Craig v. Varon, No. 01-08-00794-CV (Tex. App. 12/3/2009)
| Decision Date | 03 December 2009 |
| Docket Number | No. 01-08-00794-CV.,01-08-00794-CV. |
| Parties | BOB CRAIG AND 6030 SOUTH RICE, LTD., Appellants, v. JACOBO VARON AND CHARTER TITLE COMPANY, Appellees. |
| Court | Texas Court of Appeals |
On Appeal from the 127th District Court, Harris County, Texas, Trial Court Cause No. 2005-01486.
Panel consists of Justices JENNINGS, HIGLEY, and SHARP.
Appellants, Bob Craig and 6030 South Rice, Ltd. ("South Rice"), challenge the trial court's judgment, rendered after a nonjury trial, in favor of appellees, Jacobo Varon and Charter Title Company ("Charter"), on the parties' claims against each other for breach of a real estate contract. In three issues, Craig and South Rice contend that the trial court erred in finding that Craig had breached the contract (the "Contract"), the trial court erred in not finding that Varon had repudiated the Contract, and the judgment in favor of Charter is "defective because Charter failed to plead any cause of action against Craig, individually, and only suffered damages of attorney's fees."
We affirm.
In his original petition, Craig alleged that he, on November 10, 2004, entered into the Contract with Varon to sell Varon a parcel of commercial real estate for $ 1,315,000. Varon deposited $50,000 in earnest money with Charter pursuant to the Contract, and the parties agreed to close on or before December 10, 2004. Craig further alleged that he "tendered performance to [Charter] on December 10, 2004," but Varon failed to fulfill his obligations to timely close the Contract. Craig asserted a claim for breach of contract and sought the earnest money as his liquidated damages. Craig also sought a declaratory judgment stating that he was entitled to receive the earnest money as his liquidated damages and Varon had no claim to the earnest money or the property. Craig also sought his attorney's fees under the Declaratory Judgment Act1 and under the terms of the Contract. In an amended petition, Craig dropped his breach of contract claim but maintained his claim for a declaratory judgment.
. . .
C.. . . [I]f Seller fails to comply with this contract, Seller is in default and Buyer may as Buyer's sole and exclusive remedy: (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.
Varon filed a general denial in this lawsuit and a separate breach of contract lawsuit against Craig and Charter. After the trial court consolidated both lawsuits,2 it realigned the parties with Craig, as plaintiff/counterdefendant; Varon, as defendant/counterplaintiff/third-party plaintiff; South Rice, as third-party defendant; and Charter, as third-party defendant.
Charter then filed a cross-claim against South Rice, alleging that after the transaction failed to close, Charter released the earnest money to South Rice pursuant to South Rice's agreement to defend and indemnify it in any resulting litigation. Charter demanded that South Rice defend and indemnify it for damages and attorney's fees incurred in the litigation, and it asserted claims against South Rice in the event that Varon recovered damages from Charter.3
Charter attached to its cross-claim a copy of its indemnity agreement with South Rice, which the parties executed upon Charter's release of the earnest money. The indemnity agreement identified South Rice as the "indemnitor," and Bob Craig and Harry Craig signed it as managers of Craig GP, LLC, the general partner of South Rice. In the indemnity agreement, South Rice declared Varon in default of the Contract because of Varon's failure to perform and South Rice instructed Charter to release the earnest money to it pursuant to the Contract. Charter agreed to release the earnest money based upon South Rice's agreement to indemnify it against any damages arising from any litigation brought by Varon.
In the trial,4 Craig testified that Charter scheduled the closing for December 10, 2004. Craig called Charter multiple times on the closing date, but was informed him that Varon had not appeared to close. Craig explained that because closing did not occur, he exercised his rights under the Contract's default provisions. Even though he did not personally appear at the closing, Craig noted that South Rice's lawyer had sent "all the closing papers" to Charter, the lawyer had been in contact with Kim LaVern, the escrow agent at Charter, and he told her that "we could go by [Charter] and do what we needed to do to perform" if Varon appeared at closing.
Craig further testified that he and his brother, Harry, had formed South Rice, a limited partnership, to buy and hold the property. Craig explained that he acted as South Rice's agent to sell the property, the general partner of South Rice was "Craig GP LLC," he and his brother were the managers of Craig GP LLC, and he had the authority to sign the Contract and sell the property on behalf of South Rice and Craig GP LLC. Craig conceded that "we indemnified" Charter for releasing the earnest money to South Rice.
On cross-examination, Craig agreed that South Rice was a separate entity and that his brother owned one-half of South Rice. He stated that he signed the indemnity agreement with Charter on behalf of South Rice. He agreed that he signed the Contract in his individual name and that South Rice's name did not appear on the Contract. However, he asserted that his brother did not need to sign the closing documents in order for the sale to be consummated. Craig agreed that he did not appear in person at Charter's office on the closing date and he, individually, had agreed to "stand behind" the indemnity agreement, although he later provided conflicting testimony on this issue.
Kim LaVern, the Charter escrow agent, testified that on December 9, 2004, she learned that Varon, the buyer, would not be ready to close on December 10, 2004. She had received non-executed closing documents from "the seller," and it was her "understanding" that if Varon elected to attend the closing, South Rice intended to execute the closing documents. LaVern noted that Craig had called her several times on the day of closing to see if he needed to attend the closing, and she opined that Craig and South Rice did everything in their power to close the transaction.
However, LaVern also agreed that the Contract identified Craig, individually, as the seller and not South Rice, which was the record title owner of the property. LaVern explained that Charter would not have issued a title insurance policy, as required by the Contract, if Craig had attempted to sign the deed in his individual capacity. Although LaVern provided some conflicting testimony on this issue, LaVern, during Varon's examination, agreed that the documents that she had received from Craig were not signed and Charter would not prepare a title policy based upon the unsigned documents. She further noted that some of the closing documents would have to have been signed by Craig's brother, who was also a manager of the general partner of South Rice, the actual owner of the property. LaVern also agreed that "there were a lot of things that had to be done" before Charter would have closed the transaction and issued a title policy on the property.
Varon, a medical doctor, testified that he originally wanted to purchase the property for his personal office. However, he did not appear at closing because he had timely cancelled the Contract pursuant to the contractual termination procedures.5 Mark Ray, Varon's real estate broker, testified that, after discovering problems with the property, Varon decided to terminate the Contract.
Following the trial, the trial court entered numerous findings of fact and conclusions of law. The trial court found that the property was owned by South Rice and not Craig individually; South Rice was not named in the Contract; South Rice was not a signatory to the Contract and was not a named party to the Contract; there was no written agreement identifying Craig as the trustee for South Rice; Varon did not terminate the Contract under the termination provisions; Craig and Varon both failed to appear at the scheduled December 10, 2004 closing; as a result of failing to appear both Craig and Varon were in default under the Contract; Craig had sent a set of unsigned documents to Charter before the closing date; South Rice held title to the property on the closing date; in January 2005, Charter released the earnest money to South Rice; South Rice agreed to indemnify Charter for releasing the earnest money; Varon demanded that Charter and Craig return his earnest money; and neither Craig nor Varon qualified as a "non-defaulting party" under paragraph 9A of the Contract. The trial court concluded that under the provisions of Paragraph 9 of the Contract a non-defaulting party may exercise the remedies in Paragraph...
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