Opinion
NO. 01-16-00514-CV
06-13-2017
MIKE RAMOS, Appellant v. MELISSA Y. WALTERS, HUMBLE BEE MANAGEMENT, LLC, AND MELIFERA PARTNERS, LLC, Appellees
On Appeal from the 157th District Court Harris County, Texas
Trial Court Case No. 2015-27233
MEMORANDUM OPINION
Appellees Melissa Walters, Humble Bee Management, LLC, and Melifera Partners, LLC placed the highest bid on a home at a foreclosure sale auction and tendered payment by cashier's checks and cash to Mike Ramos, the lienholder. But, shortly thereafter, two problems with the transaction arose: appellees discovered a second lien on the home, and the banks to which Ramos tendered the cashier's checks refused to honor them. After some wrangling, the appellees deeded the property back to Ramos.
Ramos sued appellees over the failed transaction. Ramos's claims were tried to the bench, which entered a take-nothing judgment against Ramos, finding that appellees' deeding of the property back to Ramos in exchange for a release of claims constituted an accord and satisfaction.
On appeal, Ramos (1) challenges the sufficiency of the evidence supporting the trial court's finding of accord and satisfaction, and (2) contends that the trial court erred in admitting evidence of the home's title history and underlying financing and testimony of appellees' counsel regarding the parties' dispute.
We affirm.
Background
Appellee Walters is a licensed real estate broker, owner, and managing partner of appellee Melifera Partners, LLC, and owner of appellee Humble Bee Management, LLC. On November 4, 2014, appellees, through their agent, Andrew Moran, placed the highest bid—$157,500—on a home owned by Meadow Valley Interest at a foreclosure sale auction. On behalf of appellees, Moran tendered payment in the form of four cashier's checks having a combined face value of $155,000, plus $2,500 in cash. Although the cashier's checks initially were made payable to Melifera Partners, Moran endorsed them to be payable to Ramos, the sole owner of Meadow Valley Interest.
Ramos presented the cashier's checks to two banks, but both refused to honor them because they were third party checks. Acting on Ramos's behalf, the foreclosing trustee, Lee Carroll, notified Walters that the checks were not honored and demanded payment of the outstanding $155,000.
Appellees' counsel T. Deon Warner responded by letter, challenging the validity of the foreclosure sale on the basis that the deed of trust appeared to appellees to be fraudulent. Appellees believed they were purchasing the first and only lien on the home, when, in fact, Meadow Valley Interest had bought the home from a prior owner subject to a lien, and then Meadow Valley Interest obtained a second mortgage on the home by obtaining a loan from Ramos. Although the loan documents bore the date May 5, 2014, Ramos delayed recording evidence of the second lien for months. Ramos then foreclosed on the property just a few months after making the loan and initiated the foreclosure sale. Because he suspected that the second lien on the property could be fraudulent, Warner requested additional information from Ramos and demanded that Ramos take no further action with regard to the home.
At trial, Warner testified that he was later contacted by Scott R. Sommers, Ramos's counsel. According to Warner, Sommers suggested that appellees deed the property back to Ramos to resolve the dispute. Sommers then sent Warner an email attaching a general warranty deed for the property. Warner testified that he responded by first proposing a special warranty deed, but, after Sommers rejected the idea, Warner agreed that appellees would execute the general warranty deed.
Warner testified that he then returned the executed general warranty deed to Sommers by email. Warner called Sommers, and Sommers informed him that he was instructed to stop work on the file while Ramos was out of town. Warner testified that he later left Sommers a voicemail to notify him that appellees would record the deed, and Walters then recorded it. In response, Ramos recorded an affidavit of non-acceptance of the deed.
Sommers also testified at trial. According to Sommers, Ramos originally retained him to recover the purchase price appellees agreed to pay, but, after further discussion, Sommers and Ramos instead agreed to try to recover the home to settle the dispute. Sommers testified that he believed there was an actual dispute that would be resolved by deeding the property back to Ramos. Sommers also testified that he told Warner to have appellees deed the property back to Ramos to resolve the parties' dispute. Sommers testified that Ramos authorized him to send appellees' counsel the general warranty deed, and Warner returned an executed copy of the deed to him by email. Later, Sommers told Warner that Ramos instructed him to refrain from taking further action on the file.
Ramos offered conflicting testimony at trial. Ramos testified that he did not authorize Sommers to seek a return of the property and did not agree to accept title to the property. He further testified that he did not believe there was an actual dispute between the parties. Rather, according to Ramos, Walters fabricated a baseless fraud claim to avoid having to pay the agreed-upon purchase price.
Ramos sued appellees, asserting claims of breach of contract and warranty, conversion, violation of the Theft Liability Act, promissory estoppel, and fraud. In response, appellees asserted the affirmative defense of accord and satisfaction. Following a bench trial, the trial court entered a take-nothing judgment against Ramos. It later entered written findings of fact and conclusions of law supporting its determination that the parties had reached a valid accord and satisfaction. Ramos appeals, challenging the sufficiency of the evidence to support the trial court's finding of accord and satisfaction and complaining of evidentiary error.
Sufficiency of the Evidence
In his third issue, Ramos challenges the sufficiency of the evidence supporting the trial court's conclusion that there was a valid accord and satisfaction. Ramos contends that (1) the dispute underlying the alleged accord and satisfaction was not bona fide; (2) there was no agreement or clear meeting of the minds with respect to an accord and satisfaction; and (3) there was no consideration or performance by appellees.
A. Standard of Review
In conducting a legal-sufficiency review of the evidence, we must consider all of the evidence in the light most favorable to the verdict and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). To determine whether legally sufficient evidence supports a challenged finding, we must consider evidence that favors the finding if a reasonable fact-finder could consider it, and we must disregard evidence contrary to the challenged finding unless a reasonable fact-finder could not disregard it. Id. at 827. This Court may not sustain a legal insufficiency challenge unless the record demonstrates (1) a complete absence of a vital fact; (2) that the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) that the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) that the evidence conclusively establishes the opposite of the vital fact. Id. at 810.
In an appeal from a judgment after a bench trial, we accord the trial court's findings of fact the same weight as a jury's verdict. Milton M. Cooke v. First Bank & Tr., 290 S.W.3d 297, 302 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (citing Brown v. Brown, 236 S.W.3d 343, 347 (Tex. App.—Houston [1st Dist.] 2007, no pet.)). When, as here, the record includes a complete reporter's record, the trial court's findings of fact are subject to sufficiency challenges under the same standards we apply to address the sufficiency of the evidence to support a jury's answer. Cooke, 290 S.W.3d at 302 (first citing Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996), then citing Brown, 236 S.W.3d at 348).
B. Applicable Law
The common law defense of accord and satisfaction "rests upon a contract, express or implied, in which the parties agree to the discharge of an existing obligation by means of a lesser payment tendered and accepted." Lopez v. Munoz, Hockema, & Reed, LLP, 22 S.W.3d 857, 863 (Tex. 2000); Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. 1969). The evidence must establish an assent of the parties to an agreement that one party will give and the other party will accept something that is different from what each expected from the old contract. Ostrow v. United Bus. Machs, Inc., 982 S.W.2d 101, 104 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (first citing Jenkins, 449 S.W.2d at 455, then citing Bueckner v. Hamel, 886 S.W.2d 368, 372 (Tex. App.—Houston [1st Dist.] 1994, writ denied)). In addition to consideration, there must be a meeting of the minds and an unmistakable communication to the creditor that tender of the lesser sum is upon the condition that acceptance will constitute satisfaction of the underlying obligation. Jenkins, 449 S.W.2d at 455; Lopez, 22 S.W.3d at 863. The satisfaction is the actual performance of the new agreement. Ostrow, 982 S.W.2d at 104 (citing Bueckner, 886 S.W.2d at 372).
C. Analysis
1. Bona Fide Dispute
Ramos argues that appellees had no bona fide dispute with Ramos, as was necessary to support a finding of accord and satisfaction. Ramos claims that appellees' purported discontent with lien priority was merely a pretext for avoiding their obligation to tender payment, which did not create a bona fide dispute. Appellees respond that there was a bona fide dispute as to the legality of the foreclosure sale, because, they argue, the second lien appeared fraudulent.
A valid accord and satisfaction requires that there initially be a legitimate dispute between the parties about what was expected. Lopez, 22 S.W.3d at 863; Ostrow, 982 S.W.2d at 104. It is undisputed that, after the foreclosure sale, Ramos notified appellees that he was unable to cash the cashier's checks that appellees tendered as payment. But appellees did not refuse payment for no reason or merely to renegotiate the purchase price downward. To the contrary, there was evidence, which the trial court credited, that appellees suspected Ramos of fraud and responded to Ramos through Warner, questioning the legitimacy of the transaction and demanding that no further transactions related to the home should proceed. The record thus reflects that the parties disputed whether Ramos was entitled to payment and whether the foreclosure sale was valid. Accordingly, we conclude that there was sufficient evidence to support the trial court's conclusion that "a legitimate dispute existed between the parties." See Lopez, 22 S.W.3d at 863 (noting that to prevail on accord and satisfaction defense, defendant was required to produce evidence of fee dispute that was resolved by tender of reduced sum in satisfaction of underlying obligation); Case Funding Network, L.P. v. Anglo-Dutch Petroleum Intern, Inc., 264 S.W.3d 38, 51-54 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (concluding bona fide dispute existed where party to investment agreement disputed validity and enforceability of agreement).
2. Meeting of the Minds
Ramos argues that there was no meeting of the minds because he did not accept, receive, or record the general warranty deed appellees sent his counsel, Sommers, via email, and no agreement had been reached when he instructed Sommers to stop work on the matter. Appellees respond that Sommers, on behalf of Ramos, transmitted the general warranty deed to appellees and requested that they convey the property back to Ramos as a full and final settlement of the controversy, and there was no revocation of this settlement offer before appellees accepted it.
For an agreement to be enforceable, there must be a meeting of the minds with respect to the subject matter of the agreement and as to its essential terms. Palavan v. McCulley, 498 S.W.3d 134, 141 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (citing Ludlow v. DeBerry, 959 S.W.2d 265, 272 (Tex. App.—Houston [14th Dist.] 1997, no writ)). The determination of a meeting of the minds, and thus offer and acceptance, is based on the objective standard of what the parties said and did and not on their subjective states of mind. Jim Maddox Props. v. WEM Equity Capital Invs., Ltd., 446 S.W.3d 126, 133 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (citing DeClaire v. G & B McIntosh Family Ltd. P'ship, 260 S.W.3d 34, 44 (Tex. App.—Houston [1st Dist.] 2008, no pet.)).
The trial court heard evidence that Sommers, on behalf of Ramos, requested that Warner have appellees deed the property back to Ramos. It also heard Warner testify that, after speaking with his client, he called Sommers and told him that Walters would deed the property back to Ramos in return for a release. The trial court also had before it evidence that Sommers, on behalf of Ramos, sent Warner an email attaching a general warranty deed, and that Walters executed the deed and had it notarized before Warner emailed it back to Sommers. And both Sommers and Warner testified that the parties agreed that appellees' execution of the general warranty deed would resolve their dispute.
Viewing the evidence in the light most favorable to the verdict, we conclude that this evidence amply supports the trial court's finding that the parties "specifically and intentionally agreed both verbally and by email to discharge the obligation" of Walters to pay $155,000 by "reconveying the property back" to Ramos. Accordingly, we conclude appellees adduced sufficient evidence from which the trial court could reasonably find that there was a meeting of the minds.
3. Consideration and Performance
Ramos also contends that there is insufficient evidence to support the trial court's finding of accord and satisfaction because there was no evidence of consideration or performance by appellees insofar as they failed to convey title free and clear of any prior liens, as required under the terms of the general warranty deed.
Consideration is a bargained-for exchange of promises. Iacono v. Lyons, 16 S.W.3d 92, 94 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (citing Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991)). It is well-established that, with regard to an accord and satisfaction, a parties' dispute provides consideration for the ensuing agreement. Cooke, 290 S.W.3d at 304 (citing Indus. Life Ins., Co. v. Finley, 382 S.W.2d 100, 104 (Tex. 1964)).
Walters, Warner, and Sommers testified that appellees agreed to deed the property back to Ramos to resolve the parties' outstanding dispute. It is undisputed that they signed a general warranty deed to that end. Based on this evidence, we conclude sufficient evidence supports the trial court's implied findings of consideration and performance. See Tex. Gas Utils. Co. v. Barrett, 460 S.W.2d 409, 414 (Tex. 1970) (holding that parties' mutual agreement to rescind their contract and discharge themselves from their respective duties is regarded as sufficient consideration as a matter of law for such release instrument); Hycarbex, Inc. v. Anglo-Suisse, Inc., 927 S.W.2d 103, 110 (Tex. App.—Houston [14th Dist.] 1996, no writ) ("[C]onsideration for an accord and satisfaction is found in the resolution of the uncertainty which exists as to the validity or the amount of a claim . . . . the very existence of the dispute is the consideration for the accord and satisfaction."). Accordingly, we conclude that sufficient evidence supports the trial court's conclusion that an accord and satisfaction existed between Ramos and appellees.
We overrule Ramos's third issue.
In his fourth, fifth, sixth, and seventh issues, Ramos contends that the trial court erred in failing to award him actual damages, statutory damages, attorney's fees, and exemplary damages. Each of these issues is based on the premise that Ramos would prevail on his challenge to the sufficiency of the evidence to support appellees' accord and satisfaction defense. Because we have concluded that the trial court's finding of an accord and satisfaction is supported by sufficient evidence, we need not address Ramos's fourth through seventh issues.
Evidentiary Complaints
A. Standard of Review
We review a trial court's decision to admit or exclude evidence for an abuse of discretion. In re J.P.B, 180 S.W.3d 570, 575 (Tex. 2005) (citing State v. Bristol Hotel Asset Co., 65 S.W.3d 638, 647 (Tex. 2001)); Simien v. Unifund CCR Partners, 321 S.W.3d 235, 239 (Tex. App.—Houston [1st Dist.] 2010, no pet.). A trial court abuses its discretion when it acts without regard to any guiding rules or principles. Bristol Hotel, 65 S.W.3d at 647; Simien, 321 S.W.3d at 239. Even if a trial court errs by improperly admitting evidence, reversal is warranted only if the error probably caused the rendition of an improper judgment. Bay Area Healthcare Group Ltd. v. McShane, 239 S.W.3d 231, 234 (Tex. 2007). We review the entire record and require the complaining party to demonstrate that the judgment turns on the particular evidence admitted. Id. The general rule is error in the admission of testimony is not preserved if the objecting party permits the same or similar evidence to be introduced without objection. Volkswagen of Am., Inc., v. Ramirez, 159 S.W.3d 897, 907 (Tex. 2004).
B. Prior Title and Financing History of Property
In his first issue, Ramos challenges the trial court's admission of evidence regarding the title and financing history of the property.
1. Applicable Law
When a party objects to testimony but allows an exhibit containing the same or similar evidence to be admitted, error is not preserved. Austin v. Weems, 337 S.W.3d 415, 424 (Tex. App.—Houston [1st Dist.] 2011, no pet.). "A party opens the door to otherwise objectionable evidence offered by the other side when it 'introduces the same evidence or evidence of a similar character.'" Ryland Enter. Inc. v. Witherspoon, No. 01-10-00715-CV, 2012 WL 6754966, at *13 (Tex. App.—Houston [1st Dist.] 2001, no pet.) (mem. op.) (quoting Moore v. Bank Midwest, N.A., 39 S.W.3d 395, 402 (Tex. App.—Houston [1st Dist.] 2001, pet. denied)).
2. Analysis
Ramos argues that evidence of the title history and underlying financing related to the property was irrelevant and erroneously admitted. Appellees respond that this evidence was properly admitted and that Ramos in fact opened the door to it by first testifying about the underlying transaction and the property's title history.
The evidence establishes that Ramos himself introduced evidence of the title and lien history of the foreclosed property. Specifically, he introduced the 2014 deed of trust that was signed in May but not recorded until September. It reflects that it created a lien against the property, listing Meadow Valley Interest as grantor and Ramos as lender. Ramos also testified that the property was foreclosed upon because Meadow Valley Interest defaulted in its payments to him. On cross-examination, however, Ramos objected to questioning about his relationship to Meadow Valley Interest, arguing that appellees were barred from complaining or adducing evidence about the underlying transaction and status and ownership of the underlying loan because they purchased the property as is.
Because Ramos himself testified about and admitted documentary evidence related to the ownership and financing history of the foreclosed property, he opened the door to admission of evidence of a similar character by appellees. Thus, we conclude that the trial court did not abuse its discretion in overruling Ramos's objection to the admission of this evidence. See Bay Area Healthcare Grp. v. McShane, 239 S.W.3d 231, 234 (Tex. 2007) (holding that party opened door to admission of evidence of collateral matters when it injected those collateral issues into lawsuit); Ryland, 2012 WL 6754966, at *13 (concluding trial court did not err in admitting evidence previously referred to by objecting party because, by testifying about its contents, objecting party opened door to its admission).
We overrule Ramos's first issue.
C. Testimony of Appellees' Counsel
In his second issue, Ramos challenges the trial court's admission of Warner's testimony because, according to Ramos, Warner's dual role as advocate and witness violated Texas Disciplinary Rule of Professional Conduct 3.08. Appellees respond that Ramos failed to expressly cite Rule 3.08 as the basis for his objection at trial and, thus, failed to preserve this issue. Appellees further argue that Warner had only one role at trial—he testified but did not serve as an advocate.
1. Applicable Law
Rule 3.08(a) of the Texas Disciplinary Rules of Professional Conduct provides:
A lawyer shall not accept or continue employment as an advocate before a tribunal in a contemplated or pending adjudicatory proceeding if the lawyer knows or believes that the lawyer is or may be a witness necessary to establish an essential fact on behalf of the lawyer's client, unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony;TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 3.08(a), reprinted in TEX. GOV'T CODE, tit. 2, subtit. G, app. A. The Texas Supreme Court has noted that the rule reflects the concern that an opposing party may be handicapped in challenging the credibility of a testifying attorney. Anderson Producing Inc. v. Koch Oil Co., 929 S.W.2d 416, 422 (Tex. 1996). However, the Anderson court clarified that Rule 3.08 only prohibits a testifying attorney from acting as an advocate before a tribunal, not from engaging in pretrial, out-of-court matters such as preparing and signing pleadings. Id. In so holding, the Anderson court highlighted the text of comment 8 under Rule 3.08 which expressly provides that "this rule does not prohibit the lawyer who may or will be a witness from participating in the preparation of a matter for presentation to a tribunal." Id. at 422-23 (quoting TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 3.08 cmt. 8).
(3) the testimony relates to the nature and value of legal services rendered in the case;
(4) the lawyer is a party to the action and is appearing pro se; or
(5) the lawyer has promptly notified opposing counsel that the lawyer expects to testify in the matter and disqualification of the lawyer would work substantial hardship on the client.
2. Analysis
In Anderson, the Texas Supreme Court reversed the appellate court's holding that Anderson's attorney should have been disqualified because he served as an advocate and witness on behalf of Anderson in violation of Rule 3.08. Id. at 418. The Texas Supreme Court noted that, once Anderson's attorney realized he would be a necessary witness because of his personal knowledge, he did not personally represent Anderson at any subsequent court hearings or depositions. Id. at 419. The Court further noted that the testifying attorney did not represent Anderson in an "adjudicatory proceeding" within the meaning of Rule 3.08. Id. at 422. Based on Rule 3.08's language that it applies only to "employment as an advocate before a tribunal in a contemplated or pending adjudicatory proceeding" and comment 8 thereto, the Anderson court concluded that the trial court did not abuse its discretion in finding that the testifying attorney did not violate Rule 3.08 by continuing to draft pleadings, engage in settlement negotiations, or assist with trial strategy after learning that he would probably be called as a witness at trial. Id. at 422-23.
Here, Ramos failed to present any evidence that Warner participated as counsel for appellees at trial. Rather, the record reflects that Warner's involvement at trial was limited to providing his testimony regarding his investigation of the property and his subsequent communications with Walters and Sommers about resolving the parties' dispute. Because there is no evidence that Warner participated in the trial as an advocate and the record instead suggests that his involvement in the case was limited to out-of-court matters such as preparing and signing appellees' original pleading, we conclude that the trial court did not abuse its discretion in overruling Ramos's objection to Warner's testimony. See Anderson, 929 S.W.2d at 422-23 (holding testifying attorney did not violate Rule 3.08 by appearing at trial only as witness).
We overrule Ramos's second issue.
Conclusion
We affirm the judgment of the trial court.
Rebeca Huddle
Justice Panel consists of Justices Keyes, Bland, and Huddle.