Opinion
NO. 12-19-00249-CV
07-31-2020
COWBOY'S RETAIL & WHOLESALE BEVERAGE DISTRIBUTION, LLC, KYLE GILLIN AND GREAT AMERICAN TREATING, INC., APPELLANTS v. PEGGYE M. DAVIS, JAMES DAVIS, JAY DAVIS AND RICHARD L. RAY, TRUSTEE, APPELLEES
APPEAL FROM THE COUNTY COURT AT LAW NO. 3 SMITH COUNTY , TEXAS
MEMORANDUM OPINION
Cowboy's Retail & Wholesale Beverage Distribution, LLC, Kyle Gillin, & Great American Treating, Inc. (collectively Appellants) appeal the trial court's judgment against them and in favor of Peggye M. Davis, James Davis, Jay Davis, and Richard L. Ray, Trustee (collectively Appellees). They present seven issues on appeal. We affirm in part and reverse and remand in part.
While Appellants' brief lists five issues, the argument portion delineates seven issues. Therefore, we address the issues as listed in the arguments.
BACKGROUND
Gillin and Mike Mitchell formed Cowboy's Retail and Wholesale Beverage Distribution, LLC to operate a liquor store in Winona, a small town in Smith County, Texas. The Davises owned Tucker's Beverages Inc., a liquor store located in Gregg County, Texas. Gillin and Mitchell sought to purchase Tucker's assets so Cowboy's could provide wholesale liquor sales to Smith County clubs and restaurants. In January 2011, the parties signed several documents as part of Cowboy's acquisition of Tucker's business assets. These documents included a "Sale and Purchase Agreement" pursuant to which Cowboy's purchased "all of the issued and outstanding shares of common stock" of Tucker's, a promissory note in the amount of $1,790,000.00 to be paid to the Davises as "lender" executed by Gillin, individually and as president of Cowboy's, and a security agreement and deed of trust covering property in Gregg County as security for the note. As further security, Gillin signed deeds of trust covering Cowboy's property in Winona. Additionally, Mitchell signed two security agreements and a deed of trust covering property owned by Great American Treating (GAT). The Sale and Purchase Agreement only identified the Gregg County property as collateral to be pledged to the note. Cowboy's was to pay $790,000.00 on July 10, 2011, and subsequent installments of $50,000.00 each in certain months until July 2016.
After execution of the aforesaid documents, Cowboy's took immediate possession of and soon depleted Tucker's inventory and assets but never made any payments on the note. Appellees began nonjudicial foreclosure proceedings with respect to the real property securing the note. Appellants filed suit to stop the foreclosure sale and have the purchase agreement reviewed by the court. They asked the court to rescind the contract due to the Davises' fraud, reform the contract, or find that the Davises breached the contract. Additionally, they sought a declaratory judgment on grounds that there was no meeting of the minds as to material contract terms and a declaratory judgment cancelling the contract as an "incorrect draft" obtained by fraudulent representations. Appellees counterclaimed, seeking a money judgment on the note or, alternatively, judicial foreclosure of the deed of trust liens.
Appellants filed a motion for partial summary judgment alleging that, due to fraud or mistake, no agreement was reached on material terms of the contract. They argued that all of the elements of equitable rescission were met and asked the court to rescind the contract. The trial court denied Appellants' motion. Appellees filed a no evidence motion for summary judgment in which they asserted that there is no evidence to support Appellants' claims of fraud, fraudulent inducement, or breach of contract. Appellees also filed a motion for traditional summary judgment arguing that, because Cowboy's failed to pay the promissory note, Appellees are entitled to foreclose on the real property securing the note. The trial court granted both motions and granted "[a]ll affirmative relief requested by [Appellees]."
Appellants appealed to this Court. Because the trial court erroneously dismissed Appellants' declaratory judgment actions and erroneously granted Appellees' no evidence motion for summary judgment on Appellants' breach of contract claim, we reversed and remanded to the trial court for further proceedings.
Cowboy's Retail & Wholesale Beverage Distribution , LLC v. Davis , No. 12-14-00085-CV, 2015 WL 6165884, at *6 (Tex. App.—Tyler Oct. 21, 2015, pet. denied) (mem. op.).
On remand, the trial court conducted a bench trial and rendered judgment for Appellees on their contract claim. The judgment awards damages of $1,790,000, trial and appellate attorney's fees, and declares that Appellees may foreclose on the collateral, including the property included in GAT's deed of trust and security agreements. Appellants requested findings of fact and conclusions of law, which the trial court entered. This appeal followed.
JUDGMENT AGAINST GREAT AMERICAN TREATING
In their fourth issue, Appellants contend the evidence is legally insufficient to support a judgment against GAT. Specifically, they urge the evidence does not support the granting of a money judgment against GAT for the entirety of the loan amount. Standard of Review
In an appeal from a judgment rendered after a bench trial, the trial court's findings of fact have the same weight as a jury's verdict. Catalina v. Blasdel , 881 S.W.2d 295, 297 (Tex. 1994). A legal sufficiency challenge will be sustained only if the record shows (1) a complete absence of evidence of a vital fact, (2) the court is barred by the rules of law or evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the opposite of a vital fact. City of Keller v. Wilson , 168 S.W.3d 802, 810 (Tex. 2005). Evidence is more than a scintilla if it "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Serv. Corp. Int'l v. Guerra , 348 S.W.3d 221, 228 (Tex. 2011). Evidence is less than a scintilla if it is "so weak as to do no more than create a mere surmise or suspicion that the fact exists." Regal Fin. Co., Ltd. v. Tex Star Motors , Inc., 355 S.W.3d 595, 603 (Tex. 2010). The final test is whether the evidence would enable reasonable and fair-minded people to make the finding. City of Keller , 168 S.W.3d at 822.
When a party challenges the legal sufficiency of an adverse finding for which it did not have the burden of proof, it must demonstrate there is no evidence to support the adverse finding. Croucher v. Croucher , 660 S.W.2d 55, 58 (Tex. 1983); Doyle v. Kontemporary Builders , Inc., 370 S.W.3d 448, 453 (Tex. App.—Dallas 2012, pet. denied). When a party challenges the legal sufficiency of an adverse finding on an issue on which it had the burden of proof, it must demonstrate the evidence conclusively established all vital facts in support of the issue. Dow Chem. Co. v. Francis , 46 S.W.3d 237, 241 (Tex. 2001); Doyle , 370 S.W.3d at 453. We first examine the record for evidence supporting the finding. Id. If there is no evidence to support the finding, we then examine the entire record to determine if the contrary proposition is established as a matter of law. Doyle , 370 S.W.3d at 453. The Money Judgment
Appellants contend the trial court erred in entering judgment against GAT for $1,790,000. Specifically, Appellants urge there is no evidence that GAT contracted to be liable for the purchase of Tucker's by Cowboy's. At argument, Appellees conceded that GAT should not be liable for the entire purchase price.
Under the Texas Business and Commerce Code, an agreement to answer for the debt of another must be in writing to be enforceable. TEX. BUS. & COM. CODE ANN. § 26.01(a), (b)(2) (West 2009). GAT, via President Mike Mitchell, executed two security agreements and a deed of trust in favor of Appellees as security for the $1,790,000 note. However, none of the documents oblige GAT to do anything beyond providing collateral. GAT did not sign the sale and purchase agreement or otherwise guaranty the entirety of the note. As a result, GAT cannot be held liable for anything beyond the collateral pledged. Furthermore, GAT could not be held to answer for the entire note and Appellees are not entitled to recover a money judgment from GAT. Therefore, the trial court erred in entering judgment against GAT for the entirety of the $1,790,000. We sustain Appellants' fourth issue.
CHALLENGES TO THE TRIAL COURT'S FINDINGS AND CONCLUSIONS
In their first issue, Appellants contend that findings of fact numbers nineteen and twenty-one are unsupported by the evidence. Appellants urge in their seventh issue that conclusion of law number seven is incorrect. Standard of Review
In a bench trial where a trial court makes findings of fact, those findings have the same force and effect as a jury verdict. Lanier v. E. Founds., Inc., 401 S.W.3d 445, 459 (Tex. App.—Dallas 2013, no pet.). Consequently, unchallenged findings of fact are binding on this Court unless the contrary is established as a matter of law or no evidence supports the finding. Sheetz v. Slaughter , 503 S.W.3d 495, 505 (Tex. App.—Dallas 2016, no pet.).
In a case tried to the court on stipulated facts, those facts are binding on the parties, the trial court, and the reviewing court. Wells Fargo Bank Nw., N.A. v. RPK Capital XVI , L.L.C., 360 S.W.3d 691, 698 (Tex. App.—Dallas 2012, no pet.). An appellate court does not review the legal or factual sufficiency of the evidence of stipulated facts.
We review a trial court's conclusions of law de novo. In re Moers , 104 S.W.3d 609, 611 (Tex. App.—Houston [1st Dist.] 2003, no pet.). We independently evaluate conclusions of law to determine their correctness, and we uphold them if the judgment can be sustained on any legal theory supported by the evidence. Id. Findings of Fact
The trial court made twenty-two findings of fact. In their first issue, Appellants challenge two of those findings, numbers nineteen and twenty-one. These findings address the matter of a TABC rule change and state as follows:
19. Some months following the sale, changes occurred to the Texas Alcoholic Beverage Commission (TABC) rules governing the sale of alcoholic beverages in parts of Smith County.These findings appear to reference the rule change that required Smith County clubs and restaurants to purchase their alcohol from Smith County wholesalers, which predated the sales agreement. Appellants maintain that it was not any rule change that triggered Cowboy's questioning of the agreement, but instead, the post-transaction vote for Troup, Texas to "go wet." Nevertheless, the remainder of the trial court's findings remain unchallenged. Those findings support and establish that the parties had a meeting of the minds and that the sales agreement, along with the other documents, accurately reflect that agreement. For instance:
. . .
21. It was only after the TABC rules changes that Cowboys sought to question the agreement.
3. The Davises and Cowboys, Gillin, and Mitchell negotiated an agreement for the Sale of all outstanding shares of Tucker's Beverage, Inc. (owned by the Davises).
4. In their negotiations, the Davises insisted upon additional collateral, beyond the property being sold, to secure the purchase indebtedness of $1,790,000.00. The Davises demanded and the purchasers agreed to provide additional pledges of collateral for the sale of Tuckers in the form of two Security Agreements and a Deed of Trust from Great American, executed by Mike Mitchell.
. . .
6. In January of 2011, the Davises, Gillin and Mitchell signed various closing documents at the Law Office of George Holland, which Holland had prepared and which were admitted into evidence at trial. These closing documents, which were executed in Tyler, Smith County, Texas, included.
a. Sale and Purchase Agreement (Plaintiff's 1);
b. Bill of Sale for Tucker's Stock (P2);
c. Promissory Note (P3);
d. Security Agreement from Great American Treating Re: Treatment Plant Property (P18)
e. Security Agreement from Great American Treating Re: Equipment, Inventory and Other Materials (P4);
f. Security Agreement for all shares of Cowboy stock plus all inventory, equipment, receivables, and other assets (P5);
g. Security Agreement for all shares of Tucker stock plus all inventory, equipment, receivables, and other assets (P6);
h. Deed of Trust from Cowboys - George Melton Survey Tract in Gregg County, TX (P7);
i. Deed of Trust from Great American Treating - Owentown property 2 tracts (P8); and
j. Deed of trust from Cowboys - Winona .483 acres and right of way (P9).
7. As reflected in the referenced transaction documents, Great American posted various items as collateral to secure Cowboys' promised payments under the transaction. These items of security included, but were not limited to, plant and equipment.
8. Also reflected in the transaction documents, Great American granted a Deed of Trust in favor of the Davises on property in Owentown, Texas to secure Cowboys' payment under the transaction.
9. Immediately after the execution of the closing documents, Cowboys took over all business operations of Tucker's and operated Tucker's continuously thereafter.
. . .
11. There was testimony by Cowboys witnesses to the effect that the closing documents, particularly P1, did not accurately reflect the agreement of the parties. The Court does not find that testimony to be credible.
12. Cowboys provided the Court with no good reasons why Gillin and/or Mitchell would execute the necessary agreements and deeds of trust if they did not intend for those properties and items to secure their $1,790,000 debt to the Davises.
. . .
18. In the days and months following the closing, while they were operating Tucker's, neither Cowboys, Gillin, nor Mitchell made any significant effort to either question the closing documents or contend that the agreement was anything other than what was reflected in the closing documents, whether by letters, emails or any other type of communication to the Davises or George Holland, the documents' preparer.
. . .
22. Cowboys failed to make any of the contractually agreed payments and instead defaulted.
The record reflects this rule was the motivation for Gillin and Mitchell seeking to acquire Tucker's so as to be immediately able to service Smith County clubs and restaurants.
The harmless error rule applies to all errors. G & H Towing Co. v. Magee , 347 S.W.3d 293, 297 (Tex. 2011). Under Texas Rule of Appellate Procedure 44.1(a), as applicable to this case, the trial court's error is only reversible if it probably caused the rendition of an improper judgment. TEX. R. APP. P. 44.1(a)(1). It is the complaining party's burden to show harm on appeal. Ford Motor Co. v. Castillo , 279 S.W.3d 656, 667 (Tex. 2009); Guniganti v. C & S Components Co., Ltd., 467 S.W.3d 661, 666 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
While an erroneous finding of fact on an ultimate fact issue is harmful error, an immaterial finding of fact is harmless and not grounds for reversal. Andrews v. Key , 13 S.W. 640, 641 (Tex. 1890); Cooke County Tax Appraisal Dist. v. Teel , 129 S.W.3d 724, 731 (Tex. App.-Fort Worth 2004, no pet.); see also Able v . Able , 725 S.W.2d 778, 780 (Tex. App.—Houston [14th Dist.] 1987, writ ref'd n.r.e.). An ultimate fact issue, which a trial court is required to enter in its requested written findings of fact following a bench trial, is one that is essential to the cause of action and has a direct effect on the judgment. In re Marriage of Edwards , 79 S.W.3d 88, 94 (Tex. App.—Texarkana 2002, no pet.). An evidentiary issue, which a trial court is not required to enter in its requested written findings of fact following a bench trial, is one the court may consider in deciding the controlling issue but is not controlling in itself. Id.
Appellants make no attempt to show that the erroneous findings are essential to the cause of action or had a direct effect on the judgment. Considering the order in its entirety, findings of fact nineteen and twenty-one are the findings that the trial court might have considered in deciding the controlling issue, but they are not controlling in themselves. Accordingly, we conclude that Appellants have not shown the trial court's error probably caused the rendition of an improper judgment. Appellants' first issue is overruled. Conclusion of Law
In their seventh issue, Appellants argue that Conclusion of Law number seven, in which the trial court found that the Davises performed their material obligations, is incorrect. According to Appellants, the sales agreement required the Davises to endorse and deliver the stock certificates reflecting ownership of Tucker's. Appellants further argue that there was no evidence that the stock certificates were ever delivered or transferred. As a result, according to Appellants, the trial court erroneously found this failure to be immaterial.
The evidence at trial showed that the Davises delivered Tucker's business and its assets at closing. The ownership of Tucker's shares was delivered via a bill of sale. That bill of sale encompassed all of the outstanding Tucker's stock; therefore, all of Tucker's assets, including capital gains, inventory, accounts receivables, and vehicles, were also transferred. And, as found in an unchallenged finding by the trial court, Cowboy's immediately assumed accounts receivable worth approximately $80,000 and inventory worth $100,000. Contrary to Appellants' contention, it is not necessary to physically exchange stock certificates to legally transfer shares and ownership. Greenspun v. Greenspun , 194 S.W.2d 134, 137 (Tex. Civ. App.—Fort Worth), aff'd 198 S.W.2d 82 (Tex. 1946); Rio Grande Cattle Co. v. Burns , 17 S.W. 1043, 1044 (Tex. 1891). Corporate shares and ownership will transfer as long as the transferor and transferee mutually intend the stock be vested in the transferee and accomplish some act "in the nature of a symbolical delivery of the property." Greenspun , 194 S.W.2d at 197.
We note that the testimony at trial reflected that Tucker's assets included over $500,000 in inventory, up to $100,000 in bank funds, accounts receivable, the Tucker's facilities, and vehicles.
Here, the parties agreed to transfer share ownership and acted to deliver that ownership when the Davises executed and Cowboy's accepted the bill of sale and operational control over Tucker's and its assets. Furthermore, the bill of sale was a proper instrument for transferring the shares of stock. See Bourland v . State , 112 S.W.2d 720, 721 (Tex. Crim. App. 1937) (recognizing that shares of stock are a species of personal property); Yamin v. Carroll Wayne Conn , L.P., 574 S.W.3d 50, 54 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) (recognizing that husband's community property interest in shares had been transferred to wife via bill of sale). As a result, the delivery of the bill of sale enabled Tucker's, now owned and operated by Cowboy's, to issue new certificates to Cowboy's if Cowboy's so chose. Therefore, conclusion of law seven, which determined that the Davises had performed their obligations under the contract, is not erroneous. We overrule Appellants' seventh issue.
CONTRACT INTERPRETATION
In their remaining four issues, Appellants challenge the trial court's interpretation of the contract. Specifically, they argued that the trial court impermissibly reformed the contract (issue two), the trial court's interpretation is incorrect as a matter of law (issue three), the sale and purchase agreement is invalid (issue five), and the parties did not have "meeting of the minds" sufficient to support a contract (issue six). Because these issues are interrelated, we address them together. Standard of Review
The fact finder is the sole judge of the weight and credibility of the evidence. City of Keller , 168 S.W.3d at 819. When the evidence is conflicting, we must presume that the fact finder resolved the inconsistency in favor of the challenged finding if a reasonable person could do so. Id. at 821. We do not substitute our judgment for that of the fact finder if the evidence falls within this zone of reasonable disagreement. Id. at 822.
In a bench trial where a trial court makes findings of fact, those findings have the same force and effect as a jury verdict. Lanier , 401 S.W.3d at 459. Consequently, unchallenged findings of fact are binding on this Court unless the contrary is established as a matter of law or no evidence supports the finding. Sheetz , 503 S.W.3d at 505.
In a case tried to the court on stipulated facts, those facts are binding on the parties, the trial court, and the reviewing court. Wells Fargo Bank , 360 S.W.3d at 698. An appellate court does not review the legal or factual sufficiency of the evidence of stipulated facts. Id.
We review a trial court's conclusions of law de novo. In re Moers , 104 S.W.3d at 611. We independently evaluate conclusions of law to determine their correctness, and we uphold them if the judgment can be sustained on any legal theory supported by the evidence. Id. Applicable Law
In construing a written contract, a court must ascertain and give effect to the true intentions of the parties as expressed in the writing itself. Italian Cowboy Partners , Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011). We give contract terms their plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense. Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 662 (Tex. 2005). We 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. Italian Cowboy Partners , Ltd., 341 S.W.3d at 333.
If, after applying the pertinent contract construction rules, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and we will construe the contract as a matter of law. Id. If a contract "is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous, creating a fact issue on the parties' intent." J.M. Davidson , Inc. v. Webster , 128 S.W.3d 223, 229 (Tex. 2003). However, a contract is not ambiguous merely because the parties disagree on its meaning. Seagull Energy E & P , Inc. v. Eland Energy , Inc., 207 S.W.3d 342, 345 (Tex. 2006). Only if a contract is ambiguous may we consider the parties' interpretation and consider extraneous evidence to determine the true meaning of the contract. Italian Cowboy Partners , Ltd., 341 S.W.3d at 333-34.
The Texas Supreme Court has stated "[t]he statue of frauds, [under Section 26.01 of the Business and Commerce Code], is no bar to the reformation of a contract for the sale of land where the parties had an agreement and by their mutual mistake failed to state the agreement in the writing." Nat'l Resort Communities , Inc. v. Cain , 526 S.W.2d 510, 513 (Tex. 1975). A court may reform a contract to correct a mutual mistake in preparing a written instrument. See Cherokee Water Co . v. Forderhause , 741 S.W.2d 377, 379 (Tex. 1987); see also BH Contractors , LLC v. Helix Energy Sols. Grp., Inc., No. 14-15-01035-CV, 2017 WL 3611887, at *3 (Tex. App.—Houston [14th Dist.] Aug. 22, 2017, pet. denied) (mem. op.). "[R]eformation requires two elements: (1) an original agreement[;] and (2) a mutual mistake, made after the original agreement, in reducing the original agreement to writing." Cherokee Water , 741 S.W.2d at 379 (citing Sun Oil Co. v. Bennett , 84 S.W.2d 447, 451 (Tex. 1935)). "It is not enough that the writing differed from the oral agreement." Cain , 526 S.W.2d at 514 (citing Estes v. Republic Nat'l Bank of Dallas , 462 S.W.2d 273, 274 (Tex. 1970)); Sun Oil Co., 84 S.W.2d at 451. The parties must have had a "definite and explicit" agreement, and the agreement must have been reached before the contract, which the party seeks to reform, was drafted. Champlin Oil & Ref. Co. v. Chastain , 403 S.W.2d 376, 382 (Tex. 1965); see Cherokee Water , 741 S.W.2d at 379. "A scrivener's failure to embody the true agreement of the parties in a written instrument is a ground for reformation on the basis of mutual mistake." Gail v. Berry , 343 S.W.3d 520, 524 (Tex. App.—Eastland 2011, pet. denied) (citing Cornish v. Yarbrough , 558 S.W.2d 28, 32 (Tex. Civ. App.—Waco 1977, no writ)).
"Parol evidence is admissible to show that the writing, because of a mutual mistake, incorrectly reflects the true agreement, and that the equitable remedy of reformation is available to correct such a mutual mistake in the written instrument." Hardy v. Bennefield , 368 S.W.3d 643, 650 (Tex. App.—Tyler 2012, no pet.) (citing Estes , 462 S.W.2d at 275). The underlying objective of reformation is to make the written instrument, i.e., the deed, express the original bargain the parties desired to put in writing. Cherokee Water , 741 S.W.2d at 379; Cain , 526 S.W.2d at 514. The Supreme Court explained in Cain that the requirements for reformation can be satisfied when, for example, the parol evidence indicates the mistake in the writing reflected a mutual mistake in the description in the written contract, not the identity of the property itself. Cain , 526 S.W.2d at 514 (referring to the retrial of Shotwell v. Morrow , 498 S.W.2d 432, 434 (Tex. Civ. App.—Eastland 1973, writ ref'd n.r.e.)). Analysis
The trial court's findings, conclusions, and judgment determined that the Sale and Purchase Agreement, along with the other documents, constitute a single contract. Appellants contend this is an incorrect interpretation of the contract and that the trial court's judgment reformed the contract. According to Appellants, the Sale and Purchase Agreement should stand alone and none of the other documents are part of the contract. However, the Sales and Purchase Agreement included the following paragraph:
We note that the Sale and Purchase Agreement and other documents are dated the same date, and while not all of the documents were executed simultaneously, they were executed within two days of each other.
6.02 Entire Agreement. This Agreement, together with any documents and exhibits given or delivered pursuant to this Agreement, constitutes the entire agreement of the parties concerning the sale of the Property by Seller to Purchaser. There are no oral representations, warranties, agreements, or promises pertaining to the sale of the Property by Seller to Purchaser that are not incorporated in writing in this Agreement.
Contrary to Appellants' argument, this merger clause does not invalidate other written instruments executed as part of the same transaction. See In re C-Span Entm't , Inc., 162 S.W.3d 422, 426-27 (Tex. App.—Dallas, orig. proceeding); B. F. Goodrich Co. v. McCorkle , 865 S.W.2d 618, 620-21 (Tex. App.—Houston [14th Dist.] 1993, no writ); Morgan Bldgs. & Spas , Inc. v. Humane Soc'y of Se. Tex., 249 S.W.3d 480, 486-87 (Tex. App.—Beaumont 2008, no pet.). Per the provision's plain language, all of the documents that were executed along with the Sales and Purchase Agreement, even if not explicitly referenced, are incorporated into the agreement. This includes the security agreements and deed of trust executed by GAT's president, Mike Mitchell. George Holland, the Davises' attorney, testified that the transaction included three security agreements, including one executed by GAT. Jim Davis also testified that the signed instruments represented the parties' agreement as it was intended. And Jay Davis further testified that he had insisted GAT post its property as collateral to secure the agreement. As a result, the evidence showed, and the trial court found in unchallenged findings listed above, that these instruments were executed willingly and contemporaneously with the larger transaction.
Gillin and Mitchell did not have any cash to apply to the purchase resulting in the Davises owner-financing the entire purchase price of Tucker's, which reinforces the Davises' desire to maximize the amount of collateral securing the promissory note before proceeding with the sale.
Each document is a self-contained writing, signed by GAT via Mitchell, and clearly identifies the debt being secured and the collateral. Each is also supported by consideration via the Sales and Purchase Agreement. A third party's provision of collateral need not be supported by new or additional consideration when it is made contemporary to the promise of the primary debtor. See Fourticq v . Fireman's Fund Ins. Co., 679 S.W.2d 562, 564 (Tex. App.—Dallas 1984, no writ). As a result, the security agreements and deed of trust satisfy the statute of frauds and are part and parcel of the sales agreement allowing GAT's collateral to attach to the transaction and be subject to foreclosure upon a breach. Therefore, we decline to hold that the trial court reformed or misinterpreted the contract. Appellant's second and third issues are overruled.
Appellants further argue that the agreement's "opt out provision" renders the agreement invalid. A portion of that provision provides as follows:
In the event Precinct 4 votes to allow the Sale of alcohol the parties agree that the remaining balance of principal shall be subject to recalculation in a manner to be agreed upon between the parties. In the event an agreement is not reached on recalculation of the balance due the parties agree that the assets conveyed hereby shall be reconveyed to Seller and the balance of principal and accrued interest shall be cancelled.
According to Appellants, the inclusion of this provision rendered the agreement unenforceable for lack of mutuality. However, for that to be true, the provision must give one party the unilateral right to avoid its contractual obligation. See In re Palm Harbor Homes , Inc., 129 S.W.3d 636, 644 (Tex. App.—Houston [1st Dist.] 2003, orig. proceeding); Sterling Computer Sys. of Tex., Inc. v. Tex. Pipe Bending Co., 507 S.W.2d 282, 282 (Tex. Civ. App.—Houston [14th Dist.] 1974, writ ref'd). In this case, the "opt out provision" does not grant either side a unilateral right to opt out. Instead, it states that if Precinct 4 were to vote to allow alcohol sales, a very limited, extrinsic condition, then the balance owed would have been subject to recalculation. The Davises insisted at trial that the provision was meant to be limited to Precinct 4, and that a broader provision allowing for renegotiation in the event of a successful vote anywhere within Smith County would have been a "deal-breaker." Mitchell admitted that the parties had no control over whether or when any area voted to allow alcohol sales. Precinct 4 did not pass such an election prior to the breach. As a result, the "opt out provision" was never triggered. Appellants further urge that this provision is an unenforceable "agreement to agree." Even if the provision were an "agreement to agree," it would not invalidate the entire contract, just the provision. See Killion v . Lanehart , 154 S.W.3d 183, 190 (Tex. App.—Amarillo 2004, pet. denied). "In Texas, the parties to a contract may agree upon some terms of a contract, and understand them to be a contract and yet leave other terms of the agreement to be made later . . . as for those terms left for future discussion, that portion of the agreement is not part of the enforceable contract." Id. Therefore, the inclusion of the provision does not invalidate the entirety of the agreement. Appellants' fifth issue is overruled.
In their sixth issue, Appellants contend the agreement lacks mutual assent. According to Appellants, the evidence was insufficient to support a finding that the parties had a sufficiently definite agreement on all essential terms. They further contend that the evidence shows that the sale and purchase agreement was not an accurate memorialization of the parties' agreement. Appellants point to testimony from Gillin and Mitchell that the "opt out provision" should have been triggered by alcohol sales becoming legal anywhere in Smith County, not just Precinct 4. Conversely, Jay Davis testified that he would not have agreed to such a broad provision. Gillin also testified that Holland was supposed to make changes to the agreement, such as adjusting the interest rate, but those changes were not made. Both Mitchell and Gillin testified that they would not have signed the agreement if the Davises had insisted on limiting the "opt out provision" to Precinct 4. Appellants urge that this evidence demonstrates that the parties did not have a meeting of the minds and, therefore, the contract is unenforceable.
Gillin, Cowboy's, and the Davises signed the sale and purchase agreement. Cowboy's signed its security agreements and deeds of trust. GAT also signed its security agreements and deed of trust. A party's signature on a written contract is strong evidence he unconditionally assented to its terms. Lujan v. Alorica , 445 S.W.3d 443, 448 (Tex. App.—El Paso 2014, no pet.); see Rachal v . Reitz , 403 S.W.3d 840, 845 (Tex. 2013). As a result, a signatory generally may not successfully claim that he believed the provisions of the contract were different from those plainly set out in the agreement or that he did not understand the meaning of the language used. Craig Sessions , M.D., P.A. v. TH Healthcare , Ltd., 412 S.W.3d 738, 744 (Tex. App.—Texarkana 2013, no pet.). Instead, the parties' intent should be ascertained from the contract. Id.
Jim Davis testified that the signed instruments represented the parties' agreement as it was intended. He explained that the "agreement was total and complete and everybody agreed to it." Jay Davis agreed with Jim's testimony and explicitly testified that the parties had an agreement, which was reflected via the Sale and Purchase Agreement. Holland testified that Appellants never asked him to amend the purchase documents. He further explained that the purchase documents were incorporated into the actual agreement. As factfinder, the trial court was entitled to believe the Davises and Holland over Gillin and Mitchell. See City of Keller , 168 S.W.3d at 819.
Additionally, the parties' performance evidences their mutual assent. See McCarty v . Langdeau , 337 S.W.2d 407, 412 (Tex. Civ. App.—Austin 1960, writ ref'd n.r.e.). As discussed above, at closing, the Davises provided and Cowboy's accepted a bill of sale to Tucker's stock, which transferred ownership. Cowboy's and GAT likewise provided the Davises with their respective security agreements and deeds of trust. Following closing, Cowboy's assumed full operational control over Tucker's and its assets. Cowboy's accepted and used these benefits.
Based on the entirety of the evidence, a reasonable factfinder could have found that the parties entered into the sale and purchase agreement and intended to be bound by its express terms. Appellant's sixth issue is overruled.
THE FORECLOSURE JUDGMENT
Within their issues, Appellants have claimed the trial court's judgment impermissibly allows Appellees to foreclose on the collateral. We broadly construe Appellants' arguments as asserting that the trial court's judgment foreclosing on the collateral is improper.
Rule 309 of the Texas Rules of Civil Procedure governs judicial foreclosure judgments and states:
Judgments for the foreclosure of mortgages and other liens shall be that the plaintiff recover his debt, damages and costs, with a foreclosure of the plaintiff's lien on the property subject thereto, and, except in judgments against executors, administrators and guardians, that an order of sale
shall issue to any sheriff or any constable within the state of Texas, directing him to seize and sell the same as under execution, in satisfaction of the judgment.TEX. R. CIV. P. 309. It is undisputed that the judgment of foreclosure in this case was not against an executor, administrator, or guardian. Thus, Rule 309 requires the order of sale "issue to any sheriff or any constable." Instead, the trial court's order simply states that "all properties and items described in the Plaintiffs' Exhibits 4-9 and 18 (attached to this Judgment) are expressly made subject to foreclosure and/or other action as required to satisfy the Judgment."
The requirement that the sale of the property in a judicial foreclosure be conducted by a sheriff or constable is clear, unambiguous, and does not conflict with any provision of Chapter 51. Indeed, Chapter 51 distinguishes between foreclosure sales conducted under that chapter and those conducted under a court judgment foreclosing the lien. See TEX. PROP. CODE ANN. § 51.005(a)(2) (West 2014). Because nothing in Chapter 51 conflicts with Rule 309, we must assume that the legislature intended that judicial foreclosures continue to be conducted by sheriffs or constables even after the enactment of Chapter 51. Accordingly, the order of sale in this case is not in compliance with Texas law.
Reversible error is shown when the trial court makes an error of law that probably causes the rendition of an improper judgment. See TEX. R. APP. P. 44.1. In this case, the trial court's error was the rendition of an improper judgment under Rule 309 of the rules of civil procedure. This alone is sufficient to show harmful error.
DISPOSITION
We reverse the trial court's order imposing a money judgment against Great American Treating. We also reverse the portion of the judgment regarding foreclosure and remand the cause for rendition of a judgment and order of sale in compliance with Rule 309 of the Texas Rules of Civil Procedure. We affirm the trial court's judgment in all other respects.
GREG NEELEY
Justice Opinion delivered July 31, 2020.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
Appeal from the County Court at Law No. 3 of Smith County, Texas (Tr.Ct.No. 60,086-B)
THIS CAUSE came to be heard on the oral arguments, appellate record and briefs filed herein, and the same being considered, it is the opinion of this court that there was error in the order of the court below. In accordance with this court's opinion of this date, the order of the trial court is affirmed in part and reversed and remanded in part, as follows:
It is therefore ORDERED, ADJUDGED and DECREED that the portion of the order imposing a money judgment against GREAT AMERICAN TREATING, INC. is reversed, and judgment rendered that Appellees take nothing on their claim for money damages against GREAT AMERICAN TREATING, INC.
It is further ORDERED, ADJUDGED and DECREED that the portion of the judgment regarding foreclosure is reversed and the cause is remanded to the trial court for rendition of a judgment and order of sale in compliance with Rule 309 of the Texas Rules of Civil Procedure in accordance with this court's opinion.
It is further ORDERED, ADJUDGED and DECREED that the trial court's judgment is, in all other respects, affirmed.
It is further ORDERED that all costs of this appeal are hereby assessed against Appellant, COWBOY'S RETAIL & WHOLESALE BEVERAGE DISTRIBUTION, LLC, for which execution may issue, and that this decision be certified to the court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.