Digiuseppe v. Lawler

• Decision Date: 17 October 2008
• Docket Number: No. 04-0641.,04-0641.
• Citation: 269 S.W.3d 588
• Parties: Nick DiGIUSEPPE d/b/a Southbrook Development Co. and Frisco Master Plan, Petitioners, v. Roger LAWLER, Respondent.
• Court: Texas Supreme Court

269 S.W.3d 588

Nick DiGIUSEPPE d/b/a Southbrook Development Co. and Frisco Master Plan, Petitioners, v. Roger LAWLER, Respondent.

No. 04-0641.

Supreme Court of Texas.

Argued October 20, 2005.

Decided October 17, 2008.

Rehearing Denied December 19, 2008.

Craig T. Enoch, Melissa Prentice Lorber, Winstead PC, Austin, James Robert Krause, Lawrence J. Friedman, Jeffrey Thomas Hall, Friedman & Feiger, L.L.P., Dallas, TX, for Petitioner.

Hilaree A. Casada, Hermes Sargent Bates, L.L.P., Julia F. Pendery, Attorney At Law, David W. Shuford, Law Office of David W. Shuford, Daon M. Ward, Godwin Pappas Langley Ronquillo, LLP, Dallas, TX, for Respondent.

Douglas Laycock, University of Michigan Law School, Ann Arbor, MI, for Amicus Curiae.

Justice WALDROP¹ delivered the opinion of the Court, in which Justice HECHT, Justice WAINWRIGHT, Justice BRISTER, and Justice WILLETT joined.

This case involves a claim for specific performance of a real estate purchase contract. After a trial in which the jury found that the seller breached the contract, the trial court rendered judgment in favor of the buyer and ordered specific performance. The court of appeals reversed on the basis that the buyer did not obtain a finding of fact or prove that he was ready, willing, and able to perform. The court of appeals also concluded that the buyer had waived an alternative claim for refund of his earnest money by failing to file a notice of appeal as to that alternative basis for relief. We affirm the judgment of the court of appeals with respect to the claim for specific performance, reverse with respect to the finding of waiver on the alternative claim for refund of earnest money, and remand the case to the trial court for further proceedings.

I. Factual and Procedural Background

In October 1998, Nick DiGiuseppe d/b/a Southbrook Development Co. entered into a contract with Richard Lawler to purchase approximately 756 acres of Lawler's land near Frisco, Texas, for $40,000 an acre.² The contract made closing of the purchase contingent on obtaining acceptable rezoning of the property from the City of Frisco to accommodate DiGiuseppe's development plans, and provided that closing that would occur on the fifteenth day after successful completion of rezoning. The purchase contract also provided for a three-stage deposit of earnest money with the title company: (1) $100,000 upon the signing of the contract; (2) $100,000 upon the submission to the City of Frisco of the application to rezone the property; and (3) $400,000 upon "approval by the planning and zoning commission of the City of Frisco of zoning acceptable to Purchaser of the `Land' as applied for." DiGiuseppe made the first two earnest money deposits. However, a dispute arose as to whether the events that would trigger the requirement for the third deposit had occurred.

In late November 1999, after numerous meetings and a number of revisions to the rezoning application, the Planning and Zoning Commission approved new zoning for the property at issue. This new zoning was approved by the City Council on January 4, 2000. Although the new zoning differed from the zoning that the parties had applied for in their original application, it was acceptable to DiGiuseppe.

On January 12, 2000, Lawler faxed a letter to DiGiuseppe notifying him that Lawler considered DiGiuseppe in default of the purchase contract for failing to make the third earnest money deposit. Lawler took the position that the requirement for the third ($400,000) earnest money deposit had been triggered when the Planning and Zoning Commission had approved zoning that DiGiuseppe found acceptable. The January 12 letter also declared the contract "cancelled" and demanded release of the earnest money on deposit to Lawler. DiGiuseppe objected to Lawler's notification that the contract was terminated, taking the position that the third earnest money installment had not been triggered because the new zoning was not approved "as applied for." He also declared that he was moving forward with the transaction and demanded that Lawler continue to move toward closing.

Acting on the belief that the contract with DiGiuseppe was terminated, Lawler signed a new purchase contract for the property with DRHI, Inc.—the parent company of DR Horton—on February 1, 2000. DiGiuseppe, acting on the belief that the contract was not terminated, proceeded with finalizing his side of the transaction and demanded that Lawler close. The transaction did not close. Both parties alleged the other was responsible for the failure to close. DiGiuseppe then filed the purchase contract in the deed records.³ On April 14, 2000, Lawler filed suit against DiGiuseppe in Collin County District Court seeking a declaration that the purchase contract was terminated, requesting damages for breach of contract, and also seeking to quiet title as a result of the filing of the purchase contract in the deed records. DiGiuseppe counterclaimed for breach of contract, quantum meruit, breach of a duty of good faith and fair dealing, statutory fraud, promissory estoppel and specific performance.⁴

The purchase contract limited the remedies available to the parties in the event of a breach. In the event DiGiuseppe failed to close, Lawler's "sole and exclusive" remedy was to retain the earnest money as liquidated damages, and he expressly waived any right to claim any other damages or specific performance from DiGiuseppe. In the event Lawler defaulted in performing his obligations under the contract for any reason other than DiGiuseppe's default or a proper termination of the contract under its provisions, DiGiuseppe could choose between two remedies: (1) terminate the contract and receive a full and immediate refund of the earnest money, or (2) "seek to enforce" specific performance of the contract. DiGiuseppe also expressly waived any right to claim damages.

The case was ultimately tried to a jury and the parties' breach of contract claims were submitted on broad-form questions inquiring as to whether either party failed to comply with the contract. The jury answered favorably to DiGiuseppe that Lawler had failed to comply with the contract and that DiGiuseppe had not failed to comply. A damages question was also submitted and the jury found that DiGiuseppe had suffered $295,696.93 in damages.⁵ Although disputed at trial, no question was requested by either party or submitted to the jury with respect to specific performance or whether DiGiuseppe was ready, willing, and able to perform under the contract at the time he alleged the transaction should have closed.

On DiGiuseppe's post-verdict motion, the trial court rendered a take-nothing judgment against Lawler and granted DiGiuseppe specific performance of the purchase contract together with an award of attorneys' fees in the amount of $75,000. The trial court also appointed a receiver to take possession of the property and effectuate a closing of the purchase contract in accordance with its terms.

The court of appeals reversed the trial court's order granting specific performance, holding that DiGiuseppe had failed to conclusively establish, or to request and obtain a finding of fact on, an essential element of his claim for specific performance—that he was ready, willing, and able to perform under the terms of the purchase contract. Lawler v. DiGiuseppe, 2004 WL 1209569 (Tex.App.-Dallas 2004) (mem.op.). The court of appeals also held that the omitted fact finding on specific performance was not necessarily referable to a submitted theory and declined to imply a finding that DiGiuseppe was ready, willing, and able to perform. The court of appeals upheld the award of attorneys' fees, however, on the theory that Lawler had pursued a Declaratory Judgment Act claim, and that statute allows the trial court to award fees as are just and equitable.⁶ The court of appeals declined to render judgment for the $295,696.93 in damages found by the jury on the basis that there was no evidence to support the finding.⁷ The court also declined to award DiGiuseppe any portion of the $200,000 in earnest money that he had deposited on the basis that he had waived this claim by not filing a notice of appeal on that issue.

DiGiuseppe sought review in this Court on two grounds: (1) the purchase contract provided for the remedy of specific performance in the event of a breach by Lawler regardless of whether DiGiuseppe obtained a finding of fact that he was ready, willing, and able to perform; and, (2) in the alternative, if he is not entitled to specific performance, the court of appeals erred in failing either to award the damages found by the jury or to allow DiGiuseppe to recover the $200,000 in earnest money he paid. In his briefing on the merits, DiGiuseppe included a related point that he had also argued in the court of appeals: that a finding relating to the omitted jury question on his being ready, willing, and able to perform should be deemed found pursuant to Texas Rule of Civil Procedure 279 as an omitted element "necessarily referable" to a theory submitted without objection. After considering briefing on the merits, this Court initially declined review. 48 TEX. SUP. CT. J. 440 (Mar. 14, 2005).

DiGiuseppe then filed a motion for rehearing stressing that the purchase contract gave him the option to obtain at least one of two potential remedies in the event of a breach by Lawler—either seeking to enforce specific performance or terminating the contract and receiving a refund of the earnest money deposited. DiGiuseppe adamantly contended on rehearing that, even if this Court declined to review the court of appeals judgment with respect to specific performance, the Court should grant relief with respect to the $200,000 in earnest money paid to Lawler because the jury had found that Lawler breached the contract and DiGiuseppe did not. Having obtained a favorable judgment as to specific performance in the trial court, DiGiuseppe argues he...