Opinion
No. 05-08-01329-CV
Opinion Filed November 10, 2009.
On Appeal from the County Court at Law No. 1, Collin County, Texas, Trial Court Cause No. 001-187-08.
Before Chief Justice WRIGHT and Justices RICHTER and FILLMORE.
MEMORANDUM OPINION
Appellants Jerry and Frank Billy sued appellee Jim Savoy for breach of contract. The trial court entered a take nothing judgment and awarded Savoy, as the prevailing party, attorney's fees and costs. On appeal, the Billys challenge the legal sufficiency of the evidence to support the trial court's judgment asserting, in four issues, that the evidence conclusively established Savoy breached the contract, the treble damages provision in the contract is enforceable, and, as the prevailing party, the Billys were entitled to recover their attorney's fees. Because the issues in this appeal involve the application of well-settled principles of law, we issue this memorandum opinion. See Tex. R. App. P. 47.2(a), 47.4. We affirm the trial court's judgment.
Background
Savoy entered into a contract to purchase real property from the Billys and placed $5,000 in earnest money into an escrow account. The purchase contract provided that, in the event Savoy defaulted, the Billys could "(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." Savoy failed to close on the contract and orally instructed the escrow agent to release the earnest money to the Billys.
The Billys sent written notification to Savoy and the escrow agent that the Billys were not making a demand for the earnest money as liquidated damages and that they refused to consent to the release of the earnest money. The Billys indicated the "refusal to consent to the release of the earnest money shall be on-going and shall be effective as a refusal in the event that the escrow agent takes any action as set forth in paragraph 18 of the contract."
Paragraph 18 of the contract provided in relevant part:
C. DEMAND: Upon termination of this contract, either party or the escrow agent may send a release of earnest money to each party and the parties shall execute counterparts of the release and deliver same to the escrow agent. If either party fails to execute the release, either party may make a written demand to the escrow agent for the earnest money. If only one party makes written demand for the earnest money, escrow agent shall promptly provide a copy of the demand to the other party. If escrow agent does not receive written objection to the demand from the other party within 15 days, escrow agent may disburse the earnest money to the party making demand reduced by the amount of unpaid expenses incurred on behalf of the party receiving the earnest money and escrow agent may pay the same to the creditors. If escrow agent complies with the provisions of this paragraph, each party hereby releases escrow agent from all adverse claims related to the disbursal of the earnest money.
The Billys were unsuccessful in locating another buyer for the property and, seven months after Savoy failed to close on the property, notified Savoy that they were exercising their right to receive the earnest money as liquidated damages. The Billys requested Savoy sign a release authorizing the escrow agent to transfer the earnest money to the Billys. Approximately three weeks later, the escrow agent sent a release to the Billys and to Savoy and indicated all parties were required to give the escrow agent the same instructions before the funds could be released. Neither the Billys nor Savoy signed the release within seven days of receiving it from the escrow agent. The Billys sued Savoy for breach of contract. Savoy answered the lawsuit by filing a signed copy of the requested release. At some point before trial, the Billys received the $5,000 in earnest money from the escrow agent. The Billys, however, proceeded to trial before the court, arguing they were entitled to treble liquidated damages because paragraph 18(D) of the contract provided that "[a]ny party who wrongfully fails or refuses to sign a release acceptable to the escrow agent within 7 days of receipt of the request will be liable to the other party for liquidated damages of three times the amount of earnest money."
The trial court entered judgment that the Billys take nothing on their breach of contract claim and awarded Savoy attorney's fees and costs. The trial court also entered findings of fact that the Billys terminated the contract and elected to receive Savoy's earnest money; Savoy agreed the earnest money could be released to the Billys; Savoy signed a release for the earnest money; the Billys did not sign a release of the earnest money; damages were capable of determination and not speculative; and Savoy had incurred $4,620.00 in attorney's fees. The trial court concluded that the treble damages provision relied upon by the Billys was void as a penalty and that Savoy, as the prevailing party, was entitled to attorney's fees. The Billys appealed.
Standard of Review
The trial court's findings of fact have the same force and effect as a jury's verdict and may be reviewed for legal and factual sufficiency under the same standards as jury verdicts. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996) (per curiam); Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 888 (Tex. App.-Dallas 2009, no pet.). When the party who had the burden of proof at trial complains on appeal of the legal insufficiency of the evidence to support an adverse finding, that party must demonstrate the evidence establishes conclusively, i.e., as a matter of law, all vital facts in support of the finding sought. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam); Johnson v. Kindred, 285 S.W.3d 895, 898 (Tex. App.-Dallas 2009, no pet.). We must credit evidence favorable to the adverse finding if a reasonable fact finder could and disregard all contrary evidence unless a reasonable fact finder could not. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005); Francis, 46 S.W.3d at 241; Carbona v. CH Med., Inc., 266 S.W.3d 675, 682 (Tex. App.-Dallas 2008, no pet.). The evidence is legally sufficient if it would enable fair-minded people to reach the verdict under review. City of Keller, 168 S.W.3d at 827. If we find no evidence supporting the finding, we then determine whether the contrary was established as a matter of law. Francis, 46 S.W.3d at 241; Moore v. First Fin. Resolution Enters., Inc., 277 S.W.3d 510, 516 (Tex. App.-Dallas 2009, no pet.). We may not review the legal sufficiency of the evidence to support conclusions of law, but may review the correctness of the conclusions as drawn from the facts. In re Miller, No. 05-08-00627-CV, 2009 WL 3194443, at *6 (Tex. App.-Dallas Oct. 7, 2009, no pet. h.) (en banc).
Breach of Contract
In their first two issues, the Billys contend the evidence established as a matter of law that Savoy breached the purchase contract and wrongfully refused or failed to timely sign the release provided by the escrow agent. The Billys do not challenge any specific fact finding of the trial court. The only conclusion of law by the trial court that appears subject to challenge by the Billys' first two issues is that Savoy was the prevailing party. We, therefore, review whether, based on the facts, the trial court correctly concluded Savoy was the prevailing party.
The Billys had the burden of proving Savoy breached the contract. See Vance v. My Apartment Steakhouse of San Antonio, Inc., 677 S.W.2d 480, 482 (Tex. 1984) ("It is a well accepted postulate of the common law that a civil litigant who asserts an affirmative claim for relief has the burden to persuade the finder of fact of the existence of each element of his cause of action."). Although the Billys attempt to cast the issue as whether Savoy breached the purchase contract, the Billys terminated the contract when they elected to receive Savoy's earnest money as liquidated damages. Further, in their pleadings, the Billys sought to recover $15,000 as treble liquidated damages due to Savoy's failure to timely sign the release from the escrow agent. The issue, therefore, is whether the evidence conclusively established Savoy wrongfully refused or failed to timely sign the release provided by the escrow agent and, therefore, breached the contract.
Savoy admits he did not sign the release within seven days of receiving it from the escrow agent. Paragraph 18(D) of the purchase contract, however, requires a "wrongful" failure or refusal to timely sign a requested release before the treble liquidated damages clause is triggered. Although the contract does not define what constitutes a "wrongful" failure or refusal to timely sign the release, it clearly requires something more than merely failing or refusing to timely sign a requested release. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) (When construing a contract, "we must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless."); Worldwide Asset Purchasing, L.L.C. v. Rent-A-Center East, Inc., 290 S.W.3d 554, 560 (Tex. App.-Dallas 2009, no pet.).
The Billys argue that Savoy had no legal excuse for his failure to close on the purchase contract, and, therefore, his failure to timely sign the release was wrongful. The evidence showed, however, that Savoy consented to the release of the escrow funds to the Billys shortly after the scheduled closing, the Billys refused the funds at that time, and the Billys noted the refusal would be ongoing as to any request by the escrow agent for a signed release of the funds. After seven months, the Billys demanded the release of the funds, and the escrow agent provided both parties with a release for the funds and requested both parties give identical instructions regarding the funds. Savoy testified that after he received the request from the escrow agent, he contacted the Billys' attorney and attempted to resolve the dispute informally, as contemplated by the contract, by making a settlement offer. According to Savoy, he did not receive a response to his offer prior to being sued. Finally, the Billys failed to timely sign the requested release, and there was no evidence Savoy's failure to timely sign the release, as opposed to the Billys' failure to timely sign the release, prevented the transfer of the escrow funds to the Billys.
Paragraph 16 of the contract stated:
MEDIATION: It is the policy of the State of Texas to encourage resolution of disputes through alternative dispute resolution procedures such as mediation. Any dispute between Seller and Buyer related to this contract which is not resolved through informal discussion [will] be submitted to a mutually acceptable mediation service or provider. The parties to the mediation shall bear the mediation costs equally. This paragraph does not preclude a party from seeking equitable relief from a court of competent jurisdiction.
Reviewing the evidence in the light most favorable to the trial court's findings, we conclude the trial court did not err by determining Savoy did not breach the contract and, therefore, was the prevailing party. Accordingly, we overrule the Billys' first two issues.
Because Savoy did not breach the contract, the treble liquidated damages clause in paragraph 18(D) of the contract was not triggered. Therefore, we need not address the Billys' argument in their third issue that the treble liquidated damages provision is enforceable. See Tex. R. App. P. 47.1; Karlseng v. Cooke, 286 S.W.3d 51, 58 (Tex. App.-Dallas 2009, no pet.).
Attorney's Fees
In their fourth issue, the Billys assert they were entitled to prevail at trial and recover their attorney's fees from Savoy. The trial court, however, entered a take nothing judgment against the Billys. Because the Billys recovered no damages at trial, they were not the prevailing party and were not entitled to attorney's fees. Intercontinental Group P'ship v. KB Homes Lone State, L.P., No. 07-0815, 2009 WL 2667854, at *3 (Tex. Aug. 28, 2009) (plaintiff who does not receive judgment for damages or other relief has not prevailed and is not entitled to attorney's fees). We overrule the Billys' fourth issue.
We affirm the trial court's judgment.