Edward R. Pollard and Sharon Pollard v. Stephen P. Fine and Athena Fine ( 2009 )


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    MEMORANDUM OPINION
    No. 04-08-00745-CV
    Edward R. POLLARD and Sharon Pollard,
    Appellants
    v.
    Stephen P. FINE and Athena Fine,
    Appellees
    From the 216th Judicial District Court, Kerr County, Texas
    Trial Court No. 06-182-A
    Honorable Stephen B. Ables, Judge Presiding
    Opinion by:       Sandee Bryan Marion, Justice
    Sitting:          Sandee Bryan Marion, Justice
    Rebecca Simmons, Justice
    Marialyn Barnard, Justice
    Delivered and Filed: September 9, 2009
    REVERSED AND REMANDED
    This is an appeal from the trial court’s order granting the motions for summary judgment
    filed by appellees. We conclude appellees were not entitled to summary judgment; therefore, we
    reverse the trial court’s final judgment and remand the cause.
    04-08-00745-CV
    BACKGROUND
    Appellees, Stephen and Athena Fine, owned a tract of commercial real estate, and, during
    the course of their divorce proceedings, the property was listed for sale. At the time of the listing,
    the property was leased by Ferguson Enterprises, Inc. The listing stated the sale of the property was
    subject to an existing lease “which expires on January 31, 2007. Present tenant does desire to extend
    lease agreement.” Edward Pollard saw the listing and, effective January 3, 2006, Stephen Fine, as
    seller, and appellants, Edward and Sharon Pollard as buyers, executed a “Commercial Contract -
    Improved Property,” under which the Pollards paid $10,000 in earnest money to the title company.
    The contract provided for a forty-five-day “feasibility period” during which the Pollards could
    terminate the contract for any reason.
    On January 11, 2006, during the “feasibility period,” the Fines and Ferguson Enterprises
    executed a lease amendment, which gave Ferguson Enterprises an option to extend the lease for up
    to an additional fourteen years. The lease amendment also abated Ferguson Enterprises’s rent for
    six months in exchange for Ferguson Enterprises performing certain improvements to the property.
    On January 24, 2006, the Fines provided the Pollards’ real estate agent with a copy of the lease
    amendment.
    On March 24, 2006, the Pollards appeared at the closing; however, they wanted to buy the
    property only if it was not subject to the amended lease with Ferguson Enterprises. The Pollards
    filed suit against the Fines on that same date. Apparently, in anticipation of problems over the lease
    amendment, Mr. Pollard had prepared a petition to file suit prior to attending the closing. In their
    third amended petition, the Pollards alleged the Fines breached the Commercial Contract because
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    they “were unable to transfer the property as it existed on January 3, 2006, . . . in that the [Fines] had
    further encumbered the property with a new lease . . . .” The Pollards also asserted claims for
    common law and statutory fraud. The Pollards sought specific performance of the contract, money
    damages, and declaratory relief. Stephen and Athena each counter-claimed for declaratory relief and
    attorney’s fees.
    All parties moved for summary judgment. On September 10, 2007, the parties entered into
    a stipulation under which the Pollards dismissed “all fraud claims, whether common law, statutory,
    or otherwise . . . .” On October 25, 2007, the trial court granted the motions filed separately by
    Stephen and Athena, who by that time were divorced; denied the Pollards’ motion; and entered final
    judgment in favor of the Fines. On appeal, the Pollards do not challenge the trial court’s denial of
    their motion for summary judgment; however, they assert the trial court erred in granting the Fines’
    motions.1
    ATHENA’S NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT
    Athena moved for summary judgment on the Pollards’ breach of contract claim on the ground
    that there was no evidence she was a party to any contract with the Pollards.
    There is no dispute Athena did not sign the Commercial Contract. However, there is also no
    dispute she owned the property with her soon-to-be former husband, Stephen, and she knew the
    property was to be sold. The Pollards responded that because Stephen acted as agent for Athena in
    1
    … Because the Pollards dismissed their fraud claims before the trial court rendered summary judgment in
    favor of the Fines, we do not consider whether summary judgment on these claims was proper.
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    the sale of the property, she was bound by the terms of the contract and, therefore, not entitled to
    summary judgment on their breach of contract claim.
    We review a no-evidence summary judgment de novo by construing the record in the light
    most favorable to the non-movant and disregarding all contrary evidence and inferences. Reynosa
    v. Huff, 
    21 S.W.3d 510
    , 512 (Tex. App.—San Antonio 2000, no pet.). A party may move for a
    no-evidence summary judgment on the ground that there is no evidence of one or more essential
    elements of a claim or defense on which an adverse party would have the burden of proof at trial.
    TEX . R. CIV . P. 166a(i). A no-evidence summary judgment motion is improperly granted when the
    non-movant brings forth more than a scintilla of probative evidence that raises a genuine issue of
    material fact. Id.; Gomez v. Tri City Cmty. Hosp., Ltd., 
    4 S.W.3d 281
    , 283 (Tex. App.—San Antonio
    1999, no pet.). More than a scintilla of evidence exists if the evidence would allow reasonable and
    fair-minded people to differ in their conclusions. Forbes, Inc. v. Granada Biosciences, Inc., 
    124 S.W.3d 167
    , 172 (Tex. 2003). Less than a scintilla of evidence exists if the evidence is so weak as
    to do no more than create a mere surmise or suspicion of a fact. 
    Id. “The relationship
    of principal and agent does not arise from the mere fact of the marital
    relationship, nor does that fact raise a presumption of such a relationship.” Taylor v. Gilbert Gertner
    Enters., 
    466 S.W.2d 337
    , 339 (Tex. App.—Houston [1st Dist.] 1971, writ ref’d n.r.e.); TEX . FAM .
    CODE ANN . § 3.201(c) (Vernon 2006) (“A spouse does not act as an agent for the other spouse
    solely because of the marriage relationship.”). However, “[a] person is personally liable for the acts
    of the person’s spouse only if . . . the spouse acts as an agent for the person . . . .” TEX . FAM . CODE
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    ANN . § 3.201(a). Thus, facts and circumstances might be produced that would require a finding that
    the wife is bound by the agreement of her husband. 
    Taylor, 466 S.W.2d at 339
    . Only if the facts are
    uncontroverted or otherwise established, may the existence of an agency relationship be considered
    a pure question of law. III Forks Real Estate, L.P. v. Cohen, 
    228 S.W.3d 810
    , 815 (Tex.
    App.—Dallas 2007, no pet.).
    Here, the Pollards presented the following evidence on the issue of whether Stephen acted
    as Athena’s agent when he executed the Commercial Contract. The property was considered the
    community property of both Stephen and Athena. The couple’s divorce decree provided the property
    would remain jointly owned by the Fines until its sale, and Stephen testified in his deposition that
    Athena signed the listing agreement for the sale. Larry Richter, the Fines’ real estate agent, testified
    in his deposition that both Stephen and Athena signed his listing agreement. Both Stephen and Larry
    testified Athena was kept informed of the earnest money contract, and she was aware of the sales
    price and terms and conditions of the contract. The Pollards also established that Athena signed the
    lease amendment with Ferguson Enterprises, and Stephen testified she was aware of the negotiations
    that led to the amendment. We conclude the Pollards met their summary judgment burden of
    bringing forth more than a scintilla of probative evidence that raises a genuine issue of material fact
    on the question of whether Stephen acted as Athena’s agent in the sale of the property. Therefore,
    the Pollards adduced summary judgment evidence sufficient to defeat Athena’s entitlement to a no-
    evidence summary judgment on the Pollards’ breach of contract claim against her.
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    STEPHEN’S MOTION FOR SUMMARY JUDGMENT2
    The dispute between the parties is centered on the issue of whether the Commercial Contract
    prohibited the Fines from extending the lease with Ferguson Enterprises. Stephen moved for
    summary judgment on several grounds: (1) the Pollards failed to establish the existence of a contract
    because there was no meeting of the minds sufficient to form a contract, (2) there was a mutual
    mistake, and (3) the contract was ambiguous and such ambiguity should be construed against the
    Pollards.3 Stephen’s arguments all focus on the following language contained in the Commercial
    Contract:
    7.E. Contracts Affecting Operations: Until closing, Seller: (1) will operate the
    Property in the same manner as on the effective date under reasonably prudent
    business standards; and (2) will not transfer or dispose of any part of the Property,
    any interest or right in the Property . . . . After the feasibility period ends, Seller may
    not enter into, amend, or terminate any other contract that affects the operations of
    the Property without Buyer’s written approval.
    2
    … In his motion for summary judgment, Stephen asserted there was no evidence on any element of the
    Pollards’ fraud claims, which we do not address on appeal because the Pollards dismissed their fraud claims before the
    trial court rendered summary judgment in favor of the Fines. As to the Pollards’ breach of contract claim, Stephen did
    not state the elements on which there was no evidence. See T EX . R. C IV . P. 166a(i) (no-evidence motion for summary
    judgment “must state the elements as to which there is no evidence”); see also T EX . R. C IV . P. 166a(i) cmt (“The motion
    must be specific in challenging the evidentiary support for an element of a claim or defense; paragraph (i) does not
    authorize conclusory motions or general no-evidence challenges to an opponent’s case.”). Therefore, we treat Stephen’s
    motion on the Pollards’ contract claim as a motion for a traditional summary judgment. Amouri v. Southwest Toyota,
    Inc., 20 S.W .3d 165, 168 (Tex. App.— Texarkana 2000, pet. denied) (when no-evidence motion for summary judgment
    does not specifically state which elements lack evidence, the motion should be treated as a motion for a 166a(c) summary
    judgment).
    3
    … For the first time on appeal, Stephen contends the Pollards offered no evidence a contract existed. Stephen
    bases this argument on objections to “form” raised by his attorney during a deposition. This argument is not one of the
    grounds upon which he moved for summary judgment, and therefore, we do not consider it on appeal.
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    In his motion for summary judgment, Stephen argued paragraph 7.E allowed him and his
    wife to extend the lease with Ferguson Enterprises at any time before the forty-five-day feasibility
    period expired.
    Under traditional summary judgment standards, the movant must show there is no genuine
    issue of material fact and that judgment should be granted as a matter of law. KPMG Peat Marwick
    v. Harrison County Hous. Fin. Corp., 
    988 S.W.2d 746
    , 748 (Tex. 1999). A defendant moving for
    summary judgment must conclusively negate at least one essential element of each of the plaintiff’s
    causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc.
    v. Martinez, 
    941 S.W.2d 910
    , 911 (Tex. 1997). Under this traditional standard, we take as true all
    evidence favorable to the non-movant and we make all reasonable inferences in the non-movant’s
    favor. 
    Id. If the
    defendant meets this burden, the plaintiff must then raise a genuine issue of material
    fact on that element. Gonzalez v. City of Harlingen, 
    814 S.W.2d 109
    , 112 (Tex. App.—Corpus
    Christi 1991, writ denied).
    A.      Meeting of the Minds
    Whether the parties have come to a “meeting of the minds” is measured objectively according
    to what the parties said and did. Copeland v. Alsobrook, 
    3 S.W.3d 598
    , 604 (Tex. App.—San
    Antonio 1999, pet. denied). The parties’ subjective thoughts and beliefs do not control. 
    Id. When the
    “meeting of the minds” element is contested, it is a question for the fact finder. Hallmark v.
    Hand, 
    885 S.W.2d 471
    , 476 (Tex. App.—El Paso 1994, writ denied). “Meeting of the minds”
    describes the mutual understanding and assent to the agreement regarding the subject matter and the
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    essential terms of the contract. Weynand v. Weynand, 
    990 S.W.2d 843
    , 846 (Tex. App.—Dallas
    1999, pet. denied). “The parties must agree to the same thing, in the same sense, at the same time.”
    
    Id. The essential
    elements required, in writing, for the sale of real property are the price, the property
    description, and the seller’s signature. See Rus-Ann Dev., Inc. v. ECGC, Inc., 
    222 S.W.3d 921
    , 927
    (Tex. App.—Tyler 2007, no pet.); Lynx Exploration & Prod. Co. v. 4-Sight Operating Co., 
    891 S.W.2d 785
    , 788 (Tex. App.—Texarkana 1995, writ denied). However, this does not mean that a
    contract containing these terms would remain enforceable if additional terms are incorporated into
    the agreement that are so indefinite that the court could not fix the legal obligation and liabilities of
    the parties. Lynx 
    Exploration, 891 S.W.2d at 788
    .
    Here, there is no dispute the Fines agreed to sell and the Pollards agreed to buy the real
    property that was the subject matter of the Commercial Contract. The parties agreed on all terms
    essential to that sale, including, but not limited to, the sales price, financing, payment of earnest
    money, inspection of the property, fees, and details regarding closing and possession of the property.
    We conclude Stephen did not conclusively establish that there was no meeting of the minds with
    regard to the contract.
    B.      Mutual Mistake
    When parties to an agreement have contracted under a misconception or ignorance of a
    material fact, the agreement will be avoided under the doctrine of mutual mistake. Williams v.
    Glash, 
    789 S.W.2d 261
    , 264 (Tex. 1990). To prove a mutual mistake, the evidence must show that
    both parties were acting under the same misunderstanding of the same material fact when the
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    agreement was executed. Seymour v. American Engine & Grinding Co., 
    956 S.W.2d 49
    , 58 (Tex.
    App.—Houston [14th Dist.] 1996, writ denied). “The doctrine of mutual mistake must not routinely
    be available to avoid the results of an unhappy bargain.” Williams v. Glash, 
    789 S.W.2d 261
    , 265
    (Tex. 1990).
    On appeal, Stephen contends he believed paragraph 7.E allowed him to extend the lease,
    however, in neither his motion for summary judgment nor on appeal does he point to specific
    evidence in the summary judgment record supporting any contention he held this belief at the time
    the Commercial Contract was executed. There is also no evidence of the Pollards’ purported
    misunderstanding of paragraph 7.E at the time the Commercial Contract was executed. We,
    therefore, conclude there is no evidence in the record that either the Fines or the Pollards did not
    understand the implications of paragraph 7.E when the Commercial Contract was executed. See City
    of The Colony v. North Tx. Mun. Water Dist., 
    272 S.W.3d 699
    , 736 (Tex. App.—Fort Worth 2008,
    pet. filed) (although appellant submitted evidence demonstrating its own thoughts about the parties’
    various responsibilities under the contract, it offered no evidence that appellee also suffered from
    a mistake of fact regarding any of those responsibilities; therefore, appellant produced no evidence
    to support the mutual mistake element requiring that both parties be mistaken about a common
    intention). Therefore, Stephen did not conclusively establish that there existed a mutual mistake.
    C.     Ambiguity
    “Whether a contract is ambiguous is a question of law that must be decided by examining
    the contract as a whole in light of the circumstances present when the contract was entered.”
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    Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 
    940 S.W.2d 587
    , 589 (Tex. 1996). Only
    where a contract is ambiguous may a court consider the parties’ interpretation and “admit extraneous
    evidence to determine the true meaning of the instrument.” Nat’l Union Fire Ins. Co. of Pittsburgh,
    Penn. v. CBI Indus., Inc., 
    907 S.W.2d 517
    , 520 (Tex. 1995) (per curiam). A contract is not
    ambiguous merely because the parties have conflicting interpretations of the contract. Columbia
    
    Gas, 940 S.W.2d at 589
    . A contract is ambiguous only when its meaning is uncertain or it is
    reasonably susceptible to more than one meaning. Coker v. Coker, 
    650 S.W.2d 391
    , 393 (Tex.
    1983). When a contract is not ambiguous, the construction of the written instrument is a question
    of law for the court that is reviewed de novo. MCI Telecommunications Corp. v. Texas Utilities
    Elec. Co., 
    995 S.W.2d 647
    , 650-51 (Tex. 1999); 
    Coker, 650 S.W.2d at 393
    .
    Under the contract here, the seller agreed to “sell and convey” its “interest in all leases . . . .”
    Also under the contract, the buyers could terminate the contract “for any reason within 45 days after
    the effective date (feasibility period) by providing the seller written notice of termination.” During
    the feasibility period, the buyers could inspect, study, and assess the property. Within ten days after
    the effective date, the seller was obligated to provide the buyers with “a current rent roll of all leases
    affecting the Property,” and “copies of all current leases pertaining to the Property, including any
    modifications, supplements, or amendments to the leases . . . .” Until the closing date, the seller was
    allowed to “operate the Property in the same manner as on the effective date under reasonably
    prudent business standards” but could not “transfer or dispose of any part of the Property” or “any
    interest in the Property . . . .” After expiration of the feasibility period, the seller had to obtain the
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    buyer’s written consent to amend any contract affecting the Property’s operations. Finally, “[e]ach
    written lease seller is to assign to buyer under this contract must be in full force and effect according
    to its terms without amendment or modification that is not disclosed to buyer in writing.” The seller
    was also obligated to provide to the buyers with “any modification, amendments, or default by
    landlord or tenant under the leases” that “exist at the time seller provides the leases to the buyer or
    subsequently occur before closing.”
    We conclude the Commercial Contract unambiguously envisions allowing the seller to
    operate the property “under reasonably prudent business standards” at all times prior to closing,
    including modifying, supplementing, or amending any existing leases subject only to providing the
    Pollards with proper notice. We agree with Stephen that the Commercial Contract unambiguously
    allowed him and his former wife to amend the lease with Ferguson Enterprises prior to expiration
    of the feasibility period. However, we do not agree Stephen conclusively established his right to
    summary judgment on the Pollards’ breach of contract claim because the issue remains whether such
    an amendment satisfied “reasonably prudent business standards.” The question of whether the
    extension of the lease for up to fourteen years and a six-month abatement of rent satisfies
    “reasonably prudent business standards” is a question the fact-finder must determine under all the
    circumstances present. See Ridgeline, Inc. v. Crow-Gottesman-Shafer No. 1, 
    734 S.W.2d 114
    , 116
    (Tex. App.—Austin 1987, no writ) (“[E]xcept in extraordinary circumstances, inquiry as to
    reasonable conduct is a question of fact which precludes summary judgment.”). Therefore, Stephen
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    did not conclusively establish his entitlement to summary judgment on the Pollards’ breach of
    contract claim.
    D.     Specific Performance
    Stephen also argued that, even if he breached the contract, the Pollards were not entitled to
    specific performance because (1) they admitted performance of the contract was impossible after the
    Fines extended the lease with Ferguson Enterprises, (2) damages are an adequate remedy, (3) the
    Pollards failed to perform when they refused to close the sale, and (4) the Pollards lack clean hands.
    A purchaser of real estate is entitled to specific performance of a contract for sale of land
    when the contract is valid and enforceable, and when the terms of the contract are sufficiently clear
    so that the parties know their obligations under the contract. Abraham Inv. Co. v. Payne Ranch, Inc.,
    
    968 S.W.2d 518
    , 527 (Tex. App.—Amarillo 1998, pet. denied) (citations omitted). A purchaser of
    property who seeks specific performance of a real estate contract must prove that he has diligently
    and timely performed or tendered performance of all obligations set forth in the contract. See 
    id. Although the
    Pollards were prepared to file a lawsuit even before closing, we conclude they
    presented sufficient summary judgment evidence to defeat Stephen’s entitlement to summary
    judgment as a matter of law. The Pollards appeared at the closing with a cashier’s check, but did not
    complete the closing of the sale of the property when they were informed Stephen would not or could
    not convey the property without the amended lease. This failure on Stephen’s part constituted, in
    their mind, a breach of the contract. See Rus-Ann 
    Dev., 222 S.W.3d at 927
    (“It is thoroughly settled
    that where a defendant has openly and avowedly refused to perform his part of the contract or
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    declared his intention not to perform it, the plaintiff need not make tender of payment of
    the consideration before bringing suit.”); Graves v. Alders, 
    132 S.W.3d 12
    , 17-18 (Tex.
    App.—Beaumont 2004, pet. denied) (when seller has conspicuously breached the contract, “it is only
    necessary that the purchaser be ready and willing, and offers to perform within his pleadings.”).
    Therefore, Stephen did not conclusively establish his entitlement to summary judgment on whether
    the Pollards were entitled to specific performance as a result of any breach of the Commercial
    Contract.
    CONCLUSION
    Because we conclude neither Stephen nor Athena conclusively established their right to
    summary judgment on the Pollards’ breach of contract claim, we reverse the trial court’s final
    judgment in its entirety and remand for further proceedings.
    Sandee Bryan Marion, Justice
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