Coldwell Banker Whiteside v. Ryan Equity

• Decision Date: 09 January 2006
• Docket Number: No. 05-03-01571-CV.,05-03-01571-CV.
• Citation: 181 S.W.3d 879
• Parties: COLDWELL BANKER WHITESIDE ASSOCIATES, Appellant/Cross-Appellee, v. RYAN EQUITY PARTNERS, LTD., Appellee/Cross-Appellant. RYAN EQUITY PARTNERS, LTD., Appellant, v. Jeanette Sadler and James Williams, Appellees.
• Court: Texas Supreme Court

181 S.W.3d 879

COLDWELL BANKER WHITESIDE ASSOCIATES, Appellant/Cross-Appellee, v. RYAN EQUITY PARTNERS, LTD., Appellee/Cross-Appellant.

RYAN EQUITY PARTNERS, LTD., Appellant, v. Jeanette Sadler and James Williams, Appellees.

No. 05-03-01571-CV.

Court of Appeals of Texas, Dallas.

January 9, 2006.

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Robert A. Miller, Prager & Miller, P.C., Dallas, Catherine Kays, Geary Porter & Donavan, P.C., Addison, for Appellant.

Joyce W. Lindauer, Dallas, for Appellee.

Before Justices MORRIS, MOSELEY, and FITZGERALD.

OPINION

Opinion by Justice FITZGERALD.

This case arises out of Ryan Equity Partners, Ltd.'s purchase of real estate from Jeanette Sadler and James Williams. Coldwell Banker Whiteside Associates was Ryan Equity's real estate broker. The trial court found Coldwell Banker liable to Ryan Equity for breach of contract and awarded Ryan Equity damages of $90,000 plus interest and attorney's fees. The trial court found Sadler and Williams were not liable and awarded them their attorney's fees against Ryan Equity. On appeal, Coldwell Banker contends the trial court erred in finding it liable for breach of contract and awarding damages of $90,000, and Ryan Equity contends the award of only $90,000 against Coldwell Banker was insufficient. Ryan Equity also appeals the take-nothing judgment in favor of Sadler and Williams. We affirm the trial court's judgment.

FACTUAL BACKGROUND

In 1964, the Parkmont Apartments were built. This Property consisted of a thirty-one-unit apartment building in the Junius Heights neighborhood in east Dallas. At that time, the zoning permitted the construction and operation of multifamily housing projects of that size. In 1972, Sadler and Williams purchased the Property. In about 1978, the area was rezoned to single-family housing, but the zoning permitted existing multifamily uses, including the Property, to continue operating. In 1988, the area was rezoned again, making multifamily housing nonconforming. This zoning change went unrecognized until 1994, when residents petitioned the City to shut down various multifamily housing uses. The Dallas City Council then passed an ordinance creating a Planned Development District (PD) that included the Property. Under the PD, multifamily housing uses larger than six units were prohibited unless they obtained a Special Use Permit. If a property larger than six units failed to obtain a Special Use Permit, then its nonconforming use would be abated by the City's Board of Adjustment on the application of any citizen. "Abatement" of the nonconforming use meant that the nonconforming property would have to become a single-family residence or cease to operate. In 1995, Sadler and Williams applied for a Special Use Permit from the City, but their application was denied. However, they continued to operate the Property as a thirty-one-unit apartment complex, and no one applied to abate the nonconforming use while they owned the Property.

In 1998, Dean Ryan's partnership, Ryan Equity, was looking for an opportunity for quick investment of about $1.5 million from the sale of land in Hawaii.¹ Ryan Equity planned to purchase run-down apartment complexes in east Dallas, rehabilitate them, raise the rents, and leverage the properties to purchase more real estate. Ryan Equity, through Ryan, contracted with Coldwell Banker Whiteside Associates, through John Whiteside, to select suitable properties (the "Brokerage Agreement"). Whiteside was an experienced real estate broker in east Dallas. Whiteside was assisted by Paige Compton, one of his office's real estate agents.

Whiteside proposed the Property as a suitable purchase under Ryan Equity's plan. One of the partners in Ryan Equity asked Whiteside about the zoning, and Whiteside said it was a legal nonconforming use but was grandfathered,² which Whiteside explained meant that the Property could continue to be operated as an apartment complex, but if it burned down or was demolished, it could be used only as single-family housing. Ryan Equity made no independent investigation of the zoning, nor did it seek confirmation of Whiteside's representation of the extent to which the Property was grandfathered. Ryan Equity did not ask Sadler and Williams about the zoning, nor did it tell them the intended use of the Property. After looking at the Property and deciding it could be rehabilitated according to the plan, Ryan Equity offered to purchase the Property from Sadler and Williams for $470,000.

Sadler and Williams accepted the offer. The contract for the sale of the Property (the "Purchase Contract") stated that the sellers, Sadler and Williams, were "not aware of ... any material defects to the Property." The sale closed on November 24, 1998. Coldwell Banker received a commission of three percent, or $14,100, for the transaction. Ryan Equity also purchased four other properties in Dallas.

Ryan Equity planned to renovate the Property after renovating one of the other properties, but it planned to use the rental income from the Property to maintain it until the renovations could begin. Ryan Equity, however, was soon cited for the Property's multiple building code violations, and it hired Roger Albright, an attorney specializing in municipal real estate and zoning issues, to represent it before the City. Albright discovered the PD ordinance and determined that unless Ryan Equity obtained a Special Use Permit, the Property would be forced to cease operation as multifamily housing on the application of any citizen to the Board of Adjustment. Ryan and Albright held meetings with the Junius Heights Neighborhood Association to win the neighborhood's support for a Special Use Permit, but the neighborhood refused to support the plan for the Property. An application for abatement of the nonconforming multifamily use of the Property was filed with the Board of Adjustment. Because the Property did not have a legal right to exist as a multifamily-housing use, Ryan Equity was unable to obtain the building permits and financing necessary to repair the major problems with the Property. Ryan Equity incurred fines of over $167,000 for building code violations. The City of Dallas brought two suits, one seeking demolition of the buildings on the Property for building code violations and the other seeking abatement of the nonconforming use of the Property. In June 2001, Ryan Equity settled the suits with the City by agreeing to tear down the apartments in exchange for the City waiving the fines. Ryan Equity demolished the buildings in August 2001. On February 4, 2002, Ryan Equity sold the Property for $285,000, which netted $247,962 after closing costs.

Ryan Equity sued Sadler, Williams, and Coldwell Banker for breach of the duty of good faith and fair dealing, common-law and statutory fraud, and breach of contract. Ryan Equity also sued Coldwell Banker for breach of fiduciary duty. Following a trial before the court, the trial court found Sadler and Williams were not liable and found Coldwell Banker liable only for breach of contract. The trial court determined that Ryan Equity proved actual damages of $90,000.

Coldwell Banker appeals the trial court's judgment against it for breach of the Brokerage Agreement. Ryan Equity appeals the trial court's failure to determine that Sadler and Williams breached the Purchase Contract and that both Coldwell Banker and Sadler and Williams committed fraud. Ryan Equity also appeals the trial court's award of only $90,000 damages against Coldwell Banker on its breach-of-contract claim.

STANDARD OF REVIEW

Findings of fact in a case tried to the court have the same force and effect as a jury's verdict on special issues. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991); Lewis v. Dallas Soundstage, Inc., 167 S.W.3d 906, 912 (Tex.App.-Dallas 2005, no pet.). We review the trial court's findings of fact by the same standards that are applied in reviewing the evidence supporting a jury's answers. Anderson, 806 S.W.2d at 794. In reviewing the legal sufficiency of a finding of fact, we consider only the evidence and inferences that support the challenged finding and disregard all contrary evidence and inferences unless the evidence could not be rejected by the fact finder. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We uphold the trial court's finding against a legal sufficiency challenge if there is any probative evidence to support the finding. Anderson, 806 S.W.2d at 795. In reviewing a factual sufficiency point of error, we consider all of the evidence. A finding will be set aside only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is wrong and manifestly unjust. Lewis, 167 S.W.3d at 912; Sierad v. Barnett, 164 S.W.3d 471, 477 (Tex.App.-Dallas 2005, no pet.). In so doing, we do not pass on the witnesses' credibility or substitute our judgment for that of the trier of fact. Jakab v. Gran Villa Townhouses Homeowners Ass'n, Inc., 149 S.W.3d 863, 866 (Tex.App.-Dallas 2004, no pet.). In addition, the trial court, as fact finder, is the sole judge of the credibility of the witnesses and may accept or reject all or any part of a witness's testimony. Lisanti v. Dixon, 147 S.W.3d 638, 642 (Tex.App.-Dallas 2004, pet. denied); Sw. Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex.App.-Houston [1st Dist.] 1992, writ denied).

We review challenges to a trial court's conclusions of law as a matter of law. Lewis, 167 S.W.3d at 912; Boyd v. Diversified Fin. Sys., 1 S.W.3d 888, 890 (Tex.App.-Dallas 1999, no pet.). We independently evaluate the trial court's conclusions of law, and we give limited deference to a trial court's application of law to facts. Padilla v. Flying J, Inc., 119 S.W.3d 911, 913 (Tex.App.-Dallas 2003, no pet.). The trial court abuses its discretion when it misapplies the law. Id.

RYAN EQUITY V. SADLER AND WILLIAMS

In its first and second...