Opinion
No. 05-15-00375-CV
03-30-2016
DIERS, JONES & STARK, INC., Appellant v. COMERICA BANK, Appellee
On Appeal from the 298th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-14-06296
MEMORANDUM OPINION
Before Justices Bridges, Evans, and O'Neill
Opinion by Justice Bridges
The Hon. Michael J. O'Neill, Justice, Assigned
This case involves the granting of summary judgment in favor of appellee Comerica Bank based on appellant Diers, Jones, & Stark, Inc.'s underlying breach of contract suit. In four issues, Diers argues fact issues preclude summary judgment on its claims for breach of contract, fraud, negligent misrepresentation, and quantum meruit. We affirm the trial court's judgment.
Background
In March 2007, Five B's Inc. executed and delivered to Comerica an installment note for $1,652,000. At the same time, Five B's Inc. executed and delivered to Comerica a preferred fleet mortgage on three vessels: (1) "Beverly G. Barrios," (2) "Capt. Les Barrios," and (3) "TKL Barrios." Five B's Inc. later defaulted on the note. Following a bankruptcy proceeding initiated by Five B's Inc., Comerica entered into a consent order allowing the foreclosure of its interest in the vessels.
Diers had experience in marine surveying, consulting, appraising, and selling vessels. In November 2013, Comerica entered into a contract with Diers, entitled "Sales Agreement," in which Diers agreed to solicit bids for a private sale of the vessels by sealed bid. The Sales Agreement repeatedly identified Comerica as "Secured Party."
Diers opened bids on January 10, 2014 and notified Comerica of the highest bidders. Comerica asked Diers to attempt to get higher bids, and Diers successfully increased the amount of two bids. Diers forwarded the increased bids to Comerica, who immediately accepted them. Diers claimed that despite Comerica accepting the bids, Comerica delayed completion of the sales by not furnishing clean, unencumbered titles for the three vessels, which resulted in the buyers withdrawing their bids on the vessels.
Comerica accepted the following bids: (1) "Beverly G. Barrios" for $355,000; (2) "Capt. Les Barrios" for $226,000; and (3) "TKL Barrios" for $90,000.
After the sales fell through, Comerica arranged for the U.S. Marshal Service to seize and sell all three vessels. The federal marshal sale occurred on June 4, 2014. Comerica purchased all three vessels for $655,000, which was $16,000 less than the highest bids Diers received.
Diers filed suit against Comerica for breach of contract and fraud. Comerica and Diers filed cross-motions for summary judgment on the contract claim. Diers then amended its petition adding a quantum meruit claim. On October 17, 2014, the trial court denied Diers's motion for summary judgment and granted Comerica's motion for summary judgment as to Diers's breach of contract claim. Diers amended its petition again on January 13, 2015 and added a claim for negligent misrepresentation. Comerica then moved for summary judgment on Diers's remaining quantum meruit, fraud, and negligent misrepresentation claims. After considering the motion and responses, the trial court granted summary judgment in favor of Comerica on Diers's remaining claims.
Diers appeals the partial summary judgment entered on October 17, 2014 and the final summary judgment entered on March 20, 2015 in favor of Comerica.
Standard of Review
We review the trial court's summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We apply the well-established standards for reviewing summary judgments. TEX. R. CIV. P. 166a(c); Hill v. Hill, 460 S.W.3d 751, 757 (Tex. App.—Dallas 2015, pet. denied). The summary judgment movant must show there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law on the issues expressly set out in the motion. TEX. R. CIV. P. 166a(c). In our review, we credit evidence favorable to the non-movant if reasonable jurors could and disregard evidence contrary to the non-movant unless reasonable jurors could not. CPM Trust v. City of Plano, 461 S.W.3d 661, 668 (Tex. App.—Dallas 2015, no pet.). If the movant meets its burden, the burden shifts to the non-movant to respond and present evidence raising a genuine issue of material fact. Hill, 460 S.W.3d at 757.
Breach of Contract Claim
In its first issue, Diers argues it is entitled to prevail on its breach of contract claim because under the plain language of the Sales Agreement, it earned its twelve percent commission despite the sales never being consummated. Diers contends the terms "from the consummated sale" describes only where the money to pay its commission would come from, not when the commission was fully earned and due. Diers insists to conclude otherwise would result in it being defrauded because Comerica would be allowed to reap the benefit of Diers's work in setting up the private bid sale without paying for it. Comerica responds that based on the plain language of the Sales Agreement there was no consummated sale of the vessels entitling Diers to a commission; therefore, Comerica did not breach or fail to comply with the contract.
Diers and Comerica filed cross-motions for summary judgment on the breach of contract claim. In our review of the cross-motions, we review the summary judgment evidence presented by each party, determine all questions presented, and render the judgment the trial court should have rendered. Tex. Mun. Power Agency v. Pub. Util. Comm'n, 253 S.W.3d 184, 192 (Tex. 2007).
The construction of an unambiguous contract is a question of law, which we review de novo. Matheson Tri-Gas, Inc. v. Atmel Corp., 347 S.W.3d 339, 343 (Tex. App.—Dallas 2011, no pet.). Our primary concern is to determine the true intent of the parties as expressed in the agreement. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To determine the parties' intent, we examine the entire agreement and give effect to all its provisions so that none are rendered meaningless. Id. We do not consider the parties' present interpretations of the agreement, and we are not concerned with the parties' subjective intent. Matheson Tri-Gas, Inc., 347 S.W.3d at 343.
The paragraph at issue in the Sales Agreement provided in relevant part:
11. [Comerica] agrees to pay Diers Jones & Stark for the services rendered a commission of twelve percent (12%) of the final bid price from the consummated sale of the Vessels accepted by Comerica. A full commission shall be due and payable to Diers Jones & Stark, Inc. from the proceeds of the sale of the Vessels at the Bid Sale.Diers argues the unambiguous language of the contract allows for it to receive a twelve percent commission of the final bid price accepted by Comerica; however, to read the paragraph as such requires us to ignore the relation of the commission to a completed sale in both sentences of paragraph 11. In the first sentence, the commission is twelve percent of the sale price "from the consummated sale of the Vessels" and in the second sentence, the commission is payable from the "proceeds of the sale." Our review requires us to examine the entire agreement and give effect to all its provisions so that none are rendered meaningless. Coker, 650 S.W.2d at 393.
The word "consummated" is not defined by the Sales Agreement. When words are not defined in a contract, we interpret them according to their plain and ordinary meaning. Gray & Co. Realtors, Inc. v. Atl. Hous. Found., Inc., 228 S.W.3d 431, 435 (Tex. App.—Dallas 2007, no pet.). The word "consummated" is commonly defined as "completed; fully accomplished." Consummate, BLACK'S LAW DICTIONARY (7th ed. 1999).
This Court considered the meaning of "consummate" in a similar provision in Gray & Co. Realtors, Inc. 228 S.W.3d at 435. In that case, the parties entered into a "representative agreement" in which Gray & Co. was entitled to receive a broker's commission in the amount of $900,000 if a sales transaction was consummated or closed. Id. at 432. Gray & Co. argued the temporary transfer of nominal title to the properties was sufficient to "consummate" the transaction and therefore trigger the obligation to pay the broker's commission. Id. After applying the plain meaning of "consummate," we concluded the transaction was not completed or accomplished because the purchaser did not perform its obligation to pay the net purchase price for the properties. Id. Applying the same reasoning to the present facts, it is undisputed the sale of the vessels was never completed or accomplished. Considering the Sales Agreement provision as a whole, the plain language required a completed sale before Diers received its commission.
In reaching this conclusion, we are unpersuaded by Diers's argument it was entitled to commission because it found bidders to purchase the vessels and through no fault of its own, the bidders withdrew their offers. Its argument is based on the well-established legal principle that a broker is entitled to a commission at the time he procures a buyer ready, willing, and able to make an enforceable contract to purchase the seller's property on terms acceptable to him. However, the cases cited by Diers recognize a broker and seller may expressly contract otherwise and alter the time at which a broker is entitled to a commission. See Callaway v. Overholt, 796 S.W.2d 828, 832 (Tex. App.—Austin 1990, writ denied) (noting parties "may contract, for example, that the broker's legal right to a commission shall be contingent upon the actual 'sale' of the property"); see also Loma Vista Dev. Co. v. Johnson, 180 S.W.2d 922, 924 (Tex. 1944) (noting that in the absence of a special agreement, a broker is entitled to his commission when he finds a buyer who is ready, able, and willing to buy); Stevens v. Karr, 33 S.W.2d 725, 485-86 (Tex. 1930) (commission is usually owed when a broker finds customer ready, willing, and able to enter into contract unless there is a stipulation making compensation depend on performance of the contract or the happening of some other event). The Sales Agreement expressly altered this general rule and instead allowed for a commission only based on the amount of and from the proceeds of a consummated sale of the vessels. Thus, the trial court properly granted summary judgment in favor of Comerica as a matter of law on Diers's breach of contract claim. We overrule Diers's first issue.
Fraud and Negligent Misrepresentation Claims
In its second issue, Diers argues the trial court erred by granting summary judgment in favor of Comerica on its fraud and negligent misrepresentation claims because Diers raised a fact issue as to whether it relied on Comerica's false representations it had clean, clear title to the three vessels. While Comerica denies making any false representations, it argues Diers cannot establish it justifiably relied on the alleged false representations because Diers knew Comerica was not the owner of the vessels.
Both fraud and negligent misrepresentation require a plaintiff to show actual and justifiable reliance. Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010). In measuring justifiability, we must inquire whether, "given the fraud plaintiff's individual characteristics, abilities, and appreciation of facts and circumstances at or before the time of the alleged fraud[,] it is extremely unlikely that there is actual reliance on the plaintiff's part." Id. (citing Haralson v. E.F. Hutton Grp., Inc., 919 F.2d 1014, 1026 (5th Cir. 1990) (applying Texas law)). Further, "a person may not justifiably rely on a representation if there are 'red flags' indicating such reliance is unwarranted." Id.
The Sales Agreement defined Comerica as "Comerica or Secured Party." The Sales Agreement then specifically referenced Comerica as "Secured Party" eight different times. Further, paragraph 1 of the Sales Agreement stated, "Diers, Jones, and Stark, Inc. agree to conduct a Sale by Sealed Bid to sell three (3) Vessels owned by Five B's Inc., who assigned and granted a mortgage security interest to Comerica." Thus, Diers knew Comerica did not own the vessels.
Despite evidence establishing its knowledge of ownership, Diers argues it raised a fact issue through Harry Stark's affidavit. Stark testified Charles Prack, a vice president for Comerica, stated "the vessel's titles had already been cleared of any and all liens by the bankruptcy Court." However, we cannot conclude this statement creates a fact issue. The alleged misrepresentation occurred prior to the parties entering into the Sales Agreement. Therefore, even if Prack made the alleged false representation, Diers could not have justifiably relied on it when it later signed a contract explicitly stating Comerica did not own the vessels and was only a secured party. Further, the Sales Agreement stated "Secured Party" agreed to sell the vessels "'as is, where is' with no representations or warranties of any kind or character to the purchaser(s)." Therefore, if Diers believed Comerica owned clean, clear titles to the vessels before signing the Sales Agreement, the contrary information in the Sales Agreement was a "red flag" indicating such reliance was unwarranted.
Because the summary judgment evidence conclusively establishes Diers could not have justifiably relied on any purported misrepresentation as to title of the vessels, the trial court properly granted summary judgment on its fraud and negligent misrepresentation claims. Diers's second issue is overruled.
Quantum Meruit
In its third issue, Diers argues the trial court erred by granting summary judgment on its quantum meruit claim because it partially performed an express contract, but was prevented from completing the Sales Agreement because of Comerica's actions. Comerica responds Diers cannot recover in quantum meruit because there was no implied contract, and it did not breach the Sales Agreement.
Quantum meruit is an equitable remedy that does not arise out of contract, but is independent of it. Vortt Expl. Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). Generally, a party may recover under quantum meruit only where there is no express contract covering the services or materials furnished. Id.
In its response to Comerica's motion for summary judgment, Diers argued as follows:
Here, DJ&S was prevented from fully performing because Comerica had not cleared the titles to the vessels in bankruptcy. Thus, the winning bidders eventually withdrew their bids. Accordingly fact issues exist as to:As discussed above, Diers knew Comerica did not own the vessels. Further, Diers was owed a commission only if there was a consummated sale of the vessles, which did not occur. Diers has not alleged that Comerica breached the Sales Agreement in any way, other than failing to pay a commission. See Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988) (quantum meruit claim fails when express contract covers the subject matter of a claim). Because Comerica did not breach the contract, its actions did not prevent Diers from completing the contract. Id. (quantum meruit recovery allowed if because of defendant's breach, plaintiff is prevented from completing contract). Accordingly, Diers's quantum meruit claim fails. We overrule Diers's third issue.
1. Whether Comerica had properly cleared the titles in bankruptcy;
2. Whether Comerica's actions prevented DJ&S from fully performing.
We acknowledge Diers also argues a fact issue exists as to whether Comerica accepted the services it provided; however, Diers did not expressly present this ground to the trial court in its summary judgment response. Thus, we cannot consider it on appeal. See TEX. R. CIV. P. 166a(c) (issues not expressly presented to the trial court shall not be considered on appeal as grounds for reversal); Strange v. HRsmart, Inc, 400 S.W.3d 125, 128 (Tex. App.—Dallas 2013, no pet.) (appellate review of summary judgment is limited to those issues presented to the trial court).
Diers's brief includes a fourth issue in which it reargues that fact issues exist precluding summary judgment on its contract, fraud, negligent misrepresentation, and quantum meruit claims. Because we considered and overruled these arguments, Diers's fourth issue is moot. TEX. R. APP. P. 47.1. --------
Conclusion
The judgment of the trial court is affirmed.
/David L. Bridges/
DAVID L. BRIDGES
JUSTICE 150375F.P05
JUDGMENT
On Appeal from the 298th Judicial District Court, Dallas County, Texas
Trial Court Cause No. DC-14-06296.
Opinion delivered by Justice Bridges. Justices Evans and O'Neill participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee COMERICA BANK recover its costs of this appeal from appellant DIERS, JONES & STARK, INC. Judgment entered March 30, 2016.