. Deloach v. Stelly

• Decision Date: 13 August 2020
• Docket Number: 01-19-00182-CV
• Citation: . Deloach v. Stelly, 644 S.W.3d 195 (Tex. App. 2020)
• Parties: John E. DELOACH, Individually, John E. DeLoach as General Partner of John E. DeLoach Family Limited Partnership, and John E. DeLoach Family Limited Partnership, Appellants v. Stephen STELLY, Appellee
• Court: Texas Court of Appeals

644 S.W.3d 195

John E. DELOACH, Individually, John E. DeLoach as General Partner of John E. DeLoach Family Limited Partnership, and John E. DeLoach Family Limited Partnership, Appellants

v.Stephen STELLY, Appellee

NO. 01-19-00182-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued August 13, 2020

J. Todd Trombley, The Trombley Law Firm, Houston, John H. Trueheart Jr., Stephen Mark Porto, Porto, Trueheart & McStay, LLC, Houston, for Appellants.

Timothy A. Hootman, Houston, for Appellee.

Panel consists of Justices Keyes, Kelly, and Landau.

MEMORANDUM OPINION

Peter Kelly, Justice

Stephen Stelly sued John E. DeLoach, individually and as general partner of the John E. DeLoach Family Limited Partnership ("the FLP"), and the FLP for breach of contract. A jury found in favor of Stelly, and the trial court entered judgment on the verdict. The FLP filed a post-judgment motion for judgment n.o.v., judgment non obstante veredicto or judgment notwithstanding the verdict, arguing, among other things, that the claim was barred by the four-year statute of limitations for contract claims. We agree.

We reverse the judgment of the trial court and render a take-nothing judgment in favor of the FLP.

Background

Stelly is a lifelong farmer with business interests in Louisiana and southeast Texas. Those interests included farming a lease in Chambers County, an alligator farm in Louisiana, and a trucking company that specializes in hauling agricultural commodities. He also has occasionally worked in the oil fields.

DeLoach was a long-time acquaintance of Stelly's parents. He owned land, on which he sometimes grew crops, but his primary line of business was wastewater disposal, mainly from oil and gas operations. Among other related operations, DeLoach owned and operated a wastewater injection well in a salt dome in Daisetta, Texas.

In 1998, Stelly entered into a contract with a sugar producer to grow sugar cane in Texas to be supplied to a sugar mill in Louisiana. The sugar producer was building or expanding a sugar mill and wanted to ensure profitability by contracting for a steady supply of raw material. At the time, Stelly was leasing from Delta Rice Producers ("DRP") farmland in Texas that was part of the 600 acres that are the subject of this lawsuit. In September 1999, Stelly held a field day to show off his crop and enlist other local farmers to join a sugar cane co-op that would supply the Louisiana sugar mill. DeLoach attended the field day, and thereafter he began pursuing a business relationship relating to sugar cane production with Stelly.

By late December 1999, however, Stelly owed DRP nearly $50,000. DRP offered to forgive the indebtedness in exchange for Stelly planting sugar cane in other fields owned by DRP. Less than six months later, DeLoach, on behalf of the FLP entered into an earnest money contract with DRP to buy the 600 acres that included Stelly's leased fields and DRP's fields and that are the subject of this suit. According to Stelly, he and DeLoach had agreed to purchase the property as partners, but DeLoach insisted on crossing through Stelly's name on the earnest money contract. Stelly testified that in an attempt to protect what he thought would be his interest in the land, he drafted a handwritten contract, which both he and DeLoach signed and which provided:

Mutual Agreement of Partnership Between Stephen B Stelly and John E DeLoach and John E DeLoach FLP

Terms of agreement to Partners

Stephen agrees to manage, support, find help for the land operations of the FLP's Property. Farm the land for the FLP to the best of his ability with no charge for the equipment owned by Stephen.

John agrees 1^st to finance FM 1663 600 acres for Stephen. 2^nd all harvesting equipment needed by Stephen. 3^rd agrees to pay Stephen $3500 monthly for his managing of the FLP's property and any additional labor and supplies needed.

Stephen agrees to pay John the total notes, taxes any [sic] fees for the 600 acres on FM1663, along with all notes on equipment financed by John. Upon final payment of property, John will deed property over to Stephen. Same with all equipment purchased.

The FLP purchased the property for $330,000, with a mortgage from Capital Farm Credit. Around the same time, the FLP also purchased a trailer to haul sugar cane to the mill in Louisiana for $15,350. Stelly conceded at trial that the 600 acres were owned wholly in FLP's name. Stelly, however, also maintained that he had paid DeLoach more than the money due under the agreement, but DeLoach never deeded the property to him as required by the agreement.

Stelly testified that he paid by check and by directing the Louisiana sugar mill to send money owed him directly to the FLP. Stelly testified that he paid DeLoach and FLP in full "before the notes were due" over approximately three-and-a-half years, but DeLoach did not use that money to pay off the mortgage or pay for equipment that was purchased on credit. At trial, Stelly said that he was aware that there was still a balance of about $130,000 on the mortgage despite his having paid DeLoach and the FLP in full. Stelly testified: "Mr. DeLoach didn't pay the note. He'd take the money. I don't know what he did with the money. I gave it to him." Stelly said that by 2005, he had already paid about $550,000 for the property.

From 2000 until 2008, DeLoach paid Stelly $3,500 a month to manage his properties. DeLoach's waste disposal business was unexpectedly closed in May 2008. Thereafter, to help DeLoach, Stelly chose to work without payment. According to Stelly, DeLoach continued to be "broke," and in 2015, DeLoach asserted that he was the sole owner of the 600 acres and that he intended to sell the property. Soon thereafter, Stelly filed this lawsuit.¹

Stelly's live pleading at trial alleged one cause of action: breach of contract. Stelly alleged the existence of an agreement and that he had satisfied his obligations because "funds, revenues, and profits generate[d]" by his farming activities "far exceed the value of the original contract purchase price for the real estate." He also alleged that the FLP failed and refused to provide him a warranty deed in compliance with the partnership agreement.

The case was submitted to the jury on a contract theory. The jury found that the FLP agreed to deed the 600 acres to Stelly and convey ownership in the equipment at issue in the case to Stelly upon his complying with the terms of the agreement. It also found that Stelly did not "fail to comply with the agreement" and that DeLoach as general partner of the FLP failed to comply with the agreement "by refusing to deed the property to Stephen Stelly" and "by refusing to convey the equipment to Stephen Stelly."

The trial court entered judgment on the verdict on January 4, 2019. On February 1, 2019, the FLP moved for judgment n.o.v., raising fourteen arguments for modification of the final judgment. In particular, the FLP asserted that Stelly's claim was barred by the four-year statute of limitations. The trial court denied the motion on March 8, 2019, and six days later the defendants filed a notice of appeal.

Appellate Jurisdiction

On appeal, Stelly argues that the motion for judgment n.o.v. did not extend the deadline for filing the notice of appeal, thus the notice of appeal was untimely, and this court lacks jurisdiction over this appeal. Ordinarily, a notice of appeal must be filed within 30 days after the judgment is signed. TEX. R. APP. P. 26.1. When a party timely files a motion for new trial or a motion to modify the judgment, the deadline for filing a notice of appeal is extended to 90 days after the judgment. TEX. R. APP. P. 26.1(a)(1), (2). The nature of a motion is determined by its substance, not its caption. In re Brookshire Grocery Co. , 250 S.W.3d 66, 72 (Tex. 2008) (orig. proceeding) ; Surgitek v. Abel , 997 S.W.2d 598, 601 (Tex. 1999) ("[W]e look to the substance of a motion to determine the relief sought, not merely to its title."). A motion for judgment n.o.v. can constitute a motion to modify the judgment under Rule 26.1(a)(2) when it assails the judgment. See Ryland Enter., Inc. v. Weatherspoon , 355 S.W.3d 664, 666 (Tex. 2011).

The appellants filed a motion for judgment n.o.v. 28 days after the trial court's final judgment, when the trial court still had plenary power. See TEX. R. CIV. P. 329b(d) ("The trial court, regardless of whether an appeal has been perfected, has plenary power to grant a new trial or to vacate, modify, correct, or reform the judgment within thirty days after the judgment is signed."). The motion for judgment n.o.v. asked the court to modify or reform its judgment to eliminate Stelly's recovery and render a take-nothing judgment in favor of the appellants. We conclude that the motion for judgment n.o.v. assailed the judgment and therefore was a motion to modify the judgment under Texas Rule of Appellate Procedure 26.1(a)(2). Therefore, the filing of the motion extended the date for filing a notice of appeal to 90 days after the entry of judgment on January 4, 2019, which was April 4, 2019. The appellants filed their notice of appeal on March 14, 2019, and the filing was timely. We conclude that we have jurisdiction over this appeal.

Limitations

The appellants argue that the trial court erred by failing to grant the motion for judgment n.o.v. based on the affirmative defense of limitations. A judgment n.o.v. "is proper when a legal principle precludes recovery." JSC Neftegas-Impex v. Citibank, N.A. , 365 S.W.3d 387, 396 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) ; see TEX. R. CIV. P. 301 ("[U]pon motion and reasonable notice the court may render judgment non obstante veredicto if a directed verdict would have been proper ...."). We review de novo a trial court's ruling on a motion for judgment n.o.v. that is based on the assertion that a legal principle precludes recovery. JSC Neftegas-Impex , 365 S.W.3d at 396 ; see In re Humphreys , 880 S.W.2d 402, 404 (Tex. 1994) ("[Q]...