Opinion
03-22-00399-CV
02-07-2024
Greg Daniels, d/b/a PMB Distributing, a sole proprietorship, Appellant v. Ryan Pope, Appellee
From the 250th District Court of Travis County No. D-1-GN-21-007202, the Honorable Karin Crump, Judge Presiding
Before Justices Kelly, Smith, and Theofanis
MEMORANDUM OPINION
CHARI L. KELLY, JUSTICE
Greg Daniels, d/b/a PMB Distributing (Daniels) appeals the trial court's order granting Ryan Pope's motion for summary judgment on his claim for a declaration regarding the payoff amount of a loan for the purchase of real property on Blake Manor Road in Travis County ("the Property"). Daniels challenges the trial court's summary judgment in Pope's favor on Daniels's counterclaims for fraud, fraudulent inducement, fraudulent misrepresentation, and statutory fraud. See Tex. Bus. & Com. Code § 27.01(a). We will affirm.
BACKGROUND
Pope sued Daniels seeking declaratory relief; specifically, a declaration of the payoff amount of a loan Daniels made to Pope to fund Pope's purchase of the Property from Daniels. Pope alleged that on April 10, 2021, he and Daniels executed a Purchase Agreement whereby Daniels agreed to convey the Property to Pope for a purchase price of $350,000. Daniels agreed to finance a portion of the purchase price through a loan with a 10-year amortization term at 6% interest. The Purchase Agreement provided that Pope would make semiannual payments to Daniels. The Purchase Agreement also provided for a prepayment penalty of 2% of the purchase price "if property sold within 3 years." Pope alleged that he and Daniels documented the final loan agreement on August 9, 2021, when Pope executed a Promissory Note in the amount of $280,000.00. The Promissory Note provided for a 6% interest rate on the unpaid principal balance, semiannual payments of $18,820.40, a ten-year maturity date, and "a $7,000.00 prepayment penalty if [the Property] were sold within three (3) years of the date of the Note." At closing, the parties executed the Promissory Note, Pope executed a Deed of Trust, and Daniels executed a Warranty Deed with Vendor's Lien, conveying the Property to Pope.
At closing, Pope paid $70,000 of the purchase price in cash.
Pope alleged that shortly after the closing he entered into a contract to sell the Property to a developer and sought to pay off the loan evidenced by the Promissory Note in full, including interest on the unpaid principal balance and the prepayment penalty. The title company handling the sale from Pope to the developer required that Pope furnish a payoff quote before it would issue a title policy. Pope made three requests to Daniels to provide a payoff quote, but Daniels refused to furnish Pope the requested payoff quote. Pope alleged that Daniels refused to furnish or approve the requested payoff quote for the title company "because he wished to stymy the sale" and that Daniels took the position that Pope could not "payoff the Loan prior to the expiration of the full 10-year term of the Loan." Pope alleged that Daniels' intransigence caused him to lose the sale to the developer. Pope asserted a claim for tortious interference with his contract with the developer and also requested a declaration of "his rights under the Loan, including the amount of the payoff."
Daniels filed a general denial and asserted counterclaims for breach of contract, fraudulent inducement, common law and statutory fraud, fraudulent misrepresentation, and violations of Deceptive Trade Practices-Consumer Protection Act. See id. §§ 17.41-.63; 27.01(a) (Fraud in Real Estate and Stock Transactions) These counterclaims were based on Daniels's allegations, contained in his pleading, that:
[Pope] misrepresented himself as an unsophisticated individual neighboring landowner who just wanted to acquire a nearby property and who would be holding on to it to develop, which would allow for [Daniels] to avoid selling it all at once and incurring the tax penalties, through a 10-year owner finance note to spread out the capital gains. [] Once [Daniels] saw what was happening at closing, which was all arranged by [Pope] through his contacts in the real estate investment business, [Daniels] immediately informed [Pope] that he was repudiating any agreement . . . . [Pope] has refused to accept the repudiation of the contract and attempted to sell the property and pay it off in full within 2 months of purchasing the property, proof that he never intended to see out the terms of the 10-year note and made fraudulent statements to [Daniels] in order to induce him to sign the agreement despite [Daniels's] express concerns about the need to spread out the income for tax purposes.
The alleged factual basis for each of Daniels's claims is his assertion that Pope misrepresented that he would not sell the Property before the 10-year payment period had expired and committed fraud by attempting to pay off the loan in full approximately two months after the closing rather than continuing to make semiannual payments for the entire 10-year period. Daniels also asserted that the purchase agreement was unenforceable based on his assertion that the transaction was between Pope and PMB Distributing, an entity Daniels claimed to be "nonexistent" and which "lacked capacity" to enter into a contract. Finally, Daniels sought to rescind the contract based on "illegality" and "lack of consideration."
Pope filed a traditional motion for summary judgment. Pope argued that, as a matter of law, each of Daniels's fraud counterclaims fails because he could not reasonably rely on an alleged oral promise that conflicts with the terms of a written loan agreement. Pope also argued that Daniels's breach of contract claim fails as a matter of law because the terms of the written loan agreement govern, and those terms conflict with any alleged oral promise not to sell the Property before the expiration of the 10-year loan period. With regard to Daniels's attempt to rescind the contract, Pope argued that the assertion that PBM Distributing is a "non-existent entity" was meritless because, as a sole proprietorship, PMB Distributing and Daniels are legally the same. Pope also asserted that, as a matter of law, he was entitled to a declaration regarding the payoff amount of the loan as of July 14, 2022. As summary judgment evidence, Pope attached a Certificate of Assumed Name identifying PMB Distributing as a sole proprietorship owned by Daniels individually; the Purchase Agreement; the Promissory Note evidencing the loan from Daniels to Pope; an HUD-1 Settlement Statement signed by Daniels and Pope at closing of the sale of the Property; the Deed of Trust; and the Warranty Deed with Vendor's Lien conveying the Property to Pope.
Pope also filed a Rule 91a motion to dismiss Daniels's DTPA claims and his claim that the contract was unenforceable because it was "illegal" and due to "lack of consideration." See Tex. R. Civ. P. 91a (providing that party may move to dismiss cause of action on grounds that it has no basis in law or fact). Pope asserted that Daniels's own pleadings establish that there was consideration for the sale agreement; specifically, that the parties attended a closing wherein Pope delivered to Daniels a check in the amount of $70,000 and signed a Promissory Note in the amount of $280,000 secured by a vendor's lien. With respect to the alleged "illegality" of the contract, Pope argued that Daniels's pleadings contained no factual allegations that could be construed to render the contract illegal. Finally, Pope asserted that Daniels's DTPA claims had no basis in law or fact because, taking his allegations as true, he was not a "consumer" as that term is defined in the DTPA.
After a hearing, the trial court granted Pope's Rule 91a motion to dismiss, stating in its order that Daniels's DTPA claim and claim for rescission of the sale due to "illegality" and "lack of consideration" had no basis in law or fact. The court dismissed those claims with prejudice. The trial court also granted Pope's motion for summary judgment on Daniels's counterclaims and declared that the payoff amount of the loan as of July 14, 2022 was $277,600.52, plus the prepayment penalty of $7,000, for a total of $284,600.52.
Pope had filed a notice of nonsuit of his tortious interference with contract claim. Consequently, the court's summary judgment was final and appealable.
Daniels then perfected this appeal. In his notice of appeal, Daniels states that he is appealing "the trial court's Order Granting Plaintiffs Motion for Summary Judgment." Daniels did not appeal the trial court's order granting Pope's Rule 91a motion to dismiss.
DISCUSSION
Daniels's brief is cursory and, in some respects, does not comport with the briefing rules set forth in the Texas Rules of Appellate Procedure. See Tex. R. App. P. 38.1. Specifically, Daniels's brief is lacking in "clear and concise argument for the contentions made, with appropriate citations to authorities and to the record." See id. R. 38.1(i). Nevertheless, we can discern from Daniels's brief that he is challenging the trial court's determination that his fraud counterclaims against Pope fail as a matter of law. In support of this argument, Daniels asserts that he "provided evidence supporting every element of his claims of [] fraud, fraudulent inducement, and statutory fraud." Because the trial court was considering a traditional, rather than a no-evidence, motion for summary judgment, we construe Daniels's argument as asserting that the trial court erred by concluding that Pope conclusively established that Daniels could not have justifiably relied on any alleged oral agreement not to sell the Property or prepay the loan and that, as a consequence, Pope negated reliance-an element of each of Daniels's fraud claims. See Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (per curiam) (setting out that defendant prevails on motion for traditional summary judgment if it disproves at least one element of cause of action); see also Barrow-Shaver Res. Co. v. Carrizo Oil & Gas Corp., 590 S.W.3d 471, 496-97 (Tex. 2019) (establishing element of reliance in fraud claim requires showing that plaintiff actually relied on defendant's representation and that such reliance was justifiable); Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010) (elements of fraudulent misrepresentation claim include that plaintiff justifiably relied on material misrepresentation); Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001) (one of elements of fraud claim is that plaintiff actually and justifiably relied on misrepresentation); DRC Parts & Accessories, L.L.C v. VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex. App-Houston [14th Dist] 2003, pet. denied) (element of fraudulent inducement claim is that plaintiff actually and justifiably relied on misrepresentation); TCA Bldg Co. v. Entech, Inc., 86 S.W.3d 667, 674 (Tex. App-Austin 2002, no pet.) (proof of reasonable or justifiable reliance necessary to sustain fraud action under Texas Business and Commerce Code section 27.01).
Appellate issues are to be construed reasonably, yet liberally, so that the right to appellate review is not lost by waiver. See El Paso Nat. Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 316 (Tex. 1999). Appellate courts should reach the merits of an appeal whenever reasonably possible. Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008) (per curiam).
The basis for Daniels's fraud claims is his assertion that he relied to his detriment on an alleged oral agreement between him and Pope that Pope would not pay off the balance of the loan before the expiration of the 10-year payment period set forth in the Promissory Note. But reliance on an oral representation that is directly contradicted by the express, unambiguous terms of a written agreement between the parties is not justified as a matter of law. See DRC Parts & Accessories, 112 S.W.3d at 858. "[A]s Texas courts have repeatedly held, a party to a written contract cannot justifiably rely on oral misrepresentations regarding the contract's unambiguous terms." National Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424-25 (Tex. 2015). In this case, the Promissory Note contained a provision stating that "Borrower will pay a $7,000 prepayment penalty if property is sold within three (3) years of the date of the Note." Thus, the Promissory Note's plain and unambiguous terms contemplate the possibility, and certainly do not forbid, that Pope could sell the Property before the expiration of the 10-year payment period. On its face, the Promissory Note, which provides for a prepayment penalty of $7,000, obviously and unambiguously contemplates the possibility of an earlier sale of the Property and payoff of the balance of the note. Similarly, the Purchase Agreement provided for a "2% of purchase price prepayment fee to apply if property sold within 3 years." Because it directly contradicts the parties' agreement, Daniels could not, as a matter of law, justifiably rely on any alleged oral representation by Pope that he would not sell the Property before making semiannual payments for ten years. Pope conclusively negated the reliance element in each of Daniels's counterclaims based on fraud. The trial court did not err in granting summary judgment in Pope's favor on each of these counterclaims. We overrule Daniels's sole appellate issue.
CONCLUSION
Having overruled Daniels's sole appellate issue, we affirm the trial court's judgment.
Affirmed.