Aguiar v. Segal, No. 14-04-00389-CV (TX 5/24/2005)
| Decision Date | 24 May 2005 |
| Docket Number | No. 14-04-00389-CV.,14-04-00389-CV. |
| Parties | PEDRO AGUIAR AND MARIA AGUIAR, Appellants, v. PAUL SEGAL AND GEOFFREY ABADEE, Appellees. |
| Court | Supreme Court of Texas |
On Appeal from the 212th District Court, Galveston County, Texas, Trial Court Cause No. 03CV1497.
Reversed and Remanded.
Panel consists of Justices YATES, ANDERSON, and HUDSON.
MAJORITY OPINION
This is a breach of contract case. Pedro and Maria Aguiar, the sellers, appeal the trial court's judgment awarding the appellees, the buyers, specific performance of five earnest money contracts for the sale of five parcels of real property. The sellers raise three issues on appeal, arguing: (1) there is no evidence or factually insufficient evidence to support the trial court's findings of fact numbers 6, 7, 8, 11, 13, 15, 16, 18, 19, and 20; (2) the trial court's conclusions of law numbers 1, 3, 4, and 5 are erroneous; and (3) the evidence shows the buyers, not the sellers, breached the five earnest money contracts by failing to close the five sales within the time prescribed by the earnest money contracts, and the sellers are entitled to recover on their counterclaim for the earnest money paid under the five contracts and their attorney's fees. We reverse and remand.
BACKGROUND
In May 2003, the sellers, Pedro and Maria Aguiar, and the buyers, California residents Paul Segal and Geoffrey Abadee, entered into five earnest money contracts for the sale of four apartment complexes and one residential duplex located in Galveston County, Texas. The buyers agreed to pay the sellers $ 1,140,000.00 for the five properties. Pursuant to the terms of the five contracts, the buyers deposited the required amount of earnest money for each contract with Stewart Title Company, the escrow agent. The following list identifies the five properties to be sold, each property's respective sale price, and the amount of earnest money deposited:
Property Sale Price Earnest Money
1. 1704 & 1706 Ave. L $280,000.00 $5,000.00
2. 6919 Ave. O $ 65,000.00 $ 500.00
3. 1010 63rd Street $160,000.00 $1,000.00
4. 2719 Ave. P $150,000.00 $1,000.00
5. 1602 Texas Ave. $485,000.00 $5,000.00
_____________ __________
Total $1,140,000.00 $12,500.00
Each of the contracts specify "time is of the essence" and contain integration clauses. The integration clauses generally provide that the contract contains the entire agreement of the parties and may not be changed except in writing. Both parties agree there is no other written agreement by the parties that purports to change any provision of the earnest money contracts. The contracts also contain the following provision governing the remedies available to the buyers and sellers in the event of a default by the other party:
15. DEFAULT:
A. If Buyer fails to comply with this contract, Buyer is in default and Seller may:
(1) terminate this contract and receive the earnest money as liquidated damages, thereby releasing the parties from this contract; or
(2) enforce specific performance, or seek other relief as may be provided by law, or both.
B. If, without fault, Seller is unable within the time allowed to deliver the estoppel certificates or the commitment, Buyer may:
(1) terminate this contract and receive the earnest money, less any independent consideration under paragraph 7B(3)(a), as the sole remedy; or
(2) extend the time for performance up to 15 days and the closing will be extended as necessary.
C. Except as provided in Paragraph 15B, if Seller fails to comply with this contract, Seller is in default and Buyer may:
(1) terminate this contract and receive the earnest money, less any independent consideration under Paragraph 7B(3)(a), as liquidated damages, thereby releasing the parties from this contract; or
(2) enforce specific performance, or seek such other relief as may be provided by law, or both.
Additionally, paragraph 9(A) of the contracts provides, "If either party fails to close by the closing date, the non-defaulting party may exercise the remedies in Paragraph 15." The contracts also allow the prevailing party in a suit brought relating to the contracts to recover reasonable attorney's fees.
Under each contract, the original date for closing was July 15, 2003. A financing addendum to the contracts provided for an automatic fifteen-day extension of the closing date in the event the buyers' lender had not completed the lender's closing requirements, such as an appraisal, by the closing date. On July 15, 2003, the appraisals of the five properties were not complete, and the closing date was automatically extended under the contract for fifteen days, until July 30, 2003.
On July 30, 2003, the appraisals still were incomplete. The buyers' lender, Moody National Bank, would not fund the buyers' loans until the appraisals of the properties were complete. The closing date was extended by an oral agreement, but the parties disagree as to the duration of the orally agreed extension. When the properties did not close a week later on August 6, 2003, the sellers terminated the contracts, and the parties never closed the earnest money contracts. The trial court found Moody National Bank was prepared to fund the loans by August 25, 2003, and the buyers currently have a loan commitment for the purchase of the real properties.
The buyers filed this suit against the sellers seeking specific performance of the contracts based on the sellers' alleged breach of the five contracts, and asserted claims of fraud, promissory estoppel, partial performance, declaratory judgment, waiver, and attorney's fees against the sellers. The sellers filed a counterclaim against the buyers alleging the buyers breached the earnest money contracts by failing to timely close the contracts, and seeking recovery of the earnest money and their attorney's fees under the contracts together with post-judgment interest.
After a one-day bench trial, the trial court ruled in favor of the buyers, awarding them specific performance of the five earnest money contracts and $37,500.00 in attorney's fees. The trial court issued findings of fact and conclusions of law, and the evidentiary support for such findings and conclusions is at the core of this appeal.
DISCUSSION
In their first issue, the sellers challenge the following findings of fact by the trial court:
6. [The sellers] never objected or complained about any delay in obtaining the loan commitment.
7. [The sellers] never requested that the contract be terminated for failure to timely obtain financing and never returned the earnest money to [the buyers].
8. [The sellers] elected by their silence, conduct and words to treat the contracts as continuing and [the buyers] relied on that election to their detriment.
11. On or before July 30, 2003, Pedro Aguiar expressly agreed to extend the date of the closing. [Mr. Aguiar]'s behavior after July 30, 2003 was consistent with an extension of time for the closing. After July 30, 2003, [Mr. Aguiar] circulated a letter to his tenants stating that the properties were being sold. Further appraisals of the real estate were scheduled with the full knowledge and participation of the [the sellers] as follows:
Date Property
July 31, 2003 2719 Avenue P
July 31, 2003 1602 Texas Avenue
August 5, 2003 1010 63rd Street
13. On August 6, 2003, [the sellers] informed [the buyers] for the first time that [the sellers] were no longer willing to complete the sale of the property.
15. At all relevant times, [the buyers] were ready, willing and able to perform their obligations under the contracts including payment of the purchase price in cash, if necessary.
16. The [buyers] have fulfilled all of their obligations under the earnest money contracts, and all occurrences and conditions precedent to the [buyers'] right to have [the sellers] perform have been satisfied.
18. Because of [the sellers'] breach of contract, [the buyers] are entitled to recover specific performance of the contracts from [the sellers].
19. [The buyers] are entitled to reasonable attorney's fees in the amount of $37,500.00 pursuant to the contracts between [the buyers] and [the sellers].
20. [The sellers] are liable for breach of contract and [the buyers] are entitled to recover:
a. specific performance to enforce all five (5) contracts for the sale of the real estate;
b. reasonable attorney's fees in the amount of $37,500.00;
c. post-judgment interest at the rate of ten (10) percent per annum (or the highest rate allowed by law), from the date of judgment until paid; and
d. costs of court.
In their second issue, the sellers challenge the following conclusions of law:
1. [The buyers] met all statutory and common-law requirements for recovery of attorney's fees.
3. [The sellers] waived any right to terminate the contract based on delays in securing financing.
4. The July 30, 2003 closing date was waived by the parties and the parties could have closed by August 25, 2003 which is a reasonable time for performance under the circumstances.
5. [The sellers] are liable for breach of contract and [the buyers] are entitled to recover:
a. specific performance to enforce all five (5) contracts for the sale of the real estate;
b. reasonable attorney's fees in the amount of $37,500.00;
c. post-judgment interest at the rate of ten (10) percent per annum (or the highest rate allowed by law), from the date of judgment until paid; and
d. costs of court.
In their third and final issue, the sellers claim they are entitled to recover on their counterclaim for earnest money, attorney's fee's and post-judgment interest.
I. The Trial Court's Findings of Fact and Conclusions of Law...
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