Opinion
No. 04-05-00075-CV
Delivered and Filed: January 25, 2006.
Appeal from the 229th Judicial District Court, Jim Hogg County, Texas, Trial Court No. CC-03-55, Honorable Alex W. Gabert, Judge Presiding.
Reversed and Remanded.
Sitting: Alma L. LÓPEZ, Chief Justice, Catherine STONE, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Jose Ramirez, Jr. and Anabel Ramirez-Manning appeal the directed verdict granted in favor of Jose Flores and the denial of their motion for a directed verdict in their suit for reformation of a warranty deed. We reverse the trial court's judgment and remand the cause to the trial court for further proceedings.
Background
Jose Ramirez, Jr. and Anabel Ramirez-Manning (collectively the" Ramirezes") owned 240.305 acres of real property in Jim Hogg County, Texas. They agreed to sell the property and 1/16 of the mineral estate to Jose Flores on January 12, 1999 for $144,000. After the sale closed, the Ramirezes learned that because of a mistake by the title company, Border Title Group, the warranty deed transferred to Flores the surface estate and the entire mineral estate. The Ramirezes attempted to get Flores to reform the deed to reflect the parties' agreement that only the surface estate and 1/16 of the mineral estate were being sold. Flores refused, and the Ramirezes filed suit for reformation of the deed.
After the close of the evidence in the jury trial, both parties moved for a directed verdict. The Ramirezes claimed they were entitled to a directed verdict because the evidence conclusively proved their right to judgment as a matter of law. By contrast, Flores maintained that he was entitled to a directed verdict because the evidence did not raise a fact issue as to the elements the Ramirezes had to establish to be entitled to judgment. The trial court considered the parties' motions and concluded the evidence presented did not raise a fact issue on the elements that the Ramirezes had to establish to be entitled to judgment. Accordingly, the trial court denied the Ramirezes' motion for a directed verdict and instead directed a verdict in favor of Flores. The Ramirezes appeal, claiming the trial court erroneously denied their motion for a directed verdict and improperly granted Flores a directed verdict.
Standard of Review
A party is entitled to a directed verdict only when reasonable minds could reach but one conclusion under the available evidence. Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 483 (Tex. 1984). A directed verdict is proper when: (1) the opponent's pleadings are insufficient to support a judgment; (2) the evidence conclusively proves a fact that establishes a party's right to judgment as a matter of law; or (3) the evidence offered on a cause of action is insufficient to raise an issue of fact. Koepke v. Martinez, 84 S.W.3d 393, 395 (Tex.App.-Corpus Christi 2002, pet. denied); Rudolph v. ABC Pest Control, Inc., 763 S.W.2d 930, 932 (Tex.App.-San Antonio 1989, writ denied). An appeal from the denial of a motion for a directed verdict is essentially a challenge to the legal sufficiency of the evidence. Kershner v. State Bar of Tex., 879 S.W.2d 343, 346 (Tex.App.-Houston [14th Dist.] 1994, writ denied).
When reviewing the granting of a directed verdict, we must view the evidence in a light most favorable to the non-moving party and disregard evidence that is contrary to the verdict. Porterfield v. Brinegar, 719 S.W.2d 558, 559 (Tex. 1986). As the supreme court recently clarified, this means we must "credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). "If there is any conflicting evidence of probative value on any theory of recovery, a [directed] verdict is improper and the case must be reversed and remanded for jury determination of that issue." Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994). "Where no evidence of probative force on an ultimate fact element exists or where the probative force of [certain] testimony is so weak that only a mere surmise or suspicion is raised as to the existence of essential facts, the trial court has the duty to instruct the verdict." Univ. Nat'l Bank v. Ernst Whinney, 773 S.W.2d 707, 709-10 (Tex.App.-San Antonio 1989, no writ).
Discussion
On appeal, the Ramirezes maintain that the trial court erroneously denied their motion for a directed verdict and improperly directed a verdict in favor of Flores when the record evidence proves their right to reformation as a matter of law. The Ramirezes argue that the only evidence presented at trial is evidence that conclusively proves the warranty deed does not embody the true agreement of the parties due to a mutual mistake. Accordingly, the Ramirezes ask that we reverse and render judgment in their favor, or, in the alternative, reverse and remand for further proceedings.
A party is entitled to reformation of a deed upon proving the party reached an agreement with the other party, but the deed does not reflect the true agreement due to a mutual mistake. Thalman v. Martin, 635 S.W.2d 411, 413 (Tex. 1982). A mutual mistake is "one common to both or all parties, wherein each labors under the same misconception respecting a material fact, the terms of the agreement, or the provision of a written instrument designed to embody such an agreement." Allen v. Berrey, 645 S.W.2d 550, 553 (Tex.App.-San Antonio 1982, writ ref'd n.r.e.). "A mutual mistake is generally established from all the facts and circumstances surrounding the parties and the execution of the instrument." Henderson v. Henderson, 694 S.W.2d 31, 34 (Tex.App.-Corpus Christi 1985, writ ref'd n.r.e.). It is well settled that a scrivener's "failure to embody the true agreement of the parties in the written [instrument] is such mistake as to afford ground for reformation for mutual mistake." Louviere v. Power, 389 S.W.2d 333, 335 (Tex.Civ.App.-Waco 1965, writ ref'd n.r.e.); see also Henderson, 694 S.W.2d at 34.
Turning to the record, we must consider whether there is any evidence of probative value raising issues of fact on the material question presented. At trial, Leticia Perez, a senior escrow officer at Border Title Group, testified that her company insures title to real estate and handles closings for real estate transactions. She explained that in a typical real estate transaction, her company usually receives a copy of the earnest money contract together with the earnest money from the parties. Once received, Border Title Group escrows the earnest money, examines the title to the property, and issues a title commitment. The company then forwards the title commitment to one of its attorneys, who will prepare a warranty deed for the property. If there are any specific reservations that are to be included in the warranty deed, the company will also furnish the attorney preparing the deed a copy of the relevant documentation explaining the parties' reservations. For example, Perez indicated that if the parties made specific reservations in the earnest money contract, the company would forward the earnest money contract along with the title commitment to the attorney preparing the warranty deed.
Perez stated the earnest money contract in this case reflects that the Ramirezes agreed to convey to Flores the surface estate and 1/16 of the mineral estate. The document noted that the parties agreed the remaining 15/16 of the mineral estate were specifically reserved to the Ramirezes. Perez stated that the warranty deed should have included this 15/16 mineral estate reservation to the Ramirezes; however, due to a mistake on the part of Border Title Group the warranty deed failed to include the Ramirezes' 15/16 mineral estate reservation. Perez testified that due to an oversight, her company failed to furnish the attorney responsible for preparing the warranty deed with a copy of the earnest money contract when the title commitment was forwarded to the attorney. As a result, the warranty deed was prepared to convey the entire mineral estate to Flores rather than just 1/16 of the mineral estate. Perez further stated that nothing in her company's file reflects that either the parties or their representatives ever instructed Border Title Group to deviate from the terms of the earnest money contract when drafting the warranty deed.
Anabel Ramirez-Manning testified only the surface estate and 1/16 of the mineral estate were to be conveyed to Flores, nothing more. Anabel testified she did not know of any subsequent agreements between the parties which would have changed the terms of their original agreement. Anabel's brother, Jose Ramirez, likewise testified that he and his sister agreed to convey only the surface estate and 1/16 of the mineral estate to Flores. Ramirez testified that he and his sister did not enter into any subsequent agreements with Flores to change the terms of the earnest money contract. He further testified that Border Title Group's mistake led to the omission of the 15/16 mineral estate reservation from the warranty deed.
Finally, Jose Flores testified that he signed the earnest money contract reflecting that he was purchasing the surface estate and 1/16 of the mineral estate from the Ramirezes on January 12, 1999. Flores stated that, pursuant to the terms of the contract, he gave the Ramirezes' agent, John Smith, $2,500 in earnest money after he signed the agreement. He testified that the parties were supposed to close on the property on January 15, 1999; however, the parties did not close on that date because the Ramirezes lacked certain signatures needed to complete the transaction.
John Smith was unavailable to testify at trial because he passed away before the case was tried.
After the parties did not close, Flores continued to speak with the Ramirezes' agent over the next six months regarding the status of the Jim Hogg County property. Flores informed Smith that he was losing interest in the Ramirezes' property and intended to begin searching for other property. According to Flores, if he located other property, he intended to apply the earnest money held in escrow for the Jim Hogg County property to the new property. Flores testified that he became reinterested in the Jim Hogg County property when the Ramirezes offered him all of their mineral estate interest in the property. According to Flores, the Ramirezes' agent orally communicated the Ramirezes' new offer to him, which he accepted. Flores further testified that the warranty deed is consistent with the oral agreement the parties had reached, which provided the Ramirezes would convey the surface estate and 100% of the mineral estate to Flores in exchange for $144,000.
After reviewing the evidence, we hold the record contains conflicting evidence of probative value on the Ramirezes' claim for reformation. On the one hand, Flores's testimony constitutes some probative evidence in support of his contention that the warranty deed accurately reflects the parties' oral agreement concerning the property. On the other hand, the testimony of Perez, Ana, and Jose constitutes some probative evidence in support of the Ramirezes' contention that a scrivener's error caused the warranty deed not to reflect the true agreement of the parties. Because conflicting evidence exists in this case, we must conclude the question of whether the Ramirezes are entitled to reformation of the deed due to a mutual mistake cannot be decided as a matter of law. See Szczepanik, 883 S.W.2d at 649. We therefore sustain the Ramirezes' first issue, holding the trial court improperly directed a verdict for Flores, and overrule their second issue, holding the trial court properly denied their motion for a directed verdict.
We express no opinion on whether Flores's testimony constitutes impermissible hearsay or parole evidence, violates paragraph 21 of the earnest money contract regarding oral modifications, or violates the statute of frauds.
We note that Flores maintains the earnest money contract does not constitute evidence of the true agreement of the parties in this case because the contract had automatically terminated when the parties did not timely close on the property on January 15, 1999. We are unpersuaded by this argument because, as Flores himself recognized during his trial testimony, the parties' earnest money contract does not contain an automatic termination provision. We further note that the contract does specify remedies available if either party defaults; however, Flores did not pursue any remedies under the default provisions.
Conclusion
Having determined that the record contains conflicting evidence of probative value on the Ramirezes' claim for reformation, the trial court must submit the issue to the jury. The trial court's judgment is therefore reversed, and the cause is remanded to the trial court for further proceedings consistent with this opinion.