Opinion
No. 14-02-00633-CV
Opinions filed December 21, 2004.
On Appeal from the 189th District Court, Harris County, Texas, Trial Court Cause No. 01-10100.
Affirmed as Modified.
Panel consists of Justices EDELMAN, FROST, and GUZMAN. (FROST, J., concurring.)
MEMORANDUM MAJORITY OPINION
In this real estate dispute, Robert C. Reeves appeals a summary judgment entered in favor of Memorial Terrace, Ltd., Ede I. Nemeti, Arpad and Katherine Domyan, Spasco, Ltd., and Left BK L.P. (collectively, "appellees") on numerous grounds. We affirm as modified.
Background
Reeves entered into a written agreement (the "agreement") to buy land from the Domyans and Memorial Terrace (the "sellers"). The sale never closed, and Reeves filed this lawsuit against appellees for specific performance of the agreement, rescission of the subsequent deeds conveying portions of the property to Spasco and Left BK, and damages. Reeves asserted claims for breach of contract, statutory and common law fraud, conspiracy, and deceptive trade practices. Appellees filed motions for summary judgment, which the trial court granted, resulting in a take-nothing judgment.
Standard of Review
A traditional summary judgment may be granted if the motion and summary judgment evidence show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or response. TEX. R. CIV. P. 166a(c). In reviewing such a motion for summary judgment, we take all evidence favorable to the nonmovant as true and resolve every doubt, and indulge every reasonable inference, in the nonmovant's favor. Provident Life and Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2002).
A no-evidence motion for summary judgment must be granted if: (1) the moving party asserts that there is no evidence of one or more specified elements of a claim or defense on which the adverse party would have the burden of proof at trial; and (2) the respondent produces no summary judgment evidence raising a genuine issue of material fact on those elements. See TEX. R. CIV. P. 166a(i). In reviewing a no-evidence motion for summary judgment, we view the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003), cert. denied, 124 S. Ct. 2097 (2004). We must affirm a summary judgment if any of the grounds asserted are meritorious. Tex. Workers' Comp. Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex. 2004).
Contract Claims
Reeves's fifth issue challenges several grounds on which appellees sought summary judgment, including that the agreement was unenforceable for lack of consideration. Because this issue is largely dispositive of the appeal, we address it first.
To be enforceable, a contract must be supported by valid consideration, i.e., mutuality of obligation. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 409 (Tex. 1997). What constitutes consideration for a contract is a question of law. Consideration can consist of an exchange of promises. See Fed. Sign, 951 S.W.2d at 409. However, if a promise fails to actually bind a party because he retains the option to terminate the transaction in lieu of performing it, then the promise is illusory and is not valid consideration. See Light v. Centel Cellular Co., 883 S.W.2d 642, 644-45 (Tex. 1994). Therefore, when illusory promises are all that support a purported bilateral contract, there is no contract. Id.; Culbertson v. Brodsky, 788 S.W.2d 156, 157 (Tex.App.-Fort Worth 1990, writ denied) (holding earnest money contract unenforceable for lack of consideration where buyer retained right to terminate it in his sole discretion and receive a full return of his earnest money, with neither party having any continuing obligation to the other).
Sudan v. Sudan, 145 S.W.3d 280, 285 (Tex.App.-Houston [14th Dist.] 2004, pet. filed); Brownwood Ross Co. v. Maverick County, 936 S.W.2d 42, 45 (Tex.App. 1996, writ denied); Williams v. Hill, 396 S.W.2d 911, 913 (Tex.Civ.App. — Dallas 1965, no writ).
In this case, the agreement provided, among other things, that: (1) if Reeves failed to deposit $400,000 earnest money with the title company within 11 business days from the effective date of the agreement, the agreement would be null and void and Reeves would have no monetary liability; and (2) Reeves had a unilateral right to terminate the agreement for any reason for 30 days after the effective date with a full refund of his earnest money. Although many facts, as well as the effect of the agreement, are disputed, it is undisputed that no earnest money was ever deposited by Reeves. If the requirements were never met under the agreement to trigger Reeves's deadline for depositing the earnest money, then he never became bound to do anything further under the agreement (and would have had a right to terminate for several days thereafter in any event). Alternatively, if the earnest money deposit date was at some point reached, then Reeves's failure to make that deposit rendered the agreement null and void. Either way, the agreement failed to ever impose binding mutual obligations on the parties. Under these circumstances, the agreement was unsupported by consideration, lacked mutuality, and, therefore, was unenforceable. Accordingly, the trial court did not err in entering summary judgment on Reeves' claims for breach of the agreement, and we need not address Reeves's challenges to the alternative grounds for summary judgment on his contract claim.
Remaining Damage Claims
Reeves also challenges the summary judgment against his claims for statutory and common law fraud, conspiracy to commit fraud, and deceptive trade practices. In this regard, Reeves alleged that the sellers made false representations and failed to disclose material facts to induce him to enter into the agreement and deposit earnest money. Appellees' motion for summary judgment asserted, among other things, that Reeves could not show that he detrimentally relied on any alleged misrepresentation or that he was damaged by it or any non-disclosure because he was never bound by the contract and never deposited any earnest money. As Reeves's brief acknowledges, detrimental reliance and/or damage are elements of each of Reeves's claims for fraud, conspiracy, and deceptive trade practices. In that the agreement never reached completion of the formation stage and Reeves never deposited any earnest money, it is not apparent how the reliance and damage elements of these causes of action could be met under these circumstances. Accordingly, Reeves challenge to the summary judgment against these claims affords no basis for relief and is overruled.
Other Summary Judgment Contentions
Reeves also argues that the trial court erred in overruling: (1) his special exceptions to appellees motion for summary judgment because the motion did not specify whether it was a traditional or no-evidence motion; and (2) his objections to appellees' summary judgment evidence. The bases for our affirmance of the summary judgment, set forth above, are not affected by whether the motion is viewed as a traditional or no-evidence motion. Nor do we agree that the motion was so vague or confusing that it did not provide sufficient notice of its grounds. Therefore, we overrule Reeves's challenge to the trial court's denial of his special exceptions.
Similarly, our grounds for affirming the summary judgment are also not based on any of the evidence challenged by Reeves, except the agreement itself. Reeves's objection to the agreement was that it was hearsay that was not shown by affidavit to come within any hearsay objection. However, a signed instrument, such as a contract, that creates legal rights is not hearsay because it has legal effect independent of the truth of any statement contained in it. See, e.g., Kepner-Tregoe, Inc. v. Leadership Software Inc., 12 F.3d 527, 539-40 (5th Cir. 1994); Sanders v. Worthington, 382 S.W.2d 910, 915-16 (Tex. 1964). Therefore, Reeves's challenge to the trial court's evidentiary rulings are overruled.
Reeves further contends that he overcame appellees' motion with extensive evidence. However, he cites no evidence that raises a fact issue as to any of our grounds, above, for affirmance. Finally, Reeves challenges the summary judgment for being granted on claims asserted in his fifth amended petition which appellees' motion did not address. However, because this amended petition was not on file at the time of the hearing and the record does not reflect that Reeves sought or obtained permission of the trial court to file it, the petition was not timely filed, and his challenge based upon it presents nothing for our review. Accordingly, these challenges are overruled.
The trial court's docket sheet reflects that the hearing was held on May 24, 2002; the file-stamp on Reeves's fifth amended petition reflects that it was subsequently filed after hours that day; and we find no indication in the record that a motion for leave to file this amended petition was ever filed, or that permission to do so was otherwise requested, or ruled upon by the trial court.
See TEX. R. CIV. P. 166a(c) (indicating that summary judgment requirements must be satisfied with regard to pleadings that are on file at the time of the hearing or are thereafter filed before judgment with permission of the court).
Lis Pendens
Reeves also contests the trial court's cancellation and removal of his notice of lis pendens because the trial court did not comply with section 12.008 of the Texas Property Code, requiring either a deposit of money or the giving of an undertaking by the party seeking cancellation. As a practical matter, our decision affirming the summary judgment all but moots this issue. However, until the ultimate conclusion of this appeal, the title to the property technically remains in dispute. Moreover, although the right of first refusal that the trial court provided to Reeves (and that he declined) was a reasonable approach to resolving the dispute, we can find no authority allowing a validly filed lis pendens to be cancelled where, as here, the requirements of section 12.008 are not met. Accordingly, we: (1) sustain this challenge, reverse the trial court's order cancelling the lis pendens, and render judgment vacating that order; and (2) affirm the remainder of the trial court's judgment as so modified.
MEMORANDUM CONCURRING OPINION
I respectfully concur in the court's judgment. I write separately to address two aspects of the case not mentioned in the majority opinion: (1) the unusual characteristics of the agreement in question and (2) the inapplicability of the Goswami presumption to the buyer's pleading amendments.
See Goswami v. Metro. Sav. Loan Ass'n, 751 S.W.2d 487, 490 (Tex. 1988) (holding that, notwithstanding provision of Texas Rule of Civil Procedure 63 requiring leave of court for late-filed pleadings, leave of court will be presumed if (1) the record is silent of any basis to conclude that the trial court did not consider this pleading; and (2) the opposing party does not show surprise or prejudice).
The Parties' Agreement
The parties' written agreement for the sale of land contained no recitation of consideration. Although the form used by the parties provided a blank for the parties to write in an amount of independent consideration for the buyer's right to terminate the earnest money contract for any reason within thirty days, the parties put "$0.00" in this blank. Furthermore, the contract contains no consideration for the eleven-day period in which the buyer (Robert C. Reeves) could deposit the earnest money. As the majority points out, it is undisputed that the buyer did not deposit any earnest money.
The preprinted form contract provided the sellers with the following remedies if the buyer failed to comply with the parties' agreement: (1) the right to enforce specific performance or seek other relief as may be provided by law or both; and (2) the right to terminate the agreement and receive the earnest money as liquidated damages, thereby releasing the parties from the agreement. The parties, however, deleted the first item, leaving the sellers with only one remedy for the buyer's failure to comply — the earnest money as liquidated damages.
Based on the unusual language of this agreement, the majority correctly holds that the agreement is unenforceable due to a lack of consideration and mutuality. See Culbertson v. Brodsky, 788 S.W.2d 156, 157 (Tex.App.-Fort Worth 1990, writ denied) (holding that contract of sale for real estate was unenforceable for lack of consideration because there was no separate consideration for buyer's right, in his sole discretion during a 60-day period, to terminate and receive a full return of his earnest money, with neither party having any continuing obligation to the other); Hott v. Pearcy/Christon, Inc., 663 S.W.2d 851, 853-54 (Tex.App. 1983, writ ref'd n.r.e.) (holding that, because the parties' agreement limited seller's remedy for buyer's breach to recovery of earnest money, the agreement was unenforceable for lack of consideration at least until the buyer deposited the earnest money and that, because the seller revoked the gratuitous option before the buyer tendered the earnest money, there was no enforceable contract); Echols v. Bloom, 485 S.W.2d 798, 800 (Tex.Civ.App. 1972, writ ref'd n.r.e.) (holding that agreement was unenforceable for lack of consideration because seller terminated before buyer tendered earnest money and because there was no separate consideration for 14-day period during which buyer could decide whether buyer wanted to go through with the transaction). The trial court did not err in granting summary judgment for the sellers.
Inapplicability of the Goswami Presumption
Additionally, the majority correctly holds that the trial court did not err in granting a final summary judgment even though the sellers' motion for summary judgment did not address the new claims added by the buyer in his fifth amended petition, after the summary-judgment hearing. The summary-judgment rule itself provides some support for this holding, but beyond that the buyer invokes the Texas Supreme Court's holding in Goswami to argue that these newly added claims were properly before the trial court and thus the court could not have disposed of them when they were not addressed in the sellers' summary-judgment motion. See Goswami v. Metro. Sav. Loan Ass'n, 751 S.W.2d 487, 490 (Tex. 1988). In Goswami, our high court held that, despite the clear language of Texas Rule of Civil Procedure 63 requiring leave of court for late-filed pleadings, leave of court will be presumed if (1) the record is silent of any basis to conclude that the trial court did not consider this pleading; and (2) the opposing party does not show surprise or prejudice. Goswami, however, is not without limits. It does not apply in cases, such as this one, in which the late-filed pleading is filed after the summary-judgment hearing. See Automaker, Inc. v. C.C.R.T. Co., 976 S.W.2d 744, 745 (Tex.App. 1998, no pet.); Leinen v. Buffington's Bayou City Serv. Co., 824 S.W.2d 682, 685 (Tex.App. 1992, no writ). Given the buyer's failure to obtain leave of court, the trial court did not err in granting summary judgment despite the buyer's filing of the fifth amended petition after the summary-judgment hearing. See Automaker, Inc., 976 S.W.2d at 745; Leinen, 824 S.W.2d at 685. Accordingly, the majority correctly overrules this challenge to the trial court's judgment.