. denied).                                  evidence that the other provisions in the contract, such as the
                                                                 closing date, were tied to assumption for any particular reason
 [11] [12] Further, even if the writings between the parties other than to facilitate the closing date as quickly as possible,
are not sufficient to show an agreement by Paciwest to an all-   which purpose was not thwarted by the all-cash transaction.
cash transaction, provisions in an earnest money contract that   Additionally, Paciwest offered no evidence that a seven-day
provide for termination of a contract if the buyer is unable to  delay in receiving its escrow from the lender would have any
obtain financing are solely for the benefit of the buyer and     material or detrimental effect on Paciwest. Accordingly, we
may be waived by the buyer. See R. Conrad Moore & Assocs.,       conclude and hold that either (a) sufficient writings indicated
Inc. v. Lerma, 946 S.W.2d 90, 94–95 (Tex.App.–El Paso            an agreement to an all-cash transaction closing on or before
1997, writ denied); Renouf v. Martini, 577 S.W.2d 803, 803–      September 30 or *571 (b) Warner Alan was entitled to
04 (Tex.Civ.App.–Houston [14th Dist.] 1979, no writ). Thus,      waive the benefit of the financing provisions to its benefit and
even a buyer who has not strictly complied with the financing    proceed with an all-cash transaction.
terms in an earnest money contract, but who is nevertheless
able to meet its obligations to close a transaction, may enforce
                                                                 b. Whether Westcliff Is Entitled to Specific Performance
specific performance against a seller who thereafter refuses
                                                                 Paciwest contends that Westcliff is not entitled to specific
to close the transaction on the ground that the buyer did not
                                                                 performance because Warner Alan's wrongful conduct in
obtain the financing on the express terms provided for in
                                                                 sending the price reduction letter is what caused the failure
the contract. See Advance Components, Inc. v. Goodstein,
                                                                 of the transaction and because Westcliff failed to tender
608 S.W.2d 737, 739–40 (Tex.Civ.App.–Dallas 1980, writ
                                                                 performance, which Paciwest claims is a prerequisite to


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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


specific performance in this case, because Westcliff did not        v. Watson, 204 S.W.3d 30, 41 (Tex.App.–Fort Worth 2006,
tender the correct purchase price at closing.                       pet. denied). Here, the evidence shows that any harm suffered
                                                                    by Paciwest was its own doing; it had no obligation to lower
 [14] A contract is subject to specific performance if it           the purchase price and it rejected Warner Alan's attempt to do
contains the essential terms of a contract, expressed with          so. Ultimately, by failing to terminate during the inspection
such certainty and clarity that it may be understood without        period, Warner Alan obligated itself and Westcliff to the
recourse to parol evidence. Johnson v. Snell, 504 S.W.2d            purchase price as set forth in the contract. However, by
397, 398 (Tex.1973); Rus–Ann Dev., Inc. v. ECGC, Inc.,              insisting that the contract had not been validly amended
222 S.W.3d 921, 927–28 (Tex.App.–Tyler 2007, no pet.)               to allow Warner Alan to purchase the property through
(holding that lack of closing date in option contract did not       third party *572 financing rather than assumption and by
preclude enforcement by specific performance). We have              refusing to close unless the loan was assumed rather than paid
already determined that the summary judgment record shows           off, Paciwest was responsible for its own default under the
that the original written contract was validly amended, in          contract. Accordingly, we conclude and hold that the trial
writing, to provide that Warner Alan could pay the purchase         court did not abuse its discretion in determining that Westcliff
price via third party financing, rather than assumption of          was not barred from seeking specific performance by the
Paciwest's loan and that the parties would close within a           “unclean hands” doctrine. See Stafford, 231 S.W.3d at 536 n.
reasonable time, no later than September 30, 2005.                  4; Dunnagan, 204 S.W.3d at 41.

 [15]    [16] Specific performance is an equitable remedy
that may be awarded at the trial court's discretion upon a       ii. Tender of Performance
showing of breach of contract. Kress v. Soules, 152 Tex. 595,     [21]     [22]     [23] Before a grantor or obligee may assert
261 S.W.2d 703, 704 (1953); Bell v. Rudd, 144 Tex. 491,          any rights under an escrow contract, it must show compliance
191 S.W.2d 841, 843 (1946); Stafford v. S. Vanity Magazine,      with the conditions of the escrow—actual performance—or
Inc., 231 S.W.3d 530, 535 (Tex.App.–Dallas 2007, pet.            an offer to perform that was prevented through no fault of
denied). Specific performance is not a separate cause of         the grantor or obligee. Bell, 191 S.W.2d at 844; Roundville
action, but rather it is an equitable remedy used as a substitutePartners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex.App.–
for monetary damages when such damages would not be              Austin 2003, pet. denied). In cases in which the seller's and
adequate. Stafford, 231 S.W.3d at 535; Scott v. Sebree, 986      buyer's contract obligations are mutual and dependent, in that
S.W.2d 364, 368 (Tex.App.–Austin 1999, pet. denied).             a deed is required to be delivered upon tender of the purchase
                                                                 price, the purpose of a tender satisfies two purposes: first, it
                                                                 invokes the seller's obligation to convey and places him in
i. Unclean Hands                                                 default if he fails to do so; second, it satisfies the fundamental
 [17] [18] The doctrine of unclean hands operates as a bar prerequisite of specific performance—that the buyer show
to the equitable relief of specific performance. Stafford, 231   that he has done or offered to do, or is then ready and willing
S.W.3d at 536 n. 4; Lazy M Ranch, Ltd. v. TXI Operations LP,     to do, all the essential and material acts which the contract
978 S.W.2d 678, 683 (Tex.App.–Austin 1998, pet. denied).         requires of him. Krayem v. USRP (PAC), L.P., 194 S.W.3d
The party claiming unclean hands has the burden to show          91, 94 (Tex.App.–Dallas 2006, pet. denied); Roundville, 118
that it was injured by the other party's unlawful or inequitable S.W.3d at 79. An actual tender in strict compliance with the
conduct. Stafford, 231 S.W.3d at 536 n. 4; Willis v. Donnelly,   provisions of the contract, within the time allowed by the
118 S.W.3d 10, 38 (Tex.App.–Houston [14th Dist.] 2003),          contract, is always required when a contract provides that
aff'd in part and rev'd in part on other grounds, 199 S.W.3d     time is of the essence unless it is shown that the defaulting
262, 278–79 (Tex.2006).                                          party (1) prevented actual tender by the party attempting to
                                                                 perform or (2) when, as here, the defendant has repudiated
 [19] [20] The evidence is disputed as to whether the price the contract before the time for performance. Krayem, 194
reduction letter contains intentional falsehoods; however,       S.W.3d at 94; Roundville, 118 S.W.3d at 79–81. 4 Upon
even if it does, Westcliff is not barred from obtaining          either showing, a party seeking specific performance must
specific performance. The clean hands doctrine should not        only plead and prove that it is ready, willing, and able to
be applied unless the party asserting the doctrine has been      perform its part of the contract according to its terms. Rus–
seriously harmed and the wrong complained of cannot be           Ann Dev., Inc., 222 S.W.3d at 927; 17090 Parkway, Ltd. v.
corrected without the application of the doctrine. Dunnagan


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              11
Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


McDavid, 80 S.W.3d 252, 258 (Tex.App.–Dallas 2002, pet.              Section 1.3, describing the initial escrow to be deposited
denied).                                                             by Warner Alan, specifically states that if Warner Alan
                                                                     terminates the contract by right under the contract, Paciwest
 [24]    Here, the summary judgment evidence shows                   would be entitled to $100 of the initial escrow deposit as
that regardless of whether appellees actually tendered               independent consideration for the contract.
performance in strict compliance with the contract terms,
such tender is excused because Paciwest clearly repudiated           As to Paciwest's argument that Section 4.4 of the contract
the contract by not only insisting that appellees continue           —which states in one part that Warner Alan's “failure to
the assumption process but also by sending the September             obtain Lender's approval of the proposed assumption in a
28, 2005 letter indicating that the contract was terminated. 5       manner consistent with [section 4.4] shall not be a default by
See Jenkins v. Jenkins, 991 S.W.2d 440, 447 (Tex.App.–               [Warner Alan] under [the contract], but shall entitle [Warner
Fort Worth 1999, pet. denied) (stating that repudiation              Alan] to terminate [the contract], [and] receive a refund of
“consists of words or actions by a contracting party that            the Escrow Deposit”—allowed Warner Alan to avoid any
indicate he is not going to perform his contract in the              obligation under the contract by simply failing to seek the
future”). Appellees' pleadings indicate that they “remain            lender's approval of the loan assumption, Paciwest reads this
ready, willing and able to pay the purchase price, [and] any         single sentence of section 4.4 out of context. The beginning
prepayment penalty, and will perform any other obligations           of the provision obligates Warner Alan to,
they have.” Moreover, they presented summary judgment
                                                                                 [w]ithin five (5) business days after
evidence *573 that they were ready, able, and willing
                                                                                 [its] receipt of Lender's list of
to perform these obligations, including paying the entire
                                                                                 required information, ... apply to
prepayment penalty, 6 on September 30, 2005. Thus, we                            Lender for its consent to [Warner
conclude and hold that the trial court did not abuse its                         Alan's] acquisition of the Property
discretion by determining, upon the undisputed facts set forth                   pursuant to this Agreement and for
in the summary judgment record, that specific performance                        permission to assume the Note, and
is an appropriate remedy for appellees. See Longfellow v.                        thereafter [to] diligently seek to obtain
Racetrac Petroleum, Inc., No. 02–06–00124–CV, 2008 WL                            Lender's approval of such application.
2404233, at *2–3, 5 (Tex.App.–Fort Worth June 12, 2008,                          [Emphasis added.]
pet. denied) (mem.op.).
                                                                     Thus, even the provision pointed to by Paciwest, when
                                                                     read in its entirety, shows that both parties were mutually
c. Validity and Enforceability of Original Contract                  obligated under the contract, regardless of the termination
 [25]     Paciwest additionally contends that the original           rights available to Warner Alan. We conclude and hold that
contract is neither valid nor enforceable because it is not          the summary judgment record shows that the contract, as
supported by consideration and lacks mutuality of obligation.        initially entered into and as amended, was supported by
Specifically, Paciwest claims that the contract obligates            adequate consideration. See Alex Sheshunoff Mgmt. Svcs., Inc.
Warner Alan to purchase the property only if it receives the         v. Johnson, 209 S.W.3d 644, 658 (Tex.2006).
lender's approval of the loan assumption but that it is not under
any obligation to seek such approval and that it could simply        We overrule Paciwest's first issue.
terminate by failing to seek such approval. Thus, according to
Paciwest, it had the obligation to sell the property at all times,
but Warner Alan never had the obligation to purchase it.             d. Whether Trial Court Should Have Granted Paciwest's
                                                                     Motion
Paciwest's argument fails to take into account the evidence           *574 Paciwest's second issue incorporates the arguments
showing that it had agreed to amend the contract to provide          in its first issue that Westcliff is not entitled to specific
that Warner Alan would pay off Paciwest's loan at closing;           performance of the contract. However, it also argues that
upon that agreement, Warner Alan was obligated to fund               if this court does hold that the trial court did not err by
the purchase price at closing if it failed to terminate during       determining that Westcliff is entitled to specific performance,
the bargained-for inspection period. Moreover, numerous              there are nevertheless fact issues precluding summary
contract provisions bind both Warner Alan and Paciwest.              judgment. Specifically, it contends that there are fact issues



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             12
Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


concerning “whether any agreement existed as to the different
terms or modifications alleged by Warner Alan and accepted              That the matters to which Dr. Voorvaart was designated to
by the Trial Court.” However, Paciwest cites no other                   testify are directed at these additional damages;
evidence that was not already discussed in its first issue, and
                                                                        That [Paciwest's] [o]bjections are well taken and should
we discern no fact issues precluding the trial court's grant
                                                                        be SUSTAINED, that Dr. Voorvaart's opinions should
of summary judgment in appellees' favor. Thus, we overrule
                                                                        be STRICKEN, and that [appellees] should be prohibited
Paciwest's second issue.
                                                                        from presenting the testimony and opinions of Dr.
                                                                        Voorvaart at the time of trial. It is therefore,

                         Cross–Appeal                                   ORDERED, ADJUDGED, and DECREED that
                                                                        [Paciwest's] Objections and Supplemental Objections to
In a single issue on cross-appeal, appellees challenge the trial        Reliability and Foundation of Opinions of Dr. Frank
court's ruling that the only relief to which they are entitled is       Voorvaart are SUSTAINED, Dr. Voorvaart's opinions are
specific performance.                                                   hereby STRICKEN, and that [appellees] are prohibited
                                                                        from presenting any of the Dr. Voorvaart's testimony and
This ruling occurred as a result of Paciwest's Robinson                 opinions at trial.
challenge to appellees' damages expert. The trial court held
a hearing on Paciwest's objections on May 17, 2007. At the            Although Paciwest contends that the trial court could have
hearing, the trial court specifically directed the parties to brief   based its ruling on its other objections to Dr. Voorvaart's
whether appellees were entitled to additional damages having          testimony, construing the trial court's order as a whole to
elected to seek, and having obtained, specific performance.           give effect to all provisions, we conclude that the trial court's
                                                                      ruling was based solely on its conclusion that damages were
After taking the issue under advisement, on June 18, 2007,            no longer available to appellees after they had already elected
the trial court sent the parties a letter stating that                to seek, and had obtained, specific performance as a remedy.
                                                                      See Shanks v. Treadway, 110 S.W.3d 444, 447 (Tex.2003).
             [i]t appears that Texas law favors                       Thus, we will *575 confine our analysis to the trial court's
             [Paciwest's] Objections to Reliability                   specific ruling. 7
             and Foundation of Opinions of
             Dr. Frank Voorvaart. I agree with                         [26]      [27]     [28]     The general rule is that damages
             [Paciwest] that [appellees'] remedies                    constitute an alternative remedy available only when specific
             are limited to those allowed by the                      performance either is not sought or is not available. Foust
             terms of the contract and there is                       v. Hanson, 612 S.W.2d 251, 253 (Tex.Civ.App.–Beaumont
             no contractual foundation for Dr.                        1981, no writ); see Heritage Housing Corp. v. Ferguson,
             Voorvaart's damage opinions because                      674 S.W.2d 363, 365 (Tex.App.–Dallas 1984, writ ref'd
             [appellees] sought and obtained                          n.r.e.). But in appropriate circumstances, the court may order,
             summary judgment for specific                            in addition to specific performance, payment of expenses
             performance.                                             incurred by plaintiffs as a result of a defendant's late
                                                                      performance. Heritage Housing Corp., 674 S.W.2d at 365–
The trial court's order incorporating this ruling, dated June 26,
                                                                      66; Foust, 612 S.W.2d at 253–54. This compensation is not
2007, states that appellees,
                                                                      considered breach of contract damages, but rather “equalizes
  having sought and obtained a summary judgment for                   any losses occasioned by the delay by offsetting them with
  specific performance, have elected specific performance as          money payments.” Heritage Housing Corp., 674 S.W.2d at
  their remedy;                                                       366. Thus, for example, a purchaser may recover the rental
                                                                      value of property from the time of its demand for performance
  Thus, the law and relevant contract provisions do not               and tender of the purchase price. Id.
  provide for the recovery of the additional damages sought
  by [appellees] in this case;                                        Here, appellees pled for, among other things, lost rental,
                                                                      increased construction costs, and an increased interest rate on
                                                                      their third party financing as a result of Paciwest's delay in



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Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559 (2008)


                                                                     judgment rulings in favor of appellees. Having sustained
performing its obligations under the contract. Because post-
                                                                     appellees' sole issue in their cross-appeal, however, we
closing damages such as these are not in the nature of benefit
                                                                     reverse that part of the trial court's judgment barring appellees
of the bargain damages, but rather an accounting between the
                                                                     from recovering damages attributable to Paciwest's delay in
parties pending performance of the contract, we conclude and
                                                                     performing the contract. We remand that part of the case to
hold that the trial court erred by determining that appellees
                                                                     the trial court for consideration of Paciwest's other objections
were precluded from seeking and presenting evidence as to
                                                                     to the testimony of appellees' damages expert and for further
these types of damages at trial.
                                                                     proceedings as to those alleged damages consistent with this
                                                                     opinion.
We sustain appellees' sole issue in their cross-appeal.


                                                                     All Citations
                         Conclusion
                                                                     266 S.W.3d 559
Having overruled Paciwest's three issues, we affirm the
part of the trial court's judgment incorporating its summary


Footnotes
1      Warner Alan assigned its rights and duties as purchaser under the contract to Westcliff sometime in September 2005.
       The assignment document does not show the exact date the assignment occurred.
2      See River E. Plaza, L.L.C. v. Variable Annuity Life Ins. Co., 498 F.3d 718, 719, 721 (7th Cir.2007); George Lefcoe, Yield
       Maintenance and Defeasance: Two Distinct Paths to Commercial Mortgage Prepayment, 28 Real Est. L.J. 202, 202–
       03 (2000).
3      Paciwest contends that any agreement the parties did come to was indefinite because Warner Alan did not specifically
       agree in writing to pay the prepayment penalty. However, Warner Alan's letter indicating that it chose to seek third party
       financing did not indicate that it would not pay any prepayment penalty, nor did it attempt to change the terms of Nguyen's
       offer in any way. Cf. Cessna Aircraft Co. v. Aircraft Network, L.L.C., 213 S.W.3d 455, 465–466 (Tex.App.–Dallas 2006,
       pets. denied) (“An acceptance must be identical to the offer, or there is no binding contract.”); Harris v. Balderas, 27
       S.W.3d 71, 77 (Tex.App.–San Antonio 2000, pet. denied) (“If the purported acceptance contains terms that materially
       change the offer, the acceptance is actually a rejection and counter-offer.”). Additionally, by failing to pay the assumption
       fees, Warner Alan indicated its acceptance of Nguyen's offer on the terms outlined in his letter, which include the payment
       of any prepayment penalty. See United Concrete Pipe Corp. v. Spin–Line Co., 430 S.W.2d 360, 364 (Tex.1968) (holding
       that performance may be valid acceptance).
4      See also Rus–Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921, 927 (Tex.App.–Tyler 2007, no pet.); 17090 Parkway, Ltd.
       v. McDavid, 80 S.W.3d 252, 258 (Tex.App.–Dallas 2002, pet. denied); Wilson v. Klein, 715 S.W.2d 814, 822 (Tex.App.–
       Austin 1986, writ ref'd n.r.e.).
5      This case is thus distinguishable from Riley v. Powell, in which this court held that actual tender was required when the
       seller decided not to close after reviewing closing documents drafted by the purchaser, a real estate broker who also
       represented the seller. 665 S.W.2d 578, 580–81 (Tex.App.–Fort Worth 1984, writ ref'd n.r.e.).
6      Neill averred in his affidavit that additional funds were available at closing to supplement the $250,000 paid toward the
       prepayment penalty.
7      Accordingly, appellees were not required to make an offer of proof to preserve this argument, as Paciwest contends.
       See Echols v. Wells, 510 S.W.2d 916, 919 (Tex.1974); Lewis v. Lewis, 853 S.W.2d 850, 852 (Tex.App.–Houston [14th
       Dist.] 1993, no writ).


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               14
Parson v. Wolfe, 676 S.W.2d 689 (1984)


                                                                                   Equitable conversion is that change in nature
                                                                                   of property by which, for certain purposes,
     KeyCite Yellow Flag - Negative Treatment                                      realty is considered as personalty and personalty
Distinguished by Cherukula v. Spradling,      Tex.App.-Austin,   April 14,
                                                                                   is considered as realty, and property is
2006
                                                                                   transmissible as so considered.
                      676 S.W.2d 689
                  Court of Appeals of Texas,                                       1 Cases that cite this headnote
                          Amarillo.
                                                                             [2]   Equitable Conversion
              Mellane A. PARSON, Appellant,                                            In general; nature and grounds of doctrine
                            v.
                                                                                   The doctrine of equitable conversion is grounded
               Jamie R. WOLFE, Appellee.
                                                                                   on maxim that equity regards as done that which
                                                                                   in fairness and good conscience should be done.
        No. 07–83–0020–CV.               |    Aug. 30, 1984.
                                                                                   Cases that cite this headnote
The sister of a woman who had died intestate before a contract
for the sale of real estate of which she was part owner could be
closed, claimed that she inherited one-half of the decedent's                [3]   Equitable Conversion
interest in the land and was entitled to the proceeds from                             Conveyances and Contracts
that interest. The decedent's husband claimed that, under the                      Equitable Conversion
doctrine of equitable conversion, the land was to be treated                           Directions in Will
as personalty and he was thus entitled to all proceeds from
                                                                                   Equitable conversion may occur by will or by
his wife's interest. The 110th Judicial District Court, Floyd
                                                                                   contract.
County, George W. Miller, J., rendered judgment favorable to
the husband as heir of personalty, and the sister appealed. The                    Cases that cite this headnote
Court of Appeals, Countiss, J., held that: (1) a four-corners
reading of the contract led to the conclusion that a liquidated
damages clause was intended as the measure of the time that                  [4]   Equitable Conversion
was reasonable for the buyer's performance, and not as a                               Directions in Will
condition that, if unfulfilled, would bar specific performance;                    In testamentary situations, doctrine of equitable
(2) since sellers had the option to require performance or                         conversion is used to carry out intent of testator
accept liquidated damages upon the purchaser's default, the                        who directs that certain realty be sold or
contract was capable of enforcement by specific performance                        purchased.
by either party; and (3) the doctrine of equitable conversion
                                                                                   2 Cases that cite this headnote
was applicable and the decedent's interest in the land was to
be treated as personal property which passed to her husband
upon her death under the laws of descent and distribution.                   [5]   Equitable Conversion
                                                                                       Conveyances and Contracts
Affirmed.                                                                          In equitable conversion by contract, doctrine is
                                                                                   used to decide status of parties' interests during
                                                                                   period between execution of contract of sale and
 West Headnotes (11)                                                               actual transfer of legal title.

                                                                                   2 Cases that cite this headnote
 [1]      Equitable Conversion
              Realty into personalty in general                              [6]   Equitable Conversion
          Equitable Conversion                                                         Conveyances and Contracts
              Personalty into realty                                               When there is equitable conversion by contract,
                                                                                   purchaser of land is regarded in equity as owner



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                    1
Parson v. Wolfe, 676 S.W.2d 689 (1984)


        of land and debtor for purchase money, and                   thus, there was no lack of mutuality of remedies
        vendor is secured creditor having legal position             to bar specific enforcement by either party, and
        not unlike that of mortgagee.                                proceeds resulting from such enforcement were
                                                                     subject to equitable conversion.
        1 Cases that cite this headnote
                                                                     1 Cases that cite this headnote

 [7]    Equitable Conversion
            Conveyances and Contracts                        [11]    Equitable Conversion
        Pivotal question, when determining whether                       Conveyances and Contracts
        equitable conversion by contract has occurred, is            Doctrine of equitable conversion was applicable
        whether contract is specifically enforceable.                where one of owners of real estate under contract
                                                                     to be sold died intestate before the contract
        Cases that cite this headnote                                could be closed and contract was specifically
                                                                     enforceable; thus, decedent's interest in land
 [8]    Contracts                                                    was to be treated as personal property and
            Conditions Precedent in General                          passed to her husband under laws of descent
                                                                     and distribution. V.A.T.S. Probate Code, § 38(b),
        Whether condition precedent exists             is
                                                                     par. 2.
        determined from reading of entire contract.
                                                                     1 Cases that cite this headnote
        Cases that cite this headnote


 [9]    Specific Performance
            Contracts subject to conditions                 Attorneys and Law Firms
        Four-corners reading of contract containing
        clause stating that it was “contemplated” that       *690 Richard F. Stovall, Stovall & Laney, P.C., Plainview,
        purchaser of real property would obtain loan,       for appellant.
        led to conclusion that clause was intended
                                                            Lucian Morehead, Morehead, Sharp & Tisdel, Plainview, for
        as measure of time that was reasonable for
                                                            appellee.
        buyer's performance, and not as condition that,
        if unfulfilled, would bar specific performance,     Before REYNOLDS, C.J., and COUNTISS and BOYD, JJ.
        where word “contemplated” indicated that
        loan was anticipated and permissible but not        Opinion
        condition precedent, and parties used word
        “agree” when intending to create binding duty;      COUNTISS, Justice.
        thus, the contract was specifically enforceable
                                                            This is an equitable conversion case. Dissatisfied with a
        by either sellers or buyer, and proceeds from
                                                            judgment favorable to the heir of the personalty, the heir of
        sale contracted for were subject to equitable
                                                            one-half of the realty advances two points of trial court error.
        conversion.
                                                            We affirm.
        1 Cases that cite this headnote
                                                            Shawna Wolfe, now deceased, and her sister, appellant
                                                            Mellane A. Parson, contracted on September 17, 1981, to sell
 [10]   Specific Performance                                160 acres of their separate realty in Floyd County to their
            Mutuality of remedy                             paternal uncle. Before the *691 sale could be closed Mrs.
        In contract for sale of real property, option to    Wolfe died, intestate and childless. After her death, the sale
        perform or pay damages belonged to sellers,         was closed and the proceeds in dispute were placed in the
        who had option to require performance or accept     registry of the court.
        liquidated damages upon purchaser's default
        in accordance with liquidated damages clause;


              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        2
Parson v. Wolfe, 676 S.W.2d 689 (1984)


The dispute is between Mrs. Wolfe's surviving husband,                 [6] [7] When there is an equitable conversion by contract,
appellee Jamie R. Wolfe, and her sister, Mrs. Parson, her only        the purchaser of land is regarded in equity as owner of
heirs at law. Mrs. Parson says she inherited one-half of Mrs.         the land and debtor for the purchase money, and the
Wolfe's interest in the land when Mrs. Wolfe died and she             vendor is a secured creditor “having a legal position not
is entitled to the proceeds from that interest. Mr. Wolfe says        unlike that of a mortgagee.” Simpson, supra at 559. As
the land must be treated as personalty, under the doctrine of         indicated *692 by the quotation in marginal note 2, the
equitable conversion, and he is entitled to all proceeds from         pivotal question, when determining whether an equitable
Mrs. Wolfe's interest. 1 Thus, the single issue raised by Mrs.        conversion by contract has occurred, is whether the contract
Parson's points of error is whether the doctrine of equitable         is specifically enforceable. Accord, Sanderson v. Sanderson,
conversion is applicable. If it is, Mrs. Wolfe's interest in the      supra; Guzman v. Acuna, supra; Willie v. Waggoner, 181
land is to be treated as personalty under the laws of descent         S.W.2d 319, 322 (Tex.Civ.App.—Austin 1944, writ ref'd).
and distribution and it belongs to Mr. Wolfe.
                                                           In this case, the contract is properly executed and contains
 [1] [2] [3] [4] [5] Equitable conversion is generally     all of the provisions necessary in order for it to be binding
defined as that change in the nature of property by which, on, and specifically enforceable by, either the sellers or the
for certain purposes, realty is considered as personalty   buyer. Mrs. Parson advances two arguments to the contrary,
or personalty is considered as realty, and the property is however. First, she points to the following provision in the
transmissible as so considered. Toledo Soc. for Crippled   contract:
Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692, 698
                                                                                  It being contemplated that Purchaser
(1953); Sanderson v. Sanderson, 130 Tex. 264, 109 S.W.2d
                                                                                  will obtain a loan upon the
744, 748 (1937). The doctrine, developed in the English
                                                                                  security of the real property above
Court of Chancery over three hundred years ago, is grounded
                                                                                  described to provide a part of the
on the maxim that equity regards as done that which in
                                                                                  consideration hereinabove provided
fairness and good conscience should be done. Lampman v.
                                                                                  for, the reasonable time hereinafter
Sledge, 502 S.W.2d 957, 959 (Tex.Civ.App.—Waco 1973,
                                                                                  accorded Purchaser for performance
writ ref'd n.r.e.); Simpson, Legislative Changes in the Law
                                                                                  of the obligation required of him by
of Equitable Conversion by Contract, 44 Yale L.J. 559,
                                                                                  this Contract shall include a reasonable
560 (1935). Equitable conversion may occur by will or by
                                                                                  time for processing and consummation
contract. Simpson, supra, at 561; see Toledo Soc., supra.
                                                                                  of such loan.
In testamentary situations, the doctrine is used to carry out
the intent of the testator who directs that certain realty            That provision, she says, was a condition precedent
be sold or purchased. Boulware v. Sinclair Prairie Oil                unfulfilled when Mrs. Wolfe died; thus specific performance
Co., 219 S.W.2d 536, 538 (Tex.Civ.App.—Beaumont 1949,                 was not a viable option at the critical time.
writ ref'd); Simmons v. O'Connor, 149 S.W.2d 1107, 1113
(Tex.Civ.App.—Fort Worth 1941, writ dism'd judgmt cor.).               [8] [9] Whether a condition precedent exists is determined
See generally 1 H. TIFFANY, REAL PROPERTY §§ 297–98                   from a reading of the entire contract. Hudson v. Wakefield,
(3rd ed. 1939). In equitable conversion by contract, however,         645 S.W.2d 427, 430 (Tex.1983). In this case, the choice
the doctrine is used to decide the status of the parties' interests   of the word “contemplated” indicates that a loan was
during the period between execution of the contract of sale           anticipated, and permissible, but it does not indicate that a
and actual transfer of legal title. See generally TIFFANY,            loan was a condition precedent. See, e.g., Wall v. Ayrshire
supra, §§ 307–310. It is utilized, for example, to allocate           Corp., 352 S.W.2d 496, 500 (Tex.Civ.App.—Houston 1961,
the increase or decrease in value of the property during this         no writ); Zucht v. Stewart Title Guaranty Co., 207 S.W.2d
period, Guzman v. Acuna, 653 S.W.2d 315, 319 (Tex.App.                414, 418 (Tex.Civ.App.—San Antonio 1947, writ dism'd);
—San Antonio 1983, writ dism'd), or, as in this case, to              Newsome v. Brown, 157 S.W. 203, 204 (Tex.Civ.App.—
determine how the realty or personalty passes upon the                Texarkana 1913, no writ). Additionally, we note that the
death of either the vendor or vendee. Toledo Soc., supra;             parties used the word “agree” in other portions of the contract
Lampman, supra; Hardcastle v. Sibley, 107 S.W.2d 432, 437             when intending to create a binding duty. Dauray v. Gaylord,
(Tex.Civ.App.—El Paso 1937, writ ref'd). 2                            402 S.W.2d 948, 950–51 (Tex.Civ.App.—Dallas 1966, writ
                                                                      ref'd n.r.e.). Thus, from a four-corners reading of the contract,


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              3
Parson v. Wolfe, 676 S.W.2d 689 (1984)



we must conclude that the clause was intended as a measure            She argues that, because of this provision, there is no
of the time that was reasonable for the buyer's performance,          mutuality of remedies; therefore the contract cannot be
and not as a condition that, if unfulfilled, would bar specific       specifically enforced. She cites Willie v. Waggoner, 181
performance. Compare with Berman v. Rife, 644 S.W.2d                  S.W.2d 319 (Tex.Civ.App.—Austin 1944, writ ref'd), in
574, 576 (Tex.App.—Fort Worth 1982, writ ref'd n.r.e.);               which it was held there was no equitable conversion because
Lampman, supra; Faulkner v. Otto, 230 S.W. 447, 448                   a liquidated damages provision under the contract made
(Tex.Civ.App.—Amarillo 1921, writ dism'd).                            specific performance impossible. In that case, however, the
                                                                      option to perform or pay damages belonged to the purchaser.
 [10] Mrs. Parson's second argument is grounded on the                Id. at 322. In our case, it belongs to the sellers, who have the
contract's liquidated damages clause, which says:                     option to require performance or accept liquidated damages,
                                                                      upon the purchaser's default. Thus, the contract was capable
            As earnest money for prompt
                                                                      of enforcement by specific performance by either party.
            performance of this Contract on
                                                                      Sanderson, supra; Gala Homes, Inc. v. Fritz, 393 S.W.2d 409,
            his part, Seller [sic] shall deposit
                                                                      411 (Tex.Civ.App.—Waco 1965, writ ref'd n.r.e.).
            in escrow, together with copy of
            this Contract, in First National
                                                                       [11] We conclude that the doctrine of equitable conversion
            Bank, Floydada, Texas, the sum of
                                                                      is applicable to this case, that Mrs. Wolfe's interest in the land
            $5,000.00, and in event that Purchaser
                                                                       *693 is to be treated as personal property and that, upon her
            shall fail or refuse, upon tender of
                                                                      death, it passed to her husband under the laws of descent and
            performance by Sellers, to carry out
                                                                      distribution. Points of error one and two are overruled.
            and perform the terms of this Contract,
            Sellers may, at their election, declare
                                                                      The judgment is affirmed.
            this Contract terminated, whereupon
            such sum of $5,000.00 shall forfeit
            and become the absolute property
                                                                      All Citations
            of Sellers as liquidated damages for
            breach of this Contract.                                  676 S.W.2d 689


Footnotes
1      Descent and distribution in this case is dictated by § 38(b) 2 of the Probate Code, which states:
           2. If the deceased have no child or children, or their descendants, then the surviving husband or wife shall be entitled
           to all the personal estate, and to one-half of the lands of the intestate, without remainder to any person, and the other
           half shall pass and be inherited according to the rules of descent and distribution....
         Tex.Prob.Code Ann. § 38(b)(2) (Vernon 1980).
2      Professor Simpson describes the differences in the two applications as follows:
                      “Equitable conversion by will is wholly a part of the law of wills, descent and distribution; equitable
                      conversion by contract has a wide importance in the law of vendor and purchaser. The former
                      depends upon the intention of the testator; the latter does not depend upon intention, but rather
                      upon rules of law as to consequences of the right to specific performance of a land contract.”
          Simpson, Legislative Changes in the Law of Equitable Conversion by Contract, 44 Yale L.J. 559, 561 n. 10 (1935).


End of Document                                                   © 2015 Thomson Reuters. No claim to original U.S. Government Works.




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Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294



                  2015 WL 5076294                                 West Headnotes (14)
    Only the Westlaw citation is currently available.
              Court of Appeals of Texas,
                 Houston (1st Dist.).                             [1]   Appeal and Error
                                                                           On consent, offer, or admission
                 Sandra Perez, Appellant                                For a judgment to be considered an agreed or
                             v.                                         consent judgment, such that no appeal can be
                 Brian Williams, Appellee                               taken from it, either the body of the judgment
                                                                        itself or the record must indicate that the
                NO. 01–14–00504–CV |                                    parties came to some agreement as to the case's
              Opinion issued August 27, 2015                            disposition; simple approval of the form and
                                                                        substance of the judgment does not suffice.
Synopsis
Background: Father filed petition in a Suit Affecting the               Cases that cite this headnote
Parent-Child Relationship (SAPCR), seeking to be named
sole managing conservator of child and asking that mother be
                                                                  [2]   Appeal and Error
ordered to pay child support. Mother counter-petitioned for
                                                                           On consent, offer, or admission
divorce, alleging she had an informal marriage with father.
The 257th District Court, Harris County, entered summary                Each party must explicitly and unmistakably
judgment finding that no informal marriage existed and,                 give its consent for a consent judgment to
after bench trial, named mother and father joint managing               be valid consent judgment, as would preclude
conservators and granted father exclusive right to designate            appeal.
child's primary residence. Mother appealed.
                                                                        Cases that cite this headnote


                                                                  [3]   Divorce
Holdings: The Court of Appeals, Evelyn V. Keyes, J., held
                                                                            Presumptions
that:
                                                                        Court of Appeals would presume that trial court
[1] trial court acted within its discretion in denying mother's         did not consider mother's response to father's
motion to substitute legal counsel;                                     motion for summary judgment as to issue of
                                                                        whether mother and father had an informal
[2] trial court was not required to take judicial notice                marriage, in mother's divorce claim alleging
of motions and written agreements which were filed in                   such a marriage existed, where mother filed
connection with father's separate custody dispute with his ex-          response the day before summary judgment
wife;                                                                   hearing, making response untimely, and nothing
                                                                        in record indicated that trial court granted leave
[3] trial court acted within its discretion in excluding                for mother to file her response late. Tex. R. Civ.
photographs depicting bruises that mother alleged she                   P. 166a(c).
received from father; and
                                                                        Cases that cite this headnote

[4] trial court acted within its discretion in awarding primary
conservatorship rights to father.                                 [4]   Child Custody
                                                                            Hearing
                                                                        Trial court acted within its discretion in denying
Affirmed.
                                                                        mother's motion to substitute legal counsel in
                                                                        child custody proceeding, where motion was
                                                                        made orally, mother did not file written motion




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Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

        or notice to court and other parties, and motion
        was made mid-trial. Tex. R. Civ. P. 8, 10.             [9]    Child Custody
                                                                          Discovery
        Cases that cite this headnote                                 Trial court acted within its discretion in
                                                                      excluding photographs depicting bruises that
 [5]    Appeal and Error                                              mother alleged she received from father,
             Allowance of remedy and matters of                       in child custody dispute between mother
        procedure in general                                          and father, where mother did not produce
                                                                      photographs during discovery, and mother
        Appellate court reviews a trial court's decision to
                                                                      offered no explanation for this failure. Tex. R.
        grant or deny a motion to substitute counsel for
                                                                      Civ. P. 193.6(a), 193.6(b).
        an abuse of discretion. Tex. R. Civ. P. 8, 10.
                                                                      Cases that cite this headnote
        Cases that cite this headnote

                                                               [10]   Child Custody
 [6]    Evidence
                                                                          Discovery
             Mode of ascertaining facts required to be
        noticed; motions and notice of reliance                       Trial court acted within its discretion in
                                                                      precluding mother from questioning father as
        Trial court was not required to take judicial
                                                                      to whether father had seen a psychologist, in
        notice of motions and written agreements which
                                                                      custody dispute between mother and father in
        were filed in connection with father's separate
                                                                      which father acknowledged that, as part of his
        custody dispute with his ex-wife and which were
                                                                      agreement with ex-wife regarding custody of
        proffered by mother in custody dispute between
                                                                      father and ex-wife's children, father was to
        mother and father regarding mother and father's
                                                                      take children to assessments with psychologist;
        child, where mother did not provide trial court
                                                                      mother did not make offer of proof or establish
        with certified copies of the documents at time she
                                                                      that testimony was material to custody issues
        requested that court take judicial notice. Tex. R.
                                                                      regarding mother and father's child.
        Evid. 201(b), 201(c)(2).
                                                                      Cases that cite this headnote
        Cases that cite this headnote

                                                               [11]   Divorce
 [7]    Evidence
                                                                          Pleadings
            Proceedings in other courts
                                                                      Issue of whether a gift existed from father to
        A court will take judicial notice of another court's
                                                                      mother for a particular vehicle was not tried by
        records if a party provides proof of the records.
                                                                      consent, in mother's petition for divorce alleging
        Tex. R. Evid. 201(b).
                                                                      that mother and father had an informal marriage,
        Cases that cite this headnote                                 where, at bench trial, father objected to mother's
                                                                      testimony about purported gift on ground that
                                                                      mother had not sought an adjudication of her
 [8]    Evidence                                                      entitlement to the vehicle in any of her pleadings.
            Proceedings in other courts
        The contents of an unauthenticated or uncertified             Cases that cite this headnote
        record from another court are not the type of
        evidence of which the court can take judicial          [12]   Child Custody
        notice. Tex. R. Evid. 201(b).                                     Primary caregiver
        Cases that cite this headnote                                 Trial court acted within its discretion in
                                                                      awarding primary conservatorship rights for
                                                                      child to father, where father testified he had



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                          2
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

        regular employment, stable housing, and reliable        Perez and Williams also have a minor child, E.A.W., over
        transportation, that he had been child's primary        whom both parents sought custody. The trial court ruled, via
        caregiver since she was born and that he had            Williams's motion for summary judgment, that no informal
        been her exclusive caregiver for approximately          marriage existed. Following a bench trial, the trial court
        a year, that mother had become violent with             named Perez and Williams joint managing conservators of
        father or one of mother's children on numerous          E.AW. and granted Williams the exclusive right to designate
        occasions, and that mother had advertised on            E.A.W.'s primary residence.
        adult entertainment websites, and mother did not
        contradict this evidence.                               In seven issues, Perez argues that the trial court erred:
                                                                (1) in granting Williams's motion for summary judgment
        Cases that cite this headnote                           determining that no informal marriage existed; (2) in denying
                                                                her mid-trial motion to substitute legal counsel; (3) in refusing
 [13]   Child Custody                                           to take judicial notice of copies of court documents filed
            Discretion                                          in judicial proceedings related to Williams's custody dispute
                                                                over his three children from a previous relationship; (4) in
        Trial courts have wide discretion to determine a
                                                                refusing to award her a vehicle that she asserts was a gift
        child's best interest, including issues of custody,
                                                                from Williams; (5) in sustaining Williams's objection to four
        control, possession, and visitation.
                                                                photographs that she sought to admit into evidence; (6) in
        Cases that cite this headnote                           sustaining Williams's objection to her questioning regarding
                                                                whether he had seen a psychologist; and (7) in “failing to
                                                                award [her] primary conservatorship rights” to E.AW. or,
 [14]   Child Custody
                                                                alternatively, in failing to award her visitation pursuant to a
            Questions of Fact and Findings of Court
                                                                standard possession order.
        Appellate court will reverse a trial court's
        determination of conservatorship only if a review       We affirm.
        of the entire record reveals that the trial court's
        decision was arbitrary or unreasonable.

        Cases that cite this headnote                                                    Background

                                                                Perez and Williams began living together in May 2010.
                                                                At that time, Perez was still married to Miguel Perez,
                                                                and Williams had divorced his ex-wife, Devinah Finn, in
On Appeal from the 257th District Court, Harris County,
                                                                2009. Both Perez and Williams had children from previous
Texas, Trial Court Case No. 2013–05419
                                                                relationships. Perez's divorce from her previous husband
Attorneys and Law Firms                                         became final on November 3, 2010. E.A.W., the child of
                                                                Perez and Williams, was bom on October 12, 2011.
David T. Altenbern, Altenbern & Associates, P.L.L.C.,
Houston, TX, for appellant.                                     On January 29, 2013, Williams filed his original petition in
                                                                a Suit Affecting the Parent–Child Relationship (“SAPCR”)
Janice L. Berg, Daniel J. Lemkuil, Houston, TX, for appellee.   seeking to be named sole managing conservator of E.A.W.
                                                                and asking that Perez be ordered to pay child support to him.
Panel consists of Justices Keyes, Huddle, and Lloyd.

                                                                On March 1, 2013, Perez filed her original answer and
                                                                counter-petition for divorce, alleging that an informal
                         OPINION
                                                                marriage existed between Williams and herself and seeking a
Evelyn V. Keyes, Justice                                        disproportionate division of the resulting community estate.
                                                                She alleged that she and Williams “were married on or about
 *1 Appellant, Sandra Perez, alleged that she had a common-     June 2010 and have ceased to live together as man and wife”
law, or informal, marriage with appellee, Brian Williams.



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Perez v. Williams, --- S.W.3d ---- (2015)
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and that they were the parents of E.A.W. She also sought to        Williams testified that he had been E.A.W.'s primary
be named E.A.W.'s sole managing conservator.                       caregiver, had taken her to her doctor's appointments, and
                                                                   had provided for her basic care and support. He stated that
On October 7, 2013, Williams moved for partial traditional         he had had exclusive care of E.A.W. since September 2013,
and no-evidence summary judgment asserting that no genuine         when Perez moved out of his house, “but even for the year-
issue of material fact existed as to whether he should be          and-a-half prior to that she was an absentee, inactive mother.”
adjudicated the father of E.A.W. Williams also asserted            Williams testified that Perez was “active during breastfeeding
traditional and no-evidence grounds for summary judgment           for a little bit and would be there, you know, a couple of
on the issue of informal marriage.                                 hours during the evenings, but she would run off to work and
                                                                   come back late at night.” He testified that he was the one who
On December 4, 2013, Perez filed her “Original Answer to           changed E.A.W.'s diapers, prepared her meals, and provided
Partial Traditional and No–Evidence Summary Judgment.”             other care.
She argued that both she and Williams were married to
other people when they first started their relationship, they      Regarding his relationship with Perez, Williams testified that
both divorced their respective spouses in 2010, they began         he invited her and her two teenaged sons to move in with
cohabitating on May 3, 2010, and E.A.W. was born on                him in spring 2010. He testified that Perez's oldest child, who
October 12, 2011. Perez argued that a fact question existed        was eighteen at the time of the trial, had been physically
as to whether the parties were informally married beginning        violent toward him on multiple occasions and ultimately “had
in January 2011, after her divorce from Perez was finalized.       to leave the house” in the fall of 2012. Williams also stated
She supported her response with her own affidavit, her 2010        that Perez had hit, pushed, or shoved him on “numerous
divorce decree, E.A.W.'s birth certificate listing Williams as     occasions.” He testified that he never sustained any injuries
the father, a copy of a document in which Williams listed her      requiring hospitalization because he was much larger than
as his “relative for contact purposes,” copies of greeting cards   Perez, but she was frequently violent. He testified specifically
calling her “wife,” and photographs of her “wedding rings.”        about an incident in December 2010 in which Perez “came at
                                                                   [him] with a knife” which resulted in a call to the police and
 *2 On December 5, 2013, the day after Perez filed her             in Perez being charged with deadly conduct. He also testified
response, the trial court held the summary judgment hearing.       about an incident that occurred on Christmas Eve of 2012.
On December 13, 2013, “[a]fter considering the motion              Perez “became very violent in front of my three older kids, ...
and evidence submitted,” the trial court granted Williams's        picked up a Christmas tree, threw it over. Started punching
motion for partial summary judgment. It adjudicated                and punching me as I stood between her and [E.A.W.] as
Williams to be E.A.W.'s father, stated that Williams and Perez     she was threatening to run out of the house with the baby.”
“are found and declared not to be married,” and dismissed the      Williams stated that, at that point, he decided to ask Perez to
issues of marriage and division of community property from         leave his house and to file the underlying lawsuit. Williams
the suit.                                                          testified that he had never hit Perez or hurt her. However, she
                                                                   had threatened to “make those allegations against him” and
The parties tried the remaining issues of conservatorship of       to “hurt herself and blame it on [Williams]” and had followed
E.A.W., visitation, and child support to the bench on February     through on those threats.
6, 2014, and, following a continuance to address problems
with the translator, on March 28, 2014. On February 6, 2014,       Williams testified that he filed the present suit one month after
Perez was represented by attorneys Mark Lipkin and Diane           the Christmas Eve incident, in January 2013. He also asked
Perez. Williams, who was likewise represented by counsel,          Perez to leave his home multiple times, but she kept returning
testified that he had three children with his ex-wife, Finn, and   periodically. He eventually changed the locks in September
one child, E.A.W., with Perez. He had earned an MBA from           2013. He also testified that he provided Perez with money to
Harvard Business School and worked as an investment banker         use toward a deposit on an apartment so that she would have
until “early 2013” when he started his own oil-field service       somewhere else to go.
business so that he would have more time to spend with his
family.                                                             *3 Regarding Perez's relationship with E.A.W., Williams
                                                                   testified that he believed Perez loved E.A.W. However, he
                                                                   had also observed Perez “smack the baby in the face” for



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Perez v. Williams, --- S.W.3d ---- (2015)
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being “too fussy” and because Perez believed the child had “to    would not let her see her daughter. Perez testified regarding
learn to respect [Perez].” He stated that Perez had threatened    an incident that had happened the day after Williams changed
to take the baby to live in the Dominican Republic, where         the locks in September 2013, when she “went with the police”
Perez was born and where she still had family members             but was refused entry by the neighborhood security.
residing. He also testified about an occasion when Perez
became violent with one of her sons from her previous             The trial on the merits was then recessed “[b]ecause of
relationship, and he introduced an audio recording supporting     translator problems.” Trial resumed on March 28, 2014.
his testimony.                                                    Attorney David Altenbern appeared on Perez's behalf, along
                                                                  with her attorneys from the first day of trial, Lipkin and Diane
Williams also testified regarding Perez's employment.             Perez. On the record in open court, Altenbern asked the trial
Williams purchased a hair salon for Perez, and she operated       court to grant Perez's motion to substitute him as her lead
it from “early 2010” on for the next several years. Perez         counsel. Williams's counsel objected on multiple grounds,
told Williams that she “rent[ed] out rooms in the back where      including that he had not been served with notice of the
people would provide massages and sexual services” and that       motion, and the trial court ultimately denied Perez's request
she “was selling stolen items, clothing and other items in a      to substitute Altenbern as lead counsel but allowed him to
little boutique she built in one of the massage rooms.” He        appear as co-counsel.
also testified that Perez had indicated that drug deals had
occurred at her salon on two occasions. Williams introduced        *4 Perez then continued her testimony with her attorney,
copies of internet advertisements for massage services and        Lipkin, questioning her. Perez testified that she had no history
“adult entertainment” showing Perez in revealing clothing.        of psychiatric treatment, no criminal history, and no history
Williams testified that he discovered the advertisements in       of substance abuse or illegal drug use. Perez also testified that
May 2013 by searching phone numbers from Perez's cell             there were no restrictions on her custody or visitation with
phone after he became “increasingly concerned by [Perez's]        her other minor child—her son from her previous relationship
behavior and complete absence from [E.A.W.'s] life....” The       —and that she believed she had “always taken care of [her]
trial court also admitted Perez's “entertainer license” issued    children.” She also stated that if she were awarded custody of
by “HPD Vice Division,” which Perez had told Williams she         E.A.W., she would be able to provide for her care, that she
needed to work in adult entertainment. Williams testified that    would abide by the trial court's visitation orders, and that she
he knew Perez was involved on the “periphery” of sexually-        would allow Williams access to the child.
oriented business, but he did not know that she herself was
involved in it until after he filed the underlying suit.          Perez testified that Williams had been violent with her
                                                                  on numerous occasions. She testified that, in one instance,
Perez testified at trial that her relationship with Williams      Williams struck her on the arm, and she offered into evidence
started out well, but problems began to arise around the time     photographs “of what happened on that day,” but the trial
she got pregnant with E.A.W. Perez stated that Williams           court refused to admit them into evidence after Williams
“never wanted the child” and encouraged her to get an             objected on the basis that Perez had not produced the
abortion. Perez also testified regarding her employment. She      photographs during discovery. Perez further acknowledged
stated that she still owned the salon and that she knew at one    that Williams had never been arrested based on her allegations
point a “young lady ... was doing massages to lose weight”        of violence. She acknowledged that she had been arrested, but
at her salon, which Perez believed was illegal because the        not convicted, for attacking Williams.
woman did not have a license. Perez testified that she asked
the woman to leave.                                               Perez testified that she had last seen Williams's three children
                                                                  with Finn on December 24, 2012. She also testified that
Perez testified that when she left Williams's home she took       Williams had told her that he had supervised visitation with
the Range Rover that he had given her to drive. She drove the     his three children and that he had to see a psychologist. On
vehicle until Williams eventually sent police to recover it, at   cross-examination, she conceded that she had not seen any
which time she returned it to Williams's residence.               court orders from his custody dispute with Finn and that
                                                                  Williams told her that the visitation and family counseling
Perez further stated that she attempted to visit E.A.W. “many     arrangements were part of an agreement he had reached with
times” after Williams locked her out of his home, but he          Finn. Perez admitted that she had met with Finn and Finn's



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Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

lawyers and that Finn's lawyers had offered her “money in this       In her first issue, Perez argues that the trial court erred
case to prolong it to affect that case” but she did not accept it.   in granting summary judgment on the issue of informal
                                                                     marriage. Williams argues that the trial court did not err
Perez asked the trial court to take judicial notice of two           in granting summary judgment on this issue. Among other
motions and a Rule 11 Agreement filed in Williams's custody          grounds, Williams asserts that the trial court properly granted
proceeding regarding his three children with Finn. Williams          his no-evidence motion for summary judgment on this issue
objected on multiple grounds, including that Perez had not           because Perez failed to file a timely response.
provided certified copies of the documents to the trial court
in making her request, and the trial court sustained the
objection. However, the trial court allowed Perez to recall          A. Facts Relevant to Summary Judgment on Informal
                                                                     Marriage
Williams to testify on these issues. 1 Williams testified that
                                                                     Williams moved for summary judgment on October 7,
his visitation with his and Finn's children was governed
                                                                     2013, arguing, in relevant part, that he was entitled to
by his 2009 divorce decree, that he picked his children
                                                                     no-evidence summary judgment on the issue of informal
up at Finn's house pursuant to that decree, that it was
                                                                     marriage because Perez could provide no evidence that they
“incorrect” that his visitation with his children was required
                                                                     had agreed to be married or that they had a reputation
to be supervised, and that he had never been required
                                                                     in the community for being married. One day before the
to pick his children up at a psychologist's office. Perez's
                                                                     hearing on Williams's summary judgment motion, Perez
attorney asked multiple other questions regarding Williams's
                                                                     filed her response and supporting evidence. The record does
custody arrangements with Finn and regarding documents
                                                                     not contain any indication that Perez sought leave to file
filed in that custody dispute, including, “Have you seen
                                                                     her response late or that she sought a continuance of the
a psychologist?” Williams's counsel objected on multiple
                                                                     summary judgment hearing. The trial court stated in its order
bases, and the trial court sustained the objection. However,
                                                                     granting Williams's partial summary judgment motion that it
Williams acknowledged that he entered into a Rule 11
                                                                     considered “the motion and evidence submitted.”
Agreement with Finn, and he briefly described the content
and purpose of that agreement on the record.
                                                                     B. Standard of Review
 [1] [2] On April 25, 2014, the trial court signed its order         The party moving for no-evidence summary judgment must
incorporating the previous summary judgment ruling that              specifically state the elements as to which there is no
Williams was adjudicated to be E.A.W.'s father and that              evidence. SeeTEX. R. CIV. P. 166a(i). The burden then
Williams and Perez were never married. The trial court               shifts to the nonmovant to produce evidence raising a
declared Williams and Perez joint managing conservators              fact issue on the challenged elements. Id. The reviewing
of E.A.W., with Williams receiving the exclusive right to            court must view the evidence in the light most favorable
designate E.A.W.'s primary residence. Perez was granted              to the nonmovant, disregarding all contrary evidence and
periods of visitation that were ordered to increase gradually        inferences. SeeMerrell Dow Pharms., Inc. v. Havner, 953
until her visitation schedule conformed with a standard              S.W.2d 706, 711 (Tex.1997). The trial court must grant the
possession order by April 1, 2015. The trial court also ordered      no-evidence summary judgment unless the respondent brings
Perez to pay Williams child support in the amount of $195.69         forth more than a scintilla of probative evidence to raise a
per month until October 30, 2018, at which time her monthly          genuine issue of material fact. TEX. R. C IV. P. 166a(i);
payments would increase to $223.64. Williams and Perez               seeKing Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751
both signed the order under a heading that provided that it was      (Tex.2003).
approved as to form and substance. 2
                                                                     A trial court need only consider the record as it properly
 *5 Perez filed a motion for new trial complaining of various        appears before it when the motion for summary judgment
trial court rulings before and during trial. The trial court         is heard. Billelo v. Techline Servs., L.P., 372 S.W.3d 232,
denied the motion for new trial and this appeal followed.            235 (Tex.App.–Dallas 2012, no pet.)(citing WTFO, Inc. v.
                                                                     Braithwaite, 899 S.W.2d 709, 721 (Tex.App.–Dallas 1995,
                                                                     no writ)); Marek v. Tomoco Equip. Co., 738 S.W.2d 710,
                                                                     712 (Tex.App.–Houston [14th Dist.] 1987, no writ). The
    Summary Judgment on Informal Marriage Claim
                                                                     nonmovant must file its summary judgment response and


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Perez v. Williams, --- S.W.3d ---- (2015)
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evidence at least seven days before the summary judgment
hearing, unless the nonmovant gets permission to file it later.     Because nothing in the record indicates that the trial court
TEX. R. CIV. P. 166a(c). If the court allows the late filing of     granted leave for Perez to file her response late, we presume
evidence, the court must affirmatively indicate in the record       that the trial court did not consider it, and we likewise do
acceptance of the late filing. SeeBenchmark Bank v. Crowder,        not consider it on appeal. SeeFertic, 247 S.W.3d at 250–51
919 S.W.2d 657, 663 (Tex.1996); Goswami v. Metro. Sav. &            (holding that appellate court would not consider plaintiff's
Loan Ass'n, 751 S.W.2d 487, 490 n. 1 (Tex.1988); WTFO,              motion for partial summary judgment filed in response
Inc., 899 S.W.2d at 721. Absent any indication leave was            to defendant's no-evidence motion for summary judgment
granted, we must presume the trial court did not consider           because, even if it construed plaintiff's motion as response, it
the late-filed evidence. See Fertic v. Spencer, 247 S.W.3d          was not timely filed and court presumed that trial court did
242, 250–51 (Tex.App.–El Paso 2007, pet. denied); see               not consider it); Johnston v. Vilardi, 817 S.W.2d 794, 796
alsoBenchmark Bank, 919 S.W.2d at 663; WTFO, Inc., 899              (Tex.App.–Houston [1st Dist.] 1991, writ denied) (holding
S.W.2d at 721.                                                      that appellant's untimely amended response to motion for
                                                                    summary judgment could not be considered); cf.Carpenter,
 *6 Furthermore, the summary judgment rules afford a party          98 S.W.3d at 687–88 (holding that trial court did not abuse
who did not have adequate time an opportunity to obtain             its discretion in denying motion for leave to file late response
additional time to file a response, either by moving for leave      because party offered no explanation for its failure to timely
to file a late response or by requesting a continuance of           respond).
the summary-judgment hearing. TEX. R. CIV. P. 166a(c);
Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682,            Thus, although Perez argues that genuine issues of material
685 (Tex.2002) (discussing remedies available for summary           fact remain on all elements of her informal marriage claim,
judgment nonmovants who have inadequate time to respond             she failed to demonstrate that the record before the trial court
to summary judgment motion and stating that trial court's           contained any such evidence at the time the court heard
ruling on motions for leave to late-file response or for            Williams's motion for summary judgment. SeeBillelo, 372
continuance of hearing are reviewed for abuse of discretion).       S.W.3d at 235. Accordingly, Perez failed to meet her burden
                                                                    to produce summary judgment evidence raising a genuine
                                                                    issue of material fact on these elements. SeeTEX. R. CIV. P.
C. Analysis                                                         166a(i). We conclude that the trial court did not err in granting
 [3] Williams moved for summary judgment in part on the             summary judgment in favor of Williams on Perez's informal
basis that Perez could present no evidence that they had            marriage claim. See id.
agreed to be married or had represented to others that they
were married. SeeTEX. FAM. CODE ANN. § 2.401(a)(2)                  *7 We overrule Perez's first issue.
(Vernon 2006) (providing that informal marriage exists if
parties (1) agreed to be married, (2) lived together in Texas as
husband and wife after such agreement, and (3) represented
to others that they were married). Thus, the burden shifted                     Motion to Substitute Legal Counsel
to Perez to produce summary judgment evidence raising a
                                                                     [4] In her second issue, Perez argues that the trial court erred
genuine issue of material fact on these elements. SeeTEX.
                                                                    in denying her motion to substitute legal counsel following a
R. CIV. P. 166a(i). Perez filed a response the day before the
                                                                    continuance of the trial on the merits. Perez argues that the
summary judgment hearing; thus, her response was untimely.
                                                                    trial court's denial of her motion to substitute counsel violated
SeeTEX. R. CIV. P. 166a(c). Perez failed to move for leave
                                                                    her fundamental right to counsel of her own choosing.
to late-file her response or for a continuance of the summary
judgment hearing. Perez did not present any explanation,
either at trial or on appeal, for her failure to file a timely      A. Facts Relevant to the Motion to Substitute Legal
response to Williams's motion for summary judgment. Nor             Counsel
does it appear that the trial court considered Perez's late-filed   On the second day of trial, Perez requested that the trial
response—the trial court's partial summary judgment order           court grant her motion to substitute new counsel, Altenbern.
reflected that it considered only “the motion and evidence          However, the trial court stated that it had not received a
submitted” in granting summary judgment on Williams's               motion for substitution and saw only Altenbern's notice of
paternity of E.A.W. and Perez's informal marriage claim.


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               7
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

entry of appearance. Altenbern informed the trial court that      requested to be substituted as lead counsel for Perez in open
the motion to substitute had been electronically filed earlier    court at the beginning of the second day of trial. The trial court
that same day, and he asserted Perez's right to have counsel      stated on the record that it had not received a written motion to
of her choosing represent her at trial.                           substitute, and Williams objected on the basis that he had not
                                                                  received notice of the substitution. The trial court sustained
Williams's counsel opposed the motion to substitute, arguing      this objection and denied Altenbern's request.
that it was “completely a surprise” and a “trial tactic” to
attempt to substitute new counsel with approximately an            *8 Because the record does not demonstrate that Perez filed
hour of trial remaining. He also argued that the motion to        a written motion or notice to the trial court and all other
substitute was untimely and not properly noticed and that         parties, we cannot conclude that the trial court abused its
Perez's first attorney had already begun questioning her and      discretion in denying Perez's oral request, made on the record
no other witnesses had been designated, so “[t]here [was] no      mid-trial, to substitute new lead counsel. SeeTEX. R. CIV. P.
functional ability for [Altenbern] to take over and examine       8, 10; Spinks, 103 S.W.3d at 459.
any witness” under the “one witness, one lawyer rule.” The
trial court denied Altenbern's motion to substitute, stating it   We overrule Perez's second issue.
was concerned that opposing counsel did not have notice of
the motion.

                                                                                        Evidentiary Issues
Neither the notice of Altenbern's appearance on Perez's behalf
nor the motion to substitute is included in the clerk's record    In her third, fifth, and sixth issues, Perez argues that the trial
on appeal. Nor does it appear from the record that Perez's        court erred in making various evidentiary rulings.
first attorneys, Lipkin and Diane Perez, sought to withdraw
or were unable to adequately represent Perez at trial.
                                                                  A. Standard of Review
                                                                  “Evidentiary rulings are committed to the trial court's sound
B. Standard of Review                                             discretion.” U–Haul Int'l, Inc. v. Waldrip, 380 S.W.3d 118,
 [5] We review a trial court's decision to grant or deny a        132 (Tex.2012). A trial court abuses its discretion if it
motion to substitute counsel for an abuse of discretion. Spinks   acts without regard for guiding rules or principles. Id. To
v. Brown, 103 S.W.3d 452, 459 (Tex.App.–San Antonio               show the trial court abused its discretion, an appellant must
2002, pet. denied). “Under an abuse of discretion standard,       demonstrate that: (1) the court erred in not admitting the
an appellate court may reverse the decision of a trial court      evidence; (2) the excluded evidence was controlling on a
only if the trial court's ruling was without reference to any     material issue dispositive of the case and was not cumulative;
guiding rules or principles.” Id.; seeDowner v. Aquamarine        and (3) the error probably caused rendition of an improper
Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985).               judgment in the case. Jones v. Pesak Bros. Constr., Inc., 416
                                                                  S.W.3d 618, 632 (Tex.App.–Houston [1st Dist.] 2013, no
While a party has the right to be represented by counsel of its   pet.)(citing Tex. R. App. P. 44.1(a), and Tex. Dep't of Transp.
own choice, that right is not absolute. SeeSpinks, 103 S.W.3d     v. Able, 35 S.W.3d 608, 617 (Tex.2000)). We uphold the trial
at 459. The Rules of Civil Procedure provide that designations    court's evidentiary ruling if we discern a legitimate basis for
of new lead counsel and motions to withdraw and substitute        it. Id. (citing Owens–Corning Fiberglas Corp. v. Malone, 972
new counsel must be made in writing and that the party            S.W.2d 35, 43 (Tex.1998)).
designating new counsel or substituting a new attorney must
serve notice on the court and all other parties. SeeTEX. R.
CIV. P. 8, 10.                                                    B. Court Documents
                                                                   [6] In her third issue, Perez argues that the trial court erred
                                                                  in refusing to admit copies of court documents relating
C. Analysis                                                       to Williams's other judicial proceedings “pursuant to the
Although Perez argues on appeal that she filed a written notice   doctrine of judicial notice.” She argues that the documents
of Altenbern's appearance as her counsel and a written motion     were relevant to the conservatorship proceedings and to
to substitute him as lead counsel, neither document appears       E.A.W.'s best interests.
in the record. The reporter's record reflects that Altenbern


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               8
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

Perez asked the trial court to take judicial notice of two         whose accuracy cannot reasonably be questioned.” TEX. R.
motions and two copies of a Rule 11 Agreement—one                  EVID. 201(b); FreedomCommc'ns, Inc. v. Coronado, 372
handwritten draft and one typed final agreement—filed in           S.W.3d 621, 623 (Tex.2012). Judicial notice is mandatory
connection with Williams's custody dispute with Finn. In           if a party makes the request and supplies the court with
making her request for the trial court to take judicial notice,    the necessary information. See TEX. R. EVID. 201(c)(2);
her attorney stated that “certified copies are on the way, and I   Coronado, 372 S.W.3d at 623; MCISales & Serv., Inc. v.
want ... judicial notice taken in this case.” Williams objected,   Hinton, 329 S.W.3d 475, 484 n. 7 (Tex.2010). “Under this
arguing                                                            standard, a court will take judicial notice of another court's
                                                                   records if a party provides proof of the records.” Coronado,
             [the documents are] not a proper                      372 S.W.3d at 623 (citing Hinton, 329 S.W.3d at 497 n.
             subject matter for the judicial notice.               21, and WorldPeace v. Comm'n for Lawyer Discipline, 183
             He's required to provide the documents                S.W.3d 451, 459 (Tex.App.–Houston [14th Dist.] 2005, pet.
             at the time he requests judicial                      denied)). The contents of an unauthenticated or uncertified
             notice. Additionally, all of the motions              record from another court are not the type of evidence of
             are not by—by operation of law                        which the court can take judicial notice. Ex parte Luan Le,
             evidence of anything. They are                        No. 05–12–00248–CV, 2013 WL 2725593, at *4 (Tex.App.–
             requests and allegations subject to                   Dallas June 12, 2013, no pet.)(mem.op.); see alsoEx parte
             verification. So, I would object, one:                Wilson, 224 S.W.3d 860, 863 (Tex.App.–Texarkana 2007, no
             Improper verification; two: Improper                  pet.) (“Judicial records ... from a domestic court other than the
             presentation in this proceeding; three:               court being asked to take judicial notice have not been deemed
             Not evidence, as a matter of law.                     so easily ascertainable that no proof is required; they are to
                                                                   be established by introducing into evidence authenticated or
The trial court confirmed that none of the proffered
                                                                   certified copies ... of those records.”).
documents were final orders, but rather were motions and a
Rule 11 Agreement, and it sustained Williams's objection.
                                                                   Furthermore, “while the trial court can take judicial notice
                                                                   of the existence of certain documents in its records, it ‘may
However, Williams subsequently testified regarding some of
                                                                   not take judicial notice of the truth of factual statements
the documents, including the Rule 11 Agreement with Finn.
                                                                   and allegations contained in the pleadings, affidavits, or
He stated that the purpose of the agreement was
                                                                   other documents in the file.’ ” Kenny v. Portfolio Recovery
             to see my children that my ex-wife                    Assocs., LLC, 464 S.W.3d 29, ––––, 2015 WL 1135410, at *3
             has kept from me for over a year                      (Tex.App.–Houston [1st Dist.] 2015, no pet.)(citing Guyton
             because of the actions of Ms. Perez                   v. Monteau, 332 S.W.3d 687, 693 (Tex.App.–Houston [14th
             at Christmas last year, sir. And it                   Dist.] 2011, no pet.)).
             was so I could see my kids for one
             day at Christmas at the museum. And                   A trial court's erroneous decision whether to take judicial
             I agreed that I would take my kids                    notice of requested facts is subject to a harm analysis under
             and my ex-wife and me to individual                   Rule of Appellate Procedure 44.1(a). SeeTEX. R. APP. P.
             assessments with [a psychologist].                    44.1(a); In re Estate of Downing, 461 S.W.3d 231, 239
                                                                   (Tex.App.–El Paso 2015, no pet.). Thus, we may not reverse
 *9 Perez subsequently asked to include the documents in           the judgment of the trial court on this issue unless we conclude
the record as part of a bill of exceptions, and the trial court    that the trial court erred and that the error probably caused the
admitted the documents for that purpose. The documents that        rendition of an improper judgment. TEX. R. APP. P. 44.1(a).
appear in the record are not certified—they contain only a file
stamp from the Harris County Clerk's Office.                   Here, the trial court denied Perez's request to take judicial
                                                               notice of two motions and a Rule 11 Agreement filed in
 [7]    [8] To be the proper subject of judicial notice, an another court in conjunction with Williams's custody dispute
adjudicative fact must be “either (1) generally known within   with Finn. However, the record reflects that Perez did not
the territorial jurisdiction of the trial court or (2) capable provide the trial court with certified copies of the documents
of accurate and ready determination by resort to sources       at the time she requested that the court take judicial notice.



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              9
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

Rather, her attorney stated on the record that the certified         in evidence that material or information that was not timely
copies of the documents were “on the way,” and the copies            disclosed ... unless the court finds that:
provided in her bill of exceptions were likewise not certified.
Under these circumstances, we cannot conclude that the trial         (1) there was good cause for the failure to timely make,
court erred in refusing to take judicial notice of the motions          amend, or supplement the discovery response; or
and Rule 11 Agreement filed in that other case. SeeEx parte
                                                                     (2) the failure to timely make, amend, or supplement the
Luan Le, 2013 WL 2725593, at *4 (“[T]he contents of an
                                                                        discovery response will not unfairly surprise or unfairly
unauthenticated or uncertified record from another court is
                                                                        prejudice the other parties.
not the type of evidence of which the court can take judicial
notice.”).                                                         TEX. R. CIV. P. 193.6(a). The party seeking to introduce
                                                                   the evidence bears the burden of establishing good cause or
 *10 Moreover, even if we determined that the trial court had      lack of unfair surprise or unfair prejudice. TEX. R. CIV. P.
erred in refusing to take judicial notice of those documents,      193.6(b).
Perez cannot show that any such error probably caused
the rendition of an improper judgment. SeeTEX. R. APP.             After Perez proffered the photographs, Williams's attorney
P. 44.1(a); In re Estate of Downing, 461 S.W.3d at 239.            objected on the basis that although he had requested the
The trial court could only have taken judicial notice of the       photographs during discovery, Perez had not produced them.
existence of the documents—it could not have taken judicial        Perez offered no explanation of her failure to produce the
notice of the truth of any factual statements or allegations       photographs during discovery. Her counsel stated that he
contained in those documents. SeeKenny, 464 S.W.3d at              “didn't do the discovery” in this case. Thus, Perez failed to
––––, 2015 WL 1135410, at *3. The existence of the motions         meet her burden under Rule of Civil Procedure 193.6(b).
or Rule 11 Agreement filed in Williams's custody dispute           SeeCarpenter, 98 S.W.3d at 687 (citing predecessor rule to
with Finn is not relevant to issues of E.A.W.'s conservatorship    Rule 193.6 and holding that inadvertent failure to supplement
or support. Furthermore, the trial court permitted Perez to        responses was insufficient to establish good cause, even if
question Williams regarding his custody dispute with his ex-       admitting evidence would not be unfair to opposing party)
wife, and he testified on the record regarding the purpose and     (citing Sharp v. Broadway Nat'l Bank, 784 S.W.2d 669, 672
content of the Rule 11 Agreement.                                  (Tex.1990)).

We overrule Perez's third issue.                                   We cannot conclude that the trial court abused its discretion in
                                                                   excluding the photographs from evidence. SeeIn re T.K.D.–
                                                                   H., 439 S.W.3d 473, 480 & n. 4 (Tex.App.–San Antonio
C. Photographs
                                                                   2014, no pet.)(holding that trial court did not abuse its
 [9] In her fifth issue, Perez argues that the trial court erred
                                                                   discretion where proponent failed to produce photographs
in excluding photographs depicting bruising that she alleges
                                                                   in discovery and failed to provide good cause for admitting
she received from Williams.
                                                                   photographs).

Perez testified regarding one occasion when Williams struck
                                                                   We overrule Perez's fifth issue.
her and offered the photographs as evidence “of what
happened on that day.” Williams objected that she had laid an
improper foundation for the photographs and that she had not       D. Questioning
produced the photos in discovery responses in spite of their        [10] In her sixth issue, Perez argues that the trial court erred
having been requested. The trial court asked Perez's counsel       in sustaining Williams's objection to her question, “Have you
whether they had been produced, and he responded, “I can't         seen a psychologist?”
tell you. I didn't do the discovery, honestly.” The trial court
sustained Williams's objection.                                    Perez asked Williams multiple questions about his
                                                                   custody dispute with Finn, including, “Have you seen a
The Rules of Civil Procedure provide:                              psychologist?” Williams's attorney objected to this question,
                                                                   arguing, “There's no motion on file by them to request any
  A party who failed to make, amend, or supplement a
                                                                   kind of psychiatric care or examination.” The trial court
  discovery response in a timely manner may not introduce


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             10
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

sustained the objection. Perez's attorney argued that evidence    she testified that Williams intended that the Range Rover be
of Williams's mental health, including whether and why he         a gift to her and that Williams failed to provide any evidence
had seen a psychologist, was relevant. Williams's attorney        contradicting her testimony.
responded that the question was “an impermissible attempt
to get in the hearsay ... [and] impermissible filings and         Perez testified that after Williams asked her to leave his
the motions in the other case.” He also asserted that the         home, she took the Range Rover with her. She stated that
question was improper because Perez had not filed any             she had driven the car for three years until Williams “sent
pleadings challenging Williams's mental health or seeking         for the car to be taken away from [her].” Perez testified that
to require Williams to participate in counseling or mental        she believed the Range Rover belonged to her. Williams's
health treatment. The trial court again sustained Williams's      counsel objected to this testimony on relevance grounds
objection. Williams did not answer the question, and Perez        and asserted that “[c]ar titles control ownership.... It's ...
did not make an offer of proof regarding what information she     not relevant what she thought.” The trial court sustained
had expected to elicit from Williams on this issue. However,      this objection. Williams's counsel also objected to further
Williams acknowledged that, as part his Rule 11 Agreement         questioning regarding ownership of the Range Rover, arguing
with Finn, he “would take my kids and my ex-wife and me to        that there were no property issues remaining to be resolved in
individual assessments with [a psychologist].”                    the trial because “[t]he divorce [issue] has already been ruled
                                                                  on” and “there's no suit for conversion or anything else.”
 *11 Perez cannot show that the excluded testimony was
controlling on a material issue dispositive of the case and       Perez's counsel asserted that Perez's testimony about the
was not cumulative or that the trial court's ruling probably      vehicle “doesn't have anything to do with property and
caused the rendition of an improper judgment. SeeJones, 416       property rights, but it has to do with how Mr. Williams treated
S.W.3d at 632. Perez failed to make an offer of proof, so         her and allowed her to take care of her son [from her previous
the record does not reflect what Williams's testimony on this     relationship].” The trial court overruled Williams's objection
topic would have been. SeeAkin v. Santa Clara Land Co.,           and allowed Perez to testify that Williams sent police to “take
Ltd., 34 S.W.3d 334, 339 (Tex.App.–San Antonio 2000, pet.         [the vehicle] away” and left her with no other way to transport
denied) (“The failure to make an offer of proof containing        her son from a previous relationship except to use a taxi. Perez
a summary of the excluded witness's intended testimony            testified, “[Williams] gave a Range Rover to me.... He told me
waives any complaint about the exclusion of the evidence on       that it was a present, that it was mine.” She acknowledged that
appeal.”). Williams testified regarding his agreement with his    Williams had asked her to return the Range Rover multiple
ex-wife to attend family counseling, but he did not indicate      times and had sent a certified letter requesting its return before
whether he had actually begun the counseling. Thus, Perez         he sent the police to collect the vehicle. The trial court also
failed to establish that Williams's excluded testimony would      admitted into evidence the title to the Range Rover, listing
have been material to issues of custody and support of E.A.W.     Williams as the owner. Perez acknowledged that she was not
and that its exclusion probably caused the rendition of an        listed as the owner of the vehicle.
improper judgment, as required to demonstrate that the trial
court abused its discretion. SeeJones, 416 S.W.3d at 632.         The record demonstrates that the Range Rover's ownership
                                                                  was not at issue during the bench trial. The trial court granted
Thus, we cannot conclude that the trial court abused its          Williams's partial motion for summary judgment, ruling that
discretion in sustaining Williams's objection to this question.   the parties were never married and dismissing the issues
SeeWaldrip, 380 S.W.3d at 132.                                    of divorce and property division from the case. We have
                                                                  overruled Perez's complaints regarding this order. Perez did
We overrule Perez's sixth issue.                                  not file any other pleadings that might be construed as seeking
                                                                  a determination of ownership of the vehicle. SeeTEX. R. CIV.
                                                                  P. 301 (providing that judgment must conform to pleadings).

                       Gift of Vehicle
                                                                  Furthermore, when the question of whether the Range Rover
 [11] In her fourth issue, Perez argues that the trial court      was a gift from Williams to Perez arose at trial, Williams
erred in “refusing to determine that a gift existed for an        objected to Perez's testimony on the ground that she had not
award of a Range Rover motor vehicle.” Perez argues that          sought an adjudication of her entitlement to the Range Rover



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             11
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

in any of her pleadings. He also objected on the basis that the    decision and indulge every legal presumption in favor of its
title speaks for itself and establishes that Williams was the      judgment. Holley, 864 S.W.2d at 706.
sole owner of the vehicle. Perez's counsel then argued that
the testimony was not intended to establish a property right       When, as here, there are no findings of fact or conclusions of
but to show how Williams treated her. Thus, the issue was          law, we “presume that all factual disputes were resolved in
not tried by consent. SeeReed v. Wright, 155 S.W.3d 666, 670       favor of the trial court's ruling.” Aduli v. Aduli, 368 S.W.3d
(Tex.App.–Texarkana 2005, pet. denied) (holding that trial         805, 813 (Tex.App.–Houston [14th Dist.] 2012, no pet.).
by consent applies in exceptional cases when record as whole       Thus, we uphold the trial court's ruling unless “it is so contrary
clearly demonstrates that parties tried unpled issue); Mastin      to the overwhelming weight of the evidence as to be wrong
v. Mastin, 70 S.W.3d 148, 154 (Tex.App.–San Antonio 2001,          and unjust.” Id. at 814; seeWorford v. Stamper, 801 S.W.2d
no pet.)(stating that to determine whether issue was tried by      108, 109 (Tex.1990).
consent, appellate court must examine record for evidence of
trial of issue).
                                                                   B. Conservatorship Determination
 *12 We cannot conclude that the trial court erred in failing      Perez argues that she had no psychological or substance abuse
to grant relief that Perez never requested.                        problems and, thus, there is no evidence supporting the trial
                                                                   court's determination awarding Williams the exclusive right
We overrule Perez's fourth issue.                                  to designate E.A.W.'s primary residence. Even considering
                                                                   that evidence, we cannot conclude that the trial court abused
                                                                   its discretion.

                Conservatorship of E.A.W.                          Viewing the evidence in the light most favorable to the trial
                                                                   court's decision and indulging every legal presumption in
 [12] In her seventh issue, Perez argues that the trial
                                                                   favor of its judgment, as we must, we conclude that the trial
court erred in “awarding primary conservatorship rights” to
                                                                   court's ruling is not so contrary to the overwhelming weight
Williams. Because the trial court made Perez and Williams
                                                                   of the evidence as to be wrong and unjust. SeeHolley, 864
joint managing conservators of E.A.W., we construe this as an
                                                                   S.W.2d at 706; Aduli, 368 S.W.3d at 813. Williams and Perez
argument that the trial court abused its discretion by granting
                                                                   both testified regarding their interactions with each other and
Williams the exclusive right to determine E.A.W.'s primary
                                                                   with E.A.W., their respective employment, and their home
residence. In the alternative, Perez argues that the trial court
                                                                   environments.
erred in awarding her less-than-standard visitation.

                                                               Williams testified that he had regular employment, stable
A. Standard of Review                                          housing, and reliable transportation. Williams also testified
 [13]     [14] Trial courts have wide discretion to determine that he had been E.A.W.'s primary caregiver since she was
a child's best interest, including issues of custody, control, bom and that he had been her exclusive caregiver since
possession, and visitation. Gillespie v.Gillespie, 644 S.W.2d  September 2013. Williams stated that he was a former
449, 451 (Tex.1982); Holley v. Holley, 864 S.W.2d 703, 706     investment banker who had started a new career so that he
(Tex.App.–Houston [1st Dist.] 1993, writ denied). Thus, we     would have more time for his family. He testified about
will reverse a trial court's determination of conservatorship  numerous instances in which Perez became violent with
only if a review of the entire record reveals that the trial   him or one of her children, including E.A.W. Williams also
court's decision was arbitrary or unreasonable. In re J.A.J.,  testified that since he and Perez had ended their romantic
243 S.W.3d 611, 616 (Tex.2007); Patterson v. Brist, 236        relationship Perez had advertised on “adult entertainment”
S.W.3d 238, 239–40 (Tex.App.–Houston [1st Dist.] 2006, pet     websites, and he provided copies of those advertisements to
dism'd). A trial court does not abuse its discretion “as long  the trial court. Perez did not contradict this evidence. Perez
as some evidence of a substantive and probative character      also acknowledged that she had been arrested for assaulting
exists to support [its] decision.” In re W.M., 172 S.W.3d 718, Williams.
725 (Tex.App.–Fort Worth 2005, no pet.). We must view
the evidence in the light most favorable to the trial court's   *13 We conclude that the trial court's decision to grant
                                                               Williams the exclusive right to determine E.A.W.'s residence
                                                               was supported by “some evidence of a substantive and


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              12
Perez v. Williams, --- S.W.3d ---- (2015)
2015 WL 5076294

                                                                     a party seeks a ruling on some matter which, when rendered,
probative character.” SeeIn re W.M., 172 S.W.3d at 725.
                                                                     would not have any practical legal effect on a then-existing
Thus, the trial court's conservatorship determination was not
                                                                     controversy.”).
arbitrary or unreasonable and did not constitute an abuse of
discretion. SeeIn re J.A.J., 243 S.W.3d at 616.
                                                                     We overrule Perez's seventh issue.

C. Visitation
Perez also argues that, even if we affirm the trial court's
                                                                                              Conclusion
conservatorship determination, the trial court erred in not
granting her visitation pursuant to a standard possession            We affirm the order of the trial court.
order. However, we observe that the trial court's order
provides that Perez is to have visitation with E.A.W. pursuant
to a standard possession order as of April 1, 2015. Thus, this       All Citations
complaint is now moot. SeeIn re H & R Block Fin. Advisors,
                                                                     --- S.W.3d ----, 2015 WL 5076294
Inc., 262 S.W.3d 896, 900 (Tex.App.–Houston [14th Dist.]
2008, orig. proceeding) (“An issue may become moot when


Footnotes
1      The trial court also permitted Altenbern to conduct Williams's questioning.
2      In his brief, Williams argues that this statement makes the trial court's order an agreed order and, thus, Perez cannot
       complain on appeal of any of its provisions. However, for a judgment to be considered an agreed or consent judgment,
       such that no appeal can be taken from it, either the body of the judgment itself or the record must indicate that the parties
       came to some agreement as to the case's disposition; simple approval of the form and substance of the judgment does not
       suffice. See, e.g.,DeClaris Assoc. v. McCoy Workplace Solutions, L.P., 331 S.W.3d 556, 560 (Tex.App.–Houston [14th
       Dist.] 2011, no pet.); Oryx Energy Co. v. Union Nat'l Bank of Tex., 895 S.W.2d 409, 417 (Tex.App.–San Antonio 1995,
       writ denied) (holding that order, despite notation that it was “Approved and Agreed,” was not agreed order when “nothing
       in the record or the judgment indicates that the parties entered or even contemplated a settlement or agreed judgment”).
       Each party must explicitly and unmistakably give its consent for a consent judgment to be valid. Chang v. Nguyen, 81
       S.W.3d 314, 318 (Tex.App.–Houston [14th Dist.] 2001, no pet.)(stating that, for instance, body of judgment must suggest
       that case had been settled or that judgment was rendered by consent). No such agreement is evident in this case.


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              13
Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)




      KeyCite Yellow Flag - Negative Treatment                        West Headnotes (9)
Distinguished by Haden v. David J. Sacks, P.C.,   Tex.App.-Hous. (1
Dist.),  May 7, 2009
                                                                      [1]   Alternative Dispute Resolution
                     124 S.W.3d 283                                              Decisions Reviewable
                 Court of Appeals of Texas,                                 Trial court's post-arbitration order granting
                   Houston (14th Dist.).                                    employer attorney fees and costs incurred to
                                                                            compel arbitration of former employee's breach
            Robert RASMUSSON, Appellant,
                                                                            of contract and fraud claims was not a final
                        v.
                                                                            judgment that was immediately appealable,
          LBC PETROUNITED, INC., Appellee.                                  where trial court had not yet granted former
                                                                            employee's motion for nonsuit and the order
      No. 14–02–01053–CV. | Nov. 25, 2003.
                                                                            therefore did not dispose of all pending claims,
       | Supplemental Opinion Dec. 23, 2003.
                                                                            and the order did not contain language purporting
Synopsis                                                                    to dispose of all remaining claims or otherwise
Background: Former employee brought action against                          unequivocally express an intent to finally dispose
employer for fraud and breach of contract, and employer                     of the case.
counterclaimed for specific performance of arbitration
                                                                            2 Cases that cite this headnote
provision of severance agreement and sought attorney
fees and costs incurred to compel arbitration. The 269th
District Court, Harris County, John Thomas Wooldridge, J.,            [2]   Appeal and Error
compelled arbitration, and thereafter, the arbitrator denied                   Final Judgments or Decrees
former employee's claims and referred the issue of attorney                 Appeal and Error
fees and costs to the trial court, and former employee                         Finality as to All Parties
nonsuited his claims. The District Court awarded attorney
                                                                            Appeal and Error
fees and costs to employer. Former employee appealed.
                                                                               Determination of Controversy
                                                                            A judgment issued without a conventional trial
                                                                            is final and therefore immediately appealable
Holdings: The Court of Appeals, Richard H. Edelman, J.,                     only if it either actually disposes of all claims
held that:                                                                  and parties then before the court, or states with
                                                                            unmistakable clarity that it is a final judgment as
[1] employer was not statutorily precluded from recovering                  to all claims and parties, even if it is not.
attorney fees incurred to compel arbitration;
                                                                            Cases that cite this headnote
[2] arbitration provision of severance agreement did not
preclude such recovery; and                                           [3]   Appeal and Error
                                                                               Order or Decree of Dismissal
[3] employer did not establish the costs it incurred were
                                                                            Appellate timetables run from the date an order
reasonable and necessary, but employer's voluntary remittitur
                                                                            granting a nonsuit is signed, rather than the date
of costs cured the reversible error.
                                                                            a nonsuit is filed.

                                                                            Cases that cite this headnote
Affirmed as reformed.

                                                                      [4]   Alternative Dispute Resolution
                                                                                 Costs




                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              1
Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)


       Statute pertaining to judgments confirming,                  Abuse of discretion was not the appropriate
       modifying, or correcting an arbitration award did            standard for reviewing an award of attorney fees
       not preclude a party from recovering attorney                and costs rendered by summary judgment.
       fees for compelling arbitration. V.T.C.A., Civil
       Practice & Remedies Code § 171.092(a).                       2 Cases that cite this headnote

       Cases that cite this headnote
                                                             [9]    Alternative Dispute Resolution
                                                                         Costs
 [5]   Alternative Dispute Resolution                               Conclusory statement, in summary judgment
            Costs                                                   affidavit of attorney for employer, that
       Arbitration provision of employee's severance                “reasonable costs of $403.71 have been incurred
       agreement, making each party responsible for                 in performing the tasks cited above” to compel
       its own attorney fees and costs for any                      arbitration of former employee's claims for fraud
       disputes arising under or in connection with                 and breach of contract, with no indication of
       the agreement, did not preclude a party from                 what the costs consisted of, was insufficient to
       collecting attorney fees and costs incurred to               prove the costs were reasonable and necessary, as
       compel arbitration.                                          would be required for employer to recover costs
                                                                    incurred to compel arbitration.
       Cases that cite this headnote
                                                                    1 Cases that cite this headnote

 [6]   Costs
           Contracts
       Specific Performance
                                                            Attorneys and Law Firms
           Costs
       A “valid claim,” within meaning of statute           *284 Kent M. Hanszen, Houston, for appellant.
       allowing a party to recover attorney fees in
       addition to the amount of a valid claim for          Tracy C. Temple, Thomas M. Melo, Houston, for appellee.
       breach of contract, is not limited to a claim for
                                                            Panel consists of Justices EDELMAN, FROST, and
       monetary damages, and may include a claim for
                                                            GUZMAN.
       specific performance. V.T.C.A., Civil Practice &
       Remedies Code § 38.001(8).

       10 Cases that cite this headnote                                             OPINION

                                                            RICHARD H. EDELMAN, Justice.
 [7]   Appeal and Error
          Judgment                                          In this employment dispute, Robert Rasmusson appeals a
       A nonmovant need not respond to a motion for         judgment in favor of LBC PetroUnited, Inc. (“LBC”) on
       summary judgment to contend on appeal that the       the ground that the trial court erroneously awarded LBC
       movant's summary judgment proof is insufficient      attorney's fees. We affirm in part and reverse and remand in
       as a matter of law to support summary judgment.      part.

       Cases that cite this headnote
                                                                                   Background
 [8]   Appeal and Error
          Costs and Allowances                              Rasmusson filed suit against LBC, his former employer,
                                                            alleging fraud and breach of contract. LBC filed a
       Appeal and Error
                                                            counterclaim seeking specific performance of the arbitration
          Attorney Fees
                                                            provision of the parties' severance agreement (the



             © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        2
Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)


“agreement”) and recovery *285 of the attorney's fees and            Although the motion does not contain the term, “summary
costs expended to compel arbitration. LBC then moved to              judgment,” it states that it was filed pursuant to Texas Rule
compel arbitration, the trial court granted LBC's motion, and        of Civil Procedure 166a, which describes the procedure
the resulting arbitration award denied Rasmusson's claims            and requirements for summary judgment motions. Similarly,
and referred the issue of attorney's fees and costs to compel        although *286 the statement of facts in Rasmusson's brief
arbitration back to the trial court. Rasmusson subsequently          states that the September judgment was entered without a
nonsuited the claims he had originally filed in the trial court,     motion for summary judgment, the brief not only does not
and LBC filed a motion for judgment (the “motion”) on its            dispute that the motion was filed in accordance with Rule
claim for attorney's fees and costs. On September 6, 2002, the       166a, it recites the summary judgment standard of review
trial court signed a final judgment (the September judgment)         as being applicable to the case. We will follow the same
awarding LBC those fees and costs.                                   approach.

                                                                     A traditional motion for summary judgment may be granted
                                                                     if the motion and summary judgment evidence show that
                    Timeliness of Appeal
                                                                     there is no genuine issue of material fact and the moving
 [1] As a preliminary matter, LBC claims that Rasmusson's            party is entitled to judgment as a matter of law on the issues
appeal should be dismissed because it was untimely. LBC              expressly set out in the motion or response. TEX.R. CIV. P.
contends that a February 19, 2002 order (the “February               166a. In reviewing a traditional summary judgment, we take
order”), granting LBC attorney's fees and costs, was a               all evidence favorable to the nonmovant as true and resolve
final judgment because it disposed of the only claim then            every doubt, and indulge every reasonable inference, in the
remaining in the case and thus rendered Rasmusson's appeal,          nonmovant's favor. Tex. Commerce Bank, N.A. v. Grizzle, 96
filed after the September judgment, untimely.                        S.W.3d 240, 252 (Tex.2002).


 [2] [3] In a case, such as this, where only one final and
appealable judgment can be rendered, a judgment issued                          Award of Attorney's Fees and Costs
without a conventional trial is final for purposes of appeal
only if it either actually disposes of all claims and parties then   Rasmusson's sole point of error challenges the trial court's
before the court, or states with unmistakable clarity that it is     award of attorney's fees and costs to LBC on the grounds that:
a final judgment as to all claims and parties (even if it is not).   (1) the law does not allow recovery of attorney's fees incurred
Guajardo v. Conwell, 46 S.W.3d 862, 863–64 (Tex.2001);               in compelling arbitration; (2) the agreement unambiguously
Lehmann v. Har–Con Corp., 39 S.W.3d 191, 192–3, 200                  provides that each party will bear its own attorney's fees
(Tex.2001). Appellate timetables run from the date an order          incurred in any agreement dispute; (3) LBC failed to prove
granting a nonsuit is signed, rather than the date a nonsuit is      any contract damages supporting an attorney's fees award;
filed. In re Bennett, 960 S.W.2d 35, 38 (Tex.1997).                  (4) LBC waived its claim for attorney's fees when it failed to
                                                                     present its breach of contract claim to the arbitrator, asking
In this case, the record does not contain a signed order             instead for fees incurred merely to compel arbitration; (5) the
that had granted Rasmusson's motion for nonsuit at the time          attorney's fees awarded were unreasonable and unnecessary;
the February order was entered. Therefore, the record does           (6) LBC's breach of contract claim was never adjudicated, and
not reflect that the February order actually disposed of all         Rasmusson never got his day in court to assert his defenses
the claims remaining at that time. Nor did the February              to it; and (7) LBC failed to provide any evidence in support
order contain language purporting to dispose of all remaining        of the costs awarded.
claims and parties or otherwise unequivocally express an
intent to finally dispose of the case. 1 Therefore, it was not a      [4] In support of his first argument, Rasmusson contends
final order that began the time period in which Rasmusson's          that section 171.092 of the Texas Civil Practice and Remedies
appeal had to be filed and caused his appeal to be untimely.         Code (“CPRC”) disallows recovery of attorney's fees for
                                                                     compelling arbitration. However, that section pertains to a
                                                                     judgment confirming, modifying, or correcting an award, not
                                                                     an order compelling arbitration, as in this case. See TEX.
                    Standard of Review                               CIV. PRAC. & REM.CODE ANN. § 171.092(a) (Vernon



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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)



Supp.2004). 2 Therefore, Rasmusson has not demonstrated              Rasmusson next contends that LBC waived asserting its claim
that the law precludes a recovery of attorney's fees in this case.   for attorney's fees as a claim for breach of contract by instead
                                                                     presenting it to the arbitrator as merely a claim for fees to
 [5] In support of his second argument, Rasmusson argues             compel arbitration. 4 The only portion of our record that
that the award of attorney's fees and costs directly contradicts     reflects how LBC's attorney's fee claim was presented to the
the plain language of the agreement, which requires each             arbitrator is the following exchange:
party to bear his or its own costs incurred in any dispute
arising from the agreement:
                                                                       ARBITRATOR: And [LBC] is seeking attorney's fees that
             Any disputes arising under or in                           it incurred in going to court and compelling arbitration
             connection with this Agreement shall                       pursuant to the arbitration clause of the [agreement]....
             be resolved by arbitration to be held                      Is that correct?
             in Houston, Texas in accordance
             with the rules and procedures of the                           [LBC'S COUNSEL]: Correct.
             American Arbitration Association. All
                                                                       The arbitration award similarly states:
             arbitration fees shall be borne equally
             by [the parties] and [each shall be]                           [LBC] seeks $16,707.50 in attorney's fees and
             responsible for any attorneys' fees or
                                                                            $403.71 in court costs, [ [ 5 ] both of which were
             other expenses incurred by either [of
                                                                            incurred when compelling arbitration in this matter.
             them].
                                                                            However, pursuant to the District Court's order
(the “arbitration provision”). On the contrary, this provision              compelling arbitration, and its subsequent abatement
applies only to fees and expenses incurred in resolving                     pending the arbitration outcome, it appears that the
disputes by arbitration, i.e., in accordance with the agreement,            merits of the case are to be determined by the
not to costs necessitated by a party's opposition to resolving              Arbitrator while the award of attorney's fees and costs
 *287 disputes by arbitration, in contravention of the                      to compel arbitration should be determined by the
agreement. Therefore, Rasmusson has not demonstrated that                   District Court. Therefore, the Arbitrator refers the
the award of attorney's fees and costs is inconsistent with the             matter of attorney's fees and costs to the District Court
agreement.                                                                  for adjudication.

                                                                       ****
 [6] Rasmusson next contends that attorney's fees could not
be recovered by LBC under section 38.001(8) of the CPRC                   The cost of arbitration is to be shared equally by the
because LBC recovered no other monetary contract damages                  parties. The issue of attorney's fees incurred in court to
besides the attorney's fees and associated costs. See TEX.                compel arbitration is reserved for the District Court.
CIV. PRAC. & REM.CODE ANN. § 38.001(8) (Vernon
1997) (allowing recovery of attorney's fees “in addition to the           All other relief not expressly granted is denied.
amount of a valid claim” for breach of contract). However,
                                                                       (paragraph numbers omitted). While it is not clear on what
a “valid claim” for this purpose is not limited to one for
                                                                       basis the arbitrator was distinguishing the “merits of the
monetary damages 3 and may include a claim for specific
                                                                       case” from the award of attorney's fees, we cannot say from
performance. See Jones v. Kelley, 614 S.W.2d 95, 96, 100–
                                                                       this record that LBC presented its claim for attorney's fees
01 (Tex.1981) (reforming judgment to award attorney's fees,
                                                                       to the arbitrator as something other than a *288 breach of
in accordance with jury verdict, under predecessor statute
                                                                        contract claim and thereby waived its claim as such. 6
to section 38.001 in suit for specific performance of earnest
                                                                     Rasmusson next contends that the amount of attorney's
money contract for sale of real estate). Because LBC sought
                                                                     fees sought and recovered by LBC was unreasonable and
attorney's fees in addition to its claim for specific performance
                                                                     unnecessary for preparing and arguing a three-page motion
of the arbitration provision of the agreement, its failure to
                                                                     to compel arbitration at a fifteen-minute hearing. However,
recover other money damages did not preclude the award of
                                                                     because Rasmusson filed neither a cross-motion for summary
attorney's fees.
                                                                     judgment 7 nor summary judgment evidence controverting



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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)


                                                                   judgment evidence LBC provided regarding costs was a
that supporting LBC's motion on this issue, 8 we can neither
                                                                   single sentence in its attorney's affidavit: “Further, reasonable
render judgment in Rasmusson's favor nor conclude that a fact
                                                                   costs of $403.71 have been incurred in performing the tasks
issue was raised on the reasonableness and necessity of the
                                                                   cited above [to compel *289 arbitration].” Because there
amount of attorney's fees awarded.
                                                                   is no indication of what these costs consisted of, there is no
                                                                   basis to establish whether they were reasonable or necessary
Rasmusson next argues that LBC never had its breach of
                                                                   other than the conclusory statement of the attorney, which
contract claim formally adjudicated by the arbitrator or trial
                                                                   is insufficient to support a summary judgment. 10 Therefore,
court and, accordingly, Rasmusson never got his day in
                                                                   we sustain Rasmusson's challenge to the sufficiency of the
court on his defenses to those claims. However, the motion
                                                                   evidence to support the trial court's award of costs to LBC,
plainly referred to the arbitration provision and argued that
                                                                   reverse the portion of the judgment making that award,
Rasmusson's filing of suit rather than submitting the dispute
                                                                   remand that issue to the trial court for further proceedings,
to arbitration was a breach of the agreement as a matter of
                                                                   and affirm the remainder of the judgment.
law, causing LBC to incur expense in filing its motion to
compel arbitration, as described in the attached affidavit of
LBC's attorney. Rasmusson filed a response to the motion
(the “response”) in which he argued that: (1) LBC waived                          SUPPLEMENTAL OPINION
the claim by failing to ask the arbitrator to rule on whether
Rasmusson had breached the contract; (2) LBC's request for         Following the issuance of our original opinion, reversing the
relief from the court essentially sought to modify or vacate the   costs awarded by the trial court's judgment, appellee, LBC
arbitrator's award without satisfying the requisites for doing     PetroUnited, Inc., timely filed a voluntary remittitur of those
so; and (3) he disputed the reasonableness and necessity of the    costs. See TEX.R.APP. P. 46.5. We conclude that LBC's
fees (but without supporting summary judgment evidence).           voluntary remittitur cures the reversible error and accept it.
Under these circumstances, it is not apparent how LBC's            Accordingly, we reform the judgment to remove the award
breach of contract claim was not formally adjudicated by           of costs and affirm the judgment in accordance with the
summary judgment in its motion, Rasmusson's response, and          remittitur. See id.
the September judgment.

                                                           All Citations
 [7] [8] [9] Rasmusson lastly asserts that the trial court
erred in awarding costs against him because LBC failed to  124 S.W.3d 283
provide any evidence of those costs. 9 The only summary


Footnotes
1      The entire body of the February order stated:
           Having considered all of the pleadings and the evidence in this case, this Court finds that [LBC's] Motion for Judgment
           on Fees and Costs is GRANTED.
           It is ordered that LBC is entitled to the sum of $16,707.50 in attorneys' fees and $403.71 in costs for a total of
           $17,111.21.
           By contrast, the September judgment is not only entitled “Final Judgment” but contains language unequivocally
           expressing an intent to finally dispose of the only remaining claim in the case (even though an order granting
           Rasmusson's nonsuit was apparently never entered):
           This case came before the Court for final adjudication.... On September 24, 2001, [Rasmusson] non-suited its [sic]
           own claims leaving [LBC's] counter-claim the only remaining claim at issue in the case.
       ****
           It is therefore,
       ****
           ORDERED, ADJUDGED AND DECREED that this is a Final Judgment and that all relief sought in this case which
           is not specifically granted is hereby denied.




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Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (2003)



2     Nor are we at liberty to extrapolate the effect of this statute to circumstances outside its scope. See City of Garland v.
      Dallas Morning News, 22 S.W.3d 351, 358 (Tex.2000) (noting that courts are not responsible for omissions in legislation,
      but must take statutes as they find them).
3     Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 796 (Tex.App.-Houston [1st Dist.] 2001, no pet.).
4     However, neither party has cited a basis to recover attorney's fees to compel arbitration other than under section 38.001
      of the CPRC.
5     The record does not reflect whether these costs were actually taxable court costs.
6     Rasmusson's brief states that the issue presented in this case is whether the trial court had authority to award attorney's
      fees. However, to the extent the claim for attorney's fees was within the scope of the arbitration provision, Rasmusson's
      brief does not challenge the authority of the arbitrator to refer it back to the trial court or the trial court's authority to decide
      the issue based on that referral.
7     See, e.g., Dow Chem. Co. v. Bright, 89 S.W.3d 602, 605 (Tex.2002) (reiterating that when both sides have moved for
      summary judgment, and one motion is granted and the other denied, the appeals court determines all questions presented
      and renders the judgment the trial court should have rendered).
8     See, e.g., Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995) (reiterating that once a movant produces
      evidence sufficient to establish a right to summary judgment, the nonmovant must present evidence sufficient to raise
      a fact issue).
9     LBC contends that Rasmusson waived this complaint by failing to raise it in his response and that a trial court's award of
      attorney's fees and costs is reviewed for abuse of discretion. However, a nonmovant need not respond to a motion for
      summary judgment to contend on appeal that the movant's summary judgment proof is insufficient as a matter of law to
      support summary judgment. M.D. Anderson Hosp. and Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000). Similarly, to
      whatever extent an award of attorney's fees and costs is reviewable for abuse of discretion in other contexts, LBC has not
      cited, and we have not found, any authority for doing so where such an award has been rendered by summary judgment.
10    See Earle v. Ratliff, 998 S.W.2d 882, 890 (Tex.1999) (reversing summary judgment because expert's affidavit, stating that
      defendant met the applicable standard of care, did not explain its basis to link that conclusion to the facts or explain why
      the procedure was medically warranted); Burrow v. Arce, 997 S.W.2d 229, 235 (Tex.1999) (reiterating that conclusory
      statements made by an expert witness are insufficient to support summary judgment).


End of Document                                                   © 2015 Thomson Reuters. No claim to original U.S. Government Works.




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                       6
Redwine v. Hudman, 104 Tex. 21 (1911)
133 S.W. 426


                                                                           Cases that cite this headnote
     KeyCite Yellow Flag - Negative Treatment
Distinguished by Bourland v. Huffhines,     Tex.Civ.App.-Amarillo,
 October 25, 1922
                                                                     [3]   Specific Performance
                                                                               Performance Impossible
                        104 Tex. 21                                        Specific performance of a contract will not be
                   Supreme Court of Texas.                                 decreed unless complete performance by each
                                                                           party can be enforced, and equity will not
                           REDWINE
                                                                           decree a conveyance pursuant to a contract of
                              v.
                                                                           sale which will defeat the title to be conveyed,
                           HUDMAN.
                                                                           or a conveyance which will not substantially
                                                                           accomplish the end intended.
                           Jan. 11, 1911.
                                                                           5 Cases that cite this headnote
Error to Court of Civil Appeals of Second Supreme Judicial
District.
                                                                     [4]   Specific Performance
Action by W. F. Hudman against R. A. Henderson and                             Performance Impossible
another. There was a judgment of the Court of Civil Appeals                A purchaser of school land contracted to sell
reversing a judgment for defendants, and defendant M. M.                   the land to a third person before title had vested
Redwine brings error. Judgment of Court of Civil Appeals                   in the purchaser by reason of continued actual
reversed, and judgment of District Court affirmed.                         settlement for the required statutory period, and
                                                                           agreed to execute a deed on the termination,
                                                                           in favor of the purchaser, of a pending suit
 West Headnotes (7)                                                        involving the title to the land. The purchaser,
                                                                           before the completion of the time to acquire title
                                                                           by settlement, conveyed the land to another, who
 [1]     Contracts                                                         settled on it and complied with the statute so
             Reasonableness of Construction                                as to become a purchaser from the state. Held,
         The court, in construing a contract, may reject                   that the third person could not compel a specific
         an unreasonable, suggested construction when a                    performance of the purchaser's contract, since
         more reasonable one is as consistent with the                     the contract to convey to the third person was
         language used.                                                    dependent on the purchaser's future action to
                                                                           acquire title, which action the court could not
         1 Cases that cite this headnote                                   control.

                                                                           1 Cases that cite this headnote
 [2]     Public Lands
             Abandonment
         Where one settled and located his home on a                 [5]   Specific Performance
         school section, and purchased it and two other                        Options
         sections from the state, and then conveyed the                    A contract stipulating that one of two things shall
         three sections to a third person, who settled                     be done at the election of the party who is to
         on the first section, it was necessary to the                     perform the contract, so as to give him the right
         acquisition of title that the actual settlement                   to elect to perform the act called for or to pay
         should continue either on the original home                       a specific sum, cannot be specifically enforced,
         section or on one of the additional sections for                  where the contract is satisfied by the payment of
         three years from the date of the original purchase.               the money.

                                                                           4 Cases that cite this headnote



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             1
Redwine v. Hudman, 104 Tex. 21 (1911)
133 S.W. 426

                                                                  consideration of the following described property, to wit: One
 [6]    Specific Performance                                      bay horse about 14 1/2 hands high, nine years old unbranded.
            Options                                               Also one bay horse about 14 1/2 hands high four years old
        A contract, stipulating that, in consideration of         and branded X on left thigh. Also two sorrel horses, one four
        described personal property delivered by the              and one five years old branded R. F. on left shoulder. *23
        purchaser to the vendor, the latter agrees to             Also four buggies, one Perry buggy, been in use about thirteen
        execute and deliver a deed to the purchaser of            months and three new Banner buggies. Two new sets of single
        real estate described, and providing for the return       harness and one set of old single buggy harness and one set of
        of the personal property if the vendor shall fail         new double harness. Said property of the reasonable market
        or refuse from any cause to execute and deliver           value of three hundred and twenty dollars. Said property this
        the deed, does not give the vendor the right to           day sold and delivered by the party of the second part to the
        elect whether to return the personal property or          said party of the first part herein. The said party of the first part
        execute a deed, but requires him to return the            agree to make, execute and deliver to the party of the second
        personal property when his failure to convey is           part a good and sufficient deed to a certain section of state
        justified, and the contract is in form subject to         school land in Lynn county, Texas, after a certain suit which
        specific performance.                                     is now pending involving the title to said land shall have been
                                                                  terminated in favor of the party of the first part herein. Said
        10 Cases that cite this headnote                          land described as follows, to wit: Being all of state school
                                                                  section No. 448, Cert. No. 446, in block No. 1, E. L. & R. R. R.
 [7]    Specific Performance                                      R. Co. Said land of a reasonable market value of three hundred
            Effect of Stipulations for Liquidated                 and twenty dollars. It is further agreed and understood by and
        Damages or Penalty                                        between the parties herein mentioned that if the said party
        A contract which calls for the doing of an act,           of the first part herein shall fail or refuse from any cause to
        with a sum annexed as penalty or damages,                 execute and deliver said deed to said party of the second part
        to secure the performance of the act, may be              then and in that event the party of the first part shall deliver to
        specifically enforced.                                    the party of the second part said property herein conveyed to
                                                                  him and in the event of his failure or inability to deliver said
        2 Cases that cite this headnote                           property then the party of the first part shall pay to the party of
                                                                  the second part the reasonable market value of said property.
                                                                  It is further agreed and understood between and by the parties
                                                                  to this contract that the party of the second part agrees to pay
Attorneys and Law Firms                                           off and discharge any and all indebtedness that may be against
                                                                  said property herein conveyed and to warrant and defend the
 *22 **427 John P. Marrs, L. W. Dalton, G. W. Perryman,           title to the same against any and all incumbrances, liens and
and Wm. J. Berne, for plaintiff in error.                         claims whatsoever. In testimony whereof we have hereunto
                                                                  set our hands and seals this the 5th day of September, 1903.
H. C. Ferguson, for defendant in error.                           R. A. Henderson, Party of the First Part. W. F. Hudman, Party
                                                                  of the Second Part.” The judgment of the district court was in
Opinion
                                                                  favor of defendant, but it was reversed by the Court of Civil
WILLIAMS, J.                                                      Appeals, and another was rendered by that court in plaintiff's
                                                                  favor for the land, subject to such right as Redwine might
This action was brought by Hudman against R. A. Henderson         show to compensation for improvements in good faith, for
for specific performance of a contract for the conveyance         inquiry into which subject alone the cause was remanded.
of land; Redwine, the plaintiff in error, being joined as
a subsequent purchaser from Henderson. The contract is            The first objection made to the judgment is that it is not
as follows: “The State of Texas, County of Lynn. This             authorized by the contract, which, it is urged, did not bind
agreement this day entered into between R. A. Henderson,          Henderson to convey the land, but left him the right to rfeuse
party of the first part, and W. F. Hudman, party of the second    to do so and, instead, to return the property received as the
part, witnesseth: That said party of the first part, for and in   consideration, or to pay its market value. Irrespective of the



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  2
Redwine v. Hudman, 104 Tex. 21 (1911)
133 S.W. 426

other features of the case discussed later, **428 we do            right, it must be because that right is necessarily involved
not think the suggested construction of the contract is the        in that which the contract allows. Was it the intention that
proper one. Much has been well said in the opinions of this        Henderson should not be bound to convey the land at all if
court from Hemming v. Zimmerschitte, 4 Tex. 159, to Moss           without just cause he should choose not to do so? That it was
v. Wren, 102 Tex. 567, 113 S. W. 739, 120 S. W. 847,               is the contention of the defendant, expressed in its simplest
affirming the right to specific performance of contracts for       form. We think it does not give proper weight to the word
the conveyance of land which contain stipulations for the          ‘cause.’
payment of sums of money, called penalties, or liquidated
damages, inserted to secure the performance of the act agreed      The contract does not say or mean that Henderson will
to be performed. A different *24 class of contract is that         return the property delivered or its value, if he elect or
where one of the parties is given the election to do something     choose not to convey, but that he will return, etc., if he
else in lieu of conveying the land.                                fail or refuse to convey for cause, that is, for something
                                                                   causing him to fail or refuse, and justifying his failure or
The principle which controls is well settled. It is thus stated:   refusal rather than the mere exercise of his own volition. This
‘The question always is: What is the contract? Is it that          explanation frees the contract from a criticism that would
one certain act shall be done, with a sum annexed, whether         render it not only unreasonable, but well-nigh futile. We thus
by way of penalty or admages, to secure the performance            characterize the contract, as the defendant would construe it,
of this very act? Or is it that one of two things shall be         because of the fact of the delivery of the perishable personal
done at the election of the party who has to perform the           property into the possession of the vendor, as the price of
contract, namely, the performance of the act or the payment        the land, to be held and enjoyed by him at least so long as
of the sum of money? If the former, the fact of the penal          the law suit referred to should last, with no corresponding
or other like sum being annexed will not prevent the court         obligation but that finally to elect whether he would convey
enforcing the performance of the very act, and thus carrying       the land *25 or return the property, or its value, with no
into execution the intention of the parties. If the latter, the    provision for deterioration in it or compensation for its use.
contract is satisfied by the payment of a sum of money, and        Of course mere improvidence in a contract does not control
there is no ground for proceeding against the party having the     its plain provisions, but an unreasonableness in a suggested
election, to compel the performance of the other alternative.’     construction may justly prevent its adoption when a more
Fry on Specific Performance, § 115. See, also, 36 Cyc. 571,        reasonable one is as consistent with the language used. The
572. Whether a contract belongs to one class or the other          construction contended for gives to the words so often quoted
depends on the intention deduced from a proper construction        the same meaning as if they were ‘if the vendor shall fail or
of the instrument in which the parties have expressed their        refuse for any reason satisfactory to himself.’ Those used may
agreement.                                                         reasonably be interpreted differently so as to avoid absurd
                                                                   consequences.
There is certainly no room for the contention that the contract
sued on belongs to the first class mentioned in the above          We conclude that in the mere wording of the contract a
quotation. No sum of money is mentioned either as a penalty        conclusive reason is not found against specific performance,
or as liquidated damages to secure the conveyance of the land.     and, therefore, take up the next objection, which is that such
On the contrary, the agreement is to return the consideration,     relief cannot properly be adjudged because Henderson, a
or its equivalent, in case the deed is not executed; that is, to   purchaser of the land from the state as an actual settler under
do that which would constitute a rescission. We think counsel      the statutes regulating sales of the public school lands, not
for defendant is clearly correct in giving that construction to    having completed the required occupancy, could not legally
the instrument. We are unable to admit, however, that the          bind himself to convey as attempted. The facts are these: One
rescission is authorized at Henderson's mere election. The         Green first settled and located his home on another section
agreement is not so expressed. The first stipulation is that he    and then purchased it and two others in addition, one of
will convey, and the second is that if he ‘fail or refuse from     which is the land in controversy. He conveyed the three to
any cause’ to execute the deed he shall do the other thing,        Henderson, who also settled on the one first mentioned, and
which is not apt or appropriate language in which to express       properly recorded and filed in the land office his deed and was
an unconditional right of rescission at the mere election of       substituted in place of Green as purchaser. It was therefore
the vendor. If it has the effect of a reservation of such a        necessary to the acquisition of title that an actual settlement



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            3
Redwine v. Hudman, 104 Tex. 21 (1911)
133 S.W. 426

                                                                        is that the court could not have compelled him to do so,
be continued either on the original home section, or on one of
                                                                        even if the contract had contemplated that he should, which
the additional ones, for three years from the date of Green's
                                                                        is admitted not to have been the case. Specific performance
purchase. Henderson made the contract with Hudman with his
                                                                        will not be decreed unless complete performance by each
claim to the land in this situation, and afterwards, before the
                                                                        party can be enforced, which was not true here as to either
completion of the three **429 years, conveyed the section
                                                                        party. Therefore at the time Henderson conveyed to Redwine
in controversy and the other additional one to Redwine, who
                                                                        there was no right in Hudman to enforce a conveyance of the
settled on the latter, and filed his deed and obligations in the
                                                                        land. Such a right could only have become complete from a
land office in compliance with the statute so as to become
                                                                        compliance by Henderson with the statutory requirement as
a purchaser from the state. The lawsuit referred to in the
                                                                        to occupancy and a consequent acquisition of the title. The
contract was decided in 1908 in Henderson's favor.
                                                                        contract to convey the land was necessarily dependent on
                                                                        Henderson's future action, and, as that action was not to be of
We are not prepared to hold that the contract between
                                                                        a nature that could be required of Henderson by the decree of
Henderson and Hudman was illegal, in that it was necessarily
                                                                        any court, no enforceable right to a conveyance could arise
violative of the provisions or policies of the statutes,
                                                                        against him unless he obtained the title. He has never done
under which the former held. The instrument contains no
                                                                        that; but Redwine, proceeding in strict accordance with the
stipulation that, so far as we can now see, would necessarily
                                                                        statutes, has put himself in the position of purchaser from
contravene any of the purposes disclosed in the statutes;
                                                                        the state and as such has completed the necessary occupancy,
and, if Henderson had retained the section in question until
                                                                        and, under positive statutory provisions, is entitled to be
he completed his occupancy, it may be that there would
                                                                        recognized by the state as owner.
be no obstacle to the enforcement of his agreement. It is
well, however, to proceed with caution in dealing with this
                                                                        When Henderson contracted to convey to Hudman, the title
subject, and we find it unnecessary to determine this question
                                                                        was in the state to be acquired in accordance with the
definitely. Conceding that the contract is a lawful one, it by no
                                                                        statute. Redwine has strictly complied with those statutes,
means follows that it is one to which the remedy of specific
                                                                        and Hudman has not. The equitable jurisdiction of courts of
performance can be applied. That it is not will, we think,
                                                                        equity to enforce specific performance is inapplicable to such
appear from a proper consideration of the facts stated.
                                                                        a situation.
Of course a court of equity will not decree a conveyance
                                                                        The judgment of the district court was correct, and that of the
which will defeat the title to be conveyed, nor one which will
                                                                        Court of Civil Appeals erroneous.
not substantially accomplish the end intended. It is obvious
that, if the lawsuit had been decided before the three years'
                                                                        Judgment of Court of Civil Appeals reversed. Judgment of
occupancy was complete, no performance of the contract
                                                                        district court affirmed.
could properly have been decreed. The reason is that the court
could not have required Henderson to maintain the settlement
necessary to the efficacy of the decree to confer any title. *26
Thus that title would have been exposed to a danger against             All Citations
which the court could not have provided. If it be said Hudman
could have settled and completed the occupancy, the answer              104 Tex. 21, 133 S.W. 426


End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  4
Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)




                                                                       2 Cases that cite this headnote
                      118 S.W.3d 73
                Court of Appeals of Texas,
                         Austin.                                 [3]   Specific Performance
                                                                           Necessity
       ROUNDVILLE PARTNERS, L.L.C. and                                 Vendor and Purchaser
   Quintana Development Corporation, Appellants,                           Obligation to Convey in General
                        v.                                             Vendor and Purchaser
              Stephen M. JONES and                                         Tender
           Frankie Sue Jones, Appellees.                               In cases where the vendor's and purchaser's
                                                                       contract obligations pertaining to the sale of real
        No. 03–02–00712–CV. | Aug. 29,
                                                                       property are mutual and dependent, in that a deed
   2003. | Rehearing Overruled Nov. 13, 2003.
                                                                       is required to be delivered upon tender of the
Purchasers brought action against vendors arising out of               purchase price, a valid tender of the purchase
the failure to consummate a sale of real property, seeking             price invokes the vendor's obligation to convey
specific performance of the earnest money contract. Summary            and places him in default if he fails to do so,
judgment was awarded to vendors, and the Court of Appeals              and the tender also satisfies the fundamental
reversed and remanded. On remand, after a bench trial,                 prerequisite of specific performance—that the
the 26th Judicial District Court, Williamson County, Billy             purchaser show that he has done or offered to do,
Ray Stubblefield, J., rendered judgment in favor of vendors.           or is then ready and willing to do, all the essential
Purchasers appealed. The Court of Appeals, David Puryear,              and material acts which the contract requires of
J., held that vendors' failure to perform their obligations            him.
under the contract did not prevent purchasers from tendering
                                                                       5 Cases that cite this headnote
performance, and thus purchasers were not entitled to specific
performance.
                                                                 [4]   Tender
Affirmed.                                                                  Mode and Sufficiency
                                                                       The term “tender” means to notify the other party
                                                                       that one intends to perform one's side of a bargain
                                                                       immediately or at a specific time and place and
 West Headnotes (10)
                                                                       to demand that the other party do likewise.

 [1]    Appeal and Error                                               3 Cases that cite this headnote
           Sufficiency of Evidence in Support
        When the trial court acts as a fact finder, Court of     [5]   Specific Performance
        Appeals reviews its findings under the legal and                   Necessity
        factual sufficiency standards.                                 In general, actual tender of performance is a
                                                                       prerequisite to obtaining the remedy of specific
        2 Cases that cite this headnote
                                                                       performance; however, when actual tender
                                                                       would have been a useless act, an idle ceremony,
 [2]    Specific Performance                                           or wholly nugatory, constructive tender will
            Discretion of Court                                        suffice.
        Specific Performance
                                                                       Cases that cite this headnote
            Form of Remedy
        Specific performance is an equitable remedy that
        rests in the discretion of the court.                    [6]   Specific Performance
                                                                           Time as of the Essence of the Contract



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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)


        When a contract for the sale of real property                  closing, contract never closed, and thus vendors'
        specifies that time is of the essence, the purchaser           performance was not yet due.
        must make an actual tender of the price and
        demand of the deed within the time allowed by                  Cases that cite this headnote
        the contract in order to be entitled to specific
        performance.                                            [10]   Contracts
                                                                           Grounds of Action
        2 Cases that cite this headnote
                                                                       The elements of a breach of contract claim
                                                                       are: (1) the existence of a valid contract, (2)
 [7]    Specific Performance                                           performance or tendered performance by the
            Time as of the Essence of the Contract                     plaintiff, (3) breach of the contract by the
        When time is of the essence in a contract, a party             defendant, and (4) damages to the plaintiff
        must perform or tender performance in strict                   resulting from the breach.
        compliance with the provisions of the contract
        and within the time prescribed in order to be                  7 Cases that cite this headnote
        entitled to specific performance.

        4 Cases that cite this headnote
                                                               Attorneys and Law Firms
 [8]    Specific Performance
                                                                *74 Eric J. Taube, Sarah Elizabeth Starnes, Hohmann,
            Necessity
                                                               Taube & Summers, L.L.P., Robert C. DeCarli, Law Offices
        Vendors' failure to execute a deed and other           DeCarli & Irwin, Austin, R. Mark Dietz, Dietz & Associates,
        necessary documents under contract for sale            P.C., Round Rock, for Appellants.
        of real property, and their failure to take
        affirmative action to close the contract, did not      Don H. Magee, David B. Young, Michael A. Wren,
        prevent purchasers from tendering their own            McGinnis, Lochridge & Kilgore, L.L.P., Austin, for
        performance before expiration of the contract,         Appellees.
        and thus purchasers were not entitled to specific
        performance; purchasers executed all necessary         Before Chief Justice LAW, Justices B.A. SMITH and
        documentation after expiration of the contract         PURYEAR.
        even though vendors still had not performed the
        obligations purchasers alleged prevented them
        from tendering performance, and there was no                                    OPINION
        evidence purchasers could not have done so
                                                               DAVID PURYEAR, Justice.
        before expiration of the contract.
                                                               After a sale of commercial real estate was not
        1 Cases that cite this headnote
                                                               consummated, appellants Roundville Partners, L.L.C. and
                                                               Quintana Development *75 Corporation (collectively
 [9]    Specific Performance
                                                               “Roundville”) 1 sued Stephen M. and Frankie Sue Jones
            Necessity
                                                               seeking specific performance of the commercial earnest-
        Vendors' failure to pay property taxes and             money contract. Both parties moved for summary judgment,
        obtain a waiver of a right of first refusal            and the district court granted the Joneses' motion and denied
        did not prevent purchasers from tendering              Roundville's motion. Roundville appealed to this Court and
        performance under contract for sale of real            we reversed and remanded, holding that a genuine issue
        property, and thus purchasers were not entitled to     of material fact existed. See Roundville Partners, L.L.C.
        specific performance of contract, where contract       v. Jones, No. 03–00–00724–CV, 2001 WL 838736, 2001
        specified that vendors' obligations were due at        Tex.App. LEXIS 4970 (Austin July 26, 2001) (not designated
                                                               for publication) [hereinafter “Roundville I ”]. Following a


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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)


bench trial, the district court rendered judgment in favor of the   Lot 1 included in contract two was not surveyed, the title
Joneses and ordered that Roundville take nothing. On appeal,        company would not issue a title commitment or title policy.
Roundville claims that (1) there is legally and factually           Additionally, Macs discovered that a partial conveyance of
insufficient evidence to support the trial court's holding          Lot 1 might jeopardize the property's status as a platted
that Roundville was not entitled to specific performance;           subdivision and cause the property's value to decrease
(2) there is legally and factually insufficient evidence to         significantly. The parties agreed to modify the property
support several of the district court's findings of fact and        description in contract two to encompass only Lot 4.
conclusions of law, specifically its findings regarding the         Although the amount of the property to be conveyed was
Joneses' affirmative defenses; and (3) there is legally and         reduced, there was no adjustment to the purchase price.
factually insufficient evidence to support the district court's     Consequently, at closing the Joneses received $560,000, an
holding that Roundville is not entitled to attorney's fees. We      amount that exceeded the fair market value of Lot 4, which
will affirm the judgment of the district court.                     was approximately $68,000.

                                                                    Because Roundville lacked sufficient cash to close contract
                                                                    two as originally agreed, the Joneses agreed to restructure
  FACTUAL AND PROCEDURAL BACKGROUND
                                                                    the financing for the $560,000 purchase price. As a result,
In June 1997, Michael Macs, the president and sole                  Roundville paid the Joneses $331,537.17 in cash, rather than
shareholder of Quintana, executed an earnest-money contract         the $360,000 originally contemplated. Roundville executed
with the Joneses, through their real estate agent, Bob Elder,       a long-term note for $200,000 to the Joneses as originally
for the sale of 22.3 acres of land. The property, a platted         agreed and executed a second promissory note to the Joneses
subdivision known as the Henderson Tract Subdivision, is            for $6,862.83, payable on or before January 13, 1998. 5 Both
located in Round Rock, Texas, and consists of five lots.            Macs and Elder testified that the understanding of the parties
The property included a single house that straddled lots 1          at the time contract two closed was that contract three would
and 4. The parties negotiated a purchase price of $1,800,000        close within a couple of weeks, enabling Roundville to pay
based on an average valuation of $1.83 per square foot, with        the $6,862 contemporaneously with the closing of contract
$360,000 to be paid in cash at closing and the balance of the       three.
purchase price to be financed by a long-term note payable
to the Joneses (“contract one”). Prior to the closing date of       Consistent with the changes made to contract two, the
December 31,1997, Elder approached Macs with a request              parties modified the property description in contract three to
from the Joneses to restructure the deal into two separate          encompass Lot 1 in its entirety, along with Lots 2, 3, and 5.
contracts (“contract two” and “contract three”) to allow the        Section nine of the contract required that the parties close the
Joneses to take advantage of the tax deferral for the sale of       sale on or before January 30, 1998. Further, in section twenty-
their primary residence. Contract two is a residential earnest      three, the parties agreed that “time is of the essence.”
money contract and contract three is a commercial earnest-
money contract. 2 The parties agreed to close the second            Stegall had closing documents prepared on January 23, 1998,
                                                                    with an anticipated closing to be held on January 30, 1998.
contract on December 31, 1997. 3 The third contract was to
                                                                    Included in these documents was a HUD settlement statement
close on or before January 30, 1998.
                                                                    that showed the Joneses would need $15,000 at closing.
                                                                    Stegall testified that she was informed by the Joneses that
Under contract two, the Joneses agreed to convey the
                                                                    they did not have the cash to close. Stegall told Elder, who
property containing their residence, consisting of all of lot
                                                                    immediately called the Joneses and confirmed that they did
4 and approximately five acres of lot 1, for $560,000—
                                                                    not have sufficient funds to close by January 30, 1998.
approximately $1.83 per square foot. 4 Macs was to pay
$360,000 in cash and execute a long-term note to the Joneses        Mr. Jones denied telling anyone that he lacked the funds to
for $200,000.                                                       close, although in his earlier deposition testimony he stated
                                                                    that he could not remember whether he told anyone that he
On December 31, 1997, the parties met at Alamo Title                could not close on contract three because of a cash shortage.
Company to close contract two. Carolyn Stegall, the closing         He also admitted that he did not then possess the money
agent, *76 informed Macs that because the portion of



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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)


necessary to close, but claimed he could have borrowed the        closing, but the Joneses did not attend. At that time, Macs
money from relatives.                                             signed the deed of trust and accompanying real estate lien
                                                                  note. Another closing date was set for April 10, but that also
Meanwhile, the due date on the $6,862 note from Roundville        did not take place. Akin then scheduled a closing date for
had passed. The Joneses told Elder they wanted payment on         April 17, which was later delayed to April 20. This attempt to
the note. Elder called Macs to inform him that the Joneses        close contract three was also unsuccessful.
were looking for payment on the second note. Macs expressed
concern about giving more money to the Joneses before             As a result of the failure to close contract three, Roundville
contract three closed and wanted to tie the payment of            filed suit against the Joneses in May 1998 to compel the
the $6,862 note to the closing on contract three, either by       Joneses to convey the remainder of the property as required
crediting the note against the amount the Joneses owed at         under contract three. Both parties moved for summary
closing or by tendering the check to them at the closing. The     judgment. Roundville moved for summary judgment on the
Joneses refused this because they regarded the $6,862 note        issue of specific performance. In support of their motion
as a separate obligation under contract two, and unrelated        for summary judgment, the Joneses claimed, among other
to contract three. Mr. Jones testified that he viewed Macs's      things, that Roundville had failed to tender performance
attempt to *77 tie the payment of the note to the closing on      and the contract had expired under its own terms. In June
contract three as an attempt to “blackmail” him to close.         1999, the district court rendered judgment granting the
                                                                  Joneses' motion and denying Roundville's motion. Roundville
The closing on contract three did not take place in January       appealed to this Court, which reversed the trial court's
1998. Stegall, Elder, and Macs all testified that their           summary judgment, finding that a genuine issue of material
understanding of why contract three did not close in January      fact existed concerning the Joneses' actions and whether they
was that the Joneses needed more time because they lacked         prevented Roundville from complying with the terms of the
sufficient funds to close. The Joneses, however, testified that   third contract. See Roundville I, No. 03–00–00724–CV, 2001
the reason contract three did not close was because they were     WL 838736, 2001 Tex.App. LEXIS 4970.
never told an exact date and time for the closing and they
were never provided a closing statement showing how much          Meanwhile, in May 1999, Roundville declared bankruptcy.
money they needed to close.                                       Roundville attempted to recover all monies conveyed to the
                                                                  Joneses under contract two that exceeded the fair market
After the original closing date of January 30, 1998 passed,       value of Lot 4, asserting that such amount was a fraudulent
Macs, Elder, and Stegall all testified that they were under       transfer under federal and Texas law. 6 See *78 11 U.S.C.A.
the impression that the closing deadline would be extended.       § 548(a)(1)(B)(i), (ii)(I) (West Supp.2003); Tex. Bus. &
Elder asked Stegall to prepare an addendum to the purchase        Com.Code Ann. § 24.006(a) (West 2002). After a bench trial,
agreement extending the closing date. Stegall prepared the        the bankruptcy court rejected Roundville's fraudulent-transfer
extension and sent it to Elder, who then contacted the Joneses.   argument. Roundville, however, did obtain a discharge of its
Elder testified that he believed they were proceeding forward.    obligation under the $200,000 note to the Joneses to the extent
Both Elder and Macs signed the extension. The Joneses,            that it exceeded the fair market value of Lot 4, apparently
however, never signed the extension.                              because the Joneses did not file a proof of claim.

At some point after January 30, the Joneses hired Rick            In June 2002, this case was tried to the court. After a bench
Akins to collect the amount owed them on the $6,862               trial, the district court rendered judgment in favor of the
note from Roundville. Meanwhile, both parties made several        Joneses and against Roundville. It is from this judgment that
subsequent attempts during the spring to close contract three.    Roundville now appeals.
Closing dates were set for February 27 and then again for
March 3, but the parties did not consummate the sale on
either of those dates. On March 20 by a letter to Akins,
Roundville demanded that the Joneses close contract three                                DISCUSSION
no later than March 27, 1998, at 5:00 p.m. On March 27,
                                                                  Standard of Review
Roundville notified Akin that the closing was set for that day
                                                                   [1] When the trial court acts as a fact finder, we review its
at 4:00 p.m. Macs and Elder arrived at Stegall's office for the
                                                                  findings under the legal and factual sufficiency standards. In


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            4
Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)


re Doe, 19 S.W.3d 249, 253 (Tex.2000). When we review                704 (1953)). A decree of specific performance is not a matter
legal sufficiency, we review the evidence in a light that tends      of right even to enforce terms of a contract, but is “a matter
to support the finding of the disputed facts and disregard all       of grace” in the discretion of the court. 14 Powell on Real
evidence and inferences to the contrary. Lee Lewis Const.,           Property § 81.04[1][c] (Michael Allan Wolf ed., 2000).
Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex.2001). If more than
a scintilla of evidence exists, it is legally sufficient. Id. More    [3]     [4] In Bell v. Rudd, the supreme court held, as a
than a scintilla of evidence exists if the evidence furnishes        fundamental matter, that before a grantee or obligee may
some reasonable basis for differing conclusions by reasonable        assert any rights under an escrow contract he must show
minds about a vital fact's existence. Id. at 782–83.                 that he has complied with the conditions of the escrow, i.e.,
                                                                     actually tendered performance, or has offered to perform
In reviewing a factual sufficiency issue, we conduct a neutral       and was prevented without fault of his own. 144 Tex. 491,
review of all the evidence. Cain v. Bain, 709 S.W.2d 175, 176        191 S.W.2d 841, 844 (1946). In cases where the seller's and
(Tex.1986). We reverse the ruling for factual insufficiency          buyer's contract obligations are mutual and dependent, in
of the evidence only if the ruling is so against the great           that a deed is required to be delivered upon tender of the
weight and preponderance of the evidence as to be manifestly         purchase price, the purpose of a tender satisfies two purposes.
erroneous or unjust. Id. We will not substitute our judgment         First, a valid tender of the purchase price invokes the seller's
for that of the trier of fact merely because we might reach a        obligation to convey and places him in default if he fails to do
different conclusion. The Cadle Co. v. Regency Homes, Inc.,          so. Second, the tender satisfies the fundamental prerequisite
21 S.W.3d 670, 674 (Tex.App.-Austin 2000, pet. denied).              of specific performance—that the buyer show that he has
                                                                     done or offered to do, or is then ready and willing to do,
                                                                     all the essential and material acts which the contract requires
Specific Performance
                                                                     of him. 7 Wilson v. Klein, 715 S.W.2d 814, 821 (Tex.App.-
In its first issue, Roundville claims that the evidence was
                                                                     Austin 1986, writ ref'd n.r.e.) (citing 4 Pomeroy's Equity
legally and factually insufficient to support the trial court's
                                                                     Jurisprudence § 1407, p. 1050 (5th ed.1941); 17 Am.Jur.2d
holding that it was not entitled to specific performance.
                                                                     §§ 63, 64, pp. 91–92 (1973); annot., 79 A.L.R. 1240 (1932)).
Roundville first claims that it was entitled to specific
performance based on the decision by this Court in Roundville
                                                                      [5]    [6]     [7] In Wilson, this Court contemplated under
I, where we held that Roundville must show at trial that it
                                                                     what circumstances an actual tender is required or when
was prevented from tendering performance by the Joneses.
                                                                     a constructive tender will suffice. Id. In general, actual
Roundville I, No. 03–00–00724–CV, 2001 WL 838736, 2001
                                                                     tender is a prerequisite to obtaining the remedy of specific
Tex.App. LEXIS 4970. Roundville claims that it established
                                                                     performance. However, when actual tender would have
conclusively that the Joneses prevented it from tendering
                                                                     been a useless act, an idle ceremony, or wholly nugatory,
performance by not performing several of their obligations
                                                                     constructive tender will suffice. Id. at 822. For example, when
under contract three. Specifically, Roundville argues that the
                                                                     a seller has conveyed the property to a third person, actual
failure of the Joneses to execute a warranty deed prevented
                                                                     tender by a buyer is unnecessary. Id. However, when the
it from executing a real estate lien note. Further, Roundville
                                                                     contract specifies that “time is of the essence,” as this contract
argues that the Joneses prevented a closing date from being
                                                                     does, there is a more particular rule that applies. Id. “In such
set by causing all persons involved with the closing to believe
                                                                     cases, the buyer ‘must make an actual tender of the price and
that they lacked money to close and wished to extend the
                                                                     demand of the deed’ within the time allowed by the contract.”
closing deadline.
                                                                     Id. (quoting 4 Pomeroy, supra, at 1052). When time is of
                                                                     the essence in a contract, a party must perform or tender
 [2] As this Court discussed in Roundville I, specific
                                                                     performance in strict compliance with the provisions of the
performance is an equitable remedy that rests in the discretion
                                                                     contract and within the time prescribed in order to be entitled
of the court. Scott v. Sebree, 986 S.W.2d 364, 370 (Tex.App.-
                                                                     to specific performance. Id. (citing Liedeker v. Grossman, 146
Austin 1999, pet. denied); Nash v. Conatser, 410 S.W.2d
                                                                     Tex. 308, 206 S.W.2d 232, 234–35 (1947)).
512, 519 (Tex.Civ.App.-Dallas 1966, no writ). This Court
has previously acknowledged that this equitable remedy is
                                                                     Where one party claims that it was prevented from tendering
frequently granted when a *79 valid contract to purchase
                                                                     actual performance in strict compliance within the prescribed
real property is breached by the seller. Scott, 986 S.W.2d at
                                                                     time, as in this case, Ratcliffe v. Mahres is instructive. 122
370 (citing Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703,


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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)


S.W.2d 718, 721 (Tex.Civ.App.-El Paso 1938, writ ref'd). In
Ratcliffe, the court of appeals considered a suit for specific      The Joneses testified that the reason a closing was not
performance on a contract to convey an undivided interest           scheduled in January was because they were not provided
in an oil well and certain oil leases. Id. The court noted          with a closing statement indicating what they needed in order
that the language of the contract, as well as the nature of         to close. They also indicated that they were never told a time
the transaction, indicated that time was of the essence. Id.        or place when closing would occur. Mr. Jones testified that he
The court then stated that for Ratcliffe to obtain specific         never told anyone that he did not have enough cash to close.
performance, he had to show that he had complied with               He indicated that while he did not personally have sufficient
the contract obligations, or that compliance was prevented          funds, he had the ability to borrow what was needed from a
by Mahres, attributing the rule       *80 governing these           family member. He claimed that he could not do so until he
circumstances to Pomeroy's treatise, Equity Jurisprudence.          was provided a closing statement showing him exactly how
Id. at 721–22. After reviewing the evidence concerning              much he needed.
Mahres's conduct and noting that Ratcliffe had not produced
evidence of facts sufficient to excuse his non-performance,         It is clear that neither party involved made an explicit
the court concluded that Ratcliffe was not entitled to specific     request or demand that the contract close in January. The
performance. Id. at 722.                                            Joneses did not schedule a closing, nor did Roundville. The
                                                                    Joneses allowed the closing date to come and go without any
 [8] It is undisputed that Roundville did not actually tender       affirmative action on their part to ensure that contract three
performance on this contract within the time specified—             closed by January 30. They claimed that they were waiting
January 30, 1998. Because Roundville conceded that it did           for *81 the title company to provide them with a closing
not actually tender performance, it had the burden to prove         statement and for notification of when and where the closing
at trial that it was prevented from tendering performance by        would take place. The Joneses were not in default under the
the actions of the Joneses. In Roundville I, we held that a         contract prior to or on January 30, at which time the contract
genuine issue of material fact existed as to whether or not the     expired by its own terms. We cannot say that the inaction
Joneses prevented Roundville from tendering performance.            on the part of the Joneses rises to the level of affirmatively
Roundville I, No. 03–00–00724–CV, 2001 WL 838736 at                 preventing Roundville from tendering performance.
*9–10, 2001 Tex.App. LEXIS 4970 at *29–31. Roundville
asserts that it has satisfied the prerequisite of tender because,    [9] Roundville claims that it was prevented from executing
at all times it has been ready, willing, and able to tender         a real estate lien note because of the failure of the Joneses
performance on contract three but was prevented from doing          to execute a deed conveying the property. 10 However,
so by the actions of the Joneses. Roundville claims that the        Roundville did execute a lien note without a deed on March
Joneses failed to fulfill their obligations in the following        27, 1998. On March 20, Roundville demanded that the
ways: (1) failure to execute a warranty deed and prepare other      Joneses close contract three by March 27 at 5:00 p.m.
necessary documents; (2) failure to obtain a right of first         Roundville set the closing for March 27 at 4:00 p.m.,
refusal from GTE; 8 and (3) failure to pay property taxes.          notifying the Joneses through Akin. Roundville then went to
                                                                    the title company and executed all the documents necessary
Macs testified that all Roundville needed to do to close was        for closing, even though the Joneses were not present and
show up and sign a real estate lien note and deed of trust.         did not furnish the documents called for in contract three,
He said that when he stopped by the title company in late           specifically the deed conveying the property. There is no
January there was a draft of a note and deed, but they were         evidence that Roundville could not have done the same
incomplete, missing dates and some addresses. Stegall told          thing on or before January 30, 1998. The Joneses' actions
him that they would be filled in at the closing, which was          or inactions did not prevent Roundville from tendering
not yet scheduled. Macs testified that he was in constant           performance in March. There is nothing in the record
contact with Stegall to arrange for a closing date, yet a closing   that explains why Roundville could not have executed the
was never scheduled in January. However, a closing was              necessary documents to close in January.
scheduled at least six times after the January 30 closing date
specified in the contract. Further, while Macs was in contact       The evidence surrounding the events leading up to the
with the title company, he never contacted the Joneses to offer     attempted closing of contract three is not disputed. Roundville
or demand to close on or before January 30. 9                       did not set a closing or demand that one be set on or before



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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)



January 30. Neither did the Joneses. Neither party went to
                                                                     *82 Breach of Contract
the title company to tender performance of their obligations
                                                                     [10] In its fifth issue, Roundville argues that the trial court
under contract three by the January 30 deadline, when the
                                                                    erred in its failure to find that the Joneses breached contract
contract expired by its own terms. Roundville claims that it
                                                                    three. The elements of a breach of contract claim are: (1)
assumed, by the parties' actions that the contract had been
                                                                    the existence of a valid contract; (2) performance or tendered
extended, but in fact the Joneses never signed the extension
                                                                    performance by the plaintiff; (3) breach of the contract by the
agreement prepared by Elder. The only dispute is whether the
                                                                    defendant; and (4) damages to the plaintiff resulting from the
actions of the Joneses prevented Roundville from tendering
                                                                    breach. National W. Life Ins. Co. v. Rowe, 86 S.W.3d 285, 297
performance. Roundville has not established that the Joneses
                                                                    (Tex.App.-Austin 2002, pet. filed). Because we have held that
prevented it from actual tender of performance within the time
                                                                    Roundville did not tender performance and its tender was not
specified.
                                                                    prevented by the Joneses, its breach of contract claims also
                                                                    fails. We overrule issue five.
The acts Roundville complains of as preventing it from
tendering performance under contract three do not establish
that it was in fact prevented from performing its obligations.      Attorney's Fees
There were no contrary facts for the district court to consider.    In its sixth issue, Roundville claims it conclusively
Rather, the dispute is in the conclusion that the actions           established its entitlement to attorney's fees. However, in
complained of did or did not prevent Roundville from                order to be entitled to attorney's fees, a party must prevail
tendering performance. Because there is only one version of         on its suit based on a written contract. See Tex. Civ.
the facts on the pivotal point of whether the Joneses prevented     Prac. & Rem.Code Ann. § 38.001(8) (West 1997). Because
Roundville from tendering performance, we cannot say that           Roundville has not prevailed on any of its claims, it is not
the district court's judgment is clearly wrong or unjust.           entitled to attorney's fees. Issue six is overruled.
These convoluted negotiations appear to have produced an
inequitable result, but under the facts presented, Roundville
is not entitled to the remedy of specific performance. We hold
                                                                                           CONCLUSION
that the evidence is legally and factually sufficient to support
the district court's findings and conclusions that Roundville       Having overruled Roundville's issues, we affirm the judgment
is not entitled to specific performance. Issue one is overruled.    of the trial court.
Because we hold that the trial court did not err in holding
that Roundville was not entitled to specific performance, it is
unnecessary to reach issues two, three, and four.                   All Citations

                                                                    118 S.W.3d 73


Footnotes
1      Quintana Development Corporation owns a seventy-percent interest in Roundville Partners, L.L.C. and serves as
       Roundville's manager.
2      Contract two and contract three do not contain any references to each other.
3      The Joneses needed to close contract two on December 31, 1997, because they had planned to use the proceeds of
       the sale in a simultaneous closing on a new house.
4      It was the intent of the parties that contract two would convey $560,000 worth of land at $1.83 per square foot, maintaining
       the price per square foot established in contract one.
5      In order to facilitate the closing in light of the cash shortage, Elder agreed to take his commission in the form of two notes
       —one from the Joneses and one from Roundville in the amount of $21,600. This note, coupled with the $6,862.83 note
       to the Joneses, covered the cash shortage of $28,462.83.
6      A transfer may be fraudulent if a debtor made the transfer without receiving a reasonably equivalent value in exchange,
       and the debtor was insolvent or became insolvent because of the transaction. 11 U.S.C.A. § 548(a)(1)(B)(i), (ii)(I) (West
       Supp.2003); Tex. Bus. & Com.Code Ann. § 24.006(a) (West 2002).
7      The term “tender” means to notify the other party that one intends to perform one's side of the bargain immediately or at a
       specific time and place and to demand that the other party do likewise. Perry v. Little, 419 S.W.2d 198, 200–01 (Tex.1967).


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Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73 (2003)



8      GTE had a lease on the property to be conveyed under contract three that included a right of first refusal on any offer to
       purchase the property. The Joneses were required to obtain a waiver of this right at closing.
9      Macs also testified that he was told that there would not be a closing in January because the Joneses did not have
       sufficient funds to close; however, this information was provided by Stegall or Elder, not the Joneses.
10     Roundville also claims that the Joneses failure to pay property taxes and obtain a right of first refusal from GTE prevented
       it from tendering performance. This argument is without merit. The contract specified that these items would be furnished
       at closing. Since this contract has not yet closed, performance is not yet due.


End of Document                                                © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              8
Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


                                                                          A temporary injunction's purpose is to preserve
                                                                          the status quo of the litigation's subject matter
     KeyCite Yellow Flag - Negative Treatment                             pending a trial on the merits.
Distinguished by Olley v. HVM, L.L.C., Tex.App.-Hous. (14 Dist.),
 October 14, 2014                                                         Cases that cite this headnote
                     222 S.W.3d 921
                 Court of Appeals of Texas,                         [2]   Injunction
                           Tyler.                                             Preservation of status quo
                                                                          In deciding whether to grant a temporary
       RUS–ANN DEVELOPMENT, INC., Appellant,
                                                                          injunction, the only question before the trial
                       v.
                                                                          court is whether the applicant is entitled to
               ECGC, INC., Appellee.
                                                                          preservation of the status quo pending trial on the
                                                                          merits.
         No. 12–06–00324–CV. | April 30,
    2007. | Rehearing Overruled May 30, 2007.                             Cases that cite this headnote

Synopsis
Background: Commercial lessee of golf course brought                [3]   Injunction
action seeking a temporary injunction to prevent lessor from                  Grounds in general; multiple factors
evicting it under the terms of the lease, and then amended its            To obtain a temporary injunction, an applicant
suit to seek specific enforcement of an option agreement. The             must plead and prove three specific elements:
173rd Judicial District Court, Henderson County, Dan Moore,               (1) the cause of action against the defendant; (2)
J., entered the temporary injunction. Lessor appealed.                    a probable right to the relief sought; and (3) a
                                                                          probable, imminent, and irreparable injury in the
                                                                          interim.
Holdings: The Court of Appeals, James T. Worthen, C.J.,
                                                                          3 Cases that cite this headnote
held that:

[1] lessee did not breach its lease prior to timely exercise of     [4]   Appeal and Error
its option to purchase leased property;                                      Injunction
                                                                          Appeal and Error
[2] fact that lessee did not tender payment on the option                    Refusing injunction
contract did not preclude it from demonstrating that it would
                                                                          Injunction
suffer probable injury if it did not obtain a temporary
                                                                              Discretionary Nature of Remedy
injunction; and
                                                                          The decision to grant or deny a temporary writ
                                                                          of injunction lies within the sound discretion of
[3] lessee was able to demonstrate a probable right of recovery
                                                                          the trial court, and the court's grant or denial is
on its cause of action for specific performance of the option
                                                                          subject to reversal only for a clear abuse of that
contract.
                                                                          discretion.

                                                                          Cases that cite this headnote
Affirmed.

                                                                    [5]   Appeal and Error
                                                                             Abuse of discretion
 West Headnotes (24)
                                                                          The trial court abuses its discretion when it
                                                                          misapplies the law to the established facts or
 [1]     Injunction                                                       when the evidence does not reasonably support
             Preservation of status quo                                   the conclusion that the applicant has a probable



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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


       right of recovery; the trial court does not abuse its
       discretion if some evidence reasonably supports         [10]   Landlord and Tenant
       its decision.                                                      Purchase under option
                                                                      When a tenant under a lease containing an
       Cases that cite this headnote                                  option to purchase exercises the option, a binding
                                                                      bilateral contract is formed, and the relation of
 [6]   Appeal and Error                                               landlord and tenant ceases and that of vendor and
          Findings of fact and conclusions of law                     purchaser arises.

       Appeal and Error                                               Cases that cite this headnote
          Sufficiency of Evidence in Support
       When, on appeal from a trial court's decision to
                                                               [11]   Landlord and Tenant
       deny or grant a temporary injunction, specific
                                                                          Waiver of notice
       findings of fact and conclusions of law are filed
       and a reporter's record is before the appellate                Commercial lessee extended term of lease for
       court, the findings will be sustained if there is              golf course notwithstanding lessee's alleged
       evidence to support them, and the appellate court              failure to notify lessor in writing, as required by
       will review the legal conclusions drawn from the               lease, of lessee's intent to extend the lease, where
       facts found to determine their correctness.                    lessee increased its monthly rental payment
                                                                      from $7500 to $8500 after original term of
       2 Cases that cite this headnote                                lease ended, which lessee was permitted to do,
                                                                      and lessor accepted those increased monthly
                                                                      payments.
 [7]   Landlord and Tenant
           Existence of relation of landlord and tenant               Cases that cite this headnote
       A forcible entry and detainer action is dependent
       on proof of a landlord-tenant relationship.
                                                               [12]   Landlord and Tenant
       1 Cases that cite this headnote                                    Acceptance of rent
                                                                      A lessor waives its right to declare a lease
                                                                      terminated after its primary term if it continues
 [8]   Forcible Entry and Detainer
                                                                      to accept monthly rental payments.
           Justices of the peace
       Jurisdiction of forcible entry and detainer actions            Cases that cite this headnote
       is expressly given to the justice court of the
       precinct where the subject property is located.
                                                               [13]   Landlord and Tenant
       Cases that cite this headnote                                      Improvements
                                                                      Commercial lessee that allegedly failed to make
                                                                      required improvements to leased property, a
 [9]   Justices of the Peace
                                                                      golf course, did not breach its lease in manner
            Forcible entry and detainer, and recovery of
                                                                      permitting lessor to terminate the lease prior to
       possession by landlord
                                                                      lessee's exercise of option to purchase the leased
       Landlord and Tenant                                            property; addendum that included the allegedly
           Jurisdiction                                               breached terms was entitled “Promissory Note”
       Without a landlord-tenant relationship, a justice              and was signed more than two months after
       court has no jurisdiction to enter a judgment in               lease was signed, addendum was not signed on
       a forcible entry and detainer action and may be                behalf of lessee, and lease set forth no deadline
       enjoined by a district court from doing so.                    by which lessee was to make the required
                                                                      improvements.
       1 Cases that cite this headnote



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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


                                                                         Contracts Relating to Real Property
        Cases that cite this headnote
                                                                    Specific Performance
                                                                        Contracts Relating to Personal Property
 [14]   Landlord and Tenant                                         Specific performance is more readily available
            Nature of the contract                                  as a remedy for the sale of real estate than for
        The rights and duties of a lessor and lessee are            the sale of personal property; this is because
        determined by the lease and are contractual.                damages are generally believed to be inadequate
                                                                    in connection with real property.
        Cases that cite this headnote
                                                                    Cases that cite this headnote
 [15]   Landlord and Tenant
            Questions of law or fact                         [19]   Specific Performance
        Whether a lease contract has been breached is a                 Necessity
        question of law.                                            Where a defendant has openly and avowedly
                                                                    refused to perform his part of the contract or
        Cases that cite this headnote                               declared his intention not to perform it, the
                                                                    plaintiff need not make tender of payment of the
 [16]   Injunction                                                  consideration before bringing suit for specific
            Landlord and tenant                                     performance.
        Specific Performance                                        2 Cases that cite this headnote
            Necessity
        Commercial lessee was not required to tender
                                                             [20]   Specific Performance
        payment on its option contract for purchase of
                                                                        Nature and grounds of duty of plaintiff
        leased property and close sale within 90 days of
        exercising option in order to establish probable            Where tender of performance is excused, the
        injury based on lessor's refusal to proceed with            party seeking specific enforcement of a contract
        sale, in support of lessee's request for temporary          must plead and prove that he is ready, willing,
        injunction preventing lessor from proceeding                and able to perform.
        with forcible entry and detainer action to recover
                                                                    2 Cases that cite this headnote
        leased golf course, thus giving lessee opportunity
        to show, at final hearing, that it was entitled to
        specific performance of option contract, where       [21]   Injunction
        lessor's refusal to proceed with sale was clear,                Landlord and tenant
        and lessee was ready, willing, and able to                  Commercial lessee was able to demonstrate
        perform its duties under the option contract.               a probable right of recovery on its cause of
                                                                    action for specific performance of an option
        Cases that cite this headnote
                                                                    contract to purchase leased property, a golf
                                                                    course, as required to allow lessee to obtain
 [17]   Injunction                                                  a temporary injunction preventing lessor from
            Real property in general                                filing a forcible entry and detainer action, despite
        The potential loss of rights in real property is a          lessor's contention that the option contract lacked
        probable, imminent, and irreparable injury that             essential terms, defeating any right to specific
        qualifies a party for a temporary injunction.               performance; the option contract contained
                                                                    the price, the property description, and the
        3 Cases that cite this headnote                             seller's signature, and other material terms were
                                                                    determinable as they appeared in the parties'
                                                                    lease agreement.
 [18]   Specific Performance



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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)




        4 Cases that cite this headnote                         Allen B. Boswell, Deborah J. Race, for appellee.

                                                                Panel consisted of WORTHEN, C.J., GRIFFITH, J., and
 [22]   Frauds, Statute Of                                      HOYLE, J.
            Necessity that writing show all the terms
        Frauds, Statute Of
            Sufficiency                                                                  OPINION
        Specific Performance
            Contracts relating to real property                 JAMES T. WORTHEN, Chief Justice.

        Before a court will decree the specific                 Rus–Ann Development, Inc. appeals a temporary injunction
        performance of a contract for the sale of land,         granted by the trial court enjoining it from proceeding with a
        or entertain a suit for damages for the breach          forcible entry and detainer action to recover a golf course it
        thereof, the written agreement or memorandum            had leased to ECGC, Inc. In three issues, Rus–Ann contends
        required by statute must contain the essential          the trial court abused its discretion in granting the temporary
        terms of a contract, expressed with such certainty      injunction because ECGC had not timely exercised the option
        and clarity that it may be understood without           to purchase that was part of the lease, ECGC had failed
        recourse to parol evidence.                             to comply with essential terms of the option contract, and
                                                                specific performance was not available to ECGC as a remedy.
        5 Cases that cite this headnote
                                                                We affirm.

 [23]   Frauds, Statute Of
            Description of Lands
                                                                                      BACKGROUND
        Frauds, Statute Of
            Statement of price                                  ECGC leased the Echo Creek Country Club (the “golf
        Frauds, Statute Of                                      course”) from Rus–Ann for one year beginning October
            Agreements relating to land                         1, 2004. ECGC exercised an option to continue the lease
                                                                through September 30, 2006. On December 6, 2005, Homer
        The essential elements required, in writing, for
                                                                A. Lambert, President of Rus–Ann Development Company,
        the sale of real property are the price, the property
                                                                sent ECGC a letter declaring that it was in default under the
        description, and the seller's signature.
                                                                terms of the lease. On December 14, ECGC sent a letter in
        Cases that cite this headnote                           response stating that it was not in default but asking for more
                                                                information on the alleged defaults. On December 21, 2005,
                                                                ECGC filed suit seeking a temporary injunction to prevent
 [24]   Specific Performance
                                                                Rus–Ann from evicting it under the lease. Correspondence
            Completeness
                                                                flowed back and forth between Rus–Ann and ECGC over
        The failure of a real estate sales contract to          the next several months regarding the alleged defaults under
        provide the fundamental provisions of a deed            the terms of the lease. On March 21, 2006, Rus–Ann sent
        of trust, or terms relating to the proration of         ECGC a letter declaring that the lease was terminated. The
        taxes, or the place of closing, does not render it      next day, ECGC sent Rus–Ann a letter declaring that it was
        unenforceable by specific performance.                  exercising its option to purchase the golf course. On April 7,
                                                                ECGC amended its suit for temporary injunction, stating that
        Cases that cite this headnote
                                                                it was “prepared and willing to perform in accordance with
                                                                the [option] agreement.” The trial court held two hearings
                                                                on ECGC's temporary injunction. After the second hearing,
                                                                the court said it would enter an order granting the temporary
Attorneys and Law Firms                                         injunction if ECGC tendered $400,000 into the registry of
                                                                the *925 court along with a $1,000,000 promissory note
*924 George S. Henry, for appellant.
                                                                made payable to Rus–Ann Development to be paid over thirty



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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


years at six percent interest. These were the terms specified in   law, any party may file a request for specified additional or
the option to purchase. Following ECGC's compliance with           amended findings of fact or conclusions of law. TEX.R. CIV.
these terms, the trial court entered an order for a temporary      P. 298; Gentry v. Squires Constr., Inc., 188 S.W.3d 396, 408
injunction enjoining Rus–Ann from any attempt to evict             (Tex.App.-Dallas 2006, no pet.)
ECGC from the golf course pending a trial on the merits in
the case.

                                                                                      CAUSE OF ACTION
Rus–Ann requested findings of fact and conclusions of law,
which were timely filed by the trial court. Rus–Ann appealed       In its first issue, Rus–Ann contends the trial court abused its
the granting of the temporary injunction to this court.            discretion in granting a temporary injunction enjoining it from
                                                                   proceeding with its forcible entry and detainer action because
                                                                   there was no evidence or insufficient evidence that ECGC had
                    STANDARD OF REVIEW                             timely exercised its option to purchase the golf course. In the
                                                                   absence of a timely exercise of the option, there can be no
 [1] [2] [3] A temporary injunction's purpose is to preserve cause of action for specific performance.
the status quo of the litigation's subject matter pending a trial
on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198,            [7] [8] [9] [10] A forcible entry and detainer action is
204 (Tex.2002). The only question before the trial court is        dependent on proof of a landlord-tenant relationship. Dass,
whether the applicant is entitled to preservation of the status    Inc. v. Smith, 206 S.W.3d 197, 200 (Tex.App.-Dallas 2006,
quo pending trial on the merits. Walling v. Metcalfe, 863          no pet.). Jurisdiction of forcible entry and detainer actions is
S.W.2d 56, 58 (Tex.1993). To obtain a temporary injunction,        expressly given to the justice court of the precinct where the
the applicant must plead and prove three specific elements:        property is located. Aguilar v. Weber, 72 S.W.3d 729, 731
1) the cause of action against the defendant; 2) a probable        (Tex.App.-Waco 2002, no pet.). Without a landlord-tenant
right to the relief sought; and 3) a probable, imminent, and       relationship, *926 a justice court has no jurisdiction to enter
irreparable injury in the interim. Butnaru, 84 S.W.3d at 204;      a judgment and may be enjoined by a district court from doing
Walling, 863 S.W.2d at 57.                                         so. See id. at 732. When a tenant under a lease containing an
                                                                   option to purchase exercises the option, a binding bilateral
 [4] [5] The decision to grant or deny a temporary writ of contract is formed. Pitman v. Sanditen, 626 S.W.2d 496, 498
injunction lies within the sound discretion of the trial court,    (Tex.1981). The relation of landlord and tenant ceases and
and the court's grant or denial is subject to reversal only for    that of vendor and purchaser arises. Id. Therefore, if ECGC
a clear abuse of that discretion. Butnaru, 84 S.W.3d at 204.       timely exercised its option to purchase, then the trial court
The trial court abuses its discretion when it misapplies the       properly enjoined Rus–Ann from continuing its forcible entry
law to the “established facts or when the evidence does not        and detainer action in the justice court.
reasonably support the conclusion that the applicant has a
probable right of recovery.” Khaledi v. H.K. Global Trading,        [11]      [12] Rus–Ann first contends that the contract
Ltd., 126 S.W.3d 273, 280 (Tex.App.-San Antonio 2003,              terminated because ECGC failed to notify it in writing, as
no pet.) (citing State v. Southwestern Bell Tel. Co., 526          required by the lease, that it was extending the term of the
S.W.2d 526, 528 (Tex.1975)). The trial court does not abuse        lease past September 30, 2005. Evidence before the trial
its discretion if some evidence reasonably supports the trial      court showed that ECGC could continue the lease following
court's decision. Butnaru, 84 S.W.3d at 211.                       September 30, 2005 by increasing its monthly rental payment
                                                                   from $7,500 to $8,500. It did so. Rus–Ann accepted these
 [6] When, as here, specific findings of fact and conclusions increased monthly payments. A lessor waives its right to
of law are filed and a reporter's record is before the appellate   declare a lease terminated after its primary term if it continues
court, the findings will be sustained if there is evidence to      to accept monthly rental payments. Nardis Sportswear v.
support them, and the appellate court will review the legal        Simmons, 147 Tex. 608, 614, 218 S.W.2d 451, 454 (1949).
conclusions drawn from the facts found to determine their
correctness. TMC Worldwide, L.P. v. Gray, 178 S.W.3d 29,            [13] Rus–Ann also contends that it terminated the lease
36 (Tex.App.-Houston [1st Dist.] 2005, no pet.). After the         by letter dated March 21, 2006, due to alleged breaches by
trial court files its original findings of fact and conclusions of ECGC. Specifically, it complains that ECGC failed to install



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Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


a new entry gate, replace a shed, and install new carpet in
the clubhouse as required by an addendum to the lease. On      [17] [18] [19] In Texas, the potential loss of rights in
March 22, 2006, ECGC sent Rus–Ann a letter declaring its      real property is a probable, imminent, and irreparable injury
intent to exercise its option to purchase the property. The trial
                                                              that qualifies a party for a temporary injunction. See Franklin
court made a finding that ECGC had exercised its option to    Savs. Ass'n v. Reese, 756 S.W.2d 14, 15–16 (Tex.App.-Austin
purchase.                                                     1988, no writ) (op. on reh'g). It is well understood that specific
                                                              performance is more readily available as a remedy for the
 [14] [15] The rights and duties of the lessor and lessee sale of real estate than for the sale of personal property. Scott
are determined by the lease and are contractual. Exxon Corp.  v. Sebree, 986 S.W.2d 364, 369 (Tex.App.-Austin 1999, pet.
v. Pluff, 94 S.W.3d 22, 29 (Tex. App.–Tyler 2002, pet.        denied). This is because damages are generally believed to
denied) (op. on reh'g). Whether a lease contract has been     be inadequate in connection with real property. Id. at 370.
breached is a question of law. See id.; see also Jack v.      It is thoroughly settled that where a defendant has openly
State, 694 S.W.2d 391, 398 (Tex.App.-San Antonio 1985,        and avowedly refused to perform his part of the contract or
writ ref'd n.r.e.). Therefore, the issue of whether ECGC had  declared his intention not to perform it, the plaintiff need not
breached the contract in a manner that allowed Rus–Ann        make tender of payment of the consideration before bringing
to terminate the lease before ECGC exercised its option to    suit. Burford v. Pounders, 145 Tex. 460, 466, 199 S.W.2d
purchase was a question of law for the court to decide. The   141, 144 (1947).
addendum including the allegedly breached terms is entitled
“Promissory Note” and was signed more than two months          [20] Beginning with its December 6, 2005 letter and
after the lease was signed. Lambert signed for Rus–Ann,       subsequent correspondence, Rus–Ann left no doubt that it
but no one signed for ECGC. The lease does not impose a       was refusing any attempt by ECGC to proceed with the
deadline for accomplishing the three tasks. The court heard   purchase of the golf course. Where tender of performance
evidence from officers of both Rus–Ann and ECGC, who          is excused, the party must plead and prove that he is
gave conflicting testimony about whether the lease had been   ready, willing, and able to perform. 17090 Parkway, Ltd. v.
breached. The trial court does not abuse its discretion if    McDavid, 80 S.W.3d 252, 256 (Tex.App.-Dallas 2002, pet.
there is some evidence reasonably supporting its decision.    denied). ECGC pleaded that it was “prepared and willing to
Butnaru, 84 S.W.3d at 211; see also Advance Components,       perform in accordance with the Agreement between Plaintiff
Inc. v. Goodstein, 608 S.W.2d 737, 739 (Tex.Civ.App.-Dallas   and Defendant.” During the two hearings on the temporary
1980 writ ref'd n.r.e.) (a departure from the contract terms, injunction, ECGC presented testimony that it was ready to
not amounting to a material breach of the contract, will      tender the $400,000 in cash and the $1,000,000 promissory
not prevent the plaintiff from having the remedy of specific  note into the registry of the court to close the purchase of
performance). Rus–Ann's first issue is overruled.             the golf course. Rus–Ann complains that ECGC changed
                                                              its manner of financing for the $400,000 between the first
                                                              and second hearings on the temporary injunction. This is
                                                              irrelevant. When the trial court required tender into the
                     PROBABLE INJURY
                                                              registry of the court, ECGC did so. The record shows
 [16] In its second issue, Rus–Ann contends that the that ECGC was not required to tender payment of the
trial court abused its discretion in granting the temporary   consideration before bringing suit due to Rus–Ann's refusal to
injunction because there was no evidence or insufficient      perform and that there is sufficient evidence that ECGC was
evidence that ECGC had complied with the material terms       ready, willing, and able to perform its duties under the terms
of the contract and therefore was entitled to specific        of the option contract. Rus–Ann's second issue is overruled.
performance. Rus–Ann contends that ECGC was required
to close the sale within ninety days of the date in which it
exercised its *927 option to purchase the golf course. ECGC                   PROBABLE RIGHT OF RECOVERY
contends that it is entitled to a temporary injunction and is
allowed to show at the final hearing that it is entitled to          [21] In its third issue, Rus–Ann contends that the trial
specific performance even though it did not tender payment          court abused its discretion in granting a temporary injunction
within ninety days as required by the option to purchase. We        because the option contract was not sufficiently clear and
agree.                                                              definite for enforcement by specific performance. It argues



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           6
Rus-Ann Development, Inc. v. ECGC, Inc., 222 S.W.3d 921 (2007)


                                                                    [24] Rus–Ann also contends that because the deed of trust
that essential terms are missing, eliminating ECGC's right to
                                                                   clause stating whether the note is assumable or due on
specific performance.
                                                                   sale is not included in the contract, it is unenforceable by
                                                                   specific performance. We disagree. The failure of a real
 [22]      [23]    Before a court will decree the specific
                                                                   estate sales contract to provide the fundamental provisions
performance of a contract for the sale of land, or entertain a
                                                                   of a deed of trust does not render it unenforceable by
suit for damages for the breach thereof, the written agreement
                                                                   specific performance. Smith v. Hues, 540 S.W.2d 485, 492
or memorandum required by statute must contain the essential
                                                                   (Tex.Civ.App.Houston [14th Dist.] 1976, writ ref'd n.r.e.).
terms of a contract, expressed with such certainty and clarity
                                                                   Rus–Ann further complains that the option contract does not
that it may be understood without recourse to parol evidence.
                                                                   include terms relating to proration of taxes or the place of
Wilson v. Fisher, 144 Tex. 53, 56, 188 S.W.2d 150, 152
                                                                   closing. Again, failure to include these terms in the contract
(1945); see also Johnson v. Snell, 504 S.W.2d 397, 398
(Tex.1973). (“Specific performance will be decreed only            for the sale of real property does not render it unenforceable
                                                                   by specific performance. See id. Finally, Rus–Ann contends
if the essential terms of the contract are expressed with
                                                                   that the option to purchase does not include whether ECGC
reasonable certainty.”) The essential elements required, in
                                                                   had a right to the partial release of lots that it sold on the golf
writing, for the sale of real property are the price, the property
                                                                   course during the thirty years. That matter was covered in the
description, and the seller's signature. See *928 Lynx
                                                                   lease. Therefore, it is a term that can be determined by the trial
Exploration and Prod. Co. v. 4–Sight Operating Co., 891
                                                                   court at the final hearing. See Frost Nat'l Bank, 165 S.W.3d
S.W.2d 785, 788 (Tex.App.-Texarkana 1995, writ denied).
                                                                   at 312–13. We hold that the contract contained the essential
Those three essential elements are in the lease with option to
purchase in the instant case.                                      terms for a decree of specific performance and establishing
                                                                   a probable right to the relief sought. Rus–Ann's third issue is
Rus–Ann contends that the only terms of the seller financing       overruled.
included in the option to purchase contract were the term of
thirty years and the interest rate of six percent. It says that
the other terms of the seller financing such as how, when,                                   DISPOSITION
where, how much, and to whom payments were to be made
were not included. However, these terms were part of the           Having overruled Rus–Ann's three issues, we affirm the trial
provisions of the lease agreement. The court can look at both      court's order granting a temporary injunction commanding
the option to purchase and the lease in determining the terms      Rus–Ann to refrain from prosecuting an action to evict ECGC
of a contract to be enforced by specific performance. See          from the property known as Echo Creek Country Club.
Frost Nat'l Bank v. L & F Distributors, Ltd., 165 S.W.3d 310,
312–13 (Tex.2005).
                                                                    All Citations

                                                                    222 S.W.3d 921

End of Document                                                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               7
South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


                                                                         [4] lost profits were not established with reasonable certainty.

     KeyCite Yellow Flag - Negative Treatment
Distinguished by Barton v. Fashion Glass and Mirror, Ltd.,   Tex.App.-   Affirmed as modified.
Hous. (14 Dist.), July 20, 2010

                      255 S.W.3d 690
                  Court of Appeals of Texas,                              West Headnotes (36)
                          Amarillo.

    SOUTH PLAINS SWITCHING, LTD. CO. and                                  [1]     Set–Off and Counterclaim
  South Plains Lamesa Railroad, L.L.C., Appellants                                    Effect of failure to assert or claim;
                        v.                                                        compulsory counterclaim
  BNSF RAILWAY COMPANY f/k/a The Burlington                                       A counterclaim is a “compulsory counterclaim”
 Northern and Santa Fe Railway Company, Appellee.                                 if: (1) it arises out of the transaction or
                                                                                  occurrence that gives rise to the opposing party's
       No. 07–06–0165–CV. | April 17, 2008.                                       claim; (2) it is mature and owned by the
        | Rehearing Overruled May 19, 2008.                                       counterclaimant; (3) it is against an opposing
                                                                                  party in the same capacity; (4) it does not require
Synopsis                                                                          third parties who cannot be brought into the suit;
Background: Two shortline railroads with common                                   (5) it is within the court's jurisdiction; and (6)
ownership, as buyers of rail lines, brought action against                        it is not pending elsewhere. Vernon's Ann.Texas
Class I railroad, as seller, for breach of asset sale agreement,                  Rules Civ.Proc., Rule 97(a).
breach of duty of good faith and fair dealing with consequent
exemplary damages, specific performance, and mandatory                            1 Cases that cite this headnote
injunctive relief. The 72nd District Court, Lubbock County,
Ruben Reyes, J., granted partial summary judgment to
                                                                          [2]     Set–Off and Counterclaim
defendant, and at conclusion of evidence at trial granted
                                                                                      Effect of failure to assert or claim;
directed verdict to defendant on claim of breach of duty
                                                                                  compulsory counterclaim
of good faith and fair dealing, and after jury answered
eight questions with findings of breach of contract, granted                      If a claim meets the elements of a compulsory
judgment notwithstanding the verdict (JNOV) to defendant as                       counterclaim, it must be asserted in the initial
to three jury findings, denied all of one plaintiff's equitable                   action and cannot be later raised. Vernon's
requests and most of other plaintiff's equitable requests, and                    Ann.Texas Rules Civ.Proc., Rule 97(a).
awarded attorney fees to one plaintiff. Plaintiffs appealed and
                                                                                  Cases that cite this headnote
defendant cross-appealed.

                                                                          [3]     Set–Off and Counterclaim
                                                                                      Effect of failure to assert or claim;
Holdings: The Court of Appeals, John T. Boyd, J. (Retired),
                                                                                  compulsory counterclaim
held that:
                                                                                  Under the transactional approach for
[1] some claims asserted by plaintiffs had been compulsory                        determining whether compulsory counterclaim
counterclaims in earlier action, though plaintiffs had non-                       rule is applicable in a given case, weight should
suited those counterclaims in earlier action;                                     be given to such considerations as whether facts
                                                                                  are related in time, space, origin, or motivation,
[2] defendant did not have duty of good faith and fair dealing;                   whether they form a convenient trial unit, and
                                                                                  whether their treatment as a trial unit conforms to
[3] plaintiffs were not entitled to specific performance or                       parties' expectations or business understanding
mandatory injunction; and                                                         or usage. Vernon's Ann.Texas Rules Civ.Proc.,
                                                                                  Rule 97(a).



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                    1
South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


                                                                    between shortline railroad and Class I railroad,
       Cases that cite this headnote                                in which action shortline railroad had asserted
                                                                    that pursuant to asset sale agreement, quitclaim
 [4]   Set–Off and Counterclaim                                     deed was prepared that purportedly assigned
           Effect of failure to assert or claim;                    to shortline railroad certain leases and rental
       compulsory counterclaim                                      income, and had asserted that it was damaged
                                                                    because Class I railroad had failed to properly
       The “same transaction or occurrence”
                                                                    assign those leases and rental income from
       requirement, for a compulsory counterclaim, is
                                                                    them. Vernon's Ann.Texas Rules Civ.Proc., Rule
       broadly construed. Vernon's Ann.Texas Rules
                                                                    97(a).
       Civ.Proc., Rule 97(a).
                                                                    Cases that cite this headnote
       Cases that cite this headnote

                                                             [8]    Judgment
 [5]   Set–Off and Counterclaim
                                                                        Voluntary dismissal or nonsuit in general
           Effect of failure to assert or claim;
       compulsory counterclaim                                      Judgment
                                                                         Matters for defense in former action as
       Where there is a legal relationship such as under
                                                                    cause of action in second
       a lease or contract, all the claims that arise
       from that relationship will arise from the same              Judgment
       subject matter and be subject to the application                 What constitutes
       of the compulsory counterclaim rule in a proper              Shortline railroad was precluded, under
       case. Vernon's Ann.Texas Rules Civ.Proc., Rule               compulsory counterclaim rule, from bringing
       97(a).                                                       claim that Class I railroad, which had sold
                                                                    rail lines to shortline railroad pursuant to asset
       3 Cases that cite this headnote                              sale agreement, breached the agreement by
                                                                    failing to allow shortline railroad to service
 [6]   Set–Off and Counterclaim                                     customers along certain tracks which had been
           Effect of failure to assert or claim;                    included in quitclaim deed, where in earlier
       compulsory counterclaim                                      action between those parties, both parties had
                                                                    asserted claims involving those tracks, i.e., Class
       Where a defendant's claim to affirmative relief
                                                                    I railroad had sought declaration that asset
       asserts a theory distinct from and independent of
                                                                    sale agreement did not include those tracks
       the issues raised in a plaintiff's claim, it is not
                                                                    because of mutual mistake, and shortline railroad
       a compulsory counterclaim. Vernon's Ann.Texas
                                                                    had counterclaimed that Class I railroad had
       Rules Civ.Proc., Rule 97(a).
                                                                    breached the agreement by continuing to serve
       2 Cases that cite this headnote                              certain feeders and tracks, but shortline railroad
                                                                    had non-suited the counterclaim when it had
                                                                    received adverse ruling on its damages; same
 [7]   Judgment
                                                                    subject matter was involved in earlier and
            Matters for defense in former action as
                                                                    subsequent actions. Vernon's Ann.Texas Rules
       cause of action in second
                                                                    Civ.Proc., Rule 97(a).
       Under compulsory counterclaim rule, shortline
       railroad was precluded, in subsequent action,                Cases that cite this headnote
       from bringing claims that Class I railroad, which
       had sold rail lines to shortline railroad pursuant
                                                             [9]    Judgment
       to asset sale agreement, failed to appropriately
                                                                        Voluntary dismissal or nonsuit in general
       deal with shortline railroad on certain real
                                                                    Judgment
       estate claims relating to leases, where those
       same leases had been at issue in earlier action


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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


             Matters for defense in former action as                  receiving unfavorable ruling on its damages
        cause of action in second                                     evidence; claim in subsequent action was
        Judgment                                                      asserted in language identical to that used for
            What constitutes                                          non-suited counterclaim in earlier action, and
                                                                      claim in subsequent action arose out of the same
        Under compulsory counterclaim rule, shortline
                                                                      agreement in dispute in earlier action. Vernon's
        railroad was precluded, in subsequent action,
                                                                      Ann.Texas Rules Civ.Proc., Rule 97(a).
        from bringing damages claim asserting that Class
        I railroad, which had sold rail lines to shortline            Cases that cite this headnote
        railroad pursuant to asset sale agreement in
        which Class I railroad had reserved the right
        to set through routes and rates for customers,         [11]   Judgment
        unreasonably withheld consent to request for                      Nature of Action or Other Proceeding
        surcharge on traffic, where in earlier action, both           Judgment
        parties had asserted claims regarding request                      Matters for defense in former action as
        for surcharge and refusal to consent, i.e., Class             cause of action in second
        I railroad had sought declaratory relief and                  Under compulsory counterclaim rule, shortline
        shortline railroad had sought damages for refusal             railroad was precluded, in subsequent action,
        to consent but had non-suited its surcharge                   from bringing claim asserting that Class I
        counterclaim when its damages testimony was                   railroad, which had sold rail lines to shortline
        excluded; controversy in subsequent action arose              railroad pursuant to asset sale agreement,
        out of same subject matter as that involved                   breached the agreement by paying it less
        in earlier action. Vernon's Ann.Texas Rules                   than that to which it was entitled under
        Civ.Proc., Rule 97(a).                                        shortline railroad's interpretation of the meaning
                                                                      of “billing” for purposes of agreement's
        Cases that cite this headnote
                                                                      division-of-revenue provision, where in earlier
                                                                      action, both parties had disputed the meaning
 [10]   Judgment                                                      of “billing” for purposes of division-of-
            Voluntary dismissal or nonsuit in general                 revenue provision, and Class I railroad had
        Judgment                                                      received a favorable declaratory judgment as
             Matters for defense in former action as                  to its interpretation. Vernon's Ann.Texas Rules
        cause of action in second                                     Civ.Proc., Rule 97(a).
        Shortline railroad was precluded, under                       Cases that cite this headnote
        compulsory counterclaim rule, from bringing
        claim that Class I railroad, which had sold
        rail lines to shortline railroad pursuant to asset     [12]   Trial
        sale agreement, breached the agreement by                          Insufficiency to support other verdict;
        failing to recognize shortline railroad's right to            conclusive evidence
        dispatch trains on a certain track, where in earlier          A plaintiff is entitled to a directed verdict when
        action between those parties, both parties had                reasonable minds can draw only one conclusion
        asserted claims concerning operations on that                 from the evidence.
        track, i.e., Class I railroad had claimed that
        under the agreement it retained all rights to                 Cases that cite this headnote
        access and use the track and asked the court
        to so construe the agreement while shortline           [13]   Appeal and Error
        railroad had counterclaimed that Class I railroad                  Effect of evidence and inferences therefrom
        violated the agreement by refusing to recognize               on direction of verdict
        its right to dispatch trains on the track but
                                                                      On review of granting of motion for directed
        had chosen to non-suit the counterclaim after
                                                                      verdict, task of reviewing court is to consider


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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


        all the evidence in a light most favorable                   complainant and thus the transgressor should
        to party against whom verdict was instructed,                be compelled to perform that which he had
        discarding all contrary evidence and inferences,             promised in his contract.
        and determine whether there is any evidence of
        probative force to raise fact questions on material          3 Cases that cite this headnote
        questions presented.
                                                              [18]   Specific Performance
        Cases that cite this headnote
                                                                         Inadequacy of remedy at law
                                                                     It is a fundamental rule of equity that specific
 [14]   Railroads                                                    performance may not be granted unless it is
             Contracts for sale                                      shown there is no adequate remedy at law.
        Class I railroad did not have duty of good
        faith and fair dealing, as seller of tracks to two           1 Cases that cite this headnote
        shortline railroads under asset sale agreements
        that granted Class I railroad exclusive rate-         [19]   Specific Performance
        making authority and required shortline railroads                Defenses or Objections to Relief
        to obtain dispatch authority from Class I railroad
                                                                     Specific Performance
        as to when they might use the main track or
                                                                         Presumptions and burden of proof
        enter Class I railroad's two yards for interchange
                                                                     The burden of invoking the court's
        of trains to be spotted to customers; agreements
                                                                     equity jurisdiction, with respect to specific
        were result of arm's length dealing between
                                                                     performance, is on the party seeking it, and the
        parties and were not of a nature to demonstrate
                                                                     comparative advantages of the equitable remedy
        a special relationship sufficient to support a duty
                                                                     must be shown to outweigh those of the legal
        of good faith and fair dealing.
                                                                     remedy.
        1 Cases that cite this headnote
                                                                     Cases that cite this headnote

 [15]   Contracts
                                                              [20]   Specific Performance
            Terms implied as part of contract
                                                                         Defenses or Objections to Relief
        There is no general duty of good faith and
                                                                     Among the factors to be considered, when
        fair dealing in ordinary arm's length commercial
                                                                     court determines whether to exercise its equity
        transactions.
                                                                     jurisdiction with respect to specific performance,
        2 Cases that cite this headnote                              are whether long-continued supervision by the
                                                                     court will be required, whether complete relief
                                                                     can be rendered by the remedy sought, and
 [16]   Specific Performance
                                                                     whether, if the remedy sought is granted, it can
            Nature and purpose in general
                                                                     be adequately enforced.
        The purpose of specific performance is to compel
        a party who is violating a duty under a valid                2 Cases that cite this headnote
        contract to comply with his obligations.

        1 Cases that cite this headnote                       [21]   Specific Performance
                                                                          Contracts for continuous acts during long
                                                                     period
 [17]   Specific Performance
                                                                     A court generally will not decree, by specific
            Inadequacy of remedy at law
                                                                     performance, a party to perform a continuous
        The rationale for specific performance as a                  series of acts which extend through a long period
        remedy is that the recovery of monetary
        damages would be inadequate to compensate the


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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


        of time and require constant supervision by the             to set through routes and in which parties
        court.                                                      agreed to division of revenue, did not establish,
                                                                    with reasonable certainty, its lost profits from
        2 Cases that cite this headnote                             alleged breach of contract by Class I railroad, in
                                                                    allegedly wrongfully diverting some trains and
 [22]   Appeal and Error                                            refusing to allow shortline railroad to service
           Injunction                                               certain customers; while witness testified as to
                                                                    division of revenue that would be received by
        Appeal and Error
                                                                    shortline railroad on each train in issue and
           Refusing injunction
                                                                    testified in considerable detail about amount
        When a trial court grants, or refuses, a permanent
                                                                    of fuel cost that would be used in handling
        injunction, the standard of review is whether it
                                                                    those trains, there was no testimony about other
        committed an abuse of discretion.
                                                                    necessary expenses of doing business, such as
        Cases that cite this headnote                               depreciation, payroll expenses, administrative
                                                                    expenses, equipment expenses, and maintenance
                                                                    expenses.
 [23]   Injunction
            Railroads                                               2 Cases that cite this headnote
        Specific Performance
             Contracts for continuous acts during long       [25]   Judgment
        period                                                            Where directed verdict or binding
        Shortline railroad, as buyer of tracks from Class           instructions would have been proper
        I railroad pursuant to asset sale agreement in              Judgment
        which Class I railroad reserved the right to                     Where there is no evidence to sustain
        set through routes and rates for customers,                 verdict
        was not entitled to specific performance or
                                                                    A trial court may grant a judgment
        mandatory injunction, to require Class I railroad
                                                                    notwithstanding the verdict (JNOV) if there is
        to interchange to shortline railroad all trains
                                                                    no evidence to support one or more of the
        headed to customers on certain tracks owned
                                                                    jury's findings on issues necessary to liability, or
        by Class I railroad, to refrain from attempting
                                                                    conversely, if the evidence established an issue
        to relocate any of the business from customers
                                                                    as a matter of law.
        on those tracks, and to refrain from charging
        discriminatory freight rates for trains headed              Cases that cite this headnote
        to a certain destination; shortline railroad's
        request for specific performance, in essence,
                                                             [26]   Damages
        was one seeking mandatory injunction, shortline
                                                                       Mode of estimating damages in general
        railroad had not suffered irreparable injury, it
        had adequate remedy at law in form of contract              The measure of damages for the loss of profit,
        damages for breach of contract, and grant of                as consequential damages for breach of contract,
        mandatory injunction would require continued                is “net profits,” which means what remains in
        onerous judicial supervision.                               the conduct of a business after deducting from
                                                                    its total receipts all of the expenses incurred in
        2 Cases that cite this headnote                             carrying on the business.

                                                                    2 Cases that cite this headnote
 [24]   Damages
           Loss of profits
                                                             [27]   Damages
        Shortline railroad, as buyer of tracks from Class
                                                                       Breach of contract
        I railroad pursuant to asset sale agreement
        in which Class I railroad reserved the right                Damages


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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


             Loss of profits
                                                                      1 Cases that cite this headnote
        Lost profits, as damages for breach of contract,
        need not be susceptible to exact calculation, and
        need only be shown to a reasonable certainty.          [31]   Deeds
                                                                          Operation of quitclaim deed
        1 Cases that cite this headnote
                                                                      A quitclaim deed expresses upon its face doubts
                                                                      about a grantor's interest, and a buyer is
 [28]   Damages                                                       necessarily put on notice as to those doubts.
           Loss of profits
                                                                      1 Cases that cite this headnote
        An award of damages for lost profits, in an action
        for breach of contract, may be based on estimates
        that are based upon objective facts, figures, or       [32]   Limitation of Actions
        data.                                                             Causes of action in general
                                                                      When the legislature employs the term
        1 Cases that cite this headnote
                                                                      “accrues” in a statute of limitations, without an
                                                                      accompanying definition, it is the responsibility
 [29]   Deeds                                                         of the courts to determine when the cause of
            Operation of quitclaim deed                               action accrues and thus when the statute of
        Railroads                                                     limitations begins to run.
             Conveyances or release by railroad
                                                                      1 Cases that cite this headnote
        company
        Class I railroad, which sold rail lines to shortline
        railroad pursuant to asset sale agreement              [33]   Limitation of Actions
        requiring Class I railroad to convey to shortline                 Breach of contract in general
        railroad, by quitclaim deem, land that was                    Limitation of Actions
        covered by lease, but which conveyed the land                     Contracts; warranties
        to third party by special warranty deed before                An action for damages for breach of a written
        delivering quitclaim deed to shortline railroad               contract accrues, for limitations purposes, when
        and before the closing of the asset sale, was                 the breach occurs or when the claimant has notice
        not required, under asset sale agreement, to                  of facts sufficient to place him on notice of the
        assign the lease or rents thereunder to shortline             breach. V.T.C.A., Civil Practice & Remedies
        railroad after third party had reconveyed the                 Code § 16.051.
        land and lease to Class I railroad; quitclaim
        deed conveyed only whatever interest Class I                  1 Cases that cite this headnote
        railroad had in the lease when quitclaim deed
        was delivered, and Class I railroad no longer had      [34]   Limitation of Actions
        an interest in the lease when quitclaim deed was
                                                                          Contracts; warranties
        delivered.
                                                                      Assuming that Class I railroad, as seller of rail
        Cases that cite this headnote                                 lines to shortline railroad pursuant to asset sale
                                                                      agreement, was required under the agreement
                                                                      to assign leases to shortline railroad in some
 [30]   Deeds
                                                                      way other than by quitclaim deed, shortline
            Operation of quitclaim deed
                                                                      railroad's claim for breach of contract accrued,
        While a warranty deed to land conveys property,               for limitations purposes, when the asset sale
        a quitclaim deed conveys only the grantor's right             transaction closed, which closing involved only
        in it, if any.                                                quitclaim deed; at such time, shortline railroad
                                                                      must have had actual knowledge that no lease



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


        assignments had been made. V.T.C.A., Civil
        Practice & Remedies Code § 16.051.
                                                                                            History
        Cases that cite this headnote
                                                                Because of the convoluted and extensive history of these
                                                                disputes, it is necessary to go into that history in some
 [35]   Railroads                                               detail. BNSF is a Class I railroad whose principal business
             Title, estate, or interest acquired                is the transportation of freight in the western, midwestern,
        Easement allowing shortline railroad to operate         and southwestern regions of the United States. SAW and
        on tracks crossing land owned by Class I railroad       SLAL are known as “shortline” railroads that operate in
        did not entitle shortline railroad to receive any       the vicinities of Lubbock and Slaton, Texas. They provide
        portion of rent payments received by Class I            switching services to BNSF and its customers.
        railroad under a lease of the land; easement
        conveyed only a right of use, and not title to the      In the early 1990s, major Class I railroads such as BNSF
        property.                                               began selling off portions of their rail lines located near
                                                                industrial centers or that served rural areas, and the sales
        1 Cases that cite this headnote                         from which were known as “Shortline Sales.” In 1993,
                                                                prior to its merger with the Burlington Northern Railway
                                                                Company (Burlington Northern), the Santa Fe Railroad
 [36]   Easements
                                                                Company (Santa Fe) sold a portion of its line running
            Nature and elements of right
                                                                generally southwest from Slaton to Lamesa, Texas, to SLAL.
        An easement extends to certain persons or
                                                                The agreement between those parties was memorialized in
        entities the right to use the land of another for the
                                                                what is referred to here as the SLAL Asset Sale Agreement.
        purpose or purposes specified in the easement,
                                                                It provided that Santa Fe conveyed to SLAL rail freight
        and does not convey title to the property.
                                                                transportation business that it had formerly conducted on the
        1 Cases that cite this headnote                         rail lines but it reserved the right to set through routes and
                                                                rates for customers. SLAL was to be paid by a division of
                                                                revenue by which SLAL would receive a certain amount of
                                                                money per car that was handled by the parties on the line
                                                                covered by the agreement.
Attorneys and Law Firms

 *695 James L. Gorsuch, James L. Gorsuch, P.C., Lubbock,        In 1999, after Santa Fe and Burlington Northern merged
for Appellants.                                                 and became BNSF, the entity sold to SAW approximately
                                                                fourteen miles of its track that served industrial customers in
*696 D. Thomas Johnson, McWhorter, Cobb and Johnson,            east Lubbock. This sale was memorialized in another Asset
Lubbock, Chris S. Greer, Donald E. Herrmann, Kelly Hart &       Sale Agreement. The SAW Asset Sale Agreement provided
Hallman LLP, Michael E. Roper, Fort Worth, for Appellee.        that for cars that were billed in units of 27 or more, the charge
                                                                rate was to be $400 per car. SAW and SLAL share common
Before CAMPBELL and PIRTLE, JJ., and BOYD, S.J. 1               ownership.

Opinion

BOYD, Senior Justice (Retired).                                                     The Fort Worth Suit

This case arises because of disputes between South Plains       Soon after the SAW Asset Sale Agreement was finalized in
Switching, Ltd. Co. (SAW), South Plains Lamesa Railroad,        1999, disputes arose between the parties which resulted in a
L.L.C. (SLAL), and Burlington Northern Railway Company,         declaratory judgment action brought by BNSF in Fort Worth
formerly known as Burlington Northern and Santa Fe              in 2002. In its suit, BNSF asked the court to declare that:
Railway Company (BNSF).                                         1) SAW could not unilaterally impose a surcharge on traffic
                                                                without its consent; 2) SAW was not entitled under the SAW
                                                                Asset Sale Agreement to acquire further assets of BNSF; 3)



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


the SAW Asset Sale Agreement did not limit or proscribe              by BNSF to the Fort Worth Court of Appeals. The trial court
BNSF from providing rail service to Vulcan Materials on              judgment was affirmed with the exception that the appellate
Track 9200 (which SAW contended had been sold to it                  court held that BNSF was entitled to use Track 9200 for other
together with business to be conducted on it); 4) that a 1999        than storage purposes. See Burlington Northern & Santa Fe
quitclaim deed delivered pursuant to the SAW Asset Sale              Railway Co. v. South Plains Switching Ltd., Co., 174 S.W.3d
Agreement included tracks referred to as the “Burris Tracks”         348 (Tex.App.-Fort Worth 2005, no pet.).
by mistake and the deed should *697 be reformed; 5) that
the term “billed” as used in the pertinent provision of the
SAW Asset Sale Agreement meant “billed to the customer”
                                                                                           The Lubbock Suit
and did not mean “waybilled” for purposes of division of
revenue; and 6) the SAW Asset Sale Agreement did not                 The suit directly underlying this appeal was filed in Lubbock
impose liability on BNSF for what might be termed “wrongful          on June 1, 2004. In it, SAW asserted that BNSF had breached
deprivation of rent.”                                                the Asset Sale Agreement and was liable because BNSF
                                                                     had: 1) unreasonably withheld consent to a surcharge; 2)
SAW and SLAL responded to the suit with counterclaims                wrongfully provided rail service to Vulcan Materials on Track
alleging various breaches by BNSF of the SAW Asset Sale              9200 and refused to allow SAW to serve Vulcan Materials
Agreement including: 1) unreasonably withholding consent             on the track; 3) improperly continued to serve customers on
to SAW's proposed surcharge; 2) providing rail service to            the Burris Tracks; 4) paid less than it should have under the
Vulcan Materials on Track 9200; 3) continuing to serve               division of revenue provisions of the Asset Sale Agreement;
customers on the Burris Tracks; and 4) improperly paying             and 5) failed to appropriately deal with SAW on certain real
the division of revenue based on customer billing instead of         estate claims.
waybills. They also made claims that BNSF had improperly
transferred properties described in the SAW Asset Sale               Additionally, SAW and SLAL claimed that BNSF had
Agreement to a property management company which had                 breached a duty of good faith and fair dealing warranting an
then sold or disposed of the properties.                             award of exemplary damages. They also claimed they were
                                                                     entitled to specific performance and mandatory injunctive
Prior to trial, BNSF successfully filed a motion to                  relief pursuant to the Asset Sale Agreement. Moreover, SLAL
exclude SAW's and SLAL's damage testimony. SAW and                   claimed that BNSF had breached its Asset Sale Agreement
SLAL then non-suited their counterclaims for breach of               by diverting Vulcan Materials' trains or by refusing to allow
contract and damages. The case then proceeded to trial on            Vulcan Materials' trains to be routed to SLAL.
BNSF's declaratory judgment claims that: 1) it did not act
unreasonably by refusing to consent to SAW's surcharge on             *698 Subsequently, BNSF filed a motion seeking a partial
its customers of $40–$60 per car; 2) that under the SAW              summary judgment dismissing all claims that had been
Asset Sale Agreement, it had reserved the right to serve             asserted by SAW and SLAL in the Fort Worth suit and
Vulcan Materials on Track 9200; 3) that the Burris Tracks            subsequently nonsuited on the basis that they were barred
were included by mistake in the 1999 quitclaim deed executed         under the compulsory counterclaim rule, Texas Rule of Civil
by it in connection with the Asset Sale Agreement and the            Procedure 97. This motion was granted by the Lubbock trial
deed should be reformed to correct that error; and 4) the            court. The effect of the granting of this motion was that issues
term “billed” referred to in the agreement meant billed to           regarding the surcharges and payment under the freight bill
the customer and did not mean “waybilled” as contended by            were eliminated from the Lubbock County trial and the claims
SAW.                                                                 relating to Vulcan Materials' trains, the Burris traffic and lease
                                                                     assignments were barred as to events occurring prior to the
After a four-day jury trial, the jury found that SAW had the         date of the filing of the Lubbock case on June 1, 2004.
right to impose a surcharge upon its customers, that BNSF had
access rights to Track 9200 for storage purposes only, that the      At the conclusion of evidence, the trial court granted BNSF's
division of revenue under the agreement was to be paid on a          motion seeking dismissal of SAW and SLAL's quest for
waybill basis and not on a freight bill basis, and that the Burris   recovery because of breach of a duty of good faith and
Tracks had been validly conveyed to SAW. Those findings              fair dealing with consequent exemplary damages. At the
were incorporated into a final judgment which was appealed           conclusion of the trial, eight questions were submitted to



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


the jury. In its answers to questions 1 and 2, the jury found        or, in the alternative, by the great weight and preponderance
that BNSF had failed to comply with the SLAL Asset Sale              of the evidence.
Agreement by wrongfully diverting 18 Vulcan Materials
trains to its yard in Slaton, Texas, and thereby caused damages       *699 In their fourth issue, they posit that the trial court erred
to SLAL in the amount of $70,500. In answers to questions            in granting BNSF's motion for judgment n.o.v. and in denying
3 and 4, the jury found that BNSF failed to comply with the          them damages for the wrongful diversion of Vulcan trains and
SLAL Asset Sale Contract by refusing to direct or allow any          the wrongful refusal of BNSF to allow SAW to service the
of the Vulcan Materials trains described in SLAL's exhibit 12        Burris customers.
to use Track 9200 or to use a SAW switching track which
caused damages to SAW in the amount of $2,928.93.                    Summarized, this appeal is a challenge to the trial court's
                                                                     ruling on three BNSF motions, namely, its motion for partial
In its answers to questions 5 and 6, the jury found BNSF             summary judgment, in which it held that SAW could not re-
failed to comply with the SAW Asset Sale Agreement by                litigate the contract claims that were initially brought in the
refusing to allow SAW to serve traffic which damaged SAW             Fort Worth suit but then non-suited; its motion for directed
in the amount of $27,296.85. In its answers to questions 7           verdict in which the trial court held there was no factual
and 8, the jury found that BNSF had failed to comply with            basis to support the claims for breach of an alleged duty of
the Asset Sale Agreement by failing to assign the West Texas         good faith and fair dealing; and its motion for directed verdict
Industries lease which caused damages to SAW in the amount           in which the trial court held that appellants' “lost profits”
of $12,600.                                                          calculations were improper.

Subsequent to the return of the jury verdict, BNSF filed a
motion for judgment n.o.v. in which it contended that SAW
                                                                           BNSF Motion for Partial Summary Judgment
and SLAL's lost profit calculations were improper as a matter
of law. The trial court granted the motion in regard to the          The standards by which summary judgments are reviewed
jury findings in Questions 2, 4, and 6, but left intact the jury     are by now axiomatic. When reviewing a summary judgment,
findings in Questions 7 and 8. The trial court then entered          the reviewing court takes as true all evidence favorable to
judgment granting SAW relief on the real estate issues and for       the nonmovant, and resolves any doubts and indulges any
its attorney's fees but denied all of SLAL's equitable requests      reasonable inferences in the nonmovant's favor. Provident
and most of SAW's equitable requests.                                Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215
                                                                     (Tex.2003); Science Spectrum, Inc. v. Martinez, 941 S.W.2d
In pursuing their appeal, SAW and SLAL raise four issues             910, 911 (Tex.1997). The summary judgment is reviewed de
for our discussion. In their first issue, they contend that          novo, and, when the trial court's order does not specify the
the trial court erred in granting BNSF's motion for partial          ground or grounds relied upon for its ruling, it will be affirmed
summary judgment excluding all of their claims prior to June         on appeal if any of the theories advanced are meritorious. Dow
1, 2004, because the Fort Worth court's judgment is not res          Chemical Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).
judicata to those claims and the claims were not compulsory
counterclaims.                                                       BNSF's motion rested upon Texas Rule of Civil Procedure
                                                                     97, the compulsory counterclaim rule. In relevant part, that
In their second issue, relating to good faith and fair dealing       rule provides:
exemplary damages, they argue that the trial court erred
in granting BNSF's motion for directed verdict because                            a. Compulsory Counterclaims. A
the “special relationship” between the parties supports the                       pleading shall state as a counterclaim
placing of such a duty and, thus, it follows that a claim for                     any claim within the jurisdiction of
exemplary damages should also have been allowed.                                  the court, not the subject of a pending
                                                                                  action, which at the time of filing
Their third issue concerns their injunctive relief/specific                       the pleading the pleader has against
performance claims. They reason that the trial court erred in                     any opposing party, if it arises out
granting judgment n.o.v. denying those claims because they                        of the transaction or occurrence that
established their right to those claims either as a matter of law,                is the subject matter of the opposing



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


            party's claim and does not require                    Sanders v. Blockbuster, Inc., 127 S.W.3d 382, 386 (Tex.App.-
            for its adjudication the presence of                  Beaumont 2004, pet. denied); see also Weiman v. Addicks–
            third parties of whom the court cannot                Fairbanks Road Sand Co., 846 S.W.2d 414, 419 (Tex.App.-
            acquire jurisdiction;....                             Houston [14th Dist.] 1992, writ denied). However, where a
                                                                  defendant's claim to affirmative relief asserts a theory distinct
As we have noted, in the Lubbock case, SAW contended              from and independent of the issues raised in a plaintiff's
that BNSF breached the Asset Sale Agreement and became            claim, it is not a compulsory counterclaim. Astro Sign Co. v.
liable for damages because: 1) BNSF unreasonably withheld         Sullivan, 518 S.W.2d 420, 426 (Tex.Civ.App.-Corpus Christi
consent to a disputed surcharge; 2) BNSF provided rail            1974, writ ref'd n.r.e.)
service to Vulcan Materials on Track 9200 and failed to
allow SAW to serve Vulcan Materials on that track; 3) BNSF       In contending that Rule 97a is not applicable, SAW argues
continued to serve customers on the Burris Tracks and would      that BNSF's claims are too broad and posits that a party
not allow SAW to do so; 4) under the SAW Asset Sale              is not required to bring every claim based on a contract
Agreement, BNSF paid less to SAW than it was required            in a particular suit, particularly when it covers several
to do; and 5) BNSF failed to properly deal with SAW on           different matters which could involve different fact scenarios,
“real estate claims.” Thus, SAW's affirmative relief claims      different witnesses, and different theories of recovery. SAW
replicated the counterclaims it had asserted, but non-suited,    characterizes its real estate claims as involving the asserted
in the Fort Worth case.                                          failure of BNSF to assign leases to SAW, and, in addition,
                                                                 that BNSF did not assign “other income” (i.e. rent) that
 [1]     [2] A counterclaim is compulsory if: 1) it arises was due it under the Asset Sale Agreement, as well as the
out of the transaction or occurrence that gives rise to the      purported fraudulent “transfer of some or all of the properties
opposing party's claim; 2) it is mature and owned by the         involved either before or after the signing of the Asset Sale
counterclaimant; 3) it is against an opposing party in the same  Agreement.”
capacity; 4) it does not require third parties who cannot be
brought into the suit; 5) it is within the court's jurisdiction;  [7] However, in the Lubbock case, SAW asserted that
and 6) it is not pending elsewhere. Tex.R. Civ. P. 97(a); Wyatt  pursuant   to the Asset Sale Agreement, a quitclaim deed was
v. Shaw Plumbing Co., 760 S.W.2d 245, 247 (Tex.1988). If a       prepared that purportedly assigned it certain leases and rental
claim meets those elements, it must be asserted in the initial   income and claimed it was damaged because BNSF had failed
action and cannot be later raised. Id.                           to properly assign those leases and the rental income from
                                                                 them. The record shows that those were the same leases at
 *700 [3]          [4]    [5]     [6]   Our Supreme Court hasissue in the Fort Worth case. That being so, the compulsory
adopted a transactional approach in determining whether the      counterclaim rule would be applicable and would prevent the
compulsory counterclaim rule is applicable in a given case.      relitigation of those real estate claims in the Lubbock case.
It has instructed that in determining whether a transaction      Sanders v. Blockbuster, Inc., 127 S.W.3d at 386.
is within the purview of the rule, weight should be given
to “such considerations as whether the facts are related           [8] With regard to the Burris Tracks, both parties asserted
in time, space, origin, or motivation, whether they form          claims involving them in the Fort Worth case. BNSF sought
a convenient trial unit, and whether their treatment as a         a declaration that the Asset Sale Agreement did not include
trial unit conforms to the parties' expectations or business      the Burris Tracks because of a mutual mistake, and SAW
understanding or usage.” Barr v. Resolution Trust Corp.,          counterclaimed that BNSF had breached the agreement by
837 S.W.2d 627, 631 (Tex.1992), citing Restatement of             “continuing to serve Lubbock Feeders subsequent to May 3,
Judgments, §§ 24(1) & 24(2). This court has noted that the        1999” and by “continuing to serve Jarvis Metals on Tracks 7
Rule 97a “same transaction or occurrence” requirement has         and 12 at Burris....” SAW chose to non-suit its Burris Track
been broadly construed. See Lesbrookton, Inc. v. Jackson,         claims in the Fort Worth case when it received an adverse
796 S.W.2d 276, 281 (Tex.App.-Amarillo 1990, writ denied).        ruling on its damages.
Additionally, where as here, there is a legal relationship such
as under a lease or contract, all the claims that arise from      In the Lubbock case, SAW again alleged that the failure
that relationship will arise from the same subject matter and     of BNSF to allow it to service customers along the Burris
be subject to the application of the rule in a proper case.       Tracks constituted a breach of the Asset Sale Agreement.



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


Those Burris Track claims *701 involved the same subject           Because that issue was litigated in the Tarrant County trial, it
matter as the Fort Worth case. If the compulsory counterclaim      is subject to the compulsory counterclaim rule and cannot be
rule was applicable, and we think it was, the trial court's        relitigated in the Lubbock County case. We have considered
summary judgment in that regard was proper. See Compass            SAW's argument that the compulsory counterclaim rule
Exploration, Inc. v. B–E Drilling Co., 60 S.W.3d 273, 278–         only applies to issues that were specifically submitted as
79 (Tex.App.-Waco 2001, no pet.).                                  jury issues in the prior case and that its right to non-
                                                                   suit counterclaims in the Fort Worth suit was unqualified
 [9] Both parties had claims in the Fort Worth case                and absolute. However, we believe that the compulsory
concerning SAW's request for a surcharge and BNSF's                counterclaim rule is broader than the doctrine of res judicata,
refusal to give consent. BNSF sought declaratory relief            and, in a case such as this one, is applicable. See Weiman v.
and SAW sought damages. When its damage testimony                  Addicks–Fairbanks Road Sand Co., 846 S.W.2d at 421. The
was excluded, SAW non-suited its surcharge counterclaim.           first point is overruled.
BNSF's surcharge claim was submitted to the jury and it
received a favorable answer. In the Lubbock case, SAW again
asserted its surcharge claim that BNSF unreasonably withheld
                                                                               BNSF Motion for Directed Verdict
consent to a surcharge and sought damages for its refusal to
give consent. Once more, this controversy arose out of the          [12] [13] In their second point, SAW and SLAL contend
same subject matter as that involved in the Fort Worth case        the trial court erred in granting BNSF's motion for directed
and thus was subject to the compulsory counterclaim rule. See      verdict on their quest for exemplary damages because the
id.                                                                terms of the Asset Sale Agreements, the relationship between
                                                                   the parties, and the superior bargaining position of BNSF
 [10] Both BNSF and SAW asserted claims in the Fort Worth          gave rise to a duty of good faith and fair dealing between
case concerning operations on Track 9200. BNSF claimed             them and BNSF. In considering this point, we recognize
that under the Asset Sale Agreement, it retained all rights         *702 the established rule that a plaintiff is entitled to a
to access and utilize Track 9200 and asked the court to so         directed verdict when reasonable minds can draw only one
construe the agreement. SAW counterclaimed that BNSF               conclusion from the evidence. The task of a reviewing court
violated the Asset Sale Agreement by refusing to recognize         is to consider all the evidence in a light most favorable to
its right to dispatch trains on Track 9200. After it received an   the party against whom the verdict was instructed, discarding
unfavorable ruling on its damages evidence, SAW chose to           all contrary evidence and inferences, and determine whether
nonsuit its Track 9200 claim.                                      there is any evidence of probative force to raise fact questions
                                                                   on the material questions presented. Collora v. Navarro, 574
In the Lubbock case, SAW again asserted that BNSF failed           S.W.2d 65, 68 (Tex.1978).
to comply with its right to dispatch traffic on Track 9200 and
thereby prevented it from providing direct rail service to its     In support of their point, appellants place considerable weight
customers. This was done in language identical to that used        upon the decision in the seminal case of Arnold v. National
by it in its non-suited counterclaim in the Fort Worth case. It    County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex.1987). In
arose out of the same Asset Sale Agreement in dispute in the       that case, the court found there is a duty on the part of
Fort Worth case. Relitigation of the question was thus barred      insurers to deal fairly and in good faith with their insured.
by the compulsory counterclaim rule. See id.                       Id. at 167. In doing so, the court noted that it had declined
                                                                   to impose an implied covenant of good faith and fair dealing
 [11] Again, in the Fort Worth case, SAW contended that            in every contract but, “a duty of good faith and fair dealing
a dispute existed between BNSF and SAW concerning the              may arise as a result of a special relationship between the
meaning of “billed” as used in the division of revenue             parties governed or created by a contract.” Id. In the course
provision in the Asset Sale Agreement and that BNSF                of its discussion and in the context of insurance contracts,
breached the agreement by paying it less than that to which it     the court specifically noted that an insurance company had
was entitled. BNSF asked for a declaratory order construing        exclusive control over the evaluation and processing and
that provision of the agreement and received a favorable           denial of claims and that in such instances, the nature of
result.                                                            insurance contracts gave rise to unequal bargaining power
                                                                   “which would allow unscrupulous insurers to take advantage



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


of their insureds' misfortunes in bargaining for settlement or   implied covenant of good faith and fair dealing. In refusing
resolution of claims.” Id.                                       to accept such a concept, the Court cautioned that to do so,
                                                                 would “let each case be decided upon what might seem ‘fair
 [14]     [15] Appellants contend that provisions in the and in good faith’ by each fact finder,” which the Court was
agreements concerning such matters as their grant to BNSF        unwilling to do. Id. at 522.
of exclusive rate-making authority and the necessity for them
to obtain dispatch authority from BNSF as to when they           Suffice it to say, this record is sufficient to support the
might use the main track or enter BNSF's two yards for           trial court's evident conclusion that the agreements were
interchange of trains to be spotted to customers is sufficient   the result of arm's length dealing between the parties and
evidence of unequal bargaining power between the parties         were not of a nature to demonstrate a “special relationship”
similar to that existing between insurance companies and         sufficient to support a tort duty of good faith and fair
their insureds. They argue that BNSF's control of rate making    dealing. As appellants recognize, under the Punitive Damages
authority and use of its track together with its sole dispatch   Act, the term “malice” is defined as a specific intent
authority over its main line is so similar to an insurance       to cause substantial injury or harm to a plaintiff. See
company's control of its claim process as to give rise to a      Tex. Civ. Prac. & Rem.Code Ann. § 41.001(7) (Vernon
duty of good faith and fair dealing similar to that imposed      Supp.2007). Additionally, the trial court did not reversibly
upon insurance companies by the Arnold court. However,           err in concluding the evidence insufficient to support the
our Supreme Court has recognized that there is no general        submission of exemplary damages to the jury. Appellants'
duty of good faith and fair dealing in ordinary arm's length     second issue is overruled.
commercial transactions. See Formosa Plastics Corp. USA
v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41,
52 (Tex.1998); see also Wil–Roye Inv. II v. Washington Mut.
                                                                         Specific Performance and Injunctive Relief
Banks, F.A., 142 S.W.3d 393, 410 (Tex.App.-El Paso 2004,
no pet.) (the duty of good faith and fair dealing does not arise  [16]    [17]    [18]     [19]    [20]    [21] In their third issue,
in ordinary commercial transactions). In Lovell v. Western       appellants contend that the trial court erred in denying their
Nat'l Life Ins. Co., 754 S.W.2d 298 (Tex.App.-Amarillo 1988,     request for specific performance and injunctive relief. The
writ denied), this court noted the explication in the Arnold     purpose of specific performance is to compel a party who is
case as holding that the duty of good faith and fair dealing     violating a duty under a valid contract to comply with his
does not exist in Texas unless intentionally created by express  obligations. The rationale for that remedy is that the recovery
language in a contract or unless a special relationship of trust of monetary damages would be inadequate to compensate the
and confidence exists between the parties to the contract. Id.   complainant and thus the transgressor should be compelled to
at 302–03.                                                       perform that which he had promised in his contract. Estate of
                                                                   Griffin v. Sumner, 604 S.W.2d 221, 225 (Tex.Civ.App.-San
Indeed, in Farah v. Mafrige & Kormanik, 927 S.W.2d                 Antonio 1980, writ ref'd n.r.e.). It is a fundamental rule of
663 (Tex.App.-Houston [1st Dist.] 1996, no writ), cited by         equity that specific performance may not be granted unless
appellants, the court explicated that “[t]he fact that one         it is shown there is no adequate remedy at law. American
businessman trusts another and relies upon another to perform      Housing Resources, Inc. v. Slaughter, 597 S.W.2d 13, 15
a contract does not rise to a confidential relationship.” Id. at   (Tex.Civ.App.-Dallas 1980, writ ref'd n.r.e.). The burden of
675–76. In Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477           invoking the court's equity jurisdiction is on the party seeking
(Tex.App.-Corpus Christi 1989, writ denied), although the          it and the comparative advantages of the equitable remedy
court recognized the rule that certain types of contracts might    must be shown to outweigh those of the legal remedy. Among
lead to the finding *703 of a special relationship of such         the factors to be considered are whether long-continued
a nature as to give rise to a cause of action in tort, the court   supervision by the court will be required, whether complete
cautioned that the special relationship cause of action did not    relief can be rendered by the remedy sought, and whether, if
extend to ordinary commercial relationships. Id. at 481.           the remedy sought is granted, it can be adequately enforced.
                                                                   Id. A court generally will not decree a party to perform a
In English v. Fischer, 660 S.W.2d 521 (Tex.1983), also cited       continuous series of acts which extend through a long period
by appellants, the Court had occasion to discuss a theory          of time and require constant supervision by the court. Canteen
prevalent in California law that in every contract there was an



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South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


Corp. v. Republic of Texas Properties, Inc., 773 S.W.2d 398,      shows that they did not specify or demonstrate the amount of
401 (Tex.App.-Dallas 1989, no writ).                              business they may have lost because of such rates or that they
                                                                  lost Vulcan Materials or any other entity as a customer. Those
 [22] In this case, appellant's quest for specific performance,   losses would have been susceptible of determination. Thus,
in its essence, was one seeking a mandatory injunction. When      under this record, they did not make the showings of a lack
a trial court grants, or refuses, a permanent injunction, the     of an adequate remedy at law or irreparable injury requisite
standard of review is whether it committed an abuse of            to support the equitable relief they sought.
discretion. The test for determining whether a trial court
abused its discretion is whether it acted without reference       Additionally, the Asset Sale Agreement specifically provided
to any guiding rules or principles. Downer v. Aquamarine          that BNSF “shall have authority to establish through routes
Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985).               and offer through freight rates via through routes involving
                                                                  both [appellants] and [BNSF] with interchange between
[23]   SAW asked that BNSF be ordered to:                         [appellants] and [BNSF]....” The Agreements also stated that
                                                                  appellants “automatically concur in all such through rates
   *704 1) Interchange to SAW all trains headed to                established by [BNSF] ... so long as [appellants] receive
  customers on the Burris Tracks owned by BNSF, not               for transporting the traffic [their] division of revenues....”
  to attempt to relocate any business from customers on           There are no provisions in the Asset Sale Agreement
  the Burris Tracks owned by BNSF, and refrain from               preventing BNSF from charging different through rates for
  attempting to relocate any of the business from customers       traffic interchanged with appellants, and we find no evidence
  on the Burris Tracks.                                           produced at trial that the parties intended otherwise. In sum,
                                                                  the trial court could reasonably conclude that the specific
  2) Interchange all Vulcan Materials' trains headed to
                                                                  performance sought by appellants in this regard would have
  Lubbock, Texas to SAW for unloading on Track 9200 and
                                                                  compelled conduct inconsistent with the agreements.
  refrain from requiring Vulcan Materials to lease or use any
  BNSF track in the Lubbock area for unloading operations
                                                                  Likewise, the record does not show evidence that appellants
  on trains routed to SAW; and
                                                                  suffered imminent irreparable injury with no remedy at law
  3) Refrain from charging two different discriminatory           because of BNSF's practices in handling Vulcan Materials'
  freight rates for trains destined to Lubbock, Texas.            trains. Indeed, appellants sought and received from the trial
                                                                  jury money damages tied to BNSF's diversion of Vulcan
Examination of the Asset Sale Agreement reveals that              Materials' trains and its refusal to allow Vulcan Materials to
although it gave SAW title to the Burris Tracks, it made          use Track 9200.
no specific provision for its operation on BNSF's mainline
to get there. The record supports the trial judge's evident       Moreover, even though SAW argues that BNSF had locked
conclusion that SAW had not suffered an irreparable injury        the switch to Track 9200 which had the effect of denying it the
and that it did have an adequate remedy at law in the              *705 ability to serve Vulcan Materials on that track, SAW
form of contract damages if a breach of the contract had          acknowledged at trial that it still had access to Track 9200
occurred. Additionally, the record would support the court        when the switch was locked, and that on the trial date, the
in concluding that the grant of a mandatory injunction in a       switch was no longer locked. Thus, the record does not show
situation such as was presented to it would require continued     the requisite irreparable injury related to BNSF's conduct but
onerous judicial supervision. In sum, this record does not        does demonstrate that there was an adequate remedy at law in
show that the court erred in concluding that SAW did not meet     the form of contract damages.
the prerequisite requirements to justify the equitable remedy
it sought in connection with the Burris Tracks.                   Appellants also contend that BNSF assigned the Vulcan
                                                                  Materials business in the Asset Sale Agreements. However,
Appellants also sought a judicial prohibition preventing          perusal of the agreements demonstrates there are no
BNSF from quoting different freight rates for trains destined     provisions restraining BNSF from serving customers such as
to Lubbock and Slaton, Texas. In doing so, they argued that       Vulcan Materials on its own rail line. Thus, appellants did
they had lost business from Vulcan Materials because BNSF         not show any entitlement to specific performance. In sum,
had established different through rates. However, the record      appellants' third issue is overruled.



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           13
South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


                                                                  Appellants assert the testimony of Larry Wisener is sufficient
                                                                  to establish their lost profits. Wisener testified as to the
                                                                  division of revenue that would be received by appellants
                          Damages
                                                                  on each train in issue and in considerable detail about
 [24] In their fourth issue, appellants contend the trial court   the amount of fuel cost that would be used in handling
reversibly erred in granting BNSF's motion for judgment           those trains. However, there was no testimony about
n.o.v. regarding appellants' recovery of damages for the          other necessary expenses of *706 doing business such
wrongful diversion of Vulcan trains and the refusal of BNSF       as depreciation, payroll expenses, administrative expenses,
to allow SAW to service the Burris customers.                     equipment expenses, and maintenance expenses. In sum,
                                                                  Wisener's testimony falls short of fulfilling the requirement
 [25] A trial court may grant a judgment n.o.v. if there is       that lost profits be shown with reasonable certainty. See Atlas
no evidence to support one or more of the jury's findings on      Copco Tools, Inc. v. Air Power Tool & Hoist, Inc., 131
issues necessary to liability or, conversely, if the evidence     S.W.3d 203, 209 (Tex.App.-Fort Worth 2004, pet. denied).
established an issue as a matter of law. Brown v. Bank of         Thus, the trial court did not reversibly err in disregarding the
Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998); John             jury's answers to questions 2, 4, and 6. Appellants' fourth issue
Masek Corp. v. Davis, 848 S.W.2d 170, 173 (Tex.App.-              is overruled.
Houston [1st Dist.] 1992, writ denied).

In responding to appellants' fourth issue, BNSF argues that                          BNSF'S Cross–Appeal
although appellants now argue that they were entitled to
“benefit of the bargain” damages, in their pleadings, they       [29] In presenting its cross-appeal, BNSF presents three
only claimed damages based upon “lost profits” and/or lost      issues for our decision. First, it asserts the evidence is legally
revenue. Moreover, during the course of the trial, appellants   and factually insufficient to support the jury's answers to
continued to argue that they had lost profits and revenues      questions 7 and 8. In question 7, the jury was queried whether
because of BNSF's breaches of the Asset Sale Agreements.        BNSF failed to comply with the Asset Sale Agreement by
They did offer a trial amendment after the close of evidence    failing to assign the West Texas Industries lease or rent to
seeking recovery of benefit of the bargain damages but          SAW. Question 8 was predicated on an affirmative answer
the trial judge refused to let them do so. Thus, under this     to question 7 and inquired as to what sum of money would
record, they were not entitled to submission of that theory     compensate SAW for its damages, if any, resulting from the
and we are relegated to the task of determining whether the     failure to assign the West Texas Industries lease. In arriving
testimony they produced was sufficient to support a “lost       at its answer, it was instructed that it might only consider the
profits” recovery.                                              “amount of rent under the lease from West Texas Industries,
                                                                Inc. paid to BNSF after May 1, 2004.” The answer was
 [26] [27] [28] In a breach of contract action such as this $12,600.
one, the measure of damages is just compensation for the
loss or damage actually sustained. Stewart v. Basey, 150 Tex.   It is not disputed in the record that: 1) the property covered
666, 245 S.W.2d 484, 486 (1952). The measure of damages         by the West Texas Industries lease was within the property
for the loss of profit as consequential damages means net       description of the land to be conveyed to SAW by quitclaim
profits. Net profits means what remains in the conduct of       deed under the SAW Asset Sale Agreement and that the Asset
a business after deducting from its total receipts all of the   Sale Agreement was signed on May 3, 1999; 2) the property
expenses incurred in carrying on the business. The lost profits covered by that lease was conveyed by BNSF to a third party
need not be susceptible to exact calculation, but must only be  by a special warranty deed on June 29, 1999; 3) the quitclaim
shown to a reasonable certainty. An award of damages may be     deed was executed by BNSF on June 29, 1999, but was not
based on estimates that are based upon objective facts, figures delivered on that date and was held by BNSF pending closing.
or data. Interceramic, Inc. v. South Orient R.R. Co., Ltd., 999 The Asset Sale Agreement closed, and the quitclaim deed was
S.W.2d 920, 929 (Tex.App.-Texarkana 1999, pet. denied);         delivered to SAW on July 2, 1999. It is undisputed that the
Turner v. PV Intern. Corp., 765 S.W.2d 455, 465 (Tex.App.-      lease was reconveyed to BNSF by the third party on October
Dallas 1988, writ denied).                                      25, 2002.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            14
South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


SAW argues that BNSF was obligated to assign it either the        the quitclaim deed was delivered subsequent to the time that
West Texas Industries lease or the rent generated from the        BNSF had no title to the lease. Consequently, it could not be
lease. In support of that position, it relies upon section 1(e)   liable for, and there is no evidence to support the jury answers
which provides:                                                   to questions 7 and 8.

            Seller [BNSF] shall assign to Buyer                    [32]     [33]    [34] Additionally, the statute of limitations
            [SAW] on the day of closing, subject                  for a breach of contract is four years. Tex. Civ. Prac. &
            to all terms and conditions set forth                 Rem.Code Ann. § 16.051 (Vernon 1997). The limitations
            in this agreement, or in any agreement                period begins to run when the cause of action accrues.
            assigned by Seller to Buyer in                        When the legislature employs the term “accrues” without
            accordance with the terms of this                     an accompanying definition, it is the responsibility of the
            agreement, all assignable rights and                  courts to determine when the cause of action accrues and
            obligations of Seller to the extent that              thus when the statute of limitations begins to run. Moreno
            they are related to the rail line and are             v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex.1990). An
            set forth in any agreement identified in              action for damages for breach of a written contract accrues
            Exhibit D which is attached hereto....                when the breach occurs or when the claimant has notice of
            If any contract is related to the rail                facts sufficient to place him on notice of the breach. Rose v.
            line and inadvertently not identified in              Baker & Botts, 816 S.W.2d 805, 810 (Tex.App.-Houston [1st
            Exhibit D, it is the intent of Seller and             Dist.] 1991, writ denied). Assuming, arguendo, that BNSF
            Buyer that such contract be deemed                    had breached the Asset Sale Agreement by failing to assign
            to have been assigned by Seller to                    the West Texas Industries lease, that breach occurred on July
            Buyer in whole or part as appropriate                 2, 1999. If BNSF was required to assign leases in some way
            effective the date of closing.                        other than by quitclaim deed, on July 2, 1999, when the deal
                                                                  was closed, SAW must have actual knowledge that there were
It also relies upon section 12 of the agreement which provides:
                                                                  no lease assignments made. However, SAW did not make its
            Prepaid rentals, utilities and other                  breach of contract claim until June 1, 2004, some five years
            income or fees attributable to the                    later. The claim is barred by limitations.
            contracts related to the rail line that
            are being assigned under ¶ 1 of this                  Likewise, SAW's claims relating to the Furr's Cafeteria and
            agreement, shall be prorated between                  Brite Trucking leases accrued on the date of the closing of the
            Buyer and Seller in such a manner                     Asset Sale Agreement, and, like the other claims, SAW did
            as to allocate to Seller all income                   not make its breach of contract claim in that regard until June
            received and all expenses incurred, on                1, 2004, some five years later. Those claims are also barred
            or prior to the date of closing, and to               by limitations.
            allocate to Buyer all income received,
            and expenses incurred after the date of             [35] [36] SAW additionally contends that it is entitled to
            closing.                                           receive one-half of all of the rent payments received by BNSF
                                                               from the B & R Auto lease. However, it is undisputed that the
                                                               land leased to B & R Auto was not included in the description
 [30] [31] SAW contends that under the contract BNSF's
                                                               of land to be covered by quitclaim deed as provided in the
obligation was continuing *707 and that when the property
                                                               Asset Sale Agreement. All that SAW received on that tract
was deeded back to BNSF, it had an obligation to transfer
                                                               was an easement to operate on tracks crossing the land. It
the lease back to SAW. However, BNSF's obligation under
                                                               is SAW's contention that a landowner is obligated to share
the contract was only to deliver a quitclaim deed. While a
                                                               rent proceeds with those holding easements on the land. We
warranty deed to land conveys property, a quitclaim deed
                                                               disagree. An easement extends to certain persons or entities
conveys only the grantor's right in it, if any. Geodyne Energy
                                                               the right to use the land of another for the purpose or purposes
Income Prod. P'ship I–E v. Newton Corp., 161 S.W.3d 482,
                                                               specified in the easement and does not convey title to the
486 (Tex.2005). A quitclaim deed conveys upon its face
                                                               property. Magnolia Petroleum Co. v. Caswell, 1 S.W.2d 597,
doubts about a grantor's interest and a buyer is necessarily
                                                               600 (Tex. Comm'n App.1928, judgm't adopted); Long Island
put on notice as to those doubts. The record demonstrates that



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            15
South Plains Switching, Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690 (2008)


                                                                   the judgment *708 awarding injunctive relief and specific
Owner's Ass'n v. Davidson, 965 S.W.2d 674, 684 (Tex.App.-
                                                                   performance to SAW, to delete that portion of the judgment
Corpus Christi 1998, pet. denied). That being so, SAW would
                                                                   awarding attorney's fees to SAW, and to provide that SAW
not be entitled to any portion of rentals owed by B & R Auto
                                                                   take nothing on those claims. As modified, the judgment is
for the use of the property.
                                                                   affirmed. Tex.R.App. P. 43.2.
For the reasons we have expressed, the judgment of the trial
court is modified to delete those portions of the judgment
                                                                   All Citations
awarding $12,600 in damages to SAW with respect to
the West Texas Industries lease, to delete that portion of         255 S.W.3d 690


Footnotes
1      John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment. Tex. Gov't Code Ann. § 75.002(a)
       (1) (Vernon Supp.2007).


End of Document                                                © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            16
San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)




                                                                        5 Cases that cite this headnote
                       164 S.W.2d 197
       Court of Civil Appeals of Texas, San Antonio.
                                                                  [3]   Vendor and Purchaser
       SAN ANTONIO JOINT STOCK LAND BANK                                    Exercise
                       v.                                               Where option to purchase realty does not contain
                   MALCHER.                                             provisions to the contrary, all that is required by
                                                                        optionee is that he notify optionor, prior to date
             No. 11180. | July 22, 1942.                                of expiration of option, of his decision to exercise
           | Rehearing Denied Aug. 19, 1942.                            the option, and he thereafter has a reasonable
                                                                        time within which to complete the deal.
Appeal from District Court, Atascosa County; S. B. Carr,
Judge.                                                                  8 Cases that cite this headnote

Suit by August Malcher against the San Antonio Joint Stock
Land Bank of San Antonio and Edwin Seay to set aside a            [4]   Vendor and Purchaser
trustee's deed, and, in the alternative, for judgment decreeing             Exercise
specific performance of an alleged agreement to convey                  Optionee, who tendered money to optionor for
realty, together with an injunction prohibiting the bank from           the purchase of realty 18 days after date when he
interfering with plaintiff's possession of the realty, and,             was to exercise the option, tendered the money
further, in the alternative, for a money judgment against the           within a “reasonable time”.
bank, wherein the bank filed a cross-action. From an adverse
                                                                        7 Cases that cite this headnote
judgment, the bank appeals.

Judgment amended, and, as amended, affirmed.                      [5]   Specific Performance
                                                                            Options
                                                                        Where optionee tendered money to optionor
 West Headnotes (7)                                                     for purchase of realty within a reasonable time
                                                                        after date when option was to be exercised, but
                                                                        optionor refused to accept the tender, optionee
 [1]     Landlord and Tenant                                            was entitled to specific performance of option
             Time                                                       contract.
         Where rental contract provided that lessor gave
         lessee the right to purchase realty for certain                7 Cases that cite this headnote
         amount, and that option, if not exercised, expired
         on certain date, and lessee notified lessor before       [6]   Appeal and Error
         such date of his intention to exercise the option,                Total omission of findings; delay
         lessee had a reasonable time after such date to                Where trial judge, when notified of his failure
         pay the money and otherwise complete the deal.                 to file findings of fact requested by appellant,
                                                                        at once began such preparation, but because
         1 Cases that cite this headnote
                                                                        appellant's attorneys had some of the exhibits
                                                                        in their possession, he was delayed in such
 [2]     Vendor and Purchaser                                           preparation, and findings were not filed within
             Exercise                                                   time required by rule of civil procedure, and
         Where an option to purchase realty is in writing               there was a complete statement of facts filed by
         and is signed by both parties, it may be orally                appellant after appellant knew of delay in filing
         accepted.                                                      the findings, and appellant secured an extension
                                                                        of time to file such statement of facts, and
                                                                        appellant did not show that it was prejudiced by


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             1
San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)


         delay, delay did not constitute reversible error.           Malcher's possession of the 221.4 acres of land. The trial
         Rules of Civil Procedure, rule 297.                         judge made elaborate findings of fact resolving all fact issues
                                                                     against the Land Bank.
         3 Cases that cite this headnote
                                                                     From this judgment the San Antonio Joint Stock Land Bank
                                                                     alone has prosecuted this appeal.
 [7]     Appeal and Error
            To verdict, findings, or judgment                        Appellant presents its first three points together, and they are
         Where appellant made several points challenging             as follows:
         findings of fact made by trial court as not being
         supported by the evidence, but those points were            “First Point. The court erred in rendering judgment for
         not briefed, they were “waived”. Rules of Civil             Appellee, Malcher, herein, for the relief prayed for by him
         Procedure, rule 418.                                        and in rendering judgment against Appellant upon its cross-
                                                                     action, because, under the undisputed evidence, Appellee,
         15 Cases that cite this headnote                            Malcher, was not entitled to recover herein and Appellant
                                                                      *199 was entitled to judgment on its cross-action.

                                                                     “Second Point. The court erred in granting Appellee
                                                                     Malcher's prayer for specific performance of his alleged
Attorneys and Law Firms
                                                                     contract to repurchase the land in suit, because the undisputed
*198 Kelso, Locke & King and Wm. F. Koch, all of San                 evidence shows that appellee never offered to perform his
Antonio, for appellant.                                              alleged option contract, to repurchase said land until the time
                                                                     allowed him to exercise such option had expired.
O. F. Burney, of Floresville, for appellee.
                                                                     “Third Point. The court erred in granting Appellee Malcher's
Opinion                                                              prayer for specific performance of his alleged agreement to
                                                                     repurchase the land in controversy because the undisputed
MURRAY, Justice.
                                                                     evidence shows that Appellee never at any time prior to the
This suit was instituted by August Malcher in the District           filing of this suit made a valid tender of performance of his
Court of Atascosa County against San Antonio Joint Stock             option to purchase.”
Land Bank of San Antonio, a corporation, and Edwin Seay
                                                                     On August 19, 1929, August Malcher and wife executed a
seeking to set aside a certain trustee's deed conveying
                                                                     deed of trust to William B. Lupe, Trustee, upon the 221.4
221.4 acres of land out of the J. T. Eubanks Survey No.
                                                                     acres of land involved herein, to secure the Land Bank in the
506, in Atascosa County, Texas, to the above named Land
                                                                     payment of a deed of trust note in the sum of $4,500.
Bank and, in the alternative for judgment decreeing specific
performance of an alleged agreement on the part of the Land          On June 4, 1940, a trustee's sale of the land was had and the
Bank to convey said 221.4 acres of land to Malcher, together         Land Bank bid it in for the sum of $2,250, leaving a balance
with an injunction prohibiting the Land Bank from in any way         due on the note of $2,254.47.
interfering with Malcher's possession of said 221.4 acres of
land, and, further, in the alternative, for a money judgment         On June 7, 1940, Malcher went to San Antonio and had a
against the Land Bank in the sum of $1,863.94.                       conversation with William B. Lupe, Jr., a vice-president of
                                                                     the Land Bank. Malcher paid Lupe the sum of $1,500 and
The trial was to the court without the intervention of a jury and    understood that he would be permitted to redeem the land by
resulted in judgment in Malcher's favor requiring the Land           paying in full the amount due on the note. The Land Bank,
Bank to execute and deliver to the Clerk of the District Court,      through its officers and attorney, wrote Malcher several letters
for August Malcher, a deed conveying to August Malcher all           thereafter urging him to come in and complete the deal, but
the right, title and interest to said 221.4 acres of land that the   Malcher neglected to answer these letters.
Land Bank has in said property, and also that Edwin Seay has
in said land, upon the payment by Malcher to said District           Malcher never went back to see Mr. Lupe until about October,
Clerk for the Land Bank of the sum of $3,262; and further            1940, at which time he agreed to pay the taxes upon the land.
enjoining the Land Bank from in any way interfering with


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               2
San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)



After the taxes were paid he received the following letter from    “Mr. August Malcher
Mr. Lupe, which is self-explanatory, to-wit:
“November 8th, 1940                                                “Poth, Texas

 “Dear Sir:                                        In re: Loan 3008
                                                                   notified the Bank of his intention to exercise the option, he
“Confirming our conversation of October 10, 1940, in regard        would have a reasonable time after September 30th to pay the
to re-purchasing your farm, the Bank agreed that if you would      money and otherwise complete the deal. We conclude that he
pay up all taxes by the 15th of October, that we would give        would have such reasonable time. It will be borne in mind
you an option until December 1, 1940, to re-purchase the farm      that the contract does not require that the option be accepted
at the amount of investment the Bank has in the farm as of         in writing not later than September 30, 1941, neither does it
December 1, 1940.                                                  require in express terms that the money be paid or tendered
                                                                   not later than that date; nor does it require that the money be
“Since you have paid the taxes as per your agreement, this         tendered in cash. It simply provides that the “option, if not
is to confirm our agreement that you have the option to re-        exercised, expires September 30, 1941.”
purchase up to December 1, 1940, and the figure will be
$4,639.30 less $1,500.00 or $3,139.30.                              *200 [2] Where an option to purchase real estate is in
“Yours very truly,                                                 writing and signed by both parties it may be orally accepted.
                                                                   Haskell v. Merrill, Tex.Civ.App., 242 S.W. 331; 43 Tex.Jur.
“Wm. B. Lupe, Jr.                                                  100; 66 C.J. 499; Killough v. Lee, 2 Tex.Civ.App. 260, 21
                                                                   S.W. 970.
“Vice-President.”

                                                                   In Anderson v. Tinsley, 28 S.W. 121, 122, Justice Fly,
Malcher did not re-purchase the land under this option, but in     speaking for this court, said: “* * * The 10-days limit does
June, 1941, he entered into a rental contract with the Bank,       not, and evidently was not intended to, apply to the passing of
whereby he rented the land from the Bank for the year 1941.        the deed. ‘The offer to remain in force for ten days from this
This rental contract was signed by both Malcher and the            date,’ upon a fair construction, means that the 10-days limit
proper officer of the Bank and contained the following option:     is given in which to accept the offer. It was accepted within
                                                                   the 10 days. The contract was then in a condition that it could
“The Lessor hereby gives Lessee (August Malcher) the
                                                                   be enforced by either party.”
right to purchase the above described tract of land for a
                                                                    [3] Where an option does not contain provisions to the
consideration of $3,009.70, plus 6% interest from June 7,
                                                                   contrary all that is required by the optionee is that he notify
1940, to date of purchase. This option, if not exercised,
                                                                   the optionor, prior to the date of expiration, of his decision
expires September 30, 1941, is not transferrable, and is
                                                                   to exercise the option and he thereafter has a reasonable time
subject to right of sale by Lessor prior to September 30,
                                                                   within which to complete the deal. 66 C.J. 500; Horgan v.
1941.”
                                                                   Russell, 24 N.D. 490, 140 N.W. 99, 43 L.R.A.,N.S., 1150;
August Malcher testified to facts which support the trial          Killough v. Lee, supra.
court's finding to the effect that he notified the Land Bank, in
August, 1941, that he was exercising his option to purchase,        [4] [5] The trial court held upon sufficient evidence that
however, he did not tender the money or secure a deed to           Malcher tendered the money to the Land Bank within a
the property prior to September 30, 1941. He did tender the        reasonable time after September 30th, and such tender was
money to the Bank on October 18, 1941, which tender was            not accepted by the Bank. This being true Malcher is entitled
not accepted by the Bank.                                          to specific performance of his option contract.
 [1] This brings us to a consideration of the all-important
question in the case, which is, whether under the option            [6] As we have previously stated, the trial court filed
Malcher was required to pay or tender the purchase money to        elaborate findings of fact sufficient to support the judgment
the Bank on or before September 30, 1941, or whether, having       rendered. Appellant contends we should not consider these



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             3
San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (1942)


                                                                         [7] Appellant has made several points challenging certain
findings, but should reverse the judgment because such
                                                                        findings of fact made by the trial court as not being supported
findings were not filed within the time required by Rule No.
                                                                        by the evidence, but these points have not been briefed and
297, Rules of Civil Procedure. The findings of fact should
                                                                        are therefore waived. Rule No. 418, Rules of Civil Procedure;
have been filed not later than January 18, 1942, but were not
                                                                        3 Tex.Jur. 901; Lov Vorn v. Wilkinson, Tex.Civ.App., 112
filed until January 23, 1942. The trial judge, in explaining
                                                                        S.W.2d 749; Alamo Downs, Inc., v. Briggs, Tex.Civ.App.,
the delay in filing his findings, shows that he did not have
                                                                        106 S.W.2d 733.
actual knowledge of the written request of appellant for such
findings. When he was notified of his failure to file such
findings he at once began such preparation, but due to the              The judgment will be amended so as to provide that if Malcher
fact that attorneys for appellant had some of the exhibits in           should fail to pay to the Clerk of the District Court of Atascosa
their possession he was delayed in such preparation. There is a         County the sums of money provided for in the judgment,
complete statement of facts in the case, filed by appellant after       within the time provided therein, then and in that event he
it knew of the delay in filing the findings of fact. Appellant          should lose all rights under his option contract and under the
secured an extension of time so that it might be enabled to file        judgment, and, further, in such event the injunction will be
such statement of facts. Appellant has not shown that it was in         dissolved.
any way prejudiced by the delay in filing the findings. Under
such circumstances such delay on the part of the trial judge            Amended and affirmed.
in filing his findings of fact does not constitute reversible
error. Barry v. Barry, Tex.Civ.App., 162 S.W.2d 440; Grant              All Citations
v. Pendley, Tex.Civ.App., 88 S.W.2d 132; McNabb v. Cruze,
                                                                        164 S.W.2d 197
Tex.Civ.App., 101 S.W.2d 902.



End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   4
Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


                                                                        The test for an abuse of discretion is not whether,
                                                                        in the opinion of the reviewing court, the facts
                    283 S.W.3d 537
                                                                        present an appropriate case for the trial court's
                Court of Appeals of Texas,
                                                                        action, but whether the court acted without
                          Dallas.
                                                                        reference to any guiding rules and principles; the
   Benjie SMITH d/b/a Oak Cliff Metals, Appellant,                      trial court's ruling should be reversed only if it
                        v.                                              was arbitrary or unreasonable.
              DASS, INC., Appellee.
                                                                        1 Cases that cite this headnote
        No. 05–07–01023–CV.           |   May 8, 2009.
                                                                  [3]   Specific Performance
Synopsis                                                                    Nature and Grounds of Duty of Plaintiff
Background: Commercial tenant brought action against
                                                                        The equitable remedy of specific performance
landlord and equipment lessor for breach of contract,
                                                                        may be awarded upon a showing of breach
reformation of sales document and a declaration that reformed
                                                                        of contract; however, a party seeking specific
sales document would be valid and enforceable. The 160th
                                                                        performance must plead and prove (1)
Judicial District Court, Dallas County, Jim Jordan, J., entered
                                                                        compliance with the contract including tender of
judgment for tenant on jury verdict for money damages and
                                                                        performance unless excused by the defendant's
denied all other requested relief. Tenant appealed.
                                                                        breach or repudiation and (2) the readiness,
                                                                        willingness, and ability to perform at relevant
                                                                        times.
Holdings: The Court of Appeals, Lang, J., held that:
                                                                        Cases that cite this headnote
[1] landlord did not waive any purported complaint regarding
the lack of a jury charge and jury finding on issue of whether    [4]   Jury
lessee complied with provisions of sales agreement, and                        Issues of Fact in Equitable Actions
                                                                        When contested fact issues must be resolved
[2] evidence was insufficient to support award of specific
                                                                        before a court can determine the expediency,
performance.
                                                                        necessity, or propriety of the equitable relief,
                                                                        a party is entitled to have a jury resolve the
Affirmed.                                                               disputed fact issues.

                                                                        Cases that cite this headnote

 West Headnotes (11)                                              [5]   Estates in Property
                                                                            Nature and Incidents in General
 [1]    Specific Performance                                            Property
            Discretion of Court                                              Nature of Right of Property and Acquisition
        Specific Performance                                            in General
            Form of Remedy                                              “Equitable title” is the present right to compel
        Specific performance is an equitable remedy                     legal title.
        committed to the trial court's discretion.
                                                                        3 Cases that cite this headnote
        1 Cases that cite this headnote
                                                                  [6]   Appeal and Error
 [2]    Appeal and Error                                                   Necessity of Presentation in General
           Abuse of Discretion



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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


        As a general rule, a party is required to present a
        complaint to the trial judge before being allowed              Cases that cite this headnote
        to raise an issue on appeal.
                                                                [10]   Specific Performance
        Cases that cite this headnote
                                                                           Presumptions and Burden of Proof
                                                                       Commercial tenant seeking specific performance
 [7]    Specific Performance                                           of sales contract with landlord had burden of
            Appeal                                                     proving that he had worked out title details
        Landlord did not waive any purported complaint                 required by the contract and was ready, willing,
        regarding the lack of a jury charge question and               and able to perform as to such details.
        jury finding on issue of whether commercial
        tenant complied with sale agreement pursuant                   Cases that cite this headnote
        to rule providing failure to submit a question
        shall not be deemed a ground for reversal of            [11]   Vendor and Purchaser
        judgment unless it had been requested in writing                   Effect of Executory Contract on Title to
        and tendered by party complaining of judgment,                 Property
        in tenant's action for specific performance of the
                                                                       Commercial tenant's failure to plead and prove
        agreement; landlord did not assert a failure to
                                                                       that he complied with sales contract provision
        submit a question as a ground for reversal of
                                                                       that required details of title be worked out with
        judgment and did not object when tenant did not
                                                                       the Environmental Protection Agency (EPA),
        submit jury question on issue as to which he
                                                                       precluded award of equitable title in real
        had burden of proof. Vernon's Ann.Texas Rules
                                                                       property; there was no finding of fact by jury
        Civ.Proc., Rule 278.
                                                                       that tenant performed his obligations under sale
        Cases that cite this headnote                                  document regarding title details, thus there was
                                                                       no jury finding showing tenant's entitlement
                                                                       to equitable title in real property. Vernon's
 [8]    Specific Performance                                           Ann.Texas Rules Civ.Proc., Rule 54.
             Performance, Good Faith, and Diligence of
        Plaintiff                                                      Cases that cite this headnote
        Commercial tenant's equivocal testimony as
        to whether he complied with sales contract
        provision that required details of title be worked
        out with the Environmental Protection Agency           Attorneys and Law Firms
        (EPA) before he could purchase leased property
        from landlord was insufficient to support award        *539 Shawn M. McCaskill, Goodwin Ronquillo, L.L.P.,
        of specific performance of contract in his action      Dallas, TX, for Appellant.
        against landlord. Vernon's Ann.Texas Rules
                                                               Michael H. Myers, John Thomas Wilson, Myers Wilson P.C.,
        Civ.Proc., Rule 54.
                                                               Dallas, TX, for Appellee.
        Cases that cite this headnote                          Before Justices BRIDGES, O'NEILL and LANG.

 [9]    Jury
               Issues of Fact in Equitable Actions                           OPINION ON AMENDED
        When contested fact issues must be resolved                         MOTION FOR REHEARING
        before a court can determine the expediency,
                                                               Opinion by Justice LANG.
        necessity, or propriety of equitable relief, a party
        is entitled to have a jury resolve the disputed fact   On March 12, 2009, this Court issued an opinion affirming
        issues.                                                the trial court's judgment. Appellant Benjie Smith d/b/a Oak


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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


                                                                     For the reasons below, we decide Smith's first and second
Cliff Metals (“Smith”) filed a motion for rehearing on April
                                                                     issues against him. We need not reach Smith's third issue. The
9, 2009. On April 29, 2009, with his April 9, 2009 motion still
                                                                     trial court's judgment is affirmed.
pending, Smith filed a motion for leave to file an amended
motion for rehearing, to which he attached his amended
motion for rehearing. By separate order, we have granted
Smith's motion for leave to file an amended motion for                I. FACTUAL AND PROCEDURAL BACKGROUND
rehearing. We deny Smith's amended motion for rehearing.
In addition, we withdraw our March 12, 2009 opinion and              In 1999, Falcon Transit, Inc., a corporation owned by Benjie
vacate the judgment of that date. This is now the opinion of         Smith, leased real property located at 523 Pontiac Avenue
the Court.                                                           in Dallas from DASS, the owner of the real property, for
                                                                     the operation of a scrap metal business called Oak Cliff
This case involves a dispute over an agreement to purchase           Metals. The written commercial lease agreement provided for
a parcel of real property. The trial court signed a judgment         a thirty-month term commencing February 1, 1999, with a
in favor of Smith awarding damages against appellee DASS,            monthly lease payment of $2000. In addition, Smith agreed
Inc. (“DASS”) for breach of that agreement. However,                 to pay property taxes and utilities. DASS's director, Steve
appellant contends the trial court erred when it refused to sign     McFalls, signed the commercial lease agreement on behalf
a judgment granting specific performance or a declaratory            of DASS. Under a separate written lease agreement, Smith
judgment awarding equitable title. In his three issues on            leased equipment on the premises for the same term from
appeal, Smith specifically contends (1) the trial court abused       Texas Industrial Recycling Company (“TIRC”), a company
its discretion by denying his election of the remedy of specific     owned by McFalls, for a monthly lease payment of $3000.
performance of the agreement to purchase, (2) the trial court        McFalls signed the equipment lease agreement on behalf of
erred by denying his request for the alternative remedy of           TIRC.
a declaratory judgment awarding him equitable title to the
real property, and (3) the trial court's purported reasons for       Smith contends the parties executed a document dated
denying the relief requested by him are erroneous and without        August 31, 2001, titled “Pending Sale of Land” (the “Sale
merit.                                                               document”). The Sale document read as follows:

                                                     Pending Sale of Land
                                                                   8/31/01


         From:                                                                               To:

         Texas Industrial Recycling                                                          Benjie L. Smith

         Scrap yard located at 523 Pontiac Avenu, Dallas, Texas,                             *
                                                                                                 $100,000.
         known as Oak Cliff Metals


        * To be paid $1500 plus property taxes per month until details on title are worked out
        between Benjie Smith's attorney and EPA.
                                                                     Smith. McFalls denies signing the Sale document or the bills
 *540 The Sale document was purportedly signed by Smith,
                                                                     of sale.
as “Buyer,” and McFalls, as “Seller.” In addition, Smith
contends two August 31, 2001 bills of sale were signed by
                                                                     In a letter dated October 26, 2005, DASS and TIRC purported
McFalls regarding sale of the leased equipment from TIRC to
                                                                     to provide Falcon Transit, Inc. with notice of termination
                                                                     of the commercial lease agreement and equipment lease


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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


agreement. According to the notice of termination letter, upon        the [Sale document].” The remaining questions and answers
expiration of the thirty-month lease term on August 1, 2001,          in the charge are not pertinent to this appeal.
Falcon Transit, Inc. became a month-to month tenant of the
premises at 523 Pontiac Avenue and maintained a month-to-             Smith filed a “Motion for Entry of Judgment.” In that motion,
month lease of the equipment. The notice of termination letter        Smith requested the trial court in relevant part (1) render and
ordered Falcon Transit, Inc. to vacate the leased premises            sign a judgment in favor of Smith in accordance with the jury's
and return possession of the leased equipment no later than           verdict and (2) reform the Sale document and order specific
December 1, 2005. Smith responded by filing suit.                     performance of that document, as reformed, by DASS. In
                                                                      defendants' response to Smith's motion for entry of judgment,
In his third amended petition, the pleading upon which the            they asserted in part Smith “is not entitled to the equitable
parties went to trial, Smith asserted several claims. 1 First,        remedy of specific performance because there is no evidence
he pleaded a breach of contract claim, but alleged a mistake          [he] has satisfied his obligations under the [Sale document].”
in the Sale document in naming TIRC as the seller, rather             The record does not contain a record of a hearing on Smith's
than DASS. Next, Smith requested (1) reformation of the Sale          motion for entry of judgment or show a ruling on that motion.
document to “reflect the actual agreement of the parties,”
and (2) a declaratory judgment that the Sale document,                The final judgment stated it was “[b]ased upon the jury's
as reformed, was valid and enforceable, that he obtained              verdict” and awarded Smith money damages in the amount
equitable title to the real property at issue “on the date of         of $137,755, attorney's fees, prejudgment interest, post
payment of the last monies owed for the Property under the            judgment interest, and taxable costs of court. Further, the final
contract,” and that he was entitled to “an adequate conveyance        judgment denied “[a]ll other relief requested by any party to
of the Property, including a transfer to Plaintiff of legal title.”   this case.”


Finally, Smith pleaded for specific performance of the Sale           In his “Motion to Modify, Correct or Reform the Judgment,”
document, asserting in relevant part, “Plaintiff has performed        Smith requested the trial court, in relevant part, (1) reform
all obligations imposed on Plaintiff by the [Sale document].          the Sale document and order specific performance of the
Plaintiff has fully paid Defendant the agreed purchase price.”        reformed document on the part of DASS and conveyance of
Smith requested defendants be required to comply with “the            legal title to the real property, or (2) in the alternative, render
terms of the contract, as reformed, specifically that they be         a declaratory judgment Smith has equitable title in the real
required to execute and deliver to Plaintiff an adequate and          property “based on the jury's findings as to the existence of
sufficient conveyance of title to the Property to Plaintiff.”         the agreement and Benjie Smith's compliance therewith” by
                                                                      “making the full and final payment (as found by the jury).”
                                                                      Following a hearing, the trial court denied Smith's motion to
The jury found 2 in answer to question 1 of the charge of
the court that McFalls signed the Sale document. In answer            modify, correct, or reform the judgment. 3 This appeal timely
to question 2 of the charge, the jury found before the Sale           followed.
document was prepared *541 and signed, DASS and Smith
orally agreed to the terms set forth in that document, but in the
preparation of that document TIRC was erroneously written                          II. REQUIRED JURY FINDINGS
into the document instead of DASS as a result of a mutual
mistake of the parties. The jury found in answer to question          In his first and second issues on appeal, Smith contends, in
3 of the charge that DASS failed to comply with the Sale              essence, (1) the trial court abused its discretion by denying
document. In answer to question 4 of the charge, the jury             his election of the remedy of specific performance of the
awarded Smith $137,755 in damages for DASS's “failure to              agreement in the Sale document and (2) the trial court erred by
comply with the [Sale document].” Those damages included              denying his request for the alternative remedy of a declaratory
(1) $100,000 for “[m]oney paid by or on behalf of [Smith]             judgment awarding him equitable title as to the real property.
pursuant to the [Sale document]”; (2) $15,314 for “[m]oney            DASS contends, in relevant part, Smith is not entitled to
paid by or on behalf of [Smith] in excess of the amount               specific performance or equitable title because the facts
required under the [Sale document]”; and (3) $22,441 for              required to support those remedies were not found by the jury.
“[p]roperty taxes paid on or behalf [sic] of [Smith] pursuant to      With respect to DASS's argument regarding required jury
                                                                      findings, we address Smith's first and second issues together.


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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


                                                                  findings, “Johnson had paid the purchase price and fully
                                                                  performed his obligations under the contract.” Id. at 148.
                                                                  Upon such performance, the court held, Johnson became
      *542 A. Standard of Review and Applicable Law
                                                                  vested with equitable title in the property. Id.; see also Cullins
                                                                  v. Foster, 171 S.W.3d 521, 533 (Tex.App.-Houston [14th
                   1. Specific Performance                        Dist.] 2005, pet. denied) (“Equitable title may be shown when
                                                                  the plaintiff proves that he has paid the purchase price and
 [1]     [2] Specific performance is an equitable remedy fully performed the obligations under the contract.”); White
committed to the trial court's discretion. Stafford v. S. Vanity  v. Hughs, 867 S.W.2d 846, 849 (Tex.App.-Texarkana 1993,
Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007,        no writ) (same).
pet. denied). The test for an abuse of discretion is not whether,
in the opinion of the reviewing court, the facts present an
appropriate case for the trial court's action, but “whether
the court acted without reference to any guiding rules and                        B. Application of Law to Facts
principles.” Cire v. Cummings, 134 S.W.3d 835, 838–39
                                                                  With respect to specific performance, DASS argues in part
(Tex.2004) (citing Downer v. Aquamarine Operators, Inc.,
                                                                  in its brief before this Court that Smith did not submit
701 S.W.2d 238, 241–42 (Tex.1985)). The trial court's ruling
                                                                  appropriate jury questions relating to his performance of the
should be reversed only if it was arbitrary or unreasonable.
                                                                  material terms of the Sale document. Specifically, DASS
Id. at 839.
                                                                  contends
 [3]     [4] The equitable remedy of specific performance             The [Sale document] states that the consideration for the
may be awarded upon a showing of breach of contract.                  purchase was to be paid “$1,500 plus property taxes per
Stafford, 231 S.W.3d at 535. However, a party seeking                 month until details on title are worked out between Benjie
specific performance must plead and prove (1) compliance              Smith's attorney and the EPA.” Smith testified that the
with the contract including tender of performance unless              details on the title haven't been worked out as of the date
excused by the defendant's breach or repudiation and (2)              of the trial proceedings. Moreover, Smith did not submit
the readiness, willingness, and ability to perform at relevant        questions to the jury evidencing whether he *543 was
times. DiGiuseppe v. Lawler, 269 S.W.3d 588, 593–94, 601              ready, willing, or able to work out the details on title with
(Tex.2008); see also 17090 Parkway, Ltd. v. McDavid, 80               the EPA.
S.W.3d 252, 258 (Tex.App.-Dallas 2002, pet. denied). When
contested fact issues must be resolved before a court can           (citations to record omitted). Therefore, DASS asserts, Smith
determine the expediency, necessity, or propriety of equitable      is not entitled to the equitable relief of specific performance.
relief, a party is entitled to have a jury resolve the disputed
fact issues. DiGiuseppe, 269 S.W.3d at 596; Stafford, 231           Similarly, with respect to equitable title, DASS asserts in
S.W.3d at 536 (citing Burrow v. Arce, 997 S.W.2d 229, 245           relevant part, “Smith failed to submit questions to the jury
(Tex.1999)).                                                        providing evidence of his complete performance of the [Sale
                                                                    document], and therefore, cannot demonstrate that he is
                                                                    entitled to equitable title of the real property.” In particular,
                                                                    DASS alleges, there was no finding of fact Smith performed
                      2. Equitable Title
                                                                    “his obligations related to the EPA.”
 [5] Equitable title is the present right to compel legal title.
See Travis Cent. Appraisal Dist. v. Signature Flight Support        Smith asserts submission of any such questions to the jury
Corp., 140 S.W.3d 833, 840 (Tex.App.-Austin 2004, no pet.).         was unnecessary. He states in his brief to this Court, “The jury
In Johnson v. Wood, 138 Tex. 106, 157 S.W.2d 146, 148               correctly found in Question 4 that Smith had fully performed
(1941), the parties entered into a written contract to convey       and complied with the [Sale document], and that Smith paid
certain real property by warranty deed upon payment of the          $15,314,00 in excess of the amount required under the [Sale
agreed purchase price. Id. at 147. The jury found “Johnson          document] to purchase the real property.” Further, Smith
made payment of all the monthly installments due under              asserts, he was entitled to a declaratory judgment awarding
the contract.” Id. The court concluded, based on the jury's         him equitable title in the real property “upon making the full



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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


and final payment under the [Sale document], whereby such
equitable title vested by operation of law.”
                                                                                  1. Waiver Under Rule 278

 [6] In his reply brief before this Court, Smith argues DASS's    Rule 278 of the Texas Rules of Civil Procedure addresses
claim he failed to submit a question to the jury regarding        submission of jury questions, definitions, and instructions.
his performance of the terms of the Sale document and             See TEX.R. CIV. P. 278. Pursuant to rule 278, Smith asserts
therefore failed to “plead and prove that he complied with        “DASS cannot complain for the first time on appeal that a
the terms” is “legally and factually without merit.” Smith        separate issue on Smith's compliance with the reformed [Sale
asserts he pleaded in his third amended petition (1) he fully     document] was not submitted to the jury.” The portion of rule
performed all his obligations under the contracts, (2) he had     278 cited by Smith provides
already made all of the requisite lump sum and monthly
payments to McFalls and DASS to complete the purchase                         Failure to submit a question shall not
of the real property pursuant to the Sale document, and                       be deemed a ground for reversal of
(3) “[a]ll conditions precedent to Plaintiff's recovery have                  the judgment, unless its submission,
been performed, have occurred, or have been waived.” 4 In                     in substantially correct wording, has
addition, Smith contends he testified at trial the payments                   been requested in writing and tendered
required under the Sale document had been made to McFalls                     by the party complaining of the
and DASS. Further, Smith argues “[i]t is not necessary for a                  judgment; provided, however, that
party requesting specific performance of a contract to plead                  objection to such failure shall suffice
and prove both (1) full performance and compliance with the                   in such respect if the question is one
contract and (2) being ready, willing, and able to perform and                relied upon by the opposing party.
comply with that same contract.”
                                                                  Id. Here, DASS is not asserting “[f]ailure to submit a
                                                                  question” as “a ground for reversal of the judgment.” See
 [7] Also in his reply brief, Smith asserts that, pursuant to
                                                                  id. Moreover, Smith does not explain how defendants were
rule 278 of the Texas Rules of Civil Procedure,
                                                                  obligated to object when Smith did not submit a jury question
             *544 DASS waived any purported                       on issues as to which he had the burden of proof. See
            complaint ... regarding the lack of jury              DiGiuseppe, 269 S.W.3d at 596; Cullins, 171 S.W.3d at 533.
            charge question and jury finding on                   We cannot agree with Smith that DASS has “waived any
            the specific issue of whether Smith                   purported complaint ... regarding the lack of jury charge
            complied with the [Sale document] by                  question and jury finding on the specific issue of whether
            failing to (1) object to the omission                 Smith complied with the [Sale document]” pursuant to rule
            of such a question or (2) request                     278.
            the submission of such a question in
            substantially correct wording during
            the jury charge conference before the                                  2. Specific Performance
            trial court.
                                                                   [8] “[A] plaintiff seeking specific performance must plead
Accordingly, Smith contends, DASS cannot complain for             and prove (1) compliance with the contract including tender
the first time on appeal that a separate issue on Smith's         of performance unless excused by the defendant's breach or
compliance with the reformed Sale document was not                repudiation, and (2) the readiness, willingness, and ability to
submitted to the jury.                                            perform at relevant times.” DiGiuseppe, 269 S.W.3d at 601.
                                                                  The record shows the Sale document, on its face, stated the
Finally, Smith argues in his reply brief that, given the jury's   purchase price was “[t]o be paid $1500 plus property taxes
findings and answers as to the damages to him resulting from      per month until details on title are worked out between Benjie
DASS's failure to comply with the reformed Sale document,         Smith's attorney and EPA.” Even assuming, without deciding,
the omission of a jury charge question on the issue of whether    that the jury's answer to question 4 of the charge of the court
he complied with the Sale document was “immaterial and            found payment by Smith of the full amount of money required
harmless error, if error at all.”                                 under the Sale document, such a finding does not address



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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


Smith's performance or compliance as to any obligations to           Smith. Stafford does not address the precise issue presented
work out title “details” with the EPA.                               here. See id. As noted above, the Texas Supreme Court has
                                                                     stated a plaintiff seeking specific performance must plead
The testimony in the record regarding Smith's performance or         and prove (1) compliance with the contract including tender
compliance as to obligations to work out title details with the      of performance unless excused by the defendant's breach or
EPA is limited to the following testimony of Smith on cross-         repudiation, and (2) the readiness, willingness, and ability to
examination:                                                         perform at relevant times. See DiGiuseppe, 269 S.W.3d at
                                                                     593–94, 601.
  Q. Would you agree with me that if we're here today details
  on title haven't been worked out?                                   [9]    [10] When contested fact issues must be resolved
                                                                     before a court can determine the expediency, necessity, or
   *545 A. Not specifically, no.
                                                                     propriety of equitable relief, a party is entitled to have a jury
                                                                     resolve the disputed fact issues. See id. at 596. Defendants
In its brief on appeal, DASS asserts, “Smith testified that the
                                                                     did not concede or stipulate in the trial court Smith performed
details on the title haven't been worked out as of the date of the
                                                                     regarding working out title details or that he was ready,
trial proceedings.” Smith did not address that characterization
                                                                     willing, and able to perform as to such details. See id. at
of his testimony in his reply brief on appeal or in his post-
                                                                     601. No jury questions were requested regarding Smith's
submission supplemental brief. In his amended motion for
                                                                     performance or compliance as to title details or whether he
rehearing, Smith cites the testimony set forth above and
                                                                     was ready, willing, and able to perform. See id. at 593–94,
asserts counsel for DASS “asked Smith on cross-examination
                                                                     601. Also, there was no objection to the omission of such
if Smith would agree that the details on title had not been
                                                                     questions. See id. at 595. Those issues were ones on which
worked out between Smith's attorney and the EPA as of the
                                                                     Smith, as the party seeking specific performance, had the
date of trial, and Smith answered ‘no’ he would not agree.”
                                                                     burden of proof at trial. Id. at 596. Because there are no jury
However, the record shows that, rather than answering “no,”
                                                                     findings on elements of specific performance as to which the
Smith answered, “Not specifically, no.” It is not clear from
                                                                     facts were disputed and on which Smith had the burden of
the record whether Smith's answer addressed (1) whether he
                                                                     proof, we conclude the trial court's denial of Smith's request
agreed with his questioner, or not, or (2) whether the details
                                                                     for specific performance was not an abuse of discretion. We
on title had been worked out. Accordingly, the testimony is
                                                                     decide against Smith on his first issue.
equivocal. We are cited to no other evidence in the record,
nor can we find any, that addresses Smith's performance
or compliance as to “details on title” having been “worked
out.” On this record, Smith did not conclusively establish                             *546 3. Equitable Title
the fact at issue. See Gifford Hill Am., Inc. v. Whittington,
899 S.W.2d 760, 764 (Tex.App.-Amarillo 1995, no writ)                 [11] As stated above, the jury's findings in question 4 of
(equivocal testimony did not conclusively establish fact and         the charge of the court do not address Smith's performance
submission to jury was therefore required).                          as to obligations under the Sale document to work out title
                                                                     “details” with the EPA. Further, as discussed above, there
Additionally, Smith argues in his reply brief on appeal “[i]t        was no finding of fact by the jury that Smith performed his
is not necessary for a party requesting specific performance         obligations under the Sale document regarding title “details.”
of a contract to plead and prove both (1) full performance           Therefore, the record shows no jury finding Smith fully
and compliance with the contract and (2) being ready, willing,       performed his obligations under the Sale document in order to
and able to perform and comply with that same contract.”             show entitlement to equitable title. See Johnson, 157 S.W.2d
According to Smith, given that he “pleaded and proved full           at 148; see also Cullins, 171 S.W.3d at 533 (“Equitable title
performance and compliance with the [Sale document],” it             may be shown when the plaintiff proves that he has paid
would have been “inconsistent and unnecessary for [him] to           the purchase price and fully performed the obligations under
likewise plead and prove that he was ready, willing, and able        the contract.”). Accordingly, we conclude the trial court did
to perform.” In support of that argument, Smith cites Stafford       not err in denying Smith's request for a declaratory judgment
for the proposition “a party seeking specific performance            awarding Smith equitable title in the real property. Smith's
must have either performed or tendered performance.” See             second issue is decided against him.
Stafford, 231 S.W.3d at 535. However, we disagree with


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Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


                                                                       Therefore, regardless of whether the “purported reasons”
          III. “PURPORTED REASONS” FOR
                                                                       speculated by Smith in his third issue as the bases for the
           DENIAL OF EQUITABLE RELIEF
                                                                       trial court's denial of that relief are, as contended by Smith,
In his third issue, Smith asserts the trial court's “purported         “erroneous and without merit,” Smith would not be entitled
reasons” for denying the relief requested by him are erroneous         to the equitable relief he has requested. We need not address
and without merit. Specifically, Smith contends (1) because            Smith's third issue.
DASS did not plead a statute of frauds defense, the trial
court was not limited to the Sale document in determining
the sufficiency of the description of the real property to
                                                                                             IV. CONCLUSION
be conveyed; (2) the issue of whether the Sale document
was ambiguous was not pleaded by DASS, thus precluding                 We conclude the trial court's denial of Smith's request for
the issue from being submitted to the jury; (3) because the            specific performance was not an abuse of discretion because
evidence and testimony provided an undisputed description of           there are no jury findings on elements of specific performance
the real property to be conveyed, that issue was not required          as to which the facts were disputed and on which Smith had
to be submitted to the jury; (4) the parties intended for DASS         the burden of proof. Further, because the record shows no jury
to convey its title to the real property to Smith, and Smith           finding Smith fully performed his obligations under the Sale
is entitled to whatever title DASS holds in the property;              document, we conclude the trial court did not err in denying
(5) Smith properly filed breach of contract and declaratory            Smith's request for the alternative remedy of a declaratory
judgment actions, rather than a trespass to try title action; and      judgment awarding Smith equitable title in the real property.
(6) DASS waived any complaint as to “the lack of a trespass
to try title action.”                                                  Smith's first and second issues are decided against him.
                                                                       We need not address Smith's third issue. The trial court's
We concluded above the trial court did not err in denying              judgment is affirmed.
Smith's requests for specific performance and declaratory
judgment awarding him equitable title because the record
does not show the jury findings required for such relief.              All Citations

                                                                       283 S.W.3d 537


Footnotes
1       Causes of action asserted by Smith in his third amended petition, but not relevant to this appeal, included violations of
        the Texas Deceptive Trade Practices and Consumer Protection Act, common law fraud, and statutory fraud.
2       Smith's brief before this Court states the following, which is not disputed by DASS:
              The Charge of the Court signed by the trial court judge and the jury's answers thereto and verdict were lost or
              destroyed, and the parties did not have any copies of the signed Charge of the Court or the jury's verdict. The
              unsigned Charge of the Court contained in the trial court's file and the Clerk's Record constitutes a true, correct, and
              accurate copy of the Charge of the Court signed by the trial court judge and submitted to the jury upon which the
              jury returned its verdict. TEX.R.APP. P. 34.5(e).
           (citations to record omitted). The trial court judge recited the jury's verdict into the reporter's record, and the facts herein
           regarding the jury's verdict are based on that record.
3       Additionally, Smith filed a request for findings of fact and conclusions of law with respect to the trial court's denial of
        specific performance, reformation, and declaratory relief. The record does not show findings of fact and conclusions of
        law were issued by the trial court.
4       In a post-submission letter brief, Smith argues, inter alia, that pursuant to rule 54 of the Texas Rules of Civil Procedure,
        he had no burden to prove performance or compliance with the Sale document or obtain a jury finding on that issue. See
        TEX.R. CIV. P. 54 (party pleading performance of conditions precedent is required to prove only those specifically denied
        by opposite party). However, Smith's pre-submission briefs before this Court do not cite rule 54 or present that argument.
        Therefore, Smith's post-submission argument regarding his lack of burden pursuant to rule 54 presents nothing for this
        Court's review. See Tex. Med. Ass'n v. Tex. Workers Comp. Comm'n, 137 S.W.3d 342, 351 (Tex.App.-Austin 2004, no
        pet.) (argument waived where asserted during oral argument and in post-submission brief, but not in pre-submission
        briefs); see also City of Houston v. Precast Structures, Inc., 60 S.W.3d 331, 340 n. 4 (Tex.App.-Houston [14th Dist.] 2001,


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                     8
Smith v. Dass, Inc., 283 S.W.3d 537 (2009)


       pet. denied) (argument waived where raised in letter brief filed after oral argument); TEX.R.APP. P. 38.1(f) (appellant's
       brief must state concisely all issues or points presented for review). Moreover, as a general rule, a party is required to
       present a complaint to the trial judge before being allowed to raise an issue on appeal. See Ochoa v. Craig, 262 S.W.3d
       29, 32–33 (Tex.App.-Dallas 2008, pet. denied); TEX.R.APP. P. 33.1. The record shows testimony at trial from both
       sides regarding Smith's performance or compliance with the Sale document. However, the record shows no objection or
       complaint by Smith in the trial court regarding his alleged lack of burden to prove that issue.


End of Document                                               © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             9
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


                                                                           [4] there was no evidence that corporation did not intend to
                                                                           transfer stock to contractor at time of agreement, precluding
     KeyCite Yellow Flag - Negative Treatment                              contractor's fraud claim.
Distinguished by Smith v. Dass, Inc.,     Tex.App.-Dallas,   May 8, 2009

                      231 S.W.3d 530
                                                                           Affirmed.
                  Court of Appeals of Texas,
                            Dallas.

      Kelly STAFFORD, Appellant/Cross–Appellee                              West Headnotes (21)
                            v.
           SOUTHERN VANITY MAGAZINE,
                                                                            [1]    Specific Performance
             INC., Appellee/Cross–Appellant
                                                                                       Prayer for Relief
                           and
             Perry Hollingsworth and Allison                                       Independent contractor's pleadings were
                                                                                   sufficient to put closely-held corporation on
                Hollingsworth, Appellees.
                                                                                   notice that contractor was seeking specific
        No. 05–06–00545–CV.               |    Aug. 14, 2007.                      performance of stock transfer agreement;
                                                                                   contractor pleaded a cause of action for breach
Synopsis                                                                           of contract, asserted that she did not have an
Background: Independent contractor brought action against                          adequate remedy at law, and, in her prayer for
a closely-held corporation asserting a fraud claim and                             relief, sought a 20% ownership share in the
a breach of contract claim regarding contract by which                             corporation, or in the alternative, the value of a
corporation allegedly promised to convey 20% of corporate                          20% share in the corporation.
stock to contractor. The County Court at Law No. 3, Dallas
County, Sally Montgomery, J., entered judgment on jury                             1 Cases that cite this headnote
verdict finding in favor of contractor on the contract claim,
but against contractor on the fraud claim. Contractor's motion              [2]    Pleading
for a new trial on the fraud claim was denied, but motion                              Sufficiency of Allegations in General
for specific performance of contract was granted. Contractor
                                                                                   Texas follows a “fair notice” standard for
appealed, and corporation cross-appealed.
                                                                                   pleading, which tests whether the opposing
                                                                                   party can ascertain from the pleading the nature
                                                                                   and basic issues of the controversy and what
Holdings: The Court of Appeals, Carolyn Wright, J., held                           evidence might be relevant.
that:
                                                                                   Cases that cite this headnote
[1] contractor's pleadings were sufficient to put closely-held
corporation on notice that contractor was seeking specific                  [3]    Pleading
performance of stock transfer agreement;                                               Statement of Cause of Action in General
                                                                                   Under the “fair notice” standard of pleading, a
[2] contractor performed obligations under stock transfer
                                                                                   petition is sufficient if it gives fair and adequate
agreement and had no adequate remedy at law, allowing
                                                                                   notice of the facts upon which the pleader bases
specific performance;
                                                                                   his claim.

[3] there were no disputed issues of fact to submit to jury as                     2 Cases that cite this headnote
would preclude the trial court's grant of specific performance;
and
                                                                            [4]    Pleading
                                                                                       Sufficiency of Allegations in General
                                                                                   Pleading



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                      1
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


             Statement of Cause of Action in General                 Specific performance of a contract is an equitable
        The purpose of the “fair notice” standard                    remedy committed to the trial court's discretion.
        of pleading is to give the opposing party
                                                                     11 Cases that cite this headnote
        information sufficient to enable him to prepare a
        defense.
                                                              [9]    Specific Performance
        2 Cases that cite this headnote                                  Nature and Grounds of Duty of Plaintiff
                                                                     A party seeking specific performance of a
 [5]    Specific Performance                                         contract must demonstrate that they have
            Nature and Purpose in General                            performed, or tendered performance, of their
        Specific Performance                                         obligations under the contract.
            Form of Remedy
                                                                     1 Cases that cite this headnote
        “Specific performance” of a contract is an
        equitable remedy that may be awarded upon a
        showing of breach of contract.                        [10]   Specific Performance
                                                                         Inadequacy of Remedy at Law
        21 Cases that cite this headnote                             Specific Performance
                                                                         Contracts Relating to Personal Property
 [6]    Specific Performance                                         A contract will not be specifically enforced if
            Inadequacy of Remedy at Law                              there is an adequate remedy at law; however,
        “Specific performance” of a contract is not                  specific performance may be awarded when the
        a separate cause of action, but rather it is                 personal property has a special, peculiar, or
        an equitable remedy used as a substitute for                 unique value or character.
        monetary damages when such damages would
                                                                     1 Cases that cite this headnote
        not be adequate.

        18 Cases that cite this headnote                      [11]   Specific Performance
                                                                         Corporate Stock or Securities
 [7]    Specific Performance                                         A party may seek specific performance to
            Sufficiency of Performance by Plaintiff in               enforce a stock purchase agreement when
        General                                                      a closely-held corporation's stock has no
        Independent      contractor      performed     her           ascertainable value.
        obligations under contract with closely-held
                                                                     Cases that cite this headnote
        corporation, as required in order for contractor
        to seek specific performance of the contract, in
        which corporation promised to convey 20% of           [12]   Specific Performance
        its stock to contractor if contractor continued to               Corporate Stock or Securities
        work for the corporation; contractor returned to             Independent contractor had no adequate remedy
        work after receiving the stock offer.                        at law, enabling her to seek specific performance
                                                                     of contract with closely-held corporation, under
        Cases that cite this headnote
                                                                     which corporation had agreed to convey 20% of
                                                                     its stock to contractor, where the stock had no
 [8]    Specific Performance                                         ascertainable value.
            Discretion of Court
                                                                     Cases that cite this headnote
        Specific Performance
            Form of Remedy
                                                              [13]   Equity



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Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


             He Who Comes Into Equity Must Come                       party which, by its voluntary act, created the
        with Clean Hands                                              impossibility.
        The doctrine of unclean hands did not preclude
                                                                      1 Cases that cite this headnote
        independent contractor from seeking specific
        performance of stock transfer agreement that
        contractor had with closely-held corporation,          [18]   Appeal and Error
        absent any allegation from the corporation that it               Refusal of New Trial
        was harmed by contractor's illegal or inequitable             The Court of Appeals reviews the trial court's
        conduct.                                                      denial of a motion for new trial for an abuse of
                                                                      discretion.
        2 Cases that cite this headnote
                                                                      2 Cases that cite this headnote
 [14]   Equity
             He Who Comes Into Equity Must Come                [19]   New Trial
        with Clean Hands                                                  Time of Discovery
        The doctrine of unclean hands operates as a bar               Evidence that closely-held corporation had
        to the equitable relief of specific performance.              issued all its stock to one stockholder, making
                                                                      it impossible for the corporation to transfer any
        3 Cases that cite this headnote
                                                                      stock to independent contractor as promised
                                                                      in stock transfer agreement, was not “newly
 [15]   Specific Performance                                          discovered” evidence entitling contractor to
            Trial or Hearing                                          a new trial on her fraud claim against the
        There were no disputed issues of fact to submit               corporation, where the stockholder owned 100%
        to jury as would preclude trial court from                    of the corporation's stock at all times relevant to
        granting specific performance to independent                  contractor's action.
        contractor in contractor's breach of contract
                                                                      Cases that cite this headnote
        action against closely-held corporation; the jury
        had determined the existence of a valid contract
        and also determined that contractor performed          [20]   New Trial
        her obligations under the contract.                               Power and Duty of Court in General
                                                                      A party who seeks a new trial on the ground
        1 Cases that cite this headnote
                                                                      of newly discovered evidence must show the
                                                                      trial court: (1) the evidence came to the party's
 [16]   Jury                                                          knowledge after trial; (2) it was not owing to the
               Issues of Fact in Equitable Actions                    want of due diligence that it did not come sooner;
        When contested fact issues must be resolved                   (3) it is not cumulative; and (4) it is so material
        before equitable relief can be determined, a party            that it would probably produce a difference result
        is entitled to have a jury resolve the fact dispute.          if a new trial were granted.

        1 Cases that cite this headnote                               1 Cases that cite this headnote


 [17]   Specific Performance                                   [21]   Fraud
            Performance Impossible                                        Existing Facts or Expectations or Promises
        Regarding an award of specific performance                    There was no evidence that closely-held
        in a breach of contract action, impossibility of              corporation did not intend to transfer stock
        performance is not available as a defense to a                to independent contractor at the time it
                                                                      formed stock transfer agreement with contractor,
                                                                      precluding contractor's fraud claim against the


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         3
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


        corporation; the corporation believed that the           the magazine in return for a twenty percent commission.
        stock transfer was contingent on the corporation         Shortly after appellant began working for Southern Vanity,
        becoming profitable.                                     Allison and Applewhite had a business dispute. Allison
                                                                 and Perry removed Southern *534 Vanity's property from
        Cases that cite this headnote                            the magazine's offices and considered shutting down the
                                                                 magazine. For a period of several weeks, the magazine was
                                                                 in “limbo” and appellant did no work for Southern Vanity.
                                                                 Allison and Perry ultimately decided to continue with the
Attorneys and Law Firms                                          magazine and asked appellant to return to work. Southern
                                                                 Vanity could not pay appellant a salary, but on June 26,
 *533 Kurt C. Banowsky, Banowsky & Levine, P.C., Dallas,         2003, Allison sent the following e-mail to appellant and
for appellant.                                                   Donana Galloway, another independent contractor selling
                                                                 advertisements for Southern Vanity:
Kendra Karlock, David R. Weiner, Glast, Phillips & Murray,
P.C., Dallas, for appellee.
                                                                   Steve (Southern Vanity att.) is working day and night on
                                                                   legal issues with Lisa Applewhite Brandt, so he will start
Before Justices WRIGHT, RICHTER, and SMITH. 1
                                                                   working on the following documents next week. Of course
                                                                   I have put numerous amounts of time and money into the
                                                                   magazine and wound up with a disgruntled, out of control
                         OPINION                                   associate. I never want this to happen again!

Opinion by Justice WRIGHT.                                         I appreciate both of you and all of your hard work getting
                                                                   Southern Vanity back on track. There is much more to do
Kelly Stafford sued Southern Vanity Magazine, Inc.
                                                                   (sales, sales, sales)! I regret salaries and benefits are not an
(Southern Vanity), Perry Hollingsworth, and Allsion
                                                                   option as of yet, but will be in the future. Because of your
Hollingsworth for breach of contract and fraud based on
                                                                   help and continued support in building Southern Vanity
Southern Vanity's failure to transfer twenty percent of the
                                                                   Magazine, I would like to offer each of you stock and 20%
stock of the corporation to appellant. 2 The jury determined       of the company. Perry and I expect our investments back
Southern Vanity breached its agreement to convey the stock,        from the company as each of you expect to be reimbursed
but found for appellees on the fraud claim. In two issues,         for your expenses as Southern Vanity profits.
appellant contends the trial court erred by denying her motion
for new trial. In two cross-issues, Southern Vanity contends     Following this e-mail, appellant continued to work at
(1) the trial court erred by awarding specific performance       Southern Vanity, received the title of Principal/Director of
to appellant, and (2) consequently, the award of attorney's      Marketing, and took on additional duties. Southern Vanity
fees should be reversed. We overrule appellant's issues and      did not transfer the stock to appellant. In September 2003,
Southern Vanity's cross-issues, and affirm the trial court's     appellant left Southern Vanity. 3
judgment.
                                                                 Appellant sued Southern Vanity, Perry, and Allison based
                                                                 on Southern Vanity's failure to transfer the stock. At trial,
                        Background                               appellant contended she was entitled to receive the stock as
                                                                 of June 26, 2003. Appellees argued Southern Vanity was
Southern Vanity was formed in late 2002 by Perry                 not required to transfer the stock until it became profitable
Hollingsworth, Allison Hollingsworth, and Lisa Applewhite        and appellant contributed to its success. The jury determined
to publish a magazine. Allison and Perry both testified that,    Southern Vanity breached its agreement to convey the stock,
at all relevant times, Perry owned one hundred percent of the    but found for appellees on the fraud claim. Appellant moved
stock of Southern Vanity. Southern Vanity published its first    for specific performance of the contract. Southern Vanity
issue in February 2003.                                          filed an affidavit executed by Allison stating it was impossible
                                                                 for Southern Vanity to convey any stock to appellant because
Appellant began working for the magazine in April 2003           all stock had been issued to Perry.
as an independent contractor selling advertisements in


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              4
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


Appellant then filed a motion for new trial on her fraud cause    (Tex.App.-Dallas 1987, writ denied). Specific performance
of action, contending the fact the stock had been issued to       is not a separate cause of action, but rather it is an equitable
Perry was newly discovered evidence that entitled her to a        remedy used as a substitute for monetary damages when
new trial and that the jury's adverse finding on the fraud        such damages would not be adequate. See Scott v. Sebree,
claim was against the great weight of the evidence. The trial     986 S.W.2d 364, 368 (Tex.App.-Austin 1999, pet. denied).
court granted appellant's request for specific performance.       Here, appellant pleaded a cause of action for breach of
Appellant's motion for new trial was overruled by operation       contract. In the punitive damages portion of her pleading,
of law. Both appellant and Southern Vanity appealed.              appellant asserted she did not have an adequate remedy at law.
                                                                  And, in her prayer for relief, she sought “a 20% ownership
                                                                  share in the corporations, or in the alternative, the value
                                                                  of the 20% share in the corporations.” Southern Vanity did
                   Specific Performance
                                                                  not specially except to appellant's pleading. Construing the
Because appellant's issues both pertain to the motion for         pleadings liberally in appellant's favor, we conclude they are
new trial, we begin our analysis with Southern Vanity's           sufficient to put Southern Vanity on notice that appellant
cross-issue alleging the trial court erred in awarding specific   was seeking, among other things, specific performance for
performance. Southern Vanity maintains we must reverse the        Southern Vanity's breach of contract.
trial court's judgment because appellant did not (1) plead
for specific performance, (2) offer any evidence on the            [7] [8] [9] [10] [11] Southern Vanity next contends
essential elements of specific performance, or (3) request        there is “no evidence that would support an award of specific
jury questions on the elements of specific performance.           performance.” Specific performance is an equitable remedy
Additionally, Southern Vanity claims specific performance         committed to the trial court's discretion. Bell v. Rudd, 144
is impossible *535 in this case because all of the stock is       Tex. 491, 191 S.W.2d 841, 843 (1946); Roundville Partners,
owned by Perry, making it impossible for Southern Vanity to       L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex.App.-Austin 2003,
transfer stock to appellant. We will address each of Southern     pet. denied); Scott, 986 S.W.2d at 368 (Tex.App.-Austin
Vanity's contentions in turn.                                     1999, pet. denied). A party seeking specific performance
                                                                  must demonstrate that they have performed, or tendered
 [1] [2] [3] [4] Southern Vanity first contends specificperformance, of their obligations under the contract. Am.
performance is a separate cause of action that appellant failed   Apparel Prods., Inc. v. Brabs, Inc., 880 S.W.2d 267, 269
to plead. After reviewing the pleadings, we disagree. Texas       (Tex.App.-Houston [14th Dist.] 1994, no writ). A contract
follows a “fair notice” standard for pleading, which tests        will not be specifically enforced if there is an adequate
whether the opposing party can ascertain from the pleading        remedy at law. Id. However, specific performance may be
the nature and basic issues of the controversy and what           awarded when the personal property has a “special, peculiar,
evidence might be relevant. Low v. Henry, 221 S.W.3d 609,         or unique value or character.” Madariaga v. Morris, 639
612 (Tex.2007); Emerson Elec. Co. v. Am. Permanent Ware           S.W.2d 709, 711 (Tex.App.-Tyler 1982, writ ref'd n.r.e.).
Co., 201 S.W.3d 301, 309 (Tex.App.-Dallas 2006, no pet.).         Further, when a closely-held corporation's stock has no
Under this standard, “[a] petition is sufficient if it gives fair ascertainable value, the party may seek specific performance
and adequate notice of the facts upon which the pleader           to enforce a stock purchase agreement. Miga v. Jensen, 96
bases his claim.” Horizon/CMS Healthcare Corp. v. Auld, 34        S.W.3d 207, 217 (Tex.2002) (citing Bendalin v. Delgado, 406
S.W.3d 887, 897 (Tex.2000). The rule's purpose is to give the     S.W.2d 897, 900 (Tex.1966) (plaintiff could seek specific
opposing party information sufficient to enable him to prepare    performance to enforce stock purchase agreement *536
a defense. Id. When, as here, a party fails to specially except,  where corporation was closely held and stock had no market
we construe the pleadings liberally in favor of the pleader.      value)).
Horizon/CMS Healthcare Corp., 34 S.W.3d at 897; Emerson
Elec. Co., 201 S.W.3d at 309.                              With respect to whether appellant complied with the terms
                                                           of the contract, the record shows that on June 26, 2003,
 [5] [6] Specific performance is an equitable remedy that Southern Vanity offered appellant twenty percent of the stock
may be awarded upon a showing of breach of contract. Kress in the corporation if appellant continued to work for Southern
v. Soules, 152 Tex. 595, 597, 261 S.W.2d 703, 704 (1953);  Vanity. At trial, appellant maintained she was entitled to
Living Christ Church, Inc. v. Jones, 734 S.W.2d 417, 419   receive the stock at the point she agreed to continue, and



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             5
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


did continue, to work for the magazine. Although Southern         Southern Vanity breached its contract to convey stock to
Vanity argued appellant was not entitled to receive the stock     appellant, necessarily finding a contract existed as of June
until the magazine became profitable, the jury decided the        26, 2003 when Southern Vanity offered stock in exchange
issue adversely to Southern Vanity by finding it failed to        for appellant continuing to work at the magazine. It is
comply with the agreement to transfer stock. It is undisputed     undisputed appellant continued to work at the magazine after
appellant returned to work at the magazine after receiving        June 26, 2003 and, therefore, performed under the contract.
the stock offer. Thus, we cannot conclude the trial court         Thus, appellant was not required to obtain a jury finding on
abused is discretion by determining appellant demonstrated        whether she was ready, willing, and able to perform under
she performed her obligations under the contract.                 the contract. Chilton Ins. Co. v. Pate & Pate Enters., 930
                                                                  S.W.2d 877, 886 (Tex.App.-San Antonio 1996, writ denied)
 [12] [13] [14] As to whether appellant had an adequate (no jury question necessary if evidence conclusively proves
remedy at law, the record does not contain evidence the           fact). As to whether appellant had unclean hands or an
Southern Vanity stock had any ascertainable value. Rather,        adequate remedy at law, these questions “present legal policy
Southern Vanity lost money from its inception and was still       issues well beyond the jury's province of judging credibility
losing money at the time of trial. Allison testified the value of and resolving factual disputes.” Burrow, 997 S.W.2d at
the stock was “zero or worse,” and Perry testified he could not   245 (adequacy of other remedies); Hudson, 162 S.W.3d at
sell Southern Vanity due to the amount of debt the company        688 (equitable considerations such as whether plaintiff had
had incurred. Thus, the record shows Southern Vanity's stock      unclean hands and whether, and how much, equitable relief
had no ascertainable value, and appellant could seek specific     should be awarded must be determined by trial court rather
performance to enforce the stock transfer agreement. See          than jury). Accordingly, there were no additional disputed
                                                           4      issues of fact in support of appellant's claim for specific
Miga, 96 S.W.3d at 217; Bendalin, 406 S.W.2d at 900.
                                                                  performance that needed to be submitted to the jury.
 [15] We next turn to Southern Vanity's complaint regarding
jury questions. Relying on Lawler v. Digiuseppe, No. 05–            Again relying on Lawler, Southern Vanity next argues
03–00468–CV, 2004 WL 1209569 (Tex.App.-Dallas June 3,               the submission of the breach of contract question was
2004, pet. granted) (memo. op. on reh'g), Southern Vanity           not necessarily referable to appellant's claim for specific
contends appellant is not entitled to specific performance          performance and did not put it on notice appellant was seeking
because she “did not request any jury questions on the              specific performance. In Lawler, we concluded jury questions
essential elements of specific performance.” In Lawler,             asking whether the seller or one of the purchasers breached
the purchasers sued for breach of a contract to sell real           the contract, standing alone, were not necessarily referable to
estate. The jury found the seller breached the contract             a claim for specific performance. Lawler, 2004 WL 1209569,
and awarded $295,696.93 in damages. However, on the                 at *2. Therefore, the questions did not put the seller on notice
purchasers' motion, the trial court entered final judgment          the purchasers were seeking specific performance so the seller
granting specific performance. The seller appealed, arguing         could object to the omission of a jury question on whether
the trial court erred in granting specific performance because      the purchasers were ready, willing, and able to perform the
the purchasers failed to obtain a jury finding that the             contract. Id.
purchasers were ready, willing, and able to perform the
contract. We concluded the issue of whether the purchasers          However, in this case, we have concluded appellant pleaded
were ready, willing, and able to perform was disputed at trial      for specific performance. Appellant's counsel also raised
and, therefore, had to be resolved before equitable relief could    the issue of specific performance in argument before the
be awarded. Id. at *1–2.                                            trial court. And, the trial court did not submit a damages
                                                                    question relating to Southern Vanity's breach of contract,
 [16] When contested fact issues must be resolved before            putting Southern Vanity on notice damages were not an
equitable relief can be determined, a party is entitled to have a   available remedy. Finally, there were no additional issues
jury resolve the fact dispute. Burrow v. Arce, 997 S.W.2d 229,      of fact that needed to be submitted to the jury in this case.
245 (Tex.1999); *537 Hudson v. Cooper, 162 S.W.3d 685,              Accordingly, unlike Lawler, Southern Vanity not only was on
688 (Tex.App.-Houston [14th Dist.] 2005, no pet.). However,         notice appellant was seeking specific performance, but there
Southern Vanity has not pointed to a disputed issue of fact that    was no basis for Southern Vanity to object to the omission of
should have been submitted to the jury. The jury determined         any issue.



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              6
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


                                                                    v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42
 [17] Southern Vanity's final complaint regarding the award         (Tex.1985); El Dorado Motors, Inc., 168 S.W.3d at 368.
of specific performance is that specific performance of the
contract by Southern Vanity is impossible. Specifically,             [19] [20] In her first issue, appellant contends the trial court
Southern Vanity maintains that because it has issued one            erred by denying her motion for new trial on the fraud issues
hundred percent of its stock to Perry, it is impossible             because Allison's affidavit asserting Southern Vanity has no
for it to transfer any stock to appellant. Impossibility of         stock to transfer to appellant is newly discovered evidence
performance is not available as a defense to a party which          that entitled her to a new trial. A party who seeks a new trial on
by its voluntary act created the impossibility. Solomon v.          the ground of newly discovered evidence must show the trial
Greenblatt, 812 S.W.2d 7, 18 (Tex.App.-Dallas 1991, no              court (1) the evidence came to her knowledge after trial; (2) it
writ) (citing Martin v. Star Publishing Co., 126 A.2d 238,          was not owing to the want of due diligence that it did not come
242 (Del.1956) and 6 S. WILLISTON: A TREATISE ON                    sooner; (3) it is not cumulative; and (4) it is so material that it
THE LAW OF CONTRACTS § 1960). Here, the transfer of                 would probably produce a difference result if a new trial were
stock from Southern Vanity to Perry is a situation voluntarily      granted. Johnson v. Legacy Bank of Texas, 167 S.W.3d 643,
created by Southern Vanity and Perry. Thus, Southern Vanity         645–46 (Tex.App.-Dallas 2005, no pet.). Appellant contends
may not rely on *538 impossibility of performance as a              the newly discovered evidence is that Southern Vanity has
defense in this case. See Solomon, 812 S.W.2d at 18.                issued all its stock to Perry, making it impossible for Southern
                                                                    Vanity to transfer any stock to appellant. Regardless of when
Having determined appellant's pleadings were adequate to            the stock was issued to Perry, it was undisputed at trial that
put Southern Vanity on notice of her request for specific           Perry owned one hundred percent of the stock of Southern
performance, the evidence is legally sufficient to support          Vanity at all relevant times. 5 Thus, any stock transferred to
the trial court's award of specific performance, no additional      appellant would necessarily come from Perry. Appellant has
jury questions were necessary in this case, and that the            failed to show the fact Southern Vanity issued the stock to
defense of impossibility is not available in this case, we          Perry is newly discovered evidence. We overrule appellant's
conclude the trial court did not abuse its discretion in            first issue.
awarding appellant specific performance. Therefore, we
overrule Southern Vanity's first cross-issue. Due to our             *539 [21] In her second issue, appellant contends the trial
disposition of Southern Vanity's first cross-issue, we need         court erred by overruling her motion for new trial because the
not address its second cross-issue challenging the award of         jury's finding that appellees did not commit fraud is against
attorney's fees and costs.                                          the great weight of the evidence. When a party attacks the
                                                                    factual sufficiency of an adverse finding on which she had
                                                                    the burden of proof, she must demonstrate on appeal that the
                   Motion for New Trial                             adverse finding is against the great weight and preponderance
                                                                    of the evidence. Dow Chem. Co. v. Francis, 46 S.W.3d 237,
 [18] We now turn to appellant's two issues contending the          242 (Tex.2001) (per curiam). When reviewing a finding for
trial court erred in denying her motion for new trial on her        factual sufficiency, we consider all of the evidence and will
fraud claim. According to appellant, the trial court should         set aside a finding only if the evidence is so weak or if the
have granted her motion because (1) Allison's affidavit filed       finding is so against the great weight and preponderance of
after trial asserting Southern Vanity has no stock to transfer to   the evidence that it is clearly wrong and unjust. Id.
appellant is newly discovered evidence that entitled appellant
to a new trial, and (2) the jury's finding is against the great     Appellant argues the evidence is factually insufficient
weight of the evidence. We review the trial court's denial of       to support the jury's finding because the “evidence at
a motion for new trial for an abuse of discretion. In re R.R.,      trial, when considered in conjunction with the evidence
209 S.W.3d 112, 114 (Tex.2006) (per curiam); El Dorado              discovered post-trial, establishes that [appellees] committed
Motors, Inc. v. Koch, 168 S.W.3d 360, 368 (Tex.App.-                fraud by promising stock they did not intend to transfer”
Dallas 2005, no pet.). The trial court abuses its discretion        to appellant. However, the evidence supports the parties'
only if it acted unreasonably or in an arbitrary manner,            different interpretations of when the stock was to be
without reference to guiding rules or principles. Downer            transferred to appellant. Both Perry and Allison testified they
                                                                    believed Southern Vanity was not obligated to transfer stock



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              7
Stafford v. Southern Vanity Magazine, Inc., 231 S.W.3d 530 (2007)


                                                                     conclude the jury's finding appellees did not commit fraud
to appellant until Southern Vanity became profitable. Perry
                                                                     in making the stock offer to appellant is against the great
testified he agreed to the offer of stock to appellant and
                                                                     weight and preponderance of the evidence. Consequently,
“when the company became profitable and we was [sic]
                                                                     we cannot conclude the trial court abused its discretion by
paid back our investment for the money I had put into
                                                                     denying appellant's motion for new trial on that basis. We
the company, then they would receive their shares equal at
                                                                     overrule appellant's second issue.
20 percent a piece.” Allison testified Perry was willing to
release the stock after Southern Vanity became profitable.
                                                                     Accordingly, we affirm the trial court's judgment.
But, appellant testified she believed she was entitled to the
stock without the profitability condition, and the jury agreed
with her. There was no evidence Perry or Southern Vanity
                                                                     All Citations
did not intend to transfer the stock when Southern Vanity
entered into the stock transfer agreement. Thus, we cannot           231 S.W.3d 530


Footnotes
1      The Honorable Bea Ann Smith, Justice, Court of Appeals, Third District of Texas at Austin, Retired, sitting by assignment.
2      Appellant also asserted claims for breach of contract and unjust enrichment due to Southern Vanity's failure to reimburse
       appellant for certain expenses and breach of contract and tortious interference with contract due to Southern Vanity's
       failure to assume appellant's apartment lease. These claims are not at issue in this appeal.
3      The evidence was disputed over whether appellant was terminated or resigned.
4      To the extent Southern Vanity suggests specific performance was improper because appellant failed to put on evidence
       showing she had clean hands, again we disagree. The doctrine of unclean hands operates as a bar to the equitable
       relief of specific performance. Lazy M Ranch, Ltd. v. TXI Operations LP, 978 S.W.2d 678, 683 (Tex.App.-Austin 1998,
       pet. denied). As the party claiming appellant had unclean hands, it is Southern Vanity's burden to show it was injured by
       appellant's unlawful or inequitable conduct. Willis v. Donnelly, 118 S.W.3d 10, 38 (Tex.App.-Houston [14th Dist.] 2003),
       aff'd in part and rev'd in part on other grounds, 199 S.W.3d 262, 278–79 (Tex.2006). Southern Vanity has neither argued
       nor shown it was harmed by any illegal or inequitable conduct by appellant relating to the stock transfer agreement. Thus,
       we cannot conclude the award of specific performance was improper on that basis.
5      As noted, it was undisputed at trial that Perry owned one hundred percent of the stock in Southern Vanity. Indeed,
       Southern Vanity's counsel represented to the trial court that:
             Southern Vanity had no stock to give. Perry Hollingsworth owned a hundred percent of the stock. If some of that
             stock was going to go somewhere, it was going to come from [Perry].... [T]hey weren't going to issue new stock.
             [Perry] owned the stock and he was going to transfer it to her pursuant to this agreement.... Southern Vanity had
             no stock to give. It had been-it was all held by [Perry].
          Neither appellant nor Southern Vanity have cited to any authority that the actual issuance of stock to Perry affected
          this agreement.


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                8
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


                                                                     On appeal from amended summary judgment,
                                                                     Court of Appeals would take judicial notice
                     218 S.W.3d 109
                                                                     of record for appeal from original summary
                 Court of Appeals of Texas,
                                                                     judgment.
                   Houston (14th Dist.).
                                                                     9 Cases that cite this headnote
                Pablo TELLO, Appellant
                          v.
             BANK ONE, N.A. and Banc One                       [2]   Judgment
              Acceptance Corp., Appellees.                               Effect of Counterclaim
                                                                     Judgment
        No. 14–04–00888–CV.            |   Jan. 9, 2007.                 Presumptions and Burden of Proof

Synopsis                                                             For a plaintiff to prevail on a motion for summary
Background: Lessor and lienholder filed claim against lessee         judgment when the defendant has asserted a
for breach of vehicle lease agreement. Lessee counterclaimed         counterclaim, the plaintiff must prove, as a
for Deceptive Trade Practices Act (DTPA) violations,                 matter of law, each element of its cause of action
common-law fraud, and breach of contract. The County Civil           and show it is entitled to summary judgment
Court at Law No. 2, Harris County, Gary Michael Block, J.,           on the counterclaim. Vernon's Ann.Texas Rules
granted summary judgment for lessor and lienholder. Lessee           Civ.Proc., Rule 166a(c).
appealed.
                                                                     2 Cases that cite this headnote


                                                               [3]   Judgment
Holdings: The Court of Appeals, Seymore, J., held that:
                                                                         Motion or Other Application
                                                                     Although plaintiffs used language applicable
[1] lessee waived challenge to ruling on lessor's breach of
                                                                     to both traditional summary judgment motion
contract claim;
                                                                     and no-evidence summary judgment motion in
                                                                     opposing defendant's counterclaims, language
[2] lessee waived challenge to ruling on counterclaims of
                                                                     would be construed as traditional motion, since
common-law fraud and breach of contract;
                                                                     motion did not unambiguously state it was filed
                                                                     under no-evidence rule, and did not strictly
[3] lessee failed to raise fact question that would preclude
                                                                     comply with rule. Vernon's Ann.Texas Rules
summary judgment on DTPA claim;
                                                                     Civ.Proc., Rule 166a(c), (i).
[4] lessee waived affirmative defense of failure of                  1 Cases that cite this headnote
consideration; and

[5] lessee waived offset claim.                                [4]   Judgment
                                                                         Weight and Sufficiency
                                                                     If the non-movant relies on an affirmative
Affirmed.                                                            defense to oppose a summary judgment motion,
                                                                     he must provide sufficient summary judgment
Frost, J., filed dissenting opinion.                                 evidence to create a fact issue on each element
                                                                     of the defense. Vernon's Ann.Texas Rules
                                                                     Civ.Proc., Rule 166a(c).
 West Headnotes (20)
                                                                     5 Cases that cite this headnote

 [1]     Evidence                                              [5]   Judgment
             Records or Decisions in Same Case



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       1
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


             Weight and Sufficiency                                  time of execution of lease, that lienholder had
        The non-movant is not required to prove an                   no representative present at time of transaction,
        affirmative defense, raised to oppose a summary              that lienholder was purely a financial institution
        judgment motion, as a matter of law; raising                 which purchased vehicle and lease from lessor,
        a fact issue on each element of the defense is               and that lessor was not agent of lienholder or
        sufficient to defeat summary judgment. Vernon's              authorized by it to make any representations
        Ann.Texas Rules Civ.Proc., Rule 166a(c).                     to lessee. V.T.C.A., Bus. & C. §§ 17.45(5),
                                                                     17.46(b)(12), 17.50(a)(1)(A), (a)(1)(3); Rules
        5 Cases that cite this headnote                              App.Proc., Rule 38.1(h); Vernon's Ann.Texas
                                                                     Rules Civ.Proc., Rule 166a(c).
 [6]    Appeal and Error                                             Cases that cite this headnote
           Insufficient Discussion of Objections
        Lessee waived his challenge on appeal to
                                                              [9]    Appeal and Error
        grant of summary judgment that lienholder
                                                                        Nature and Grounds of Right
        failed to prove elements of breach of vehicle
        lease agreement claim, where lessee only made                Appeal and Error
        bare assertion that genuine issue of material                   Points and Arguments
        fact existed on claim, and never asserted                    The Court of Appeals must construe the Rules of
        in its argument on appeal that lienholder                    Appellate Procedure reasonably, yet liberally, so
        failed to prove elements of its claim. Rules                 that the right to appeal is not lost by imposing
        App.Proc., Rule 38.1(h); Vernon's Ann.Texas                  requirements not absolutely necessary to effect
        Rules Civ.Proc., Rule 166a(c).                               the purpose of a rule; however, no authority
                                                                     obligates the court to become advocates for
        Cases that cite this headnote                                a particular litigant through performing their
                                                                     research and developing their argument for them.
 [7]    Appeal and Error                                             Rules App.Proc., Rule 38.9.
           Insufficient Discussion of Objections
                                                                     10 Cases that cite this headnote
        Lessee waived any challenge to grant of
        summary judgment for counterclaims of
        common-law fraud and breach of vehicle lease          [10]   Appeal and Error
        agreement, where lessee presented no issue or                     Asserting Invalidity of Contract or Other
        argument on appeal. Vernon's Ann.Texas Rules                 Instrument
        Civ.Proc., Rule 166a(c); Rules App.Proc., Rule               Appeal and Error
        38.1(h).                                                          Ratification, Estoppel, Waiver, and Res
                                                                     Judicata
        Cases that cite this headnote
                                                                     If Court of Appeals were to craft, on appellant's
                                                                     behalf, an argument for his affirmative defenses
 [8]    Judgment                                                     of fraudulent inducement and equitable estoppel
            Evidence and Affidavits in Particular Cases              that he had not made in response to motion
        On its motion for summary judgment on                        for summary judgment, the court would
        vehicle lessee's Deceptive Trade Practices                   improperly become his advocate and improperly
        Act (DTPA) counterclaim, lienholder negated                  consider issues not expressly presented to trial
        lessee's assertion that former lessor's salesperson          court. Rules App.Proc., Rule 38.1(h); Vernon's
        misrepresented the lease as a purchase, thus                 Ann.Texas Rules Civ.Proc., Rule 166a(c).
        shifting burden to lessee to raise issue of
                                                                     Cases that cite this headnote
        fact, by presenting affidavit of lienholder's
        representative, averring that lienholder made no
        representations to lessee before, during, or at       [11]   Appeal and Error


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        2
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


             To Verdict, Findings, or Judgment
                                                                  11 Cases that cite this headnote
        Lessee waived claim that evidence raised a
        genuine issue of material fact on affirmative
        defense of failure of consideration for vehicle    [15]   Appeal and Error
        lease agreement sufficient to defeat summary                 Defects, Objections, and Amendments
        judgment, where he presented no issue or                  Issues are not expressly presented on appeal
        argument on appeal addressing this defense.               of summary judgment by the non-movant's
        Vernon's Ann.Texas Rules Civ.Proc., Rule                  mere reference to summary judgment evidence.
        166a(c); Rules App.Proc., Rule 38.1(h).                   Vernon's Ann.Texas Rules Civ.Proc., Rule
                                                                  166a(c).
        1 Cases that cite this headnote
                                                                  Cases that cite this headnote
 [12]   Appeal and Error
           Insufficient Discussion of Objections           [16]   Judgment
        Lessee waived claims on appeal of summary                     Motion or Other Application
        judgment that he might be entitled to avoid               Judgment
        liability with current lessor and lienholder or               Effect of Failure to File Affidavit
        to offset damages by return of leased vehicle
                                                                  Summary judgments must stand or fall on their
        to former lessor; lessee failed on appeal to
                                                                  own merits, and the non-movant's failure to
        cite any authority, offer any argument, point to
                                                                  answer or respond cannot supply by default the
        any evidence, make any substantive analysis,
                                                                  summary judgment proof necessary to establish
        or identify elements of lessor's claim on
                                                                  the movant's right. Vernon's Ann.Texas Rules
        which return of vehicle allegedly raised fact
                                                                  Civ.Proc., Rule 166a(c).
        issue. Rules App.Proc., Rule 38.1(h); Vernon's
        Ann.Texas Rules Civ.Proc., Rule 166a(c).                  1 Cases that cite this headnote

        2 Cases that cite this headnote
                                                           [17]   Appeal and Error
                                                                     Nature or Subject-Matter in General
 [13]   Judgment
                                                                  Judgment
            Motion or Other Application
                                                                      Motion or Other Application
        The non-movant must expressly present to the
                                                                  Judgment
        trial court, by written answer or response, any
                                                                      Effect of Failure to File Affidavit
        issues defeating the movant's entitlement to
        summary judgment. Vernon's Ann.Texas Rules                If a non-movant fails to present any issues in its
        Civ.Proc., Rule 166a(c).                                  response or answer to summary judgment, the
                                                                  movant's right is not established and the movant
        15 Cases that cite this headnote                          must still establish its entitlement to summary
                                                                  judgment; the effect of such a failure is that the
 [14]   Judgment                                                  non-movant is limited on appeal to arguing the
            Motion or Other Application                           legal sufficiency of the grounds presented by the
                                                                  movant. Vernon's Ann.Texas Rules Civ.Proc.,
        The requirement that issues be expressly
                                                                  Rule 166a(c).
        presented on appeal of summary judgment by
        the non-movant's written answer or response               4 Cases that cite this headnote
        refers to an answer or response to the motion
        for summary judgment, not to the pleadings.
                                                           [18]   Appeal and Error
        Vernon's Ann.Texas Rules Civ.Proc., Rule
                                                                     Sufficiency of Presentation of Questions
        166a(c).




              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                      3
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


        The Court of Appeals could not construe lessee's
        single reference to general standard applicable     Panel consists of Justices HUDSON, FROST, and
        to every summary judgment motion, without any       SEYMORE.
        argument concerning, or reference to, evidence
        of lessor and lienholder as an adequate argument
        challenging sufficiency of their motion for                           MAJORITY OPINION
        summary judgment and evidence to support
                                                            CHARLES W. SEYMORE, Justice.
        damages awarded. Vernon's Ann.Texas Rules
        Civ.Proc., Rule 166a(c); Rules App.Proc., Rule      Appellant, Pablo Tello, appeals a summary judgment in favor
        38.1(h).
                                                            of appellees, Bank One, N.A. and Bank One Acceptance
                                                            Corp., on their claim against Tello for breach of a vehicle
        Cases that cite this headnote
                                                            lease agreement and on Tello's counterclaims for DTPA
                                                            violations, common-law fraud, and breach of contract. We
 [19]   Appeal and Error                                    affirm.
           Nature or Subject-Matter in General
        For issue to have been “expressly” presented in
        response to motion for summary judgment, as
                                                                                I. BACKGROUND
        required for issue to be considered on appeal as
        grounds for reversal, written answer or response    Tello entered into a written agreement to lease a truck from
        to motion must fairly apprise movant and court      Randall Reed Ford. The lease shows Randall Reed Ford as
        of issues non-movant contends should defeat the     lessor and Tello as lessee. In the same agreement, Randall
        motion. Vernon's Ann.Texas Rules Civ.Proc.,         Reed Ford assigned the lease and the vehicle to Banc One
        Rule 166a(c).                                       Texas Leasing Corp. Subsequently, Banc One Texas Leasing
                                                            Corp. merged with Banc One Acceptance Corp. By virtue of
        18 Cases that cite this headnote
                                                            this merger, Banc One Acceptance Corp. became the owner/
                                                            lessor of the vehicle. The title to the vehicle shows Bank One
 [20]   Appeal and Error                                    Texas N.A. as lienholder. Bank One Texas N.A. subsequently
           Sufficiency of Presentation of Questions         merged with Bank One, N.A. By virtue of this merger, Bank
        The requirement that the non-movant “fairly         One, N.A. became lienholder.
        apprise” the trial court of the issues
        allegedly defeating summary judgment clearly        Bank One, N.A. and Banc One Texas Leasing Corp.
        contemplates that the trial court is not required   eventually sued Tello, alleging he defaulted on the lease
        to guess why a non-movant presents certain          by failing to make some monthly payments. 1 In his
        evidence or consider every possible reason          answer, Tello raised the affirmative defenses of failure of
        the evidence might defeat summary judgment.         consideration, fraudulent inducement, and equitable estoppel.
        Vernon's Ann.Texas Rules Civ.Proc., Rule            He also asserted counterclaims for DTPA violations,
        166a(c).                                            common-law fraud, and breach of contract, seeking to recover
                                                            his own alleged damages and offset any recovery by the Bank
        2 Cases that cite this headnote                     on its breach of contract claim. His affirmative defenses and
                                                            counterclaims *113 were all based on his allegation that he
                                                            does not read or write English and the Randall Reed Ford
                                                            salesperson induced him to sign the lease by misrepresenting
Attorneys and Law Firms                                     it was an agreement to purchase the vehicle.

*112 William Peter Capasso, Houston, for appellants.         [1] Bank One, N.A. and Banc One Acceptance Corp.
                                                            moved for summary judgment on their claim against Tello
George M. McDonald, Richardson, for appellees.
                                                            and on his counterclaims. The trial court signed a “First
                                                            Amended Summary Judgment” on July 27, 2004, granting



              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                      4
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


summary judgment in favor of Bank One, N.A. and Banc              Houston [1st Dist.] 2006, pet. denied). The non-movant is not
One Acceptance Corp. on their claim against Tello and on his      required to prove the affirmative defense as a matter of law;
counterclaims. 2 The trial court awarded the Bank $29,366.24      raising a fact issue is sufficient to defeat summary judgment.
in damages, $13,933.86 for attorney's fees and costs, and         See Brownlee, 665 S.W.2d at 112; Anglo–Dutch Petroleum,
                                                                  193 S.W.3d at 95.
post-judgment interest. 3 The trial court also ordered Tello to
surrender the vehicle to the Bank. 4                              We review a summary judgment de novo. Valence Operating
                                                                  Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). We take
                                                                  all evidence favorable to the nonmovant as true and indulge
                     II. DISCUSSION                               every reasonable inference and resolve any doubts in favor of
                                                                  the nonmovant. Id.
In six issues, Tello contends the trial court erred by (1)
granting the Bank's motion for summary judgment on its
breach of contract claim; (2) granting the Bank's motion       A. The Bank's Breach of Contract Claim
for summary judgment on Tello's affirmative defense of          [6] In his first stated issue, Tello contends the trial court
fraudulent inducement; (3) granting the Bank's motion          erred by granting the Bank's motion for summary judgment
for summary judgment on Tello's affirmative defense of         on its breach of contract claim. Tello makes one argument,
equitable estoppel; (4) granting the Bank's motion for         consisting of two-and-a-half-page pages, to support all his
summary judgment on Tello's DTPA counterclaim; (5)             issues challenging the summary judgment with respect to his
generally granting the Bank's motion for summary judgment;     liability to the Bank and with respect to his counterclaim.
and (6) granting the Bank's motion for summary judgment on     At the outset of this argument, he makes a bare assertion
its claim for damages.                                         that a genuine issue of material fact existed on the Bank's
                                                               breach of contract claim. However, in the argument that
 [2] [3] For a plaintiff to prevail on a motion for summary follows, he never asserts that the Bank failed to prove the
judgment when, as here, the defendant has asserted a           elements of its breach of contract claim. Instead, in what
counterclaim, the plaintiff must prove, as a matter of law,    little argument he does advance, he mentions only the factual
each element of its cause of action and show it is entitled    allegations which form the basis of his counterclaim and
to summary judgment on the counterclaim. See First State       affirmative defenses. Therefore, to the extent, he contends the
Bank of Athens, Mabank Branch v. Purina AG Capitol Corp.,      Bank failed to prove the elements of its breach of contract
113 S.W.3d 1, 4 (Tex.App.-Tyler 1999, no pet.); see also       claim, he has waived any such contention by failing to include
Rush v. Barrios, 56 S.W.3d 88, 97 (Tex.App.-Houston [14th      any argument. 6 See TEX.R.APP. P. 38.1(h) (providing that
Dist.] 2001, pet. denied). A plaintiff asserting a traditional appellant's brief must contain a clear and concise argument for
motion for summary judgment in opposition to a defendant's     the contentions made, with appropriate citations to authorities
counterclaim must disprove at least one essential element of   and the record); Sunnyside Feedyard, L.C. v. Metropolitan
                                      5                         *115 Life Ins. Co., 106 S.W.3d 169, 173 (Tex.App.-
the counterclaim as a matter of law. See *114 TEX.R.
CIV. P. 166a(c); First State Bank, 113 S.W.3d at 4; Rush,      Amarillo 2003, no pet.) (recognizing failure to either cite
56 S.W.3d at 97; Taylor v. GWR Operating Co., 820 S.W.2d       authority or advance substantive analysis waives an issue on
908, 910 (Tex.App.-Houston [1st Dist.] 1991, writ denied).     appeal). We overrule his first issue.
If the movant establishes a right to summary judgment, the
burden shifts to the non-movant to present evidence raising
                                                                  B. Tello's DTPA Counterclaim
a material fact issue. See Centeq Realty, Inc. v. Siegler, 899
                                                                   [7] We will next address Tello's fourth issue, in which
S.W.2d 195, 197 (Tex.1995).
                                                                  he challenges the summary judgment on his DTPA

 [4] [5] If, as here, the non-movant relies on an affirmative     counterclaim. 7 At the outset of his argument, he generally
defense to oppose the summary judgment motion, he must            contends that a genuine issue of material fact existed on his
provide sufficient summary judgment evidence to create a          DTPA counterclaim and refers to the DTPA as 17.46(b) of
fact issue on each element of the defense. See Brownlee v.        the Texas Business and Commerce Code. However, he does
Brownlee, 665 S.W.2d 111, 112 (Tex.1984); Anglo–Dutch             not thereafter mention the DTPA again, cite the elements
Petroleum Int'l, Inc. v. Haskell, 193 S.W.3d 87, 95 (Tex.App.-    of a DTPA claim, or specify which acts prohibited by the



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           5
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


DTPA were allegedly committed by the Bank. See Proctor            to show that the Bank entities who are the current lessor and
v. White, 155 S.W.3d 438, 441 (Tex.App.-El Paso 2004, pet.        lienholder may be liable under the DTPA for the Randall Reed
denied) (finding appellants waived challenge to summary           Ford salesperson's alleged misrepresentation.
judgment on several claims because their argument consisted
of several pages referring to evidence in support of factual       [9] We recognize that we must “construe the Rules of
allegations without a single reference to a relevant case or      Appellate Procedure reasonably, yet liberally, so that the
legal principle).                                                 right to appeal is not lost by imposing requirements not
                                                                  absolutely necessary to effect the purpose of a rule.” Republic
Nonetheless, in his pleading, Tello alleged that the Bank         Underwriters Ins. Co. v. Mex–Tex, Inc., 150 S.W.3d 423,
violated the DTPA by: (1) representing “that an agreement         427 (Tex.2004); see TEX.R.APP. P. 38.9. However, “we
confers or involves rights, remedies, or obligations which        know of no authority obligating us to become advocates for
it does not have or involve, or which are prohibited by           a particular litigant through performing their research and
law,” see TEX. BUS. & COM.CODE ANN. § 17.46(b)(12)                developing their argument for them.” See Jordan v. Jefferson
(Vernon Supp.2006); TEX. BUS. & COM.CODE ANN. §                   County, 153 S.W.3d 670, 676 (Tex.App.-Amarillo 2004, pet.
17.50(a)(1)(A) (Vernon Supp.2006); and (2) engaging in            denied). We would improperly become an advocate for Tello
an “unconscionable action or course of action” by taking          if we were to develop an argument for imposition of liability
“advantage of the lack of knowledge, ability, experience, or      on the Bank entities who are the current lessor and lienholder
capacity of [Tello] to a grossly unfair degree.” See TEX. BUS.    because of the Randall Reed Ford salesperson's alleged
& COM.CODE ANN. § 17.50(a)(3) (Vernon Supp.2006);                 misrepresentations. In addition, we may not consider grounds
TEX. BUS. & COM.CODE ANN. § 17.45(5) (Vernon 2002).               for reversal of a summary judgment that were not expressly
                                                                  presented to the trial court by written response to the motion.
 [8] Although Tello asserted that the Bank violated these         See TEX.R. CIV. P. 166a(c); see McConnell v. Southside
provisions, the factual allegation he pleaded was that the        Indep. School Dist., 858 S.W.2d 337, 343 (Tex.1993)
Randall Reed Ford salesperson misrepresented the lease was        (plurality op.). Accordingly, Tello has not demonstrated that
a purchase agreement. In support of its motion for summary        there was a genuine issue of material fact on his DTPA
judgment, the Bank presented an affidavit of its representative   counterclaim against the Bank. We overrule his fourth issue.
who averred as follows: the Bank made no representations
to Tello before, during, or at the time of execution of the
lease; the Bank had no representative present at the time of      C. Tello's Affirmative Defenses
the transaction; the Bank was purely a financial institution       [10] [11] In his second and third issues, Tello contends he
which purchased the vehicle and the lease from Randall Reed       raised a fact issue on his affirmative defenses of fraudulent
Ford; and Randall Reed Ford was not an agent of the Bank          inducement and equitable estoppel sufficient to defeat the
or authorized by the Bank to make any representations to          Bank's motion for summary *117 judgment. 11 Tello
Tello. 8 Therefore, the Bank negated the assertion that it made   generally refers to his affidavit, but other than the general
any misrepresentations to Tello as alleged in his counterclaim    summary judgment standards, he cites no authority. He
and shifted the burden *116 to Tello to raise a fact issue on     does not cite the elements of the doctrines of fraudulent
                                                                  inducement and equitable estoppel, much less argue why
that claim. 9 See Centeq Realty, 899 S.W.2d at 197.
                                                                  his affidavit raised a fact issue on each element of these
                                                                  defenses. See Sunnyside Feedyard, 106 S.W.3d at 173
In response to the motion for summary judgment and on
                                                                  (holding appellant waived contention that fact issue existed
appeal, Tello merely referred to the contents of his affidavit
                                                                  on legal doctrines sufficient to defeat summary judgment
attached to his response. 10 In the affidavit, he averred that    by referring to well-developed doctrines without citing basic
he does not speak or write English and an unnamed Randall         authority as to their elements or any analysis to show a fact
Reed Ford salesperson led him to believe the lease was a          issue existed on these doctrines).
purchase agreement. Therefore, despite the Bank's evidence,
Tello continued to rely solely on the Randall Reed Ford           Nevertheless, in response to the motion for summary
salesperson's alleged misrepresentation to purportedly create     judgment and on appeal, Tello relied solely on the
a fact issue on his DTPA counterclaim against the Bank.           Randall Reed Ford salesperson's alleged misrepresentation to
However, in response to the motion for summary judgment           purportedly raise a fact issue on his affirmative defenses to
and on appeal, Tello offered no argument, authority, or theory


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           6
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


the Bank's breach of contract claim. However, Tello offered        do not know the basis for his allegation that he was entitled to
no argument, authority, or theory to show that the Bank            avoid liability or offset the damages by returning the vehicle.
entities who are the current lessor and lienholder should          Based on his scant argument, we cannot determine whether
be bound by the Randall Reed Ford salesperson's alleged            he is relying on a provision of the lease, some legal principle,
misrepresentation or otherwise subject to any defenses Tello       or both.
may have had against Randall Reed Ford. Again, if we
were to craft such an argument on Tello's behalf, we would         More particularly, Tello does not cite any authority, offer
improperly become his advocate and improperly consider an          any argument, or point to any evidence showing why he
issue not expressly presented to the trial court in his summary    might be entitled to avoid liability or offset the damages
judgment response. Accordingly, Tello has not demonstrated         awarded the Bank entity, who is the current owner and lessor,
that he raised a genuine issue of material fact issue on his       based on his return of the vehicle to Randall Reed Ford,
affirmative defenses. We overrule his second and third issues.     the former owner and lessor. Consequently, by failing to
                                                                   make any substantive analysis whatsoever, Tello has waived
In his fifth issue, Tello generally states that the trial court    his contention that his return of the vehicle raised a fact
erred by granting the Bank's motion for summary judgment.          issue sufficient to defeat the Bank's claim for damages or
Because we have addressed all the arguments purportedly            offset its damages. See TEX.R.APP. P. 38.1(h); Sunnyside
raised in his first five issues with respect to his liability on   Feedyard, 106 S.W.3d at 173; see also Nguyen v. Kosnoski,
the Bank's breach of contract claim and with respect to his        93 S.W.3d 186, 188 (Tex.App.-Houston [14th Dist.] 2002,
counterclaim, we overrule his fifth issue.                         no pet.) (finding appellant waived issue on appeal by failing
                                                                   to support argument with legal authority or references to
                                                                   the record); cf. Mex–Tex, Inc., 150 S.W.3d at 427 (holding
D. The Bank's Damages                                              appellant did not waive argument by citing only one statute in
In his sixth issue, Tello asserts that the trial court erred by    its brief considering it was clear appellant was relying solely
entering summary judgment because there is a genuine issue
                                                                   on this statute and no other authority was necessary). 12
of material fact regarding the Bank's claim for damages. With
respect to this issue, Tello primarily refers to his affidavit,
                                                                    [13]     [14]    [15]    [16]    [17] Moreover, in response to
in which he averred that, approximately three years after he
                                                                   the motion for summary judgment, Tello did not raise
executed the agreement, he called the Bank to inquire about
                                                                   his contention that his return of the vehicle should offset
his balance and was informed the agreement was a lease—not
                                                                   the Bank's damages or otherwise defeat its entitlement to
a purchase agreement. Within about a month, he returned the
                                                                   summary judgment. The non-movant must expressly present
vehicle to Randall Reed Ford. Other than reciting the general
                                                                   to the trial court, by written answer or response, any issues
summary judgment standards, Tello's argument regarding the
                                                                   defeating the movant's entitlement to summary judgment.
effect of this averment consists solely of the following:
                                                                   McConnell, 858 S.W.2d at 343 (citing City of Houston v.
             Had the trial court taken into account                Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979));
             [Tello's] claim that he returned                      Dubose v. Worker's Medical, P.A., 117 S.W.3d at 916, 920
             the vehicle, the damages would be                     (Tex.App.-Houston [14th Dist.] 2003, no pet.); see TEX.R.
             significantly decreased. The affidavit                CIV. P. 166a(c). “Issues not expressly presented to the trial
             filed by [Tello] clearly raises a genuine             court by written motion, answer or other response shall not
             issue of material fact, which is an issue             be considered on appeal as grounds for reversal.” TEX.R.
             for a judge and jury to decide.                       CIV. P. 166a(c); see McConnell, 858 S.W.2d at 343; Dubose,
                                                                   117 S.W.3d at 920. Issues are not expressly presented by
                                                                   mere reference to summary judgment evidence. McConnell,
 [12] It is not clear whether Tello seeks to avoid liability on
                                                                   858 S.W.2d at 341; see Dubose, 117 S.W.3d at 920; D.M.
the lease based on his return of the vehicle or merely offset
                                                                   Diamond Corp. v. Dunbar Armored, Inc., 124 S.W.3d 655,
the amount of the Bank's damages, although his assertion
suggests the latter. Nevertheless, Tello does not cite any         659–60 (Tex.App.-Houston [14th Dist.] 2003, no pet.). 13
authority, offer any argument, or point to any evidence            However, summary judgments must stand or fall on their
generally showing why he might be entitled to avoid liability      own merits, and *119 the non-movant's failure to answer
on the lease or offset the Bank's damages based on his *118        or respond cannot supply by default the summary judgment
return of the vehicle. Even liberally construing his brief, we     proof necessary to establish the movant's right. McConnell,


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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


858 S.W.2d at 343 (citing Clear Creek, 589 S.W.2d at 678).         contract claim on which his return of the vehicle allegedly
If a non-movant fails to present any issues in its response or     raised a fact issue or suggest *120 why it raised a fact issue
answer, the movant's right is not established and the movant       on any particular element[s].
must still establish its entitlement to summary judgment.
Id. “The effect of such a failure is that the non-movant is         [20] The requirement that the non-movant “fairly apprise”
limited on appeal to arguing the legal sufficiency of the          the trial court of the issues allegedly defeating summary
grounds presented by the movant.” Id. (citing Clear Creek,         judgment clearly contemplates that the trial court is not
589 S.W.2d at 678).                                                required to guess why a non-movant presents certain evidence
                                                                   or consider every possible reason the evidence might defeat
 [18] Tello's suggestion on appeal that he may offset the          summary judgment. In short, Tello's bare assertion in his
Bank's damages or otherwise avoid liability on the lease based     affidavit that he returned the vehicle did not “fairly apprise”
on his return of the vehicle is an issue by which he seeks         the trial court what, if anything, he wanted the trial court to
to defeat the Bank's entitlement to summary judgment—not           do with that information. Cf. Engel, 713 S.W.2d at 771–72
a challenge to the legal sufficiency of the Bank's summary         (holding affidavit of attorney filed by non-movant in response
judgment grounds. To prove its breach of contract claim, the       to motion for summary judgment requesting recovery of
Bank presented portions of the lease and its representative's      movant's attorneys' fees fairly apprised trial court of issue
affidavit purportedly showing Tello failed to make certain         allegedly defeating the motion by stating the fees were
payments as agreed and setting forth the balance due. Tello        “excessive and unreasonable.”).
does not contend that this evidence is insufficient to prove
the amount of the damages awarded by the trial court. 14           In sum, trial court could not have erred by refusing to consider
Rather, what little argument Tello does advance suggests he        the effect, if any, of Tello's return of the vehicle on the Bank's
should offset the Bank's damages or otherwise avoid liability,     entitlement to summary judgment when Tello never requested
notwithstanding the Bank's proof, because he returned the          that it be considered. Accordingly, because Tello failed to
vehicle to Randall Reed Ford. Consequently, he was required        “expressly” present his issue that his return of the vehicle
to “expressly” present this issue to the trial court in response   should offset the Bank's damages or otherwise defeat its
to the motion for summary judgment. See TEX.R. CIV. P.             entitlement to summary judgment in response to the motion
166a(c); McConnell, 858 S.W.2d at 343; Dubose, 117 S.W.3d          for summary judgment, we may not consider it as grounds
at 920.                                                            for reversal. 15 See Querner Truck Lines, Inc. v. Alta Verde
                                                                   Indus., Inc., 747 S.W.2d 464, 469 (Tex.App.-San Antonio
 [19] To “expressly” present issues pursuant to Rule 166a(c),      1988, no writ) (finding non-movant waived argument on
“[t]he written answer or response to the motion must fairly        appeal that it was entitled to additional offset against movant's
apprise the movant and the court of the issues the non-            damages than offset allowed by trial court because non-
movant contends should defeat the motion.” Clear Creek, 589        movant did not raise issue of additional offset in its summary
S.W.2d at 678; see Engel v. Pettit, 713 S.W.2d 770, 771–           judgment response). We overrule his sixth issue.
72 (Tex.App.-Houston [14th Dist.] 1986, no pet.). The extent
of Tello's summary judgment response with respect to the           Accordingly, the judgment of the trial court is affirmed.
Bank's breach of contract claim was his general statement
that a genuine issue of material fact existed on the claim and
his reference to his attached evidence and his pleading. Tello
                                                                   FROST, J., dissenting.
made a bare averment in his attached affidavit that he returned
the vehicle during a particular time period. However, he
made no statement in his affidavit or response regarding the       KEM THOMPSON FROST, Justice, dissenting.
effect of this averment on the Bank's entitlement to summary       Appellees Bank One, N.A. (“Lienholder”) and Banc One
judgment. Specifically, he did not mention that his return of      Acceptance Corporation (“Assignee”) filed suit against
the vehicle should offset the Bank's damages or otherwise          appellant Pablo Tello to recover sums they claim were owing
defeat summary judgment, as he now suggests on appeal,             under the lease agreement; however, they attached only part
much less mention why his return of the vehicle should offset      of the lease agreement to their pleadings, and when they
the damages or otherwise defeat summary judgment. He did           moved for summary judgment in the trial court, they made the
not even identify the element[s] of the Bank's breach of           same mistake. Consequently, our appellate record contains



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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


only part of the contract upon which the trial court's summary     claim or defense). There is no valid basis to find waiver for
judgment is based. As explained in more detail below, this         failure to preserve error in the trial court.
omission is significant because to *121 recover damages
for breach of a contract as a matter of law, the movant must       The court also holds that Tello waived this point through
establish the amount of damages flowing from the breach.           inadequate briefing. This analysis, though a somewhat
In this case, the part of the lease agreement omitted from         subjective call, is contrary to the standards the Texas
our record contains terms regarding early termination of the       Supreme Court has articulated for disposing of parties'
lease, any security interest in the vehicle, and default charges   appellate rights without reaching the merits of their appellate
—parts that would show how much Tello would owe if he              points. Under both the Texas Rules of Appellate Procedure
terminated the lease before the end of its term and how much       and Texas Supreme Court precedent, this court must
the Lienholder and the Assignee (hereinafter collectively          construe the briefing rules reasonably, yet liberally. See
“Bank One Entities”) would be entitled to recover for breach       TEX.R.APP. P. 38.1(h), 38.9; Republic Underwriters Ins.
of the lease agreement. Moreover, because the Assignee does        Co. v. Mex–Tex, Inc., 150 S.W.3d 423, 427 (Tex.2004).
not have the vehicle and has no way of knowing the amount          Substantial compliance with the briefing rules may be
of mileage on the vehicle, it is not possible to calculate         sufficient, and this court is not required to insist on unerring
any applicable mileage penalty, a data point necessary to          compliance with them. Bufkin v. State, 179 S.W.3d 166,
determine the amount ostensibly due under the lease. Based         174 (Tex.App.-Houston [14th Dist.] 2005), aff'd, 207 S.W.3d
on the portions of the lease that are in the summary-judgment      779 (Tex.Crim.App., 2006). Texas courts have embraced this
evidence, Tello owes only a fraction of the amount the trial       liberal briefing standard largely because the proper objective
court awarded in actual damages.                                   of a reviewing court is to reach a just, fair, and equitable
                                                                   adjudication of the rights of litigants under established
In his appellate brief, Tello asserts that the trial court erred   principles of substantive law. *122 While well-organized
in granting summary judgment as to the amount of contract          and sharply focused writing is always appreciated, that is
damages for which he is liable. Construing Tello's brief           not the standard by which we determine the legal adequacy
liberally, as this court must, Tello argues that the traditional   of appellate briefs. The Texas Supreme Court has set a far
summary-judgment motion and attached evidence did not              more forgiving standard, one that requires appellate courts to
prove the lack of a genuine issue of fact and that the Bank        construe arguments liberally so that parties' poor presentation
One Entities are entitled to judgment as a matter of law for       of their appellate points does not result in a forfeiture of the
the damages awarded on their contract claim. This assertion        opportunity for a merits review.
is correct and should be sustained, but rather than reaching
the merits of Tello's winning argument, the court erroneously      Ideally, an appellant's brief should contain a clear and concise
concludes that Tello should lose based on a failure to preserve    argument for the contentions made, with appropriate citations
error.                                                             to authorities and to the record. TEX.R.APP. P. 38.1(h). We
                                                                   must interpret this requirement reasonably and liberally. See
According to the majority, Tello did not expressly present         TEX.R.APP. P. 38.1(h), 38.9; Mex–Tex, Inc., 150 S.W.3d at
his sixth issue to the trial court, thereby waiving this issue.    427; see also Tribble & Stephens Co. v. RGM Constructors,
This analysis is based on the majority's conclusion that Tello's   L.P., 154 S.W.3d 639, 675 (Tex.App.-Houston [14th Dist.]
argument is not an attack on the sufficiency of the summary-       2004, pet. denied) (plurality op.) (construing appellate brief
judgment motion, a point that need not be raised in the trial      liberally as asserting that contract was ambiguous even
court to be asserted on appeal. This conclusion is incorrect       though brief did not state that contract was ambiguous).
because, under a liberal construction, Tello's argument under      Applying these standards in construing Tello's appellate
his sixth issue challenges the sufficiency of the Bank One         brief, this court should discern, at a minimum, an argument
Entities' motion and proof of their entitlement to summary         challenging the trial court's summary judgment in favor of the
judgment on their contract claim. Therefore, contrary to the       movants, the Bank One Entities, on their contract claim.
majority's assertion, this argument did not have to be raised
in the trial court. See M.D. Anderson Hosp. and Tumor Inst.        Under the applicable standard of review, we must take as
v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (stating that, as to      true all evidence favorable to Tello and make all reasonable
traditional motions for summary judgment, nonmovant has no         inferences in his favor. See Dolcefino v. Randolph, 19 S.W.3d
duty to respond unless the movant conclusively establishes its     906, 916 (Tex.App.-Houston [14th Dist.] 2000, pet. denied).



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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


Thus, in evaluating the propriety of summary judgment,             then answering) the wrong question. The inquiry is not
we must consider the following facts and all reasonable            whether Tello defeated the Bank One Entities' traditional
inferences therefrom:                                              summary-judgment motion but whether the Bank One
                                                                   Entities, as movants, established their entitlement to the
Tello, who speaks Spanish but does not read or speak English,      amount of damages awarded as a matter of law. The majority
went to Randall Reed Ford in May 1999, to buy a truck. He          erroneously frames the issue as one of Tello failing to
signed a contract, written in English, which he believed to be     establish an offset when it is actually a failure by the Bank
an agreement to purchase the vehicle, based on conversations       One Entities to carry their summary-judgment burden—or
he had with the Spanish-speaking salesman. However, the            even to present a prima facie case to recover the amount
contract he signed was a lease agreement and he unknowingly        of damages awarded under the lease. Instead of faulting the
had agreed to lease—not buy—the truck. The lease identified        movants (the Bank One Entities) for failing to show from their
an assignee, Bank One Texas Leasing Corporation, to whom           own summary-judgment proof how they arrived at the amount
monthly payments were to be made. Tello made monthly               awarded, the majority criticizes the non-movant (Tello) for
payments on the truck for the next three years. Then one day       failing to “cite any authority or evidence to inform us why
he called to find out the outstanding balance and was told that    he was allegedly entitled to offset the Bank's damages or
he had not bought the truck but had leased it instead. While       otherwise defeat summary judgment.” 1 The problem with
still current in his payments, in July 2002, Tello returned the    the summary judgment is not what Tello failed to do in
truck to Randall Reed Ford, and continued to make payments         attacking it, but what the Bank One Entities failed to do in the
on it through September 2002.                                      first instance to prove their damages as a matter of law.

In his sixth issue, Tello asserts that the trial court erred in    Recovery under a lease agreement is not automatic nor is there
granting summary judgment because, under the applicable            a universal measure of damages for breach. “The ultimate
standard of review, Tello's affidavit raised a genuine issue of    goal in measuring damages for a breach-of-contract claim is
material fact regarding the amount of contract damages for         to provide just compensation for any loss or damage actually
which he is liable to the Bank One Entities. Tello points to       sustained as a result of the breach.” Mays v. Pierce, 203
his testimony that, after he learned the agreement he signed       S.W.3d 564, 577 (Tex.App.-Houston[14th Dist.] 2006, pet.
was a lease and not a sales contract, he returned the vehicle to   filed); Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d
Randall Reed Ford. Tello then asserts that (1) “[t]he motion       303, 328 (Tex.App.-Houston [14th Dist.] 2003, pet. denied).
for summary judgment and its supporting evidence must show         Typically, the measure of damages in a breach-of-contract
there is no genuine issue of a material fact and that the          case is the benefit-of-the-bargain measure, the purpose of
movant is entitled to judgment as a matter of law”; and (2)        which is to restore the injured party to the economic position
“[h]ad the trial court taken into account appellant's claim that   it would have been in had the contract been performed. Mays,
he returned the vehicle, the damages would be significantly        203 S.W.3d at 577; SAVA gumarska in kemijska industria
decreased.” (citations omitted). Read liberally, Tello's brief     d.d. v. Advanced Polymer Scis., Inc., 128 S.W.3d 304, 317
contains the argument that, based on his return of the truck       n. 6 (Tex.App.-Dallas 2004, no pet.). Because the movants
three years after signing the contract and three months before     failed to show what the contract provides as the measure of
he stopped making payments, the trial court erred in granting      their recovery (or to show from the terms of the contract
summary judgment on the Bank One Entities' contract claim          that the damage calculations would not be impacted by the
because their motion and supporting evidence did not *123          missing portions of the contract), the Bank One Entities failed
show that they are entitled to judgment as a matter of law for     to establish a prima facie case for the damages awarded, let
the amount of damages awarded—more than $29,000, before            alone establish their entitlement to damages as a matter of
attorney's fees. Tello points to his summary-judgment proof        law.
that he returned the vehicle to Randall Reed Ford in July 2002,
and asserts that, if this evidence is true (and we must presume    This is not a suit on a sworn account in which the plaintiff's
that it is), then the damages would be significantly decreased.    sworn and unrefuted assertion of the amount allegedly owed
                                                                   itself will constitute prima facie evidence of damages; rather,
The majority reaches the wrong conclusion—that the Bank            this is a breach-of-contract case in which the movants
One Entities are entitled to summary judgment on their             are required to prove their entitlement to damages by
claim for contract damages—partly because it is asking (and        establishing the amount of those damages under the terms



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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


of the contract. See e.g. Park v. Swartz, 110 Tex. 564,            that cannot be resolved by turning to the summary-judgment
222 S.W. 156 (1920) (holding that plaintiff “prima facie           proof before this court.
was entitled to as damages the amount which under the
contract he would, presumably, have earned ...”)(emphasis          Because the part of the lease contained in the record does not
added); Consol. Petroleum Partners, I, LLC v. Tindle, 168          address early termination, default, credits, or what happens if
S.W.3d 894, 900 (Tex.App.-Tyler 2005, no pet.) (determining        Tello returns the vehicle before expiration of the lease term, it
 *124 damages based on “the amount of money to which               provides no basis for determining the amounts owing, if any,
[plaintiff] was entitled as reimbursement pursuant to the          under the lease. The Bank One Entities' summary-judgment
agreement” ) (emphasis added); Garza v. Allied Fin. Co.,           affidavit states the following:
566 S.W.2d 57, 62 (Tex.Civ.App.-Corpus Christi 1978, no
writ)(holding that summary-judgment evidence consisting of           ● Tello missed at least six payments starting in October
“the manager's affidavit and copy of the note and security             2002.
agreement present evidence establishing a prima facie case
                                                                     ● After all offsets, payments, and credits were allowed and
in a suit on a promissory note ...”) (emphasis added); Hagar
                                                                       applied, the outstanding balance on the lease including
v. Texas Distrib., Inc., 560 S.W.2d 773, 775 (Tex.Civ.App.-
                                                                       principal and interest was $25,693.46 as of January 14,
Tyler 1977, writ ref'd n.r.e.)(holding summary-judgment
                                                                       2003.
proof sufficient in promissory note case after looking to the
“face of the note” and determining the amount that was due           ● Prejudgment interest has been accruing at the rate of six
thereon). The Bank One Entities not only failed to prove               percent per annum, which equates to $4.22 per day.
the terms of the lease agreement that would entitle them
to the sums awarded, they omitted portions of it that are          However, there is no summary-judgment evidence addressing
germane to their dispute with Tello and the proper calculation     how credits are applied under the lease agreement or
of damages flowing from his alleged failure to perform. As         addressing the effect, if any, of Tello's return of the vehicle
the movants, the Bank One Entities had to present evidence         in July 2002, on Tello's liability *125 for various sums
to support the damages they sought under the contract. They        allegedly owing under the lease. The Bank One Entities
failed to satisfy this burden. It is simply not possible to tell   asserted that they did not have the vehicle and that Tello had
from the Bank One Entities' summary-judgment proof how             concealed it and refused to surrender possession of it to them.
much (if any) is owing under the lease. According to the           Nothing in their summary-judgment evidence shows that the
Bank One Entities' affidavit, the first payment Tello failed       Bank One Entities had knowledge of the truck's whereabouts
to make under the lease was the payment due in October             or its odometer reading. Therefore, the Bank One Entities
2002, three months after Tello returned the vehicle to Randall     have no way of knowing the amount of mileage on the truck
Reed Ford. While Randall Reed Ford is an entity distinct from      to calculate any applicable mileage penalty. Based on the
the Bank One Entities, the lease agreement contains defined        summary-judgment evidence and the parts of the lease the
terms which include Randall Reed Ford and any party to             Bank One Entities did attach to their motion, Tello would
whom the lease is assigned in its definition of “we,” “us,”        owe only $9,870 (21 monthly payments of $470) plus a $350
and “our” as used in the lease. Furthermore, the lease states at   return fee. Nonetheless, the trial court awarded the Assignee
least three times that there are additional terms and conditions   in excess of $29,000 in actual damages, even though this
on the reverse side of the pages of the lease, none of which       amount is not supported by the part of the contract contained
are in our record. The lease portion that is in the record         in the summary-judgment evidence and even though the
unambiguously states that the back of the lease document           missing parts of the lease (like certain parts of it that are in
contains “additional information on early termination, ...         the record) may use the term “we” or “us” for the person to
late and default charges, ... and any security interest, if        whom the truck may be returned, which terms would include
applicable.” 2 Because our record does not contain a copy of       Randall Reed Ford.
the reverse sides of these pages, this court is not aware—and
presumably the trial court was not aware—of all of the terms       Though an affidavit containing a statement of balance due
of the lease, any one of which could undermine the damage          can in some instances suffice to satisfy a movant's summary-
calculation proffered by the Bank One Entities. The absence        judgment burden, when, as in this case, the summary-
of the contract or other proof of its terms creates an ambiguity   judgment affidavit itself creates a fact question that cannot
                                                                   be resolved by turning to the summary-judgment proof, a



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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


                                                                    judgment because Tello raised a fact issue as to the proper
material fact issue as to the measure of damages arises
                                                                    amount of damages based on his affidavit demonstrating he
and precludes summary judgment. General Specialties, Inc.
                                                                    returned the leased vehicle and received no credit for it.
v. Charter Nat'l Bank–Houston, 687 S.W.2d 772, 774
                                                                    Summary judgment is not proper because Tello raised a fact
(Tex.App.-Houston [14th Dist.] 1985, no writ) (ambiguous
                                                                    issue that had the Bank One Entities calculated the sums they
lump sum figure in suit for collection on note, that is
                                                                    claim are owing in accordance with the lease agreement, the
unexplained by other summary-judgment proof raises fact
                                                                    amount of damages awarded would have been less. In Tello's
issue precluding summary judgment); FFP Mktg. Co., Inc.
                                                                    words, “[h]ad the trial court taken into account appellant's
v. Long Lane Master Trust IV, 169 S.W.3d 402, 411–12
                                                                    claim that he returned the vehicle, the damages would be
(Tex.App.-Fort Worth 2005, no pet.). Because the Bank One
Entities did not prove up all of the terms of the lease on which    significantly decreased.” 3 (citations omitted).
they sought and obtained summary judgment, this court has
no way of knowing the appropriate amount of damages for             For these reasons, the Bank One Entities did not prove their
breach of the agreement or whether Tello's return of the            entitlement to summary judgment on their contract claim as a
vehicle affected the calculation of damages under the Bank          matter of law. See *126 McCulley Fine Arts Gallery, Inc. v.
One Entities' contract claim. These ambiguities cannot be           “X” Partners, 860 S.W.2d 473, 478 (Tex.App.-El Paso 1993,
resolved by turning to their summary-judgment proof. Thus,          no writ) (reversing summary judgment based on failure to
on a merits review, the summary-judgment evidence does              prove contract claim as a matter of law). This court should
not support the amount of damages the Bank One Entities             sustain Tello's sixth issue, reverse the summary judgment as
sought and the trial court awarded. Therefore, even if Tello        to the Bank One Entities' contract claim against Tello, sever,
had not responded at all, it would not have been proper to          and remand for further proceedings. Because it does not, I
grant summary judgment on the Bank One Entities' breach-            respectfully dissent.
of-contract claim.

                                                                    All Citations
Moreover, even if the Bank One Entities had not failed in
the first instance, they still would not be entitled to summary     218 S.W.3d 109


Footnotes
1      Despite the previous merger of Banc One Texas Leasing Corp. into Banc One Acceptance Corp., the petition showed
       Banc One Texas Leasing Corp. as one of the plaintiffs. The trial court later allowed Banc One Acceptance Corp. to be
       substituted for Banc One Texas Leasing Corp.
2      An original motion for summary judgment was filed by Bank One, N.A. and Bank One Texas Leasing Corp., although Bank
       One Texas Leasing Corp. had merged into Banc One Acceptance Corp. On May 14, 2003, the trial court entered an order
       granting summary judgment. Tello appealed the summary judgment to this court under case number 14–03–00644–CV.
       We dismissed the appeal on the ground the summary judgment was not final because it did not dispose of Bank One
       Texas Leasing Corp.'s claims. See Tello v. Bank One, N.A., 138 S.W.3d 533 (Tex.App.-Houston [14th Dist.] 2004, no
       pet.). Bank One, N.A. and Banc One Acceptance Corp. then filed a supplemental petition and supplemental motion for
       summary judgment to clarify the issues concerning their identities. They presented proof that Banc One Acceptance Corp.
       is the current lessor/owner by virtue of its merger with Bank One Texas Leasing Corp. In the First Amended Summary
       Judgment, the trial court allowed Banc One Acceptance Corp. to be substituted for Banc One Texas Leasing Corp. and
       then granted summary judgment in favor of Bank One, N.A. and Banc One Acceptance Corp.
3      Now that we have clarified the correct names of the Bank entities who are parties to this suit, we will refer to the appellees,
       Bank One, N.A. and Banc One Acceptance Corp., collectively as “the Bank,” except where necessary to refer to them
       separately.
4      Pertinent pleadings, including the original motion for summary judgment and Tello's response, are not included in the
       appellate record for this cause number. However, they are included in the record for the appeal from original summary
       judgment. Accordingly, we have taken judicial notice of that record.
5      The Bank did not specify whether the part of its motion opposing Tello's counterclaims was a traditional motion or a
       “no-evidence” motion. Compare TEX.R. CIV. P. 166a(c) with TEX.R. CIV. P. 166a(i). At times, the Bank used language
       applicable to a traditional motion; but at other times, the Bank generally asserted that Tello has “no evidence” to support
       his various claims or factual allegations. However, the motion did not “state the elements as to which there is no evidence”



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Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)


       as required by Rule 166a(i). See TEX.R. CIV. P. 166a(i). Because the motion did not unambiguously state it was filed
       under Rule 166a(i) and did not strictly comply with that rule, we construe it as a traditional motion. See Adams v. Reynolds
       Tile & Flooring, Inc., 120 S.W.3d 417, 420 (Tex.App.-Houston [14th Dist.] 2003, no pet.).
6      We note that the evidence indicates that only one of the Bank entities, Banc One Acceptance Corp., is the lessor of
       the vehicle. The evidence shows Bank One, N.A. is a lienholder on the vehicle, but does not show this lien secures the
       indebtedness that is the subject of the lease at issue or how being a lienholder entitled Bank One, N.A. to recover under
       the lease. Nevertheless, on appeal, Tello does not argue that both Bank entities failed to prove the initial elements of
       their breach of contract claim.
7      Tello also pleaded counterclaims for common-law fraud and breach of contract. However, on appeal, he presents no issue
       or argument challenging the summary judgment on those counterclaims. Therefore, he has waived any challenge to the
       summary judgment on those counterclaims. See Jacobs v. Satterwhite, 65 S.W.3d 653, 655–56 (Tex.2001) (recognizing
       appellate court may not reverse summary judgment on a particular claim when appellant fails to challenge summary
       judgment on that claim).
8      The Bank representative made these averments with respect to Bank One, N.A. and Banc One Texas Leasing Corp.,
       although Banc One Texas Leasing Corp. had already merged with Banc One Acceptance Corp. However, the Bank
       entities presented proof in their supplemental motion for summary judgment that Banc One Acceptance Corp. became
       the lessor and owner of the vehicle by virtue of its merger with Banc One Texas Leasing Corp. Therefore, the averments
       concerning Banc One Texas Leasing Corp. necessarily apply equally to Banc One Acceptance Corp.
9      The Bank's motion did not specifically address the DTPA counterclaim, although it addressed the factual allegation
       forming the basis of the counterclaim. See Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex.1990) (stating
       defendant moving for summary judgment on ground there is no genuine issue of material fact on essential element of
       plaintiff's claim must identify or address the claim and its elements). However, on appeal, Tello does not challenge the
       summary judgment on his DTPA counterclaim on the ground that the Bank's motion was deficient or the trial court granted
       more relief than requested. See Beathard Joint Venture v. W. Houston Airport Corp., 72 S.W.3d 426, 436 (Tex.App.-
       Texarkana 2002, no pet.) (recognizing appellant must raise an issue on appeal that excess relief was improperly granted
       in summary judgment order); Toonen v. United Servs. Auto. Ass'n., 935 S.W.2d 937, 942 (Tex.App.-San Antonio 1996,
       no writ) (same). Instead, he suggests there was a fact issue on the counterclaim.
10     In his response to the motion for summary judgment, Tello repeated the same general statement to address each
       counterclaim (as well as each affirmative defense). He merely stated that “a genuine issue of material fact exists as to
       [counterclaim/affirmative defense]” and referred to his attached evidence and pleadings.
11     Tello also pleaded the affirmative defense of failure of consideration. However, in his appellate brief, he presents no issue
       or argument addressing this defense. Therefore, he has waived any contention that the evidence raised a genuine issue
       of material fact on this defense sufficient to defeat summary judgment. See Jacobs, 65 S.W.3d at 655–56.
12     Contrary to our dissenting colleague's suggestion, the inadequacy in Tello's brief with respect to this issue is not just
       a lack of “well-organized and sharply focused writing,” but a failure to advance any substantive analysis and cite any
       authority or evidence to inform us why he was allegedly entitled to offset the Bank's damages or otherwise defeat the
       summary judgment based on his return of the vehicle to Randall Reed Ford. Moreover, the dissent would reverse the
       summary judgment because the Bank omitted the back of the lease from its summary judgment evidence and a missing
       provision may address the effect of Tello's return of the vehicle to Randall Reed Ford on his liability to the Bank or the
       amount of its damages. However, Tello does not complain that the back of the lease was omitted, much less assert that
       any missing provisions may address his return of the vehicle. The fact that the dissent advocates reversal on this basis,
       when Tello makes no such argument, merely accentuates that his contention is inadequately briefed.
13     In addition, the requirement that issues be expressly presented by written answer or response refers to an answer or
       response to the motion for summary judgment, not to the pleadings. See Wheeler v. Security State Bank, N.A., 159
       S.W.3d 754, 756 n. 2 (Tex.App.-Texarkana 2005, no pet.) (citing Clear Creek, 589 S.W.2d at 673).
14     Our dissenting colleague advocates reversal because the Bank's own evidence is insufficient to support the damages
       awarded, and the dissent then calculates the damages purportedly supported by its evidence. However, Tello makes no
       such argument challenging the sufficiency of the Bank's motion and evidence. The dissent seems to interpret the following
       statement in Tello's brief as raising this argument: “The motion for summary judgment and its supporting evidence must
       show there is no genuine issue of a material fact and that the movant is entitled to judgment as a matter of law.” We
       cannot construe this single reference to the general standard applicable to every summary judgment motion, without
       any argument concerning, or reference to, the Bank's evidence in this case, as an adequate argument challenging the
       sufficiency of the Bank's motion and evidence to support the damages awarded.



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              13
Tello v. Bank One, N.A., 218 S.W.3d 109 (2007)



15     The dissent also asserts that Tello was not required to raise the issue regarding his return of the vehicle in his summary
       judgment response because he is attacking the conclusiveness of the Bank's motion and evidence. As we have noted,
       Tello has not adequately presented an argument attacking the conclusiveness of the Bank's motion and evidence. But,
       even if he had, that would be a separate issue than his contention he should nonetheless defeat summary judgment
       based on his own affidavit showing he returned the vehicle. The fact that the dissent (and Tello) must refer to Tello's own
       evidence attached to his response when urging reversal based on his return of the vehicle shows that his contention is
       not an attack on the conclusiveness of the Bank's motion and evidence. Finally, we disagree with the dissent's suggestion
       that, because an omitted provision on the back of the lease may address the effect of Tello's return of the vehicle, his
       contention is merely an attack on the conclusiveness of the Bank's motion and evidence. Even if the Bank had attached
       all the provisions and a missing provision addressed the effect, if any, of Tello's return of the vehicle, such provision
       would have been inconsequential unless Tello “expressly” presented to the trial court his contention that return of the
       vehicle should affect the Bank's entitlement to summary judgment.
1      See majority opinion, at 118.
2      Emphasis added.
3      Emphasis added.


End of Document                                               © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            14
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


                                                                           Reasons for Decision
                    400 S.W.3d 139                                    If an appellant fails to challenge one of the
                Court of Appeals of Texas,                            grounds for summary judgment, an appellate
                          Dallas.                                     court may affirm the summary judgment on that
                                                                      ground alone.
       TREVINO & ASSOCIATES MECHANICAL,
         L.P., and Mike Trevino, Sr., Appellants                      6 Cases that cite this headnote
                           v.
        The FROST NATIONAL BANK, Appellee.                      [3]   Appeal and Error
                                                                         On motion for judgment
        No. 05–11–00650–CV.         |     April 9, 2013.
                                                                      The issues determined on a motion for partial
Synopsis                                                              summary judgment are final, even though the
Background: Commercial lender brought action against                  judgment is interlocutory. Vernon's Ann.Texas
borrower and its principal for breach of contract. Borrower           Rules Civ.Proc., Rule 166a(e).
brought counterclaim for fraud, breach of fiduciary duty, and
                                                                      1 Cases that cite this headnote
promissory estoppel, among other claims. The 14th District
Court, Dallas County, Eric Moye, J., entered partial summary
judgment in favor of lender for approximately $1.76 million     [4]   Judgment
and ordered that borrower take nothing on the counterclaims.              Construction and operation
Borrower appealed.                                                    After an interlocutory, partial summary
                                                                      judgment is granted, the issues it decides cannot
                                                                      be litigated further, unless the trial court sets the
                                                                      partial summary judgment aside or the summary
Holdings: The Court of Appeals, Lang, J., held that:
                                                                      judgment is reversed on appeal.
[1] partial no evidence summary judgment in favor of lender           2 Cases that cite this headnote
was warranted on borrower's breach of contract counterclaim,
and
                                                                [5]   Judgment
[2] borrower failed to establish detrimental reliance element             Construction and operation
of promissory estoppel claim against lender.                          The issues decided by an interlocutory, partial
                                                                      summary judgment cannot be relitigated further,
                                                                      unless the trial court sets that order aside.
Affirmed.
                                                                      1 Cases that cite this headnote


 West Headnotes (18)                                            [6]   Judgment
                                                                          Partial summary judgment
                                                                      Partial no evidence summary judgment in
 [1]    Appeal and Error
                                                                      favor of commercial lender was warranted
           Reasons for Decision
                                                                      on borrower's breach of contract counterclaim,
        An appellant must attack every ground relied on               where borrower failed to challenge every
        for which summary judgment could have been                    possible ground for the summary judgment.
        granted in order to obtain a reversal.
                                                                      Cases that cite this headnote
        6 Cases that cite this headnote

                                                                [7]   Fraud
 [2]    Appeal and Error



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            1
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


             Effect of existence of remedy by action on                  Future events; promissory estoppel
        contract                                                    To show detrimental reliance as required for
        A plaintiff seeks to recover for negligent                  promissory estoppel claim, the plaintiff must
        misrepresentation and fraud what it would have              demonstrate that he materially changed his
        gained had the alleged oral agreement been                  position in reliance on the promise.
        performed; the gist of the cause of action is the
        breach of the alleged oral promise.                         2 Cases that cite this headnote

        Cases that cite this headnote
                                                             [13]   Estoppel
                                                                        Future events; promissory estoppel
 [8]    Judgment                                                    Commercial borrower failed to establish
            Partial summary judgment                                detrimental reliance element of promissory
        Partial no evidence summary judgment in                     estoppel claim against lender, although borrower
        favor of commercial lender was warranted                    claimed that lender orally renewed and extended
        on borrower's counterclaim for negligent                    the business loan for three months and, thus,
        misrepresentation and fraud, where borrower                 it continued to deposit money in its operating
        failed to challenge every possible ground for the           account, which was also with lender; continuing
        summary judgment.                                           to deposit money in the account did not amount
                                                                    to a material change in borrower's position as a
        Cases that cite this headnote                               result of lender's promise.

                                                                    Cases that cite this headnote
 [9]    Estoppel
            Future events; promissory estoppel
        Generally, promissory estoppel is a viable           [14]   Conversion and Civil Theft
        alternative to breach of contract.                              In general; nature and elements
                                                                    To establish a claim for conversion, a plaintiff
        1 Cases that cite this headnote                             must prove that: (1) plaintiff owned or had
                                                                    possession of the property or entitlement to
 [10]   Estoppel                                                    possession; (2) the defendant unlawfully and
            Future events; promissory estoppel                      without authorization assumed and exercised
                                                                    control over the property to the exclusion of,
        Promissory estoppel is not applicable to a
                                                                    or inconsistent with, the plaintiff's rights as an
        promise covered by a valid contract between the
                                                                    owner; (3) the plaintiff demanded return of the
        parties; however, promissory estoppel will apply
                                                                    property; and (4) the defendant refused to return
        to a promise outside a contract.
                                                                    the property.
        4 Cases that cite this headnote
                                                                    Cases that cite this headnote

 [11]   Estoppel
                                                             [15]   Banks and Banking
            Future events; promissory estoppel
                                                                        Relation between bank and depositor in
        The elements of a promissory estoppel claim
                                                                    general
        are: (1) a promise, (2) foreseeability of reliance
                                                                    The relationship of a bank to a general depositor
        thereon by the promisor, and (3) substantial
                                                                    is contractual, that of debtor-creditor arising
        detrimental reliance by the promisee.
                                                                    from the depository contract.
        4 Cases that cite this headnote
                                                                    1 Cases that cite this headnote

 [12]   Estoppel
                                                             [16]   Banks and Banking


              © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                        2
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


              Application of Deposits to Debts Due Bank             appeal, claiming the trial court erred when it (1) granted Frost
         or Set-Off by Bank                                         Bank's motion for partial no-evidence summary judgment
         The nature of the relationship of a bank to a              on its counterclaims for breach of contract, promissory
         general depositor authorizes a bank to offset              estoppel, negligent misrepresentation, fraud, conversion, and
         deposits against a debt of equal amount owed               wrongful setoff; and (2) granted Frost Bank's motion for
         the bank by that depositor, assuming proof of the          partial traditional summary judgment on its counterclaims as
         amount of the debt owed.                                   to damages. Trevino did not file a brief in this appeal.

         1 Cases that cite this headnote                            We affirm the trial court's final judgment as to Trevino
                                                                    because he did not file a brief on appeal. We conclude
                                                                    the trial court did not err when it granted Frost Bank's
 [17]    Banks and Banking
                                                                    motion for partial no-evidence summary judgment on TAM's
             Applying deposits to debts not matured
                                                                    counterclaims. Based on this conclusion, we need not address
         A bank is not authorized to offset deposits, unless
                                                                    TAM's claim that the trial court erred when it granted Frost
         there is a mature or past-due debt owed by the
                                                                    Bank's motion for partial traditional summary judgment on
         depositor to the bank.
                                                                    TAM's counterclaims. The trial court's final judgment is
         Cases that cite this headnote                              affirmed.


 [18]    Banks and Banking
             Actions by Depositors or Others for                     I. FACTUAL AND PROCEDURAL BACKGROUND
         Deposits
                                                                    TAM is a mechanical contractor that provides plumbing,
         A bank depositor's remedy for the wrongful                 heating, air conditioning, piping, and duct work. Frost Bank
         offset of a general account is an action for return        provided TAM with a line of credit to allow it to complete
         of the funds for breach of the depository contract.        its construction projects and expand its business. In 2006,
                                                                    TAM and Frost Bank signed a business loan agreement for a
         1 Cases that cite this headnote
                                                                    $3.5 million line of credit that was secured by a commercial
                                                                    security agreement. The business loan agreement matured in
                                                                    2008, but was renewed and extended to April 30, 2009. On
                                                                    May 12, 2009, Frost Bank sent TAM a notice stating that its
Attorneys and Law Firms                                             line of credit had matured and the amount due was stated. That
                                                                    sum was $2,309,749.89.
*141 Kevin Bernard Wiggins, White & Wiggins, L.L.P.,
Eric Donald Walker, Carlos Morales, R. Jeronimo Valdez, J.,
                                                                    On June 4, 2009, Trevino met with representatives of Frost
Dallas, TX, for Appellants.
                                                                    Bank. At the conclusion of the meeting, Trevino believed
Michael J. Quilling, Quilling Selander Lownds Winslett &            that Frost Bank had orally renewed and extended the business
Moser, PC, Michael D. Clark, Dallas, TX, for Appellee.              loan agreement for three months or until July 30, 2009, and
                                                                    he had until June 30, 2009, to provide Frost Bank with a
Before Justices BRIDGES, LANG and RICHTER. 1                        business plan. No written renewal and extension or other
                                                                    written agreement was signed by the parties at that time.


                          OPINION                                   Subsequent to the above meeting, Frost Bank sent TAM
                                                                    a written notice dated June 19, 2009, stating the maturity
Opinion by Justice LANG.                                            date of the loan as June 30, 2009 and that TAM's line of
                                                                    credit was due on that date. Also, on June 19, 2009, Frost
Trevino & Associates Mechanical, L.P., (TAM) and Mike               Bank setoff from TAM's account at Frost Bank $660,089.17,
Trevino, Sr., a/k/a Miguel Trevino, Sr., appeal the trial court's   which constituted all of the funds in TAM's *142 operating
final judgment dismissing all of its counterclaims against The      account. Frost Bank sent TAM written notice of the setoff
Frost National Bank (Frost Bank). TAM raises two issues on          on June 22, 2009. That notice listed the maturity date of the



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              3
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


loan as April 30, 2009. According to TAM, Frost Bank's           in the record on appeal. The trial court granted that motion
actions caused TAM to lay off its employees and resulted in      and ordered that TAM and Trevino take-nothing on those
its inability to complete eight ongoing construction projects.   counterclaims.
Liberty Mutual was surety for those projects and incurred the
cost of completion. As a result, Liberty Mutual sued TAM         Second, Frost Bank filed a motion for partial traditional and
and obtained a judgment against it for $6,198,186.00 plus pre-   no-evidence summary judgment on all of Trevino's remaining
and post-judgment interest.                                      counterclaims. There is no response to this motion by Trevino
                                                                 in the record on appeal. The trial court granted that motion
Frost Bank sued TAM for breach of contract respecting            and ordered that Trevino take-nothing on his counterclaims.
the loan and Trevino on his personal guaranty. Frost Bank
claimed it was owed $1,741,469.88, and sought pre- and           Third, Frost Bank filed a motion for partial traditional and
post-judgment interest and its attorney's fees. It alleged       no-evidence summary judgment on TAM's counterclaims for
that the loan agreement with TAM matured by its own              fraud, fraudulent inducement, negligent misrepresentation,
terms on April 30, 2009, at which time the outstanding           breach of contract, promissory estoppel, conversion, and
principal and interest became due and payable. TAM and           wrongful setoff. This motion for partial traditional summary
Trevino answered the lawsuit generally denying the claims        judgment asserted that TAM's counterclaims lacked merit, as
and asserting the affirmative defenses of estoppel, laches,      a matter of law, because Frost Bank did not cause TAM's
accord and satisfaction, failure of consideration, waiver,       alleged damages since *143 the evidence shows that TAM's
failure to satisfy all conditions precedent to recovery,         liabilities exceeded its assets before Frost Bank setoff TAM's
failure to mitigate damages, ratification, and payment and       operating account.
release. They also alleged counterclaims sounding in fraud,
fraudulent inducement, negligent misrepresentation, breach       TAM filed a response to Frost Bank's final motion for partial
of fiduciary duty, special relationship, breach of contract,     traditional and no-evidence summary judgment, claiming
promissory estoppel, conversion, and wrongful setoff, and        that in its response it raised an issue of material fact
sought damages and attorney's fees. All of the counterclaims     as to its counterclaims for negligent misrepresentation,
were based on the allegation that Frost Bank orally renewed      fraud, breach of contract, promissory estoppel, conversion,
and extended the note.                                           wrongful setoff, and damages. TAM did not respond to Frost
                                                                 Bank's motion for partial no-evidence summary judgment on
Frost Bank moved for partial traditional summary judgment        its counterclaim for fraudulent inducement. Also, TAM did
on its breach of contract claim against TAM and Trevino          not file a motion asking the trial court to reconsider the prior
arguing the loan agreement with TAM and Trevino expired          partial traditional summary judgment rendered in favor of
by its own terms. The record contains no response by TAM         Frost Bank on its breach of contract claim. However, TAM
and Trevino to that motion. The trial court granted partial      filed a motion to strike the affidavit of Frost Bank's senior vice
summary judgment on Frost Bank's breach of contract claim        president, which was filed in support of its motions for partial
and awarded it $1,758,322.48 in damages, pre-judgment            traditional and no-evidence summary judgment on TAM's
interest, and attorney's fees. See TEX.R. CIV. P. 166a(e).       counterclaims. There is no ruling in the record on that motion.

Frost Bank answered the counterclaims of TAM and                 Frost Bank filed a reply to TAM's summary judgment
Trevinio, generally denying the counterclaims, asserting the     response that included an objection to some of TAM's
affirmative defense of failure of consideration, and seeking     summary judgment evidence. Specifically, Frost Bank
an offset and reduction of any amount awarded to TAM from        objected to the judgment, original petition, and motion for
the amount already awarded to Frost Bank on its breach of        summary judgment filed in the suit by Liberty Mutual against
contract claim. Then, Frost Bank filed a series of motions for   TAM as being unauthenticated hearsay. The record does not
partial summary judgment, both traditional and no-evidence.      show the trial court ruled on Frost Bank's objection. In the
                                                                 trial court's final judgment, rendered in favor of Frost Bank,
First, Frost Bank filed a motion for partial traditional and     the trial court stated it granted Frost Bank's motion for partial
no-evidence summary judgment on TAM and Trevino's                traditional and no-evidence summary judgment on TAM's
counterclaims for breach of fiduciary duty and special           counterclaims and incorporated its previous, partial summary
relationship. There is no response by either TAM or Trevino      judgment orders.



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              4
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


                                                                 performed or was excused from performing under the alleged
In its brief on appeal, TAM specifically challenges only the     oral contract because it admits that it never submitted the
portion of the trial court's final judgment that granted Frost   required business plan.
Bank's motion for partial no-evidence summary judgment
on TAM's counterclaims for breach of contract, promissory
estoppel, negligent misrepresentation, fraud, conversion, and
                                                                                     1. Standard of Review
wrongful setoff, and partial traditional motion for summary
judgment as to damages. TAM does not challenge the trial          [1]    [2] An appellant must attack every ground relied
court's partial traditional summary judgment on Frost Bank's     on for which summary judgment could have been granted
breach of contract claim or on TAM's counterclaims for           in order to obtain a reversal. See Malooly Bros., Inc. v.
breach of fiduciary duty, special relationship, and fraudulent   Napier, 461 S.W.2d 119, 121 (Tex.1970); Worldwide Asset
inducement.                                                      Purchasing, LLC v. Rent–A–Center E., Inc., 290 S.W.3d 554,
                                                                 569 (Tex.App.-Dallas 2009, no pet.). If an appellant fails
                                                                 to challenge one of the grounds for summary judgment, an
         II. JUDGMENT AGAINST TREVINO                            appellate court may affirm the summary judgment on that
                                                                 ground alone. See Worldwide Asset, 290 S.W.3d at 569.
TAM and Trevino filed a joint notice of appeal of the trial
court's final judgment. However, Trevino did not file a brief
on appeal and TAM's brief does not state or otherwise indicate
                                                                                       2. Applicable Law
that it was filed on behalf of Trevino. Accordingly, we affirm
the trial court's final judgment as to Trevino.                   [3]    [4] The issues determined on a motion for partial
                                                                 summary judgment are final, even though the judgment is
                                                                 interlocutory. Martin v. First Republic Bank, Fort Worth,
             III. SUMMARY JUDGMENT                               N.S., 799 S.W.2d 482, 488 (Tex.App.-Fort Worth 1990, writ
            ON TAM'S COUNTERCLAIMS                               denied); Linder v. Valero Transmission Co., 736 S.W.2d
                                                                 807, 810 (Tex.App.-Corpus Christi 1987, writ ref'd n.r.e.)
In issue one, TAM argues the trial court erred when it           (clear purpose of former version of Texas Rule of Civil
granted Frost Bank's motion for partial no-evidence summary      Procedure 166a(e) 2 is to make issues determined in motion
judgment on its counterclaims for breach of contract,            for summary judgment final); Tex. United Ins. Co. v.
negligent misrepresentation, fraud, promissory estoppel,         Burt Ford Enters., Inc., 703 S.W.2d 828, 833 (Tex.App.-
conversion, and wrongful setoff.                                 Tyler 1986, no writ) (discussing former version of rule
                                                                 166a(e)); Cunningham v. Eastham, 465 S.W.2d 189, 192
                                                                 (Tex.Civ.App.-Houston [1st Dist.] 1971, writ ref'd n.r.e.)
                   A. Breach of Contract                         (same); City of Houston v. Socony Mobil Oil Co., 421
                                                                 S.W.2d 427, 430 (Tex.Civ.App.-Houston [1st Dist.] 1967,
TAM argues on appeal that its counterclaim for breach of         writ ref'd n.r.e.) (same). 3 After an interlocutory, partial
contract was supported by summary judgment evidence that         summary judgment is granted, the issues it decides cannot be
shows Frost Bank orally renewed and extended the loan            litigated further, unless the trial court sets the partial summary
agreement, agreed not to setoff TAM's operating account,         judgment aside or the summary judgment is reversed on
and agreed to negotiate in good faith while TAM prepared         appeal. Martin, 799 S.W.2d at 488–89; Linder, 736 S.W.2d
its business plan. In its appellate brief, Frost Bank asserts    at 810 (issues decided cannot be further litigated unless
“[TAM] does not challenge the contract documents or the          interlocutory summary judgment set aside by trial court or
money judgment in favor *144 of [Frost Bank]. The express        reversed on appeal); Cunningham, 465 S.W.2d at 192 (same);
language of those uncontested contracts controls the issues
                                                                 Socony, 421 S.W.2d at 430 (same). 4
on [TAM's] counterclaims and is dispositive of all issues in
the case.” Further, Frost Bank responds that TAM cannot
show an oral contract was formed at the June 4, 2009 meeting
and therefore, there is no breach. Also, Frost Bank argues                  3. Application of the Law to the Facts
that TAM failed to produce any evidence demonstrating it


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              5
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


 [5] At this juncture, we review whether TAM has challenged           appellant did not raise as error the trial court's interlocutory,
all grounds that could support the trial court's final judgment       partial summary judgment, the propriety of that partial
that granted partial no-evidence *145 summary judgment                summary judgment is not considered on appeal). Applying
on TAM's breach of contract counterclaim. As indicated                the appropriate standard of review, we must conclude the trial
above, Frost Bank moved for partial traditional summary               court did not err when it granted Frost Bank's motion for
judgment on its breach of contract claim against TAM arguing          partial no-evidence summary judgment on TAM's breach of
it was an “undisputed” material fact that “the loan agreement         contract counterclaim because TAM has not challenged every
matured by its own terms on April 30, 2009, at which                  possible ground for the trial court's summary judgment. See
time all outstanding principal and interest became fully due          Malooly, 461 S.W.2d at 121; Worldwide Asset, 290 S.W.3d
and payable.” The record contains no response by TAM                  at 569.
and Trevino to that motion. The trial court granted partial
traditional summary judgment on Frost Bank's breach of
contract claim and awarded it $1,758,322.48 in damages. The
                                                                              B. Negligent Misrepresentation and Fraud
partial traditional summary judgment expressly found, inter
alia, both Trevino and TAM were “jointly and severally”                [7] [8] Where, as here, a plaintiff seeks “to recover [for
liable for damages awarded and Frost Bank's “lien interest            negligent misrepresentation and fraud] what [it] would have
in [TAM's] business equipment and accounts receivable are             gained had the [alleged oral agreement] been performed, the
hereby foreclosed.” As a matter of law, the partial traditional       gist of [the] cause of action is the breach of the alleged
summary judgment on Frost Bank's breach of contract claim             oral promise.” See 1001 McKinney Ltd. v. Credit Suisse
fixed TAM's liability. See Tex. United, 703 S.W.2d at 833;            First Boston Mortg. Capital, 192 S.W.3d 20, 29 (Tex.App.-
Socony, 421 S.W.2d at 430. The issues decided by an                   Houston [14th Dist.] 2005, pet. denied). Because TAM's
interlocutory, partial summary judgment cannot be relitigated         negligent *146 misrepresentation and fraud counterclaims
further, unless the trial court sets that order aside. See            arise from the alleged oral agreement to extend the loan, based
Martin, 799 S.W.2d at 488–89; Linder, 736 S.W.2d at 810;              on our resolution of TAM's breach of contract counterclaim,
Cunningham, 465 S.W.2d at 192; Socony, 421 S.W.2d at 430.             we conclude the trial court did not err when it granted Frost
                                                                      Bank's motion for partial no-evidence summary judgment on
Then, Frost Bank sought partial no-evidence summary                   those counterclaims. See 1001 McKinney, 192 S.W.3d at 29.
judgment on TAM's remaining counterclaims, including its
counterclaim for breach of contract. In an attempt to revisit
the facts that were established, as a matter of law, by the
trial court's partial summary judgment order on Frost Bank's                             C. Promissory Estoppel
breach of contract claim, TAM responded to the motion
                                                                      TAM argues that its counterclaim for promissory estoppel
for partial no-evidence summary judgment on its breach
                                                                      was supported by summary judgment evidence. Frost Bank
of contract counterclaim by attaching evidence it claimed
                                                                      does not specifically respond on appeal to TAM's argument
demonstrated the loan agreement was orally renewed and
                                                                      relating to the partial no-evidence summary judgment on its
extended. TAM did not file a motion to reconsider, modify,
                                                                      promissory estoppel counterclaim. However, in its motion for
or set aside the partial traditional summary judgment on Frost
                                                                      partial no-evidence summary judgment, Frost Bank argued
Bank's breach of contract claim. There is nothing in the
                                                                      that TAM could produce no evidence supporting any element
record indicating the trial court set aside the partial traditional
                                                                      of its promissory estoppel counterclaim. In its reply to TAM's
summary judgment order on Frost Bank's breach of contract
                                                                      response to its motion for partial no-evidence summary
claim. Further, the trial court granted Frost Bank's motion
                                                                      judgment, Frost Bank argued TAM failed to raise any
for partial no-evidence summary judgment on TAM's breach
                                                                      evidence showing that it made any representation on which
of contract counterclaim. That is consistent with the trial
                                                                      TAM justifiably relied or prove causation.
court's earlier partial traditional summary judgment rendered
on Frost Bank's breach of contract claim.

 [6] On appeal, TAM does not challenge the trial court's                                    1. Applicable Law
partial traditional summary judgment on Frost Bank's breach
                                                                       [9] [10] [11] [12] Generally, promissory estoppel is a
of contract claim. See, e.g., Socony, 421 S.W.2d at 430 (when
                                                                      viable alternative to breach of contract. Allied Vista, Inc. v.


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 6
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


Holt, 987 S.W.2d 138, 141 (Tex.App.-Houston [14th Dist.]                      operations. In addition, Frost [Bank's]
1999, pet. denied). Promissory estoppel is not applicable                     representations prevented TAM from
to a promise covered by a valid contract between the                          seeking additional funding *147
parties. However, promissory estoppel will apply to a promise                 from another source to avoid being put
outside a contract. See Richter v. Wagner Oil Co., 90                         out of business.
S.W.3d 890, 899 (Tex.App.-San Antonio 2002, no pet.). The
elements of a promissory estoppel claim are (1) a promise,        (Citations omitted). In support of its argument that it
(2) foreseeability of reliance thereon by the promisor, and       deposited money into its operating account in June 2009,
(3) substantial detrimental reliance by the promisee. See         TAM referred the trial court to Trevino's affidavit, which
English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983); Fretz         states, “[TAM] further provided assurances to Frost [Bank]
Constr. Co. v. S. Nat'l Bank of Houston, 626 S.W.2d 478,          that its credit balance would be paid down from its accounts
480 (Tex.1981). To show detrimental reliance, the plaintiff       receivables and outstanding retainage and that TAM would
must demonstrate that he materially changed his position in       continue its banking relationship with Frost [Bank],” and a
reliance on the promise. See English, 660 S.W.2d at 524           bank statement for TAM's operating account showing that
(finding no promissory estoppel when plaintiff could not          TAM made several deposits in June 2009. TAM did not
show he would not have taken his detrimental actions if           cite any summary judgment testimony or evidence to support
defendant had not made promise); Sandel v. ATP Oil & Gas          its claim that Frost Bank's promises prevented TAM from
Corp., 243 S.W.3d 749, 753 (Tex.App.-Houston [14th Dist.]         seeking funding from another source or that he continued to
2007, no pet.) (demonstrating failure to seek another job was     make deposits at Frost Bank in June 2009 because of the
insufficient to show detrimental reliance, employee required      alleged oral representation.
to show that but for stock option letter, he would have stopped
working for employer).                                            In TAM's brief on appeal, TAM argued it raised evidence of
                                                                  a fact issue on its promissory estoppel counterclaim as to the
                                                                  element of reliance, claiming:

          2. Application of the Law to the Facts                              The record revealed that Trevino
                                                                              testified by deposition and affidavit
In TAM's second amended original answer and                                   that because of Frost [Bank's]
counterclaims, TAM alleged it “reasonably and substantially                   promises, TAM continued its banking
relied, to its detriment, on Frost [Bank's] promises—which is                 relationship with Frost [Bank] and
evidenced by TAM's substantial cash deposit made in June                      continued to deposit money into
2009. Because of the nature of Frost [Bank's] promise, TAM's                  its Frost [Bank] operating account.
reliance was both reasonable and substantial.” In its response                Acting in good faith, TAM was
to Frost Bank's motion for partial no-evidence summary                        preparing its business proposal, but
judgment, TAM argued it reasonably and substantially relied                   before it had a chance to present it
on Frost Bank's promise to its detriment as follows:                          to Frost [Bank], Frost [Bank] setoff
                                                                              its account. There was no evidence in
            Because of Frost [Bank's] promises,
                                                                              the record to suggest TAM should not
            TAM        continued    its     banking
                                                                              have relied on the promises. Instead,
            relationship with Frost [Bank] and
                                                                              the parties' prior actions lent credibility
            continued to deposit money into
                                                                              to Frost [Bank's] words at that time.
            its Frost [Bank] operating account.
            Acting in good faith, TAM was                         (Record citations omitted). To support this argument, TAM
            preparing its business proposal, but                  cites to its summary judgment evidence of a bank statement
            before it had a chance to present                     for TAM's operating account that shows TAM made several
            it to Frost [Bank], Frost [Bank]                      deposits in June 2009.
            setoff its account. As a result, TAM
            never received the retainage it planned                [13] In summary, TAM contends that it detrimentally relied
            to use to pay down its line of                        on Frost Bank's promise to renew and extend the loan
            credit and it was forced to cease                     agreement by continuing to deposit money in its operating



               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                           7
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


account, which was also with Frost Bank. However, even           precluding partial no-evidence summary judgment on its
had we concluded Frost Bank did orally promise to renew          counterclaim for conversion.
and extend the loan agreement, TAM falls short of its
burden because it offered no evidence of detrimental reliance.
Continuing to deposit money in its operating account does
                                                                                     E. Wrongful Setoff
not amount to a material change in TAM's position as a
result of Frost Bank's promise. See English, 660 S.W.2d at       Finally, TAM contends the trial court erred when it
524 (finding no promissory estoppel when plaintiff could         granted Frost Bank's motion for partial no-evidence summary
not show he would not have taken his detrimental actions if      judgment on its counterclaim for wrongful setoff because it
defendant had not made promise); Sandel, 243 S.W.3d at 753       produced evidence raising a fact issue. Specifically, TAM
(demonstrating failure to seek another job was insufficient to   claims its summary judgment evidence shows that Frost Bank
show detrimental reliance, employee required to show that        setoff its account before the loan agreement matured and it
but for stock option letter, he would have stopped working       did not give TAM contemporaneous notice of the setoff.
for employer). Also, TAM argues “There was no evidence
in the record to suggest TAM should not have relied on            [15]     [16]    [17]    [18] The relationship of a bank to a
the promises.” However, to preclude a no-evidence summary        general depositor is contractual, that of debtor-creditor arising
judgment, it was TAM's burden to produce evidence raising        from the depository contract. See Upper Valley Aviation v.
a fact issue as to each element of each claim in which no-       Mercantile Nat'l Bank, 656 S.W.2d 952, 955 (Tex.App.-
evidence summary judgment was sought. See TEX.R. CIV.            Dallas 1983, writ ref'd n.r.e.); Am. Bank of Waco v. Waco
P. 166a(i); Tex. Integrated Conveyor Sys., Inc. v. Innovative    Airmotive, Inc., 818 S.W.2d 163, 170 (Tex.App.-Waco 1991,
Conveyor Concepts, Inc., 300 S.W.3d 348, 375 (Tex.App.-          writ denied). The nature of the relationship authorizes a bank
Dallas 2009, pet. denied); RTLC AG Prods., Inc. v. Treatment     to offset deposits against a debt of equal amount owed the
Equip. Co., 195 S.W.3d 824, 833 (Tex.App.-Dallas 2006,           bank by that depositor, assuming proof of the amount of the
no pet.). We conclude that TAM did not meet its burden           debt owed. See Am. Bank of Waco, 818 S.W.2d at 170. An
to preclude a partial no-evidence summary judgment on its        offset is not authorized unless there is a mature or past-due
promissory estoppel counterclaim.                                debt owed by the depositor to the bank. See Am. Bank of
                                                                 Waco, 818 S.W.2d at 170; see also Bandy v. First State Bank,
                                                                 Overton, Tex., 835 S.W.2d 609, 619 (Tex.1992) (discussing
                       D. Conversion                             claim for wrongful setoff in equity). A depositor's remedy for
                                                                 the wrongful offset of a general account is an action for return
 [14] Next, TAM argues the trial court erred when it             of the funds for breach of the depository contract. See Upper
granted Frost Bank's motion *148 for partial no-evidence         Valley Aviation, 656 S.W.2d at 955; Am. Bank of Waco, 818
summary judgment on TAM's counterclaim for conversion.           S.W.2d at 170.
Specifically, TAM claims that Frost Bank's setoff of the
funds in TAM's operating account constituted conversion. To      TAM does not dispute that Frost Bank had a contractual
establish a claim for conversion, a plaintiff must prove that:   right of setoff. However, TAM's claim for wrongful setoff is
(1) the plaintiff owned or had possession of the property or     premised on the viability of one of its other counterclaims.
entitlement to possession; (2) the defendant unlawfully and      Based on our resolution of the no-evidence motion for partial
without authorization assumed and exercised control over         summary judgment as to TAM's counterclaims for breach of
the property to the exclusion of, or inconsistent with, the      contract, negligent misrepresentation, fraud, and promissory
plaintiff's rights as an owner; (3) the plaintiff demanded       estoppel, we need not address TAM's argument that it raised
return of the property; and (4) the defendant refused to         an issue of fact precluding no-evidence summary judgment
return the property. Tex. Integrated, 300 S.W.3d at 365–         on its counterclaim for wrongful setoff.
66. TAM's claim for conversion is premised on one of its
other counterclaims surviving Frost Bank's motion for partial
no-evidence summary judgment. Based on our resolution
                                                                      F. No–Evidence Summary Judgment Conclusion
of TAM's counterclaims for breach of contract, negligent
misrepresentation, fraud, and promissory estoppel, we need       We conclude the trial court did not err when it granted Frost
not address TAM's argument that it raised an issue of fact       Bank's motion for partial no-evidence summary judgment


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                         8
Trevino & Associates Mechanical, L.P. v. Frost Nat. Bank, 400 S.W.3d 139 (2013)


                                                                     The trial court's final judgment is affirmed as to Trevino
on TAM's counterclaims for breach of contract, negligent
                                                                     because he did not file a brief on appeal. Also, the trial
misrepresentation, fraud, promissory estoppel, conversion,
                                                                     court did not err when it granted partial no-evidence summary
and wrongful setoff. Issue one is decided against TAM.
                                                                     judgment on TAM's counterclaims. Based on this conclusion,
                                                                     we need not address TAM's claim that the trial court erred
                                                                     when it granted frost Bank's motion for partial traditional
        *149 IV. TRADITIONAL SUMMARY                                 summary judgment.
     JUDGMENT ON TAM'S COUNTERCLAIMS
                                                                     The trial court's final judgment is affirmed as to TAM.
In issue two, TAM argues the trial court erred when it granted
Frost Bank's motion for partial traditional summary judgment
as to damages. Based on our resolution of issue one, we need         All Citations
not address this issue.
                                                                     400 S.W.3d 139


                    V. CONCLUSIONS



Footnotes
1      The Hon. Martin E. Richter, retired Justice, sitting by assignment.
2      Effective September 1, 1997, rule 166a(e) was amended by “making minor changes in the wording of that subsection.
       This change was intended simply as a clarification of the existing rule.” Timothy Patton, Summary Judgments in Texas:
       Practice Procedure and Review § 3.03[1] (3d ed. 2012).
3      See also Timothy Patton, Summary Judgments in Texas: Practice Procedure and Review § 3.03[2] (issues determined by
       partial summary judgment are final even though judgment is interlocutory) (3d ed. 2012); 3 Roy W. McDonald & Elaine A.
       Grafton Carlson, Texas Civil Practice § 18:4 (2d ed. 2000) (“A summary judgment order that does not purport to dispose
       of all parties and all issues is interlocutory even though [ ] rule [166a(e) ] anticipates that ordinarily a ruling made under
       it shall be conclusive at the trial with respect to the facts that it specifies.”).
4      See also Patton, § 3.03[2]; 3 McDonald & Carlson, § 18:4 (2d ed. Supp.2012).


End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                9
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)




                    493 S.W.2d 882                                 West Headnotes (12)
             Court of Civil Appeals of Texas,
                       Fort Worth.
                                                                   [1]   Specific Performance
              UNITED COIN METER                                              Discretion of court
           COMPANY, INC. et al., Appellants,                             Specific performance of a contract by a court of
                       v.                                                equity is not a matter of absolute right in the
           JOHNSON-CAMPBELL LUMBER                                       parties demanding it, and applications for such
             COMPANY et al., Appellees.                                  relief are addressed to the sound discretion of the
                                                                         court.
               No. 17394.      |   April 6, 1973.
                                                                         Cases that cite this headnote
Lessees filed suit for specific performance by lessors of two
written contracts relating to right of lessees to maintain coin-
                                                                   [2]   Specific Performance
operated laundry equipment in two apartment complexes
                                                                             Existence of other remedy
owned by lessors and for a mandatory injunction requiring
lessors to reinstall lessees' laundry equipment which had                In order to get specific performance of a contract,
been removed. The District Court, Tarrant County, Ardell                 party seeking it must show that he has no
M. Young, J., rendered judgment for lessors, and lessees                 adequate remedy at law by way of an action
appealed. The Court of Civil Appeals, Brewster, J., held that            for damages for breach of contract, and if an
where lessees who had been engaged in performing contracts               adequate remedy at law is available, then specific
for maintenance of coin-operated laundry equipment in                    performance will not be granted.
lessors' apartment complexes for more than five years
                                                                         5 Cases that cite this headnote
possessed all data needed for proving damages they would
sustain by reason of lessors' breach of contracts, lessees'
president who had many years of experience in business was         [3]   Specific Performance
bound to have known amount of expenses and depreciation                      Contracts Relating to Real Property
incurred by lessees in performing their obligations under                Where a period of several years remained
contracts, amount of damages lessees sustained from breach               before end of term of one of contracts giving
of contracts could be readily proven and only benefit lessees            lessees the right to maintain coin-operated
could get from a performance of contracts for rest of their              laundry equipment in apartment complexes
terms was amount of net profit they would realize from                   owned by lessors and contract called for
complete performance of contracts, plaintiffs had adequate               performance by parties or their representatives
legal remedy at law by way of an action for damages and                  of numerous additional, yet unperformed acts,
were not entitled to specific performance of contracts. The              during that period so that a decree for
Court further held that where term of one of the contracts               specific performance of contracts would require
giving lessees right to install and maintain coin-operated               considerable supervision, contracts possessed
laundry equipment in apartment complex owned by lessors                  features which influenced discretion of court so
had expired while lessees' action for specific performance of            that rule requiring specific performance of a
contracts was on appeal, controversy relating to that contract           contract involving real estate was not applicable
was moot.                                                                to such contracts.

Affirmed in part and reversed in part.                                   Cases that cite this headnote


                                                                   [4]   Specific Performance
                                                                             Inadequacy of remedy at law
                                                                         Where lessees who had been engaged in
                                                                         performing contracts for the maintenance of


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            1
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


       coin-operated laundry equipment in lessors'                 in controversy by a decree capable of present
       apartment complexes for more than five years                performance; it will not decree a party to
       possessed all data needed for proving damages               perform a continuous series of acts extending
       they would sustain by reason of lessors' breach             through a long period of time, requiring constant
       of contracts, lessees' president who had many               supervision by the court.
       years of experience in business was bound to
       have known amount of expense and depreciation               2 Cases that cite this headnote
       incurred by lessees in performing their
       obligations under contracts, amount of damages       [8]    Specific Performance
       lessees sustained from breach of contracts could                 Contracts for continuous acts during long
       be readily proven and only benefit lessees could            period
       get from specific performance of contracts for
                                                                   Where contracts giving lessees the right to
       rest of their terms was amount of net profit
                                                                   maintain coin-operated laundry equipment in
       they would realize from complete performance
                                                                   apartment complexes owned by lessors were
       of contracts, lessees had adequate legal remedy
                                                                   in part executory at time of trial and required
       at law by way of an action for damages and were
                                                                   lessees to install, maintain and repair laundry
       not entitled to specific performance of contracts.
                                                                   machines during remainder of contract terms
       1 Cases that cite this headnote                             and required lessees monthly, throughout the
                                                                   terms, to go to machines, collect money and
                                                                   give apartment owners their part of proceeds
 [5]   Injunction                                                  and where one of contracts had several years
           Recovery of damages                                     yet to run, court could not render a decree for
       When application for injunctive relief has same             specific performance of contracts capable of
       effect as an application for specific performance,          being presently performed that would dispose
       injunctive relief will not be granted where an              of entire controversy; thus, refusal to decree
       action for damages affords an adequate legal                specific performance of contracts was not error.
       remedy.
                                                                   Cases that cite this headnote
       2 Cases that cite this headnote

                                                            [9]    Specific Performance
 [6]   Landlord and Tenant                                             Sufficiency in general
           Actions                                                 Evidence, in lessees' action for specific
       Where lessees were not entitled to specific                 performance of contracts giving them the right
       performance of contracts giving them the right              to maintain coin-operated laundry equipment in
       to maintain coin-operated laundry equipment in              apartment complexes, supported finding that for
       lessors' apartment complexes because lessees                arrangement to be successful and financially
       had adequate remedy at law by way of an action              profitable it was essential that cooperation,
       for damages, lessees were not entitled to an                goodwill and mutual trust and confidence exist
       injunction ordering lessors to re-install lessees'          between lessors and lessees.
       laundry equipment that had been removed.
                                                                   Cases that cite this headnote
       Cases that cite this headnote

                                                            [10]   Specific Performance
 [7]   Specific Performance                                            Subject-matter and terms of contract
            Contracts for continuous acts during long              Evidence, in lessees' action for specific
       period                                                      performance of contract giving them the right
       A court of equity will ordinarily decree specific           to install and maintain coin-operated laundry
       performance only when it can dispose of matter              equipment in apartment complexes, supported



             © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                       2
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


         finding that leases required that corporate lessees       presently owned by the defendants. Plaintiffs also sought a
         perform substantial personal services throughout          mandatory injunction against defendants ordering defendants
         remaining terms of contracts.                             to remove the laundry equipment that is presently on the
                                                                   premises involved and to reinstall on such property the
         Cases that cite this headnote                             laundry equipment belonging to plaintiffs that had been
                                                                   removed. The plaintiffs did not seek in this case to recover
 [11]    Specific Performance                                      damages.
             Requisites and validity in general
                                                                   The defendant, Johnson-Campbell Lumber Company, is a
         Where terms provided for in a contract have               partnership, and the defendant, Ralph Campbell, is the
         come to an end, court can no longer order                 managing partner.
         specific performance of contract.
                                                                   At the time of trial defendants were the owners of a 42-unit
         Cases that cite this headnote                             apartment complex located at 2231 Capri Drive in Fort Worth
                                                                   and of another apartment complex located in Euless, Texas,
 [12]    Appeal and Error                                          at 1450 Sagebrush Trail.
            Review of specific questions in general
                                                                   On February 11, 1966, a former owner of the apartment
         Where term of one of two contracts giving
                                                                   units located on Capri Drive entered into a written contract
         lessees right to install and maintain coin-
                                                                   with United Coin Meter Company wherein the owner was
         operated laundry equipment in apartment
                                                                   referred to as lessor and the Coin Company was referred
         complex owned by lessors had expired while
                                                                   to as lessee. The agreement provided that lessee hires from
         lessees' action for specific performance of
                                                                   lessor the laundry room on the premises described therein
         contracts was on appeal, controversy relating to
                                                                   for a term of five years from date. Lessee was thereby given
         that contract was moot.
                                                                    *885 the right of exclusive installation and operation of
         1 Cases that cite this headnote                           coin-operated laundry equipment on the apartment premises
                                                                   for which lessee agreed to pay lessor of the gross receipts
                                                                   taken from the equipment on a monthly basis 30% Thereof as
                                                                   the total lease fee.

Attorneys and Law Firms                                            The agreement required lessee to maintain public liability
                                                                   insurance without expense to lessor.
*884 Abney, Burleson, Bondies, Conner & Mills and Phil
Burleson, Dallas, for appellants.                                  The agreement provided that lessor shall furnish gas, water
                                                                   and electricity and shall clean and maintain the premises
Loe & Warren and H. J. Loe, Fort Worth, for appellees.
                                                                   without expense to lessee. Under the agreement lessee was
                                                                   obligated to service, maintain and repair the equipment that it
                                                                   installs without expense to lessor.
                          OPINION
                                                                   Lessee was given the right of ingress and egress during the
BREWSTER, Justice.                                                 term provided for. The agreement provided that it would be
                                                                   binding on the parties and their heirs and assigns.
The trial court rendered judgment for the defendants,
Johnson-Campbell Lumber Company, a partnership, and                This agreement further provided that it would be
Ralph G. Campbell, to the effect that plaintiffs take nothing by   automatically renewed for the same period of time (5 years)
their suit and the plaintiffs, United Coin Meter Company, Inc.,    unless cancelled by either party in writing 30 days prior to its
and United Coin Meter Company have brought this appeal.            expiration.
The plaintiffs sued for specific performance by the defendants     On December 14, 1965, a prior owner of the apartments on
of two separate and distinct written contract relating to the      Sagebrush Trail in Euless, executed a similar agreement with
right of plaintiffs to put and keep coin-operated laundry          United Coin Meter Company.
equipment in two different apartment complexes that are


                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             3
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


                                                                   and confidence exist *886 between the parties; that the
It provided that owner leased to Coin Company all laundry          agreements require Coin Company to perform substantial
space in this apartment project for the purpose of installing,     services; that plaintiffs did not seek to recover damages and
maintaining and servicing a special washing, drying and            offered no evidence trying to prove their damages.
laundry equipment system for a term of five years, ending
December 13, 1970.                                                 The trial court concluded that defendants breached the
                                                                   agreement; that plaintiffs failed to show that they had
This lease provided that it would continue in force for an         no adequate remedy at law; plaintiffs failed to show that
additional Two years unless notice of cancellation in writing      irreparable injury would result if they were denied specific
by owner was given to Coin Company not less than 60 days           performance and a mandatory injunction; and that the trial
before the end of the original term of the agreement.              court concludes, in the exercise of its discretion, that the relief
                                                                   plaintiffs sought should not be granted.
By the agreement the Coin Company was obliged to furnish
the investment necessary to equip the laundry room with            Plaintiffs had not breached the agreement at the time
washing machines and drying equipment and to service the           defendant took over the laundry rooms.
equipment and keep it in repair during term of the contract and
to pay owner 35% Of the gross income from the equipment            The evidence showed that defendants acquired the Capri
monthly. Coin Company also agreed to furnish at its expense        Drive apartments in 1967 and acquired the Sagebrush Trail
public liability insurance protecting from suits arising from      apartments in 1968. On those dates the Coin Company
operating the equipment. Coin Company also agreed to               equipment was already located in the laundry rooms of both
furnish necessary advertising and to demonstrate and instruct      apartment units under the terms of these agreements.
tenants in the use of the equipment.
                                                                   The evidence shows that United Coin Meter Company
The apartment owner agreed to permit Coin Company                  dissolved in April, 1969, at the time that Raymond Johnson
employees ingress and egress during reasonable hours               bought out the interests of people named Ford. A successor
for purpose of making installations, inspections, servicing        corporation, which was the other plaintiff, was formed and
equipment and removing coins. The owner agreed not to              all the assets of the original Coin Company, including its
install or let others install similar equipment on the apartment   interests in the two contracts here involved, were transferred
premises. Owner agreed to promptly report to Coin Company          to this new corporation which is now United Coin Meter
the need for service and to keep the laundry space clean.          Company, Inc.

It will be noted that the five year term of this last agreement    The basic contentions, as we understand them, in plaintiffs'
ended on December 13, 1970, and that the agreement only            first four points are: the two written instruments that plaintiffs
provided for one renewal term and that was for Two years.          seek to specifically enforce are actually leases of real estate;
This two year renewal term expired on December 13, 1972,           since defendants breached the leases, plaintiffs are entitled
while this case was on appeal.                                     to have them specifically enforced as a matter of right and
                                                                   as a matter of law under the proof made; that since the
The agreement relating to the apartments on Capri Drive was        written contracts were leases of realty, and since defendants
for a term of five years and it provided for a renewal of          breached them, it was not necessary in this case, to be
one five year term. That renewal term will not expire until        entitled to have the leases specifically enforced and to get the
February 11, 1976.                                                 mandatory injunction sought, that plaintiffs prove that they
                                                                   have no adequate remedy at law and that they will suffer
This was a non-jury trial. The court's findings of fact provided
                                                                   irreparable injury; and that the question of whether or not
in substance that: while both agreements were in full force on
                                                                   specific performance and a mandatory injunction should be
May 14, 1971, the defendants, owners, took possession of the
                                                                   granted by the trial court was not under the facts of this
laundry rooms in both apartment units; the machines involved
                                                                   case a matter that lay within the discretion of the trial court
are coin-operated and under the agreement Coin Company
                                                                   and that plaintiffs, on proving that defendants breached the
employees are required to come on the premises, open the
                                                                   agreements, were entitled to such relief as a matter of law and
cash boxes, count the receipts and to account to lessor for his
                                                                   as a matter of right.
share of gross receipts; that for the operation to be profitable
it was necessary that cooperation, good will, mutual trust         We overrule plaintiffs' first four points.



                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                4
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)




We hold that the plaintiffs were not entitled to specific         “. . . Whenever a contract concerning real property is in
performance as a matter of right and that we are required         its nature and incidents entirely unobjectionable,—When it
to affirm the case regardless of whether or not the written       possesses none of those features which, in ordinary language,
contracts involved here are leases of real estate.                influence the discretion of the court,—it is as much a
' [1] As a general rule, the specific performance of a contract   matter of course for a court of equity to decree its specific
by a court of equity is not a matter of absolute right in         performance as it is for a court of law to give damages for its
the parties demanding it, . . . and applications for such         breach.” (Emphasis ours.)
relief are addressed to the sound discretion of the court.'
See 81 C.J.S. Specific Performance s 9, p. 417; Steves v.         The same rule is stated in 52 Tex.Jur.2d 638, Specific
United Services Automobile Association, 459 S.W.2d 930            Performance, Sec. 92. The rule relied on by plaintiffs, as
(Beaumont Civ.App., 1970, ref., n.r.e.); Ferguson v. von          stated there, also makes it clear that such rule does not apply
Seggern, 434 S.W.2d 380 (Dallas Civ.App., 1968, ref., n.r.e.);    in instances where the contract is objectionable in any of the
and W. K. Ewing Co. v. Krueger, 152 S.W.2d 488 (San               features that address themselves to the court's discretion.
Antonio Civ.App., 1941, ref., w.o.m.).                             [3] We are convinced that the contracts that are involved
                                                                  here do possess features which influence the discretion of the
 [2] It is also a settled rule that in order to get specific      court.
performance of a contract the party seeking it must show that
he has no adequate remedy at law by way of an action for
                                                                  One such feature is the fact that there remained after the trial
damages for breach of contract, and if an adequate remedy
                                                                  a period of several years before the term covered by at least
at law is available, then specific performance will not be
                                                                  one of the contracts came to an end and the contracts called
granted. See 52 Tex.Jur.2d 542, Specific Performance, Sec.
                                                                  for the performance by the parties or their representatives
22; 81 C.J.S. Specific Performance s 6, p . 414; and Lone Star
                                                                  of numerous additional, yet unperformed acts, during that
Salt Co. v. Texas Short Line Ry. Co., 99 Tex. 434, 90 S.W.
                                                                  future period. A specific performance decree under those
863 (1906).
                                                                  circumstances would require considerable supervision. See
                                                                  Edelen v. W. B. Samuels & Co., 126 Ky . 295, 103 S.W.
 *887 The plaintiffs contend that the first general rule above    360 (1907) and 81 C.J.S. Specific Performance s 9, page 421,
mentioned does not apply in this case, because the contracts      wherein it is pointed out that a court must use discretion in
involved here are actually leases of real estate and that a       determining if a legal remedy is adequate and that a discretion
different rule applies in such cases. They contend that in this   is involved in determining if the remedy lacks mutuality.
case they did not have to offer proof that they had no adequate   These are additional features of these contracts that influence
remedy at law because since the contracts involved real estate,   the discretion of the court.
it will be presumed that an action for damages is an inadequate
                                                                  In Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703 (1953)
remedy.
                                                                  the Supreme Court stated in substance that although specific
The rule relied on by plaintiffs is stated in the case of         performance of a contract for the sale of realty will ordinarily
Bennett v. Copeland, 149 Tex. 474, 235 S.W.2d 605 (1951)          be granted, it is not a remedy that exists as a matter of
as follows:                                                       right. Whether plaintiff seeking specific performance has an
                                                                  adequate remedy at law is an important factor to be considered
“. . . a contract for the sale of land will be enforced as a      in such cases.
matter of right, regardless of its wisdom or folly, if fairly
and understandingly made. . . . courts cannot arbitrarily         For the reasons stated we are convinced that the rule relied
refuse specific performance of a contract, because they deem      upon by plaintiffs is not applicable to the facts of this case.
it unwise, or because subsequent events disclose that it          Since it is not, the trial court correctly held that a disposition
will result in a loss to defendant; but to justify the refusal    of this case was governed by the general rules relating to
of this relief it must appear that the defendant had been         specific performance that we have hereinabove stated. In
misled and overreached to such an extent that the contract is     other words the trial court's discretion was properly involved
unconscionable.' . . .                                            in determining whether or not to grant specific performance
                                                                  and we are convinced that that court did not abuse its




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                               5
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


discretion in refusing to grant specific performance under the
facts of this case.                                                 [6] The plaintiffs here did not prove themselves entitled to
                                                                   specific performance. The court, therefore, properly refused
Since the disposition of this case was governed by the             to grant the injunctions sought in view of the rule just stated.
general rules that we have hereinabove stated, it was also
necessary, *888 before plaintiffs would be entitled to a
decree of specific performance that they prove that they had       Plaintiffs were not entitled to a decree of specific performance
no adequate remedy at law. This they did not do.                   in this case for other reasons.
 [4] It is obvious that since the plaintiffs had been engaged      ' [7] It is a settled principle that a court of equity will
in the performance of each of these contracts for more than        ordinarily decree specific performance only when it can
5 years that all data needed for proving the damages they          dispose of the matter in controversy by a decree capable of
would sustain by reason of defendants' breach of the contract      present performance; it will not decree a party to perform a
is readily available to them. The defendants offered into          continuous series of acts extending through a long period of
evidence the checks that plaintiffs had paid to them covering      time, requiring constant supervision by the court, . . ..' 81
their proportionate part of the income from the machines           C.J.S. Specific Performance s 75, page 584. This is the law in
involved. It could easily be determined how much plaintiffs        Texas. See Beckham v. Munger Oil & Cotton Co., 185 S.W.
had grossed from the contracts. Plaintiffs' president had many     991, supra.
years of experience in the business and is bound to have
known the amount of expense and depreciation plaintiffs had
incurred in performing their obligations under the contracts       The following is from Williston on Contracts, Revised
during the part of the term that had already expired. It appears   Edition, Vol . 5, Sec. 1430, ‘Completeness of relief’: ‘At least
obvious to us that the amount of damages plaintiffs sustained      in the enforcement of affirmative promises a court of equity
from a breach of the contracts could be readily proven. Since      deems it neither wise nor just to enforce one or more of such
the only benefit plaintiffs could get from a performance of        promises in a contract unless it can enforce all of the contract
the contracts for the rest of their terms is the amount of net     outstanding at the time of the suit, including the promises of
profit they would realize from a complete performance of the       the plaintiff as well as those of the defendant.’
contracts, a judgment awarding plaintiffs a recovery of that        *889 [8] The contracts that are here involved were in part
sum would be an adequate remedy. See Lone Star Salt Co. v.         executory at the time of the trial and the contracts required
Texas Short Line Ry. Co., 99 Tex. 434, 90 S.W. 863 (1906).         the plaintiffs to install the laundry machines, maintain them,
                                                                   service them and keep them repaired during the remainder
                                                                   of the contract term. In addition, the plaintiffs were required
Since a disposition of this case is governed by the general        monthly, throughout the terms of the contracts, to go to the
rules above announced, the trial court properly denied             machines, collect the money from them, count it and to give
plaintiffs' prayer for specific performance for the reason that    the apartment owners their part of the proceeds. One of the
plaintiffs failed to establish that they had no adequate remedy    contracts had several years yet to run.
at law. The evidence showed that plaintiffs did have an
adequate legal remedy at law by way of an action for damages.
 [5] The plaintiffs' application for an injunction is in effect    The facts here were such that the court could not render
the same as an application for specific performance because        a specific performance decree capable of being presently
the effect of granting the injunctive relief would be to           performed that would dispose of the entire controversy and
compel the carrying out of the contract. When this is true         this was an additional reason why the court did not err in
the application for injunctive relief will not be granted where    refusing to decree specific performance of the contracts.
an action for damages affords an adequate legal remedy.
                                                                   An examination of the contracts involved makes it apparent
See Beckham v. Munger Oil & Cotton Co., 185 S.W. 991
                                                                   that many of the things that the plaintiffs were thereby
(Dallas Civ.App., 1916, no writ hist.) wherein the following
                                                                   required to do during the remaining terms of the contracts
rule is set out at page 992: “Whether a court of equity will
                                                                   were incapable of being enforced in behalf of defendants
grant an injunction the effect of which is to compel the
                                                                   by specific performance. Many cases hold that the remedy
specific performance of a contract, depends, of course, upon
                                                                   of specific performance is a mutual one between the parties
the same principles as govern a direct decree for specific
                                                                   to a contract and that before such a decree will be granted
performance. . . .”


               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                             6
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


mutuality of remedy must exist. E. M. Goodwin, Inc. v.
Stuart, 52 S.W.2d 311 (San Antonio Civ.App., 1932, affirmed          The contracts required the apartment owners to keep the
in 125 Tex. 212, 82 S.W.2d 632, 1935). It does not exist here.       laundry room clean.
Other courts hold that even though mutuality of remedy does
                                                                     Mr. Johnson had been working for one of the plaintiffs since
not deprive a court of jurisdiction to specifically enforce a
                                                                     1961. He testified that: cleanliness of a laundry room has a
contract, it is addressed to the court's discretion and is an
                                                                     definite bearing on its income; apartment management can do
element to be considered in determining whether the court
                                                                     almost anything to a laundry room; they can promote it, help
should grant specific performance. See 81 C.J.S. Specific
                                                                     the income to be substantial, or they can let it ride and not
Performance s 11, p. 425.
                                                                     report machines that are out of order, thus preventing them
Another case that supports our holding here is the case of           from being kept in good repair, which will bring the income
Galbreath v. Farrell, 249 S.W. 277 (Dallas Civ.App., 1923,           down; management has a lot to do with it; they can make or
no writ hist.). There the two plaintiffs and defendant agreed        break you in the laundry room.
that defendant would furnish the money with which to buy              [10] The sixth and last point of error is that the court erred
a tract of land and the plaintiffs would over a period of time       in finding as a fact that the leases required that lessee perform
in the future do a number of different things. The three were        substantial personal services in performing the agreements.
to be equal owners of the land. The defendant repudiated the
contract and plaintiffs sought specific performance. The court
                                                                     We hold that no reversible error was committed in connection
said at page 280:
                                                                     with this finding and therefore overrule the point.
'. . . before a court of equity will enforce affirmative promises
made by defendant in behalf of the plaintiff, it must also be        It is true that the services that the contracts obligated the
able to enforce the affirmative promises made by plaintiff in        plaintiffs to perform in the future over an extended period
behalf of the defendant. Such court never deems it wise or just      of time are not ‘personal’ services in the sense that they
to enforce one or more of the promises in a contract until it        will be performed personally by the plaintiffs. This would be
can enforce all of the contract outstanding at the time of the       impossible because the plaintiffs are corporations. And they
suit, including the promises of the plaintiff as well as those       are not ‘personal’ services in the sense that there is a personal
of the defendant. . . .                                              relationship involved as exists between an employer and his
                                                                     employee, and in which case the employee personally does
'. . . It is not sufficient to the ends of justice that appellants
                                                                     the work. It is true that the word ‘personal’ was probably not
simply declare their willingness and ability to perform their
                                                                     the best word to be used in that finding .
part of the contract; there must be the ability of the court
to enter a decree that compels such performance on their             But a reading of the record and the statement of facts
part. . . .'                                                         makes it apparent that the court was saying by this finding
 [9] Plaintiffs' fifth point of error is that the court erred in     that the contracts involved provide that plaintiffs will be
making its finding of fact No. 9, which was: ‘. . . for the          required, in performing their part of the agreement, to
arrangement to be successful and financially profitable, it          furnish in the future, throughout the remaining terms of the
is essential that cooperation, goodwill and mutual trust and         contracts, substantial services. The evidence establishing this
confidence exist as between lessor and lessee.’                      fact finding is undisputed .

                                                                     If the court chose the wrong word in calling the services
The attack on the finding is based on the contentions that there     Personal services, then such action is immaterial because it is
is no evidence to support it and the finding is against the great    obvious what services he was talking about.
weight and preponderance of the evidence.
                                                                     An attempt by a court to decree specific performance of
We overrule the point.                                               the services that plaintiffs did agree to perform in the
                                                                     future throughout a period of over two years, even though
 *890 The finding was obviously based on the testimony
                                                                     they are not technically ‘personal’ services, would require
of Raymond Johnson, President of one of the plaintiff
                                                                     considerable supervision by the court for a long period after
corporations.
                                                                     the rendition of the decree. This is the type of thing that




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                7
United Coin Meter Co., Inc. v. Johnson-Campbell Lumber Co., 493 S.W.2d 882 (1973)


                                                                         [11] It is obvious that since the terms provided for in the
influences the discretion of a court in determining whether or
                                                                        contracts have come to an end, that a court can no longer order
not to grant a specific performance decree.
                                                                        specific performance of that contract.
The only relief sought in this suit was specific performance of
two separate and distinct contracts and mandatory injunctions
                                                                        We would have affirmed the entire judgment had not part of
the effect of which would be to cause specific performance
                                                                        the case become moot.
of the contracts.
                                                                        The courts hold that when a case becomes moot while it is
The original five year term of the contract relating to the Capri
                                                                        on appeal it is the duty of the appellate court to reverse the
Drive Apartments expired on February 11, 1971. The contract
                                                                        trial court's judgment and to dismiss the case. Texas & N.O.R.
was renewed for another five year term which will not expire
                                                                        Co. v. Priddie, 127 Tex. 629, 95 S.W.2d 1290 (1936). For
until February 11, 1976.
                                                                        other cases see 4 Tex.Jur.2d 207, Appeal and Error—Civil,
The original five year term of the contract relating to the             Sec. 703.
Sagebrush Trail Apartments ended on December 13, 1970.                   [12] It is therefore ordered that the trial court's judgment
This lease did not provide for a renewal term of five years,            in so far as it relates to that part of plaintiffs' action seeking
but it did provide for one renewal term of two years. This              injunctive relief and specific performance of the December
contract was renewed by the parties for the two year term and           14, 1965, contract that covers the Sagebrush Trail Apartments
this renewal term expired on December 13, 1972.                         is hereby reversed and that part of plaintiffs' case is hereby
                                                                        dismissed without prejudice.
The courts hold that: ‘A cause becomes moot when one ‘seeks
judgment upon some matter which, when rendered, for any
reason, *891 cannot have any practical legal effect upon a              That part of the trial court's judgment in so far as it relates
then existing controversy.‘‘ Bevil v. Wilfert, 241 S.W.2d 195           to the part of plaintiffs' action seeking injunctive relief and
(Beaumont Civ.App., 1951, no writ hist.). See also McNeill              specific performance of the February 11, 1966, contract that
v. Hubert, 119 Tex. 18, 23 S.W.2d 331 (1930).                           covers the apartments located on Capri Drive in Fort Worth
                                                                        is affirmed.
This case, in so far as the controversy relates to the contract
covering the apartments on Sagebrush Trail, has become                  The costs are taxed against appellants.
moot while the case has been on appeal. It was not moot when
the trial started in February, 1972.                                    All Citations

                                                                        493 S.W.2d 882

End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   8
§ 38.001. Recovery of Attorney's Fees, TX CIV PRAC & REM § 38.001




     KeyCite Yellow Flag - Negative Treatment
Proposed Legislation

  Vernon's Texas Statutes and Codes Annotated
    Civil Practice and Remedies Code (Refs & Annos)
      Title 2. Trial, Judgment, and Appeal
         Subtitle C. Judgments
           Chapter 38. Attorney's Fees (Refs & Annos)

                                        V.T.C.A., Civil Practice & Remedies Code § 38.001

                                                § 38.001. Recovery of Attorney's Fees

                                                            Currentness


A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim
and costs, if the claim is for:


  (1) rendered services;


  (2) performed labor;


  (3) furnished material;


  (4) freight or express overcharges;


  (5) lost or damaged freight or express;


  (6) killed or injured stock;


  (7) a sworn account; or


  (8) an oral or written contract.


Credits
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985.



Notes of Decisions (1441)

V. T. C. A., Civil Practice & Remedies Code § 38.001, TX CIV PRAC & REM § 38.001



                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                      1
§ 38.001. Recovery of Attorney's Fees, TX CIV PRAC & REM § 38.001


Current through the end of the 2015 Regular Session of the 84th Legislature

End of Document                                                  © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                2
38.1. Appellant's Brief, TX R APP Rule 38.1




  Vernon's Texas Rules Annotated
    Texas Rules of Appellate Procedure
      Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)
        Rule 38. Requisites of Briefs (Refs & Annos)

                                                TX Rules App.Proc., Rule 38.1

                                                     38.1. Appellant's Brief

                                                          Currentness


The appellant's brief must, under appropriate headings and in the order here indicated, contain the following:


(a) Identity of Parties and Counsel. The brief must give a complete list of all parties to the trial court's judgment or order
appealed from, and the names and addresses of all trial and appellate counsel, except as otherwise provided in Rule 9.8.


(b) Table of Contents. The brief must have a table of contents with references to the pages of the brief. The table of contents
must indicate the subject matter of each issue or point, or group of issues or points.


(c) Index of Authorities. The brief must have an index of authorities arranged alphabetically and indicating the pages of the
brief where the authorities are cited.


(d) Statement of the Case. The brief must state concisely the nature of the case (e.g., whether it is a suit for damages, on a note,
or involving a murder prosecution), the course of proceedings, and the trial court's disposition of the case. The statement should
be supported by record references, should seldom exceed one-half page, and should not discuss the facts.


(e) Any Statement Regarding Oral Argument. The brief may include a statement explaining why oral argument should or should
not be permitted. Any such statement must not exceed one page and should address how the court's decisional process would,
or would not, be aided by oral argument. As required by Rule 39.7, any party requesting oral argument must note that request
on the front cover of the party's brief.


(f) Issues Presented. The brief must state concisely all issues or points presented for review. The statement of an issue or point
will be treated as covering every subsidiary question that is fairly included.


(g) Statement of Facts. The brief must state concisely and without argument the facts pertinent to the issues or points presented.
In a civil case, the court will accept as true the facts stated unless another party contradicts them. The statement must be
supported by record references.


(h) Summary of the Argument. The brief must contain a succinct, clear, and accurate statement of the arguments made in the
body of the brief. This summary must not merely repeat the issues or points presented for review.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                              1
38.1. Appellant's Brief, TX R APP Rule 38.1




(i) Argument. The brief must contain a clear and concise argument for the contentions made, with appropriate citations to
authorities and to the record.


(j) Prayer. The brief must contain a short conclusion that clearly states the nature of the relief sought.


(k) Appendix in Civil Cases.


  (1) Necessary Contents. Unless voluminous or impracticable, the appendix must contain a copy of:


     (A) the trial court's judgment or other appealable order from which relief is sought;


     (B) the jury charge and verdict, if any, or the trial court's findings of fact and conclusions of law, if any; and


     (C) the text of any rule, regulation, ordinance, statute, constitutional provision, or other law (excluding case law) on which
     the argument is based, and the text of any contract or other document that is central to the argument.


  (2) Optional Contents. The appendix may contain any other item pertinent to the issues or points presented for review,
  including copies or excerpts of relevant court opinions, laws, documents on which the suit was based, pleadings, excerpts
  from the reporter's record, and similar material. Items should not be included in the appendix to attempt to avoid the page
  limits for the brief.


Credits
Eff. Sept. 1, 1997. Amended by Supreme Court March 10, 2008, and Aug. 20, 2008, eff. Sept. 1, 2008. Approved by Court of
Criminal Appeals Sept. 30, 2008, eff. Sept. 30, 2008.



Notes of Decisions (937)

Rules App. Proc., Rule 38.1, TX R APP Rule 38.1
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.

End of Document                                                      © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   2
39.1. Right to Oral Argument, TX R APP Rule 39.1




  Vernon's Texas Rules Annotated
    Texas Rules of Appellate Procedure
      Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)
        Rule 39. Oral Argument; Decision Without Argument (Refs & Annos)

                                               TX Rules App.Proc., Rule 39.1

                                                39.1. Right to Oral Argument

                                                         Currentness


A party who has filed a brief and who has timely requested oral argument may argue the case to the court unless the court, after
examining the briefs, decides that oral argument is unnecessary for any of the following reasons:


(a) the appeal is frivolous;


(b) the dispositive issue or issues have been authoritatively decided;


(c) the facts and legal arguments are adequately presented in the briefs and record; or


(d) the decisional process would not be significantly aided by oral argument.


Credits
Eff. Sept. 1, 1997. Amended by Supreme Court March 10, 2008, and Aug. 20, 2008, eff. Sept. 1, 2008. Approved by Court of
Criminal Appeals Sept. 30, 2008, eff. Sept. 30, 2008.


Editors' Notes

NOTES AND COMMENTS

     Comment to 2008 change: Subdivision 39.1 is amended to provide for oral argument unless the court determines it
     is unnecessary and to set out the reasons why argument may be unnecessary. The appellate court must evaluate these
     reasons in view of the traditional importance of oral argument. The court need not agree on, and generally should not
     announce, a specific reason or reasons for declining oral argument.


Rules App. Proc., Rule 39.1, TX R APP Rule 39.1
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.

End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




                 © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                 1
43.4. Judgment for Costs in Civil Cases, TX R APP Rule 43.4




  Vernon's Texas Rules Annotated
    Texas Rules of Appellate Procedure
      Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)
        Rule 43. Judgment of the Court of Appeals (Refs & Annos)

                                              TX Rules App.Proc., Rule 43.4

                                          43.4. Judgment for Costs in Civil Cases

                                                         Currentness


In a civil case, the court of appeal's judgment should award to the prevailing party the appellate costs--including preparation
costs for the clerk's record and the reporter's record--that were incurred by that party. But the court of appeals may tax costs
otherwise as required by law or for good cause.


Credits
Eff. Sept. 1, 1997.



Notes of Decisions (17)

Rules App. Proc., Rule 43.4, TX R APP Rule 43.4
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  1
Rule 139. On Appeal and Certiorari, TX R RCP Rule 139




  Vernon's Texas Rules Annotated
    Texas Rules of Civil Procedure
      Part II. Rules of Practice in District and County Courts
        Section 6. Costs and Security Therefor

                                           TX Rules of Civil Procedure, Rule 139

                                             Rule 139. On Appeal and Certiorari

                                                          Currentness


When a case is appealed, if the judgment of the higher court be against the appellant, but for less amount than the original
judgment, such party shall recover the costs of the higher court but shall be adjudged to pay the costs of the court below; if the
judgment be against him for the same or a greater amount than in the court below, the adverse party shall recover the costs of
both courts. If the judgment of the court above be in favor of the party appealing and for more than the original judgment, such
party shall recover the costs of both courts; if the judgment be in his favor, but for the same or a less amount than in the court
below, he shall recover the costs of the court below, and pay the costs of the court above.


Credits
Oct. 29, 1940, eff. Sept. 1, 1941.



Notes of Decisions (99)

Vernon's Ann. Texas Rules Civ. Proc., Rule 139, TX R RCP Rule 139
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.

End of Document                                                     © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                   1
