Besteman v. Pitcock

• Decision Date: 05 December 2008
• Docket Number: No. 06-07-00134-CV.,06-07-00134-CV.
• Citation: 272 S.W.3d 777
• Parties: Jack BESTEMAN and Pam Besteman, Appellants, v. Jerry PITCOCK and Joanne Pitcock, Appellees.
• Court: Texas Court of Appeals

272 S.W.3d 777

Jack BESTEMAN and Pam Besteman, Appellants, v. Jerry PITCOCK and Joanne Pitcock, Appellees.

No. 06-07-00134-CV.

Court of Appeals of Texas, Texarkana.

Submitted October 29, 2008.

Decided December 5, 2008.

James R. Rodgers, Nikki D. Miller, The Moore Law Firm, LLP, Paris, for appellants.

Mark Frels, Mark H. How, How, Frels, Rohde, Woods & Duke, PC, Dallas, for appellees.

Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice MOSELEY.

About two months after Jack Besteman and his wife, Pam, acquired a called 235-acre tract of land in Lamar County as part of a like-kind exchange for property they had owned in another state, the Bestemans were approached by Jerry Pitcock and his wife, Joanne, who wanted to buy it. Jack Besteman refused to sell it to the Pitcocks in an outright sale, indicating that he would only agree to part with it if it could be achieved through a similar like-kind exchange of the manner he had just experienced, thus saving substantially on taxes which would otherwise be incurred. As a vehicle to facilitate this, Besteman insisted that the Pitcocks enter into a lease of the property for two years with an option to purchase at the termination of the lease agreement. Besteman explained this delay by indicating that he wanted an opportunity to locate available apt real estate which could be used to effect such an exchange.

Besteman drafted a lease/option agreement by which the Pitcocks would pay the Bestemans $11,675.00 per year for two years and, at the expiration of the lease term, could exercise the option to purchase the property at $950.00 per acre (i.e., $223,250.00). The general form of the lease/option agreement was drawn heavily from one which the Bestemans had used in the past in another transaction. It contained clauses that required maintenance of the pastures and improvements in accord with good husbandry of the land and dictated that any addition or removal of improvements on the land could only be done with the approval of the Bestemans. A condition precedent in the contract to the Pitcocks' right to purchase was stated as follows: "90 days before the 24 month lease period expires, Lessee will notify Lessor of Lessee's intent to purchase said property." The twenty-four-month lease period was set to expire on September 20, 2006. The lease agreement also specified that:

Any notice required, or permitted to be delivered hereunder must be in writing, and all notices and payments of rent will be deemed received on the date they are deposited in the United States mail, certified mail or registered mail, postage prepaid, return receipt requested, addressed to Lessor or Lessee, as the case may be, at the address shown above, or at such other place as the Lessor or Lessee may from time to time designate by written notice as provided in this paragraph. Notices delivered otherwise will be effective upon receipt.

It is uncontroverted that no written notice of an intention to exercise the option to purchase was given by the Pitcocks to the Bestemans at least ninety days before the expiration of the lease agreement term.

The Pitcocks went into possession of the tract of land under the lease agreement and made timely payments of the lease installments. However, they failed to provide any written notice of their intention to exercise the option to purchase until some forty-nine days after the time specified in the contract. When the Pitcocks did send written notice by certified mail, it was not retrieved by the Bestemans and the notice was returned, undelivered.

Almost immediately after the notice was returned to them, the Pitcocks filed suit for specific performance, declaratory judgment, and breach of contract. In their petition, the Pitcocks alleged that they had provided unequivocal notice of their intention to exercise the option to purchase well before the required time and that they had, in reliance upon the option to purchase, invested substantial sums in improving the property. The Bestemans responded with a request for an award of reasonable rentals from the time of the termination of the two-year lease until the time of recovery of the property from the Pitcocks. Both parties requested attorneys' fees pursuant to Sections 37.009 and 38.001 of the Texas Civil Practice and Remedies Code.

The Pitcocks maintain that although the contract states that all notices required under the agreement be in writing and delivered by certified mail, the paragraph concerning notices ends with the statement that "Notices delivered otherwise will be effective upon receipt." The Pitcocks insist that since the contract permits notices to be delivered "otherwise," that means that the notice could be delivered orally rather than in writing; in other words, the Pitcocks say that they effected notice by oral communication and that this was sufficient notice to invoke the option to purchase.

The Pitcocks also rely upon the equitable doctrine of disproportionate forfeiture (defined later) as a defense against the claims that they failed to conform to the ninety-day notice requirement.

In a trial to the court at which only Jack Besteman and Jerry Pitcock testified, the testimony was somewhat controverted as to the efforts made by Pitcock to orally communicate the intention to exercise the option to purchase.

Pitcock testified that he had attempted unsuccessfully on a number of occasions to reach Besteman by telephone and had tried on one occasion to find him at home, all with the intention of communicating his intention to exercise the option to purchase; Pitcock further said that on the occasion of paying the annual rent, he had requested that he be allowed to simply complete the purchase at that time rather than waiting the additional year; and that on another occasion, he had attempted to persuade Besteman to terminate the lease by completing a sale of the property. Pitcock testified further that the course of his actions on the property by improving the ponds, clearing of underbrush, the construction of a concrete pad as a horse-washing area, and fertilizing the property was evidence of the intention of the Pitcocks to exercise their option to purchase, this evidence being tantamount of notice of their intention to purchase. However, on cross-examination, it was shown that the $15,000.00 statement which was presented as evidence of the Pitcocks' investment in clearing the property was from Joanne Pitcock's father, and the Pitcocks were unable to particularize the services which had been performed and indicated that these services were not paid for in cash. Pitcock also admitted that fertilization of the property was a part of good husbandry of the property (although he indicated that he would not have fertilized as much had he not believed he would be able to purchase), that some of the billing statements he presented were for work done on other property, and that the oats which had been sown were to feed deer and the oats provided benefits only during the term of the lease.

Besteman responded by indicating that he was not difficult to reach by telephone and he indicated doubt that someone would be unable to find him (or someone in his family) at his house as Pitcock had testified, that he had no recollection of Pitcock's expression of interest in purchasing the property at the time Pitcock paid the second year's lease amount or any other time during the two-year term of the lease, that he was unaware of the actions taken by Pitcock on the property, and that he had believed that the Pitcocks' desire to purchase the property was contingent on their ability to sell their house (which continued to be for sale throughout the entire two-year term of the lease). Besteman also indicated that he erroneously believed that the certified-mail notice sent by the Pitcocks had to do with a contested medical bill and that he was unaware that it was intended to be a notice from the Pitcocks expressing their intention to purchase.

The trial court then requested letter briefs from the parties. In the post-trial brief filed by the Pitcocks, disproportionate forfeiture was first raised as a theory of recovery.¹

The trial court gave judgment in favor of the Pitcocks, ordering specific performance and awarding attorneys' fees; the trial court also entered detailed findings of fact and conclusions of law. The Bestemans have perfected their appeal to this Court, raising three primary points of error (with subpoints): (1) the trial court erred in granting specific performance relief, (2) the trial court erred in six of the findings of fact and conclusions of law, stating that none of the six were supported by evidence and that each was manifestly erroneous, and (3) the trial court erred in awarding attorneys' fees to the Pitcocks.

Although their brief indicates that the complained-of findings of fact and conclusions of law are "without evidence to support" them and that they are "manifestly erroneous," the Bestemans do not specify whether their challenge to the various findings of fact regard their legal sufficiency or their factual sufficiency.

Questions of law are reviewed de novo. City of San Antonio v. TPLP Office Park Props., 218 S.W.3d 60, 66 (Tex.2007). Questions of fact resolved by the trial court are subject to the same legal and factual sufficiency standards as jury findings. In re Doe, 19 S.W.3d 249, 253 (Tex. 2000).

The test for the legal sufficiency of evidence is "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). In making this kind of determination, the Court credits favorable evidence if a reasonable fact-finder could, and disregards contrary evidence unless a reasonable fact-finder could not. Id. So long as the evidence falls within the zone of reasonable disagreement, the Court may not substitute its judgment for that of the fact-finder. Id....