Amita Desai v. Good Hope Missionary Baptist Church of Houston ( 2021 )

Opinion issued April 15, 2021
In The
Court of Appeals
For The
First District of Texas
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NO. 01-19-00420-CV
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AMITA DESAI, Appellant
V.
GOOD HOPE MISSIONARY BAPTIST CHURCH OF HOUSTON, Appellee
On Appeal from the 80th District Court
Harris County, Texas
Trial Court Case No. 2014-43768
MEMORANDUM OPINION
Appellant, Amita Desai, contracted with appellee, Good Hope Missionary
Baptist Church of Houston (“Good Hope”) to purchase a vacant lot in Houston,
Texas for $2,300,000. After the sale failed to close, Desai sued Good Hope for
specific performance. A jury concluded that neither party breached the contract,
and the trial judge entered a judgment in Good Hope’s favor, refusing to award
Desai specific performance of the contract and awarding Good Hope attorney’s
fees as the prevailing party. On appeal, Desai contends that, because she
conclusively proved that Good Hope breached the contract, the trial court erred in
refusing to disregard the jury’s finding that Good Hope did not breach the contract.
We reverse and render in part and reverse and remand in part.
BACKGROUND
The Contract
Good Hope owns unimproved real property located at 1400 West Dallas
Street, Houston, Texas. The Church and Desai executed an Unimproved Property
Contract on March 31, 2014. Pursuant to the contract, Good Hope agreed to sell
the property to Desai for $2,300,000. The contract required Desai to pay the agreed
upon price and required Good Hope to “furnish to [Desai] at [Good Hope’s]
expense an owner’s policy of title insurance (Title Policy) [i]ssued by American
Title Co. (“American Title”) in the amount of the Sales Price, dated at or after
closing, insuring [Desai] against loss under the provisions of the Title Policy . . . .”
The contract provided for a June 1, 2017 closing date (extended by
agreement of the parties until June 2, 2017) and provided that “[i]f either party fails
to close the same by the Closing Date, the non-defaulting party may exercise the
remedies contained in Paragraph 15,” which provides as follows:
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If Buyer fails to comply with this contract, Buyer will be in default
and Seller may (a) enforce specific performance, seek such other
relief as may be provided by law or both, or (b) terminate this contract
and receive the earnest money as liquidated damages, thereby
releasing both parties from this contract. If Seller fails to comply with
this contract, Seller will be in default and Buyer may (a) enforce
specific performance, seek such other relief as may be provided by
law, or both, or (b) terminate this contract and receive the earnest
money, thereby releasing both parties from this contract.
The Contract provided the following relevant responsibilities of the parties at
closing.
(1) Seller shall execute and deliver a general warranty deed conveying
title to the Property to Buyer and showing no additional exceptions
to those permitted in Paragraph 6 and furnish tax statements or
certificates showing no delinquent taxes on the property.
(2) Buyer shall pay the Sales Price in good funds acceptable to the
escrow agent.
(3) Seller and Buyer shall execute and deliver any notices, statements,
certificates, affidavits, releases, loan documents reasonably
required for the closing of the sale and the issuance of the Title
Policy.
(4) There will be no liens, assessments, or security interests against the
Property which will not be satisfied out of the sales proceeds
unless securing the payment of any loans assumed by the Buyer
and assumed loans will not be in default.
American Title was chosen to close the transaction, and both the contract
and Desai’s $25,000 earnest money check were deposited with American Title on
April 1, 2014. That same day, American Title opened title and designated Veronica
Corona as its closing agent for the transaction.
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The Title Encumbrances
On April 7, 2014, American Title issued a title commitment, which it
forwarded to Michael Williams on April 24, 2014. Williams, the chairman of Good
Hope’s Board of Trustees, acted as its representative in the transaction. The April
24 email to Williams asked for a survey of the property and to review Schedule C
of the commitment, which contained a list of title problems that, if not cleared,
would prevent the sale from closing.
Specifically, Schedule C contained four liens from the City of Houston and
instructed that a release was needed for those liens before closing. Schedule C also
contained two bank deeds of trust on the property: One secured a $220,150 loan
from JPMorgan Chase Bank and the other secured a loan from Amegy National
Bank for $5,600,000 and provided that it could be released in exchange for a
$100,000 payment.
There were also seven items relating to demolition liens imposed by the city
of Houston. For each of those items, Good Hope was instructed:
[The] title company will require the following: A release from the
City of Houston releasing same is to be recorded in the Real Property
records of Harris County, Texas. Obtain a “payoff statement” from
the assessing authority, indicating whether any money is owing for the
repair, removal or demolition.
The commitment also reflected several lawsuits filed by various taxing
agencies because of delinquent taxes on the property, and Good Hope was
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instructed that before the title-insurance policy could be issued, “[w]e must verify
that any such taxes, together with interest, penalties, and/or attorney’s fees and
court costs, if any, have been paid.”
Finally, American Title instructed Good Hope that:
We must be furnished with a copy of Articles of Incorporation and a
Corporate Resolution of record owner indicating names of the
principles and identifying those persons authorized to act on behalf of
said corporation. In addition, we must be furnished with an affidavit
stipulating that there have been no amendments to said articles and
stating who is/are still empowered to act on behalf of said corporation.
The Failed Closing
After the April 24 email to Williams, which included the Schedule C items
that needed to be cleared before closing, there was some issue regarding the
communication between Williams and Corona. Good Hope contends that “after the
April 24, 2014 email American Title went silent for a month because the closing
agent, Corona, went on vacation and no one else at the company worked on the
file.” Corona testified that she did not go on vacation, and that even though she
sent an email to Williams that bounced back, she had been in communication with
him, but he was unresponsive to her requests.
The next email between Williams and Corona was May 22, 2014, 11 days
before closing. In this email, Corona requested (1) corporate documents and
resolutions authorizing the sale of the property, (2) payoff information for the
Amegy bank lien, and (3) payoff information for the JPMorgan Chase Bank lien.
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American Title indicated to Williams that it would attempt to obtain releases of the
City of Houston liens, and it initiated attempts to do so the next day.
Sometime before May 29, 2014, Desai called Corona and asked how much
money she needed to have available to close the transaction on June 2, 2014.
Corona told her that American Title was not ready to close so Desai should not
send any funds because the closing would not take place on June 2. On June 2,
2014, Williams sent Corona an email that included some of the requested
information about Good Hope’s corporate resolutions and asked about the time of
the closing. Corona told Williams that they could not close that day and that Desai
had already been informed.
On June 3, after the failed closing, Desai emailed Williams and Corona,
stating that she would need three days’ advance notice of any future closing day in
order “to set up our funding prior to closing.” At trial, Williams claimed to be
surprised that Desai needed or planned to use financing to close the transaction,
even though the contract permitted her to do so. Desai presented evidence that she,
even as of the date of the closing, had sufficient funds to close without borrowed
money, but that once the closing date passed, she did not execute any documents to
obtain financing.
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Neither party immediately declared a default in the contract. Instead, Desai
requested that Good Hope execute a letter extending the closing day to July 3,
2014, and Good Hope continued to try to obtain the documents required to close.
Events After the Failed Closing
On June 11, 2014, Good Hope sent a letter to Desai declining her request to
extend the closing date and informing her that because it had been ready to close
on June 2, the contract was no longer valid. The next day, June 12, 2014, Good
Hope emailed Corona confirming its termination of the contract and requesting that
American Title return Desai’s earnest money to her. At trial, Good Hope presented
evidence that it declined to extend the contract because it needed the money to pay
the Harris County taxing authorities no later than July 1, 2014. In contrast, Desai
presented evidence to suggest that Good Hope terminated the contract because its
board members had met with a real-estate broker who told them that the property
was worth $3,500,000 to $5,500,000; much more than the $2,300,000 million
dollars that Desai had contracted to pay Good Hope.
The Jury Verdict
Desai filed suit against Good Hope on July 30, 2014, and, after several
continuances and the recusal of the first judge assigned to the case, the case
proceeded to trial on January 7, 2019. In Question 1 of the jury charge, the jury
was asked whether either party failed to comply with the contract. In its answer to
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Jury Question 1a, the jury found that Good Hope did not fail to comply; in its
answer to Jury Question 1b, the jury found that Desai did not fail to comply. In
Question 2, the jury was asked whether either parties’ failure to comply with the
contract was excused. In light of its negative answers to Jury Questions 1a and 1b,
the jury never reached Question 2. In Jury Question 3, the jury was asked “who
failed to comply with the Contract first.” Again, because of the negative answers to
Jury Questions 1a and 1b, the jury did not answer Jury Question 3. In Jury
Question 4, the jury was asked, “Was Amita Desai ready, willing and able to pay
Good Hope Missionary Baptist Church the sum of $2,300,000 at all times on and
after June 2, 2014 through the present?” The jury answered Jury Question 4,
“Yes.”
Post-Verdict Motions and Final Judgment
Post-verdict, Desai filed a Motion to Disregard Jury Finding, asking the trial
court to disregard the jury’s answer to Question 1a, in which the jury had found
that Good Hope did not breach the contract. Desai argued that the jury’s answer
was immaterial and should have been disregarded. Post-verdict, Good Hope filed a
Motion for Entry of Final Judgment and for Determination of Attorney’s Fees and
Costs. In its motion, Good Hope argued that because the jury found that it did not
breach the contract, it was the prevailing party. As the prevailing party, Good Hope
“mov[ed] for entry of a final judgment disposing of all issues and all parties[,]”
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and, argued that, under the contract, it was “entitled to recover its attorney’s fees
and costs.” Good Hope did not move to set aside the jury’s answers finding that
Desai did not breach the contract and that she was “ready, willing and able to pay .
. . at all times on and after [the June 2 closing through trial].” The trial court
granted Good Hope’s motion and denied Desai’s motion.
Thereafter, the trial court entered a Final Judgment in Good Hope’s favor,
awarded Good Hope reasonable and necessary attorney’s fees, and vacated the
notice of lis pendens previously filed by Desai. Desai filed a Motion for Judgment
Notwithstanding the Verdict and a Motion for New Trial, both of which the trial
court denied. This appeal followed.
SUFFICIENCY OF THE EVIDENCE
In her first issue on appeal, Desai contends that she “is entitled to specific
performance of the Contract,” because “[t]he evidence conclusively proved [Good
Hope’s] failure to comply with material terms of the contract.” Specifically, Desai
argues that “the jury’s failure to find breach by [Good Hope] should have been
disregarded as immaterial.”
Standard of Review and Applicable Law
A trial court may disregard a jury finding when the question is immaterial or
there is legally insufficient evidence to support the finding. Hall v. Hubco, Inc.,
292 S.W.3d 22, 27 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (citing
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Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994)). A
question is immaterial: “(1) if the question should not have been submitted; (2) if
the question was rendered immaterial by other findings, or (3) if the question
called for a finding not within the jury’s province, such as presenting a question of
law for the court.” Vecellio Ins. Agency, Inc. v. Vanguard Underwriters Ins. Co.,
127 S.W.3d 134, 140 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (citing
Spencer, 876 S.W.2d at 157). A trial court’s decision on a motion to disregard
based on a legal issue is reviewed de novo. Hall, 292 S.W.3d at 27– 28 (citing
Houston Lighting & Power Co. v. City of Wharton, 101 S.W.3d 633, 638 (Tex.
App.—Houston [1st Dist.] 2003, pet. denied)). When the motion to disregard is
based on a complaint that the evidence is legally insufficient, we employ the well-
settled legal sufficiency or “no evidence” review. See Tiller v. McLure, 121
S.W.3d 709, 713 (Tex. 2003). The evidence is legally insufficient when (1) the
record discloses a complete absence of evidence of a vital fact; (2) the court is
barred by rules of law or rules of evidence from giving weight to the only evidence
offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no
more than a mere scintilla; or (4) the evidence establishes conclusively the
opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).
In determining whether there is legally sufficient evidence, we must consider
evidence favorable to the finding if a reasonable factfinder could and disregard
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evidence contrary to the finding unless a reasonable factfinder could not. Id. at
807, 827.
Analysis
Desai argues that the evidence conclusively established that Good Hope
failed to comply with the material terms of the contract by: (1) failing to convey
the property and deliver a general warranty deed, (2) failing to procure a title-
insurance policy, and (3) failing to close by the closing date.
Good Hope responds, arguing that “ample evidence supports the jury’s
determination that [Good Hope] did not breach the contract.” In support, Good
Hope argues that, had Desai gone to the closing with the money, Good Hope could
have paid all the outstanding liens and “delivered good title to the Property free
and clear of all liens and encumbrances on the June 2, 2014 closing date required
by the contract.” The gist of this argument is that Desai breached the contract first
by not tendering the money at closing, thus Good Hope’s breach in failing to
deliver good title free and clear of liens was excused.
However, Good Hope cannot rely on a “prior material breach” by Desai to
argue that there is legally sufficient evidence of its own breach for at least two
reasons: (1) the jury found that Desai did NOT breach the contract, and (2) the
jury found that Desai was “ready, willing and able to pay [Good Hope] the sum of
$2,300,000 at all times on and after [the contractual closing date] through the
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present.”1 Good Hope did not challenge these jury answers, either at trial or on
appeal. Similarly, Good Hope moved for judgment on the verdict without asking
the trial court to disregard these two jury answers. See Casu v. Marathon Ref. Co.,
896 S.W.2d 388, 389 (Tex. App.—Houston [1st Dist.] 1995, writ denied); see also
Cosgrove v. Grimes, 757 S.W.2d 508, 510 (Tex. App.—Houston [1st Dist.] 1988),
rev’d on other grounds, 774 S.W.2d 662 (Tex. 1989) (“By moving for judgment in
accordance with the jury verdict without a motion to disregard unfavorable
answers, [appellee] affirmed that the jury’s findings on all material issues were
supported by the evidence, and he is bound thereby.”).
There was also undisputed evidence that other items on Schedule C, in
addition to items that might have been satisfied out of the sale proceeds, were still
unfulfilled and could not have been fulfilled by closing, such as the City of
Houston’s demolition liens and Good Hope’s corporate documents, which were
necessary to prove that those acting on Good Hope’s behalf actually had the
authority to sell the property.
Veronica Corona of American Title testified that “[t]here are some liens
that can be paid at closing such as payoffs . . . [h]owever, there are such liens in
this particular case like demolition liens that cannot be taken care [of] at payoff.”
1
Even though the issue of “prior material breach” was submitted to the jury, the
jury did not reach the issue because it found that neither party breached the
contract.
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Corona further testified that “a demolition requires certain documentation to be
provided to the city for the city to provide either a payoff or instructions on what
needs to be done to remove that demolition lien.” Corona stated, “I can’t take care
of that after closing. There’s no way for me to secure title after closing. I need that
prior to.”
Good Hope does not point to any evidence that the City of Houston’s
demolition liens were satisfied. Instead, it contends that “American Title advised
the parties days before the closing date that it, in lieu of [Good Hope], had
undertaken that particular task prior to closing.” Good Hope further argues that
“[it] did not refuse to timely obtain these releases prior to closing . . . [r]ather, the
title company’s unexplained delay in even requesting the releases—an obligation
that it imposed upon itself rather than [Good Hope]—caused the failure of the
releases to be escrowed prior to the June 2 closing date.”
Corona also presented uncontroverted testimony that before Good Hope
could deliver good title, she needed Good Hope’s articles of incorporation,
corporate resolutions, and an affidavit to show that the persons acting on Good
Hope’s behalf in the sale were, in fact, authorized to do so. These documents have
never been sufficiently provided.
In both instances, Good Hope does not point to any evidence that it actually
performed its obligations by providing the documents necessary to establish clear
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title. Instead, Good Hope argues that its performance is excused either (1) because
American Title undertook Good Hope’s contractual duty and American Title failed
to perform or (2) American Title canceled the closing thereby making Good
Hope’s performance a “useless act.” However, the contention that a party to a
contract is excused from performance is an affirmative defense that must be
affirmatively pleaded. See Compass Bank v. MFP Fin. Servs., Inc., 152 S.W.3d
844, 852 (Tex. App.—Dallas 2005, pet. denied). If an affirmative defense or
avoidance is not expressly pleaded, the party cannot rely on the defense as a bar to
liability. See MAN Engines & Components, Inc. v. Shows, 434 S.W.3d 132, 136–37
(Tex. 2014). Additionally, a party must not only plead its affirmative defenses; it
must also obtain jury findings on those issues. See TEX. R. CIV. P. 279.
The only affirmative defense of excuse that Good Hope pleaded was a “prior
material breach” by Desai, an issue the jury did not reach because it found that
Desai did not breach the contract.2 Good Hope did not plead, or obtain jury
findings, on any of the other excuses it now offers for its failure to perform its
obligations under the contract. Similarly, Good Hope did not file a claim against
2
In Good Hope’s live trial pleading, the only “excuse” affirmative defense pleaded
by Good Hope was that “[Good Hope’s] conduct was excused and in compliance
with the contract, and/or closing was justified due to [Desai’s] failure to tender
required funding an[d] perform pursuant to the terms of the sales contract.”
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American Title as a responsible third party under Texas Civil Practices and
Remedies Code section 33.004. See TEX. CIV. PRAC. & REM. CODE § 33.004.
There being no evidence that Good Hope performed its obligations under the
contract, the trial court erred in denying Desai’s motion to disregard the jury’s
answer to Question 1, subsection 1a.
Specific Performance
Having determined that Desai conclusively established Good Hope’s breach,
and that the trial court erred in not disregarding the jury’s answer that Good Hope
did not breach the contract, we turn to the issue of whether Desai is entitled to
specific performance of the contract.
Specific performance is an equitable remedy that may be awarded upon a
showing of breach of contract. Ifiesimama v. Haile, 522 S.W.3d 675, 685 (Tex.
App.—Houston [1st Dist.] 2017, pet. denied); Stafford v. S. Vanity Magazine, Inc.,
231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet. denied). Specific performance
is not a separate cause of action but is instead an equitable remedy that is used as a
substitute for monetary damages when such damages would not be adequate.
Ifiesimama, 522 S.W.3d at 685; Stafford, 231 S.W.3d at 535.
Breach of contract requires pleading and proof that (1) a valid contract
exists; (2) the plaintiff performed, or tendered performance as contractually
required; (3) the defendant breached the contract by failing to perform or tender
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performance as contractually required; and (4) the plaintiff sustained damages due
to the breach. Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d
882, 890 (Tex. 2019). A party seeking the equitable remedy of specific
performance in lieu of money damages may, in some circumstances, be excused
from pleading and proving the second element, but must additionally plead and
prove that, at all relevant times, it was ready, willing, and able to perform under the
contract. Id. Contested fact issues, including prerequisites to obtaining equitable
relief, are for the jury to resolve, and the burden of proof is on the party seeking a
remedy. Id.All elements entitling Desai to specific performance are present in this case.
See Pathfinder, 574 S.W.3d at 890 (setting forth breach of contract elements and
explaining how proven in claims for specific performance). All parties concede
that a valid contract exists. In lieu of proving that she tendered the money, Desai
obtained a jury answer that she was “ready, willing and able to pay [Good Hope]
the sum of $2,300,000 at all times on and after June 2, 2014 through the present.”
Good Hope neither moved to set aside this jury finding, nor did it challenge the
finding on appeal; indeed, it moved to enter judgment on the verdict without
challenging this adverse finding. And, we have already held that Desai
conclusively established that Good Hope breached the contract and that the trial
court erred by refusing to set aside the jury answer that Good Hope did not breach
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the agreement. It is uncontested that Desai suffered damages because of Good
Hope’s breach of the contract. See Pathfinder, 574 S.W.3d at 890.
Accordingly, we sustain issue one, reverse the judgment of the trial court,
and render judgment in favor of Desai on her request for specific performance of
the agreement.
ATTORNEY’S FEES
After the jury verdict, the trial court awarded attorney’s fees to Good Hope
as the “prevailing party.” In issue two, Desai contends the trial court erred in
awarding Good Hope its attorney’s fees; she contends that, as the prevailing party
she should recover her attorney’s fees. We agree for two reasons.
First, the contract provides:
A Buyer, Seller, Listing Broker, Other Broker, or escrow agent who
prevails in any legal proceeding related to this contract is entitled to
recover reasonable attorney’s fees and all costs of such proceeding.
Second, Section 38.001(8) of the Texas Civil Practice and Remedies Code
provides for the recovery of reasonable attorney’s fees associated with a successful
claim on an oral or written contract. TEX. CIV. PRAC. & REM. CODE § 38.001(8). To
recover attorney’s fees under this chapter, the claimant must (1) prevail on a cause
of action for which attorney’s fees are recoverable and (2) recover damages. Green
Int’l v. Solis, 951 S.W.2d 384, 390 (Tex. 1997). The Texas Supreme Court has
established that a party satisfies this test when the court awards the party
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“something, either monetary or equitable.” Intercont’l Grp. P'ship v. KB Home
Lone Star L.P., 295 S.W.3d 650, 655 (Tex. 2009).
Since we have rendered judgment in favor of Desai on her equitable, specific
performance claim, she is the prevailing party under both the contract and section
38.001(8). Accordingly, we reverse the judgment in favor of Good Hope on the
issue of attorney’s fees and remand for a determination of Desai’s claim for
attorney’s fees.
CONCLUSION
We reverse the portion of the judgment ordering that Desai take nothing
from Good Hope, and we render judgment in favor of Desai on her claim for
specific performance of the contract. We also reverse the portion of the judgment
awarding Good Hope reasonable and necessary attorney’s fees, costs, and interest,
and, having determined that Desai is the prevailing party, we remand for a
determination of her reasonable and necessary attorney’s fees, costs, and interest.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Goodman and Farris.
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