Elijah Ragira v. Vip Lodging Group

• Decision Date: 12 November 2009
• Docket Number: No. 08-07-00182-CV.,08-07-00182-CV.
• Citation: 301 S.W.3d 747
• Parties: ELIJAH RAGIRA/VIP LODGING GROUP, INC., Appellant/Cross-Appellant, v. VIP LODGING GROUP, INC., Atmex Corporation and J. Santos Espinoza/Elijah Ragira, Cross-Appellee/Appellees.
• Court: Texas Court of Appeals

301 S.W.3d 747

ELIJAH RAGIRA/VIP LODGING GROUP, INC., Appellant/Cross-Appellant, v. VIP LODGING GROUP, INC., Atmex Corporation and J. Santos Espinoza/Elijah Ragira, Cross-Appellee/Appellees.

No. 08-07-00182-CV.

Court of Appeals of Texas, El Paso.

November 12, 2009.

Rehearing Overruled December 30, 2009.

Michael Hassett, Jones & Cannon, Arlington, TX, for Appellant.

Annette Vanicek, Fort Worth, TX, Scott Allen Shanes, Strasburger & Price, LLP, Frisco, TX, for Appellee.

Before McCLURE, J., RIVERA, J., and HILL, C.J. (Ret., sitting by assignment).

OPINION

GUADALUPE RIVERA, Justice.

This appeal stems from a suit for specific performance of three commercial real estate sales contracts. We affirm in part and reverse in part.

BACKGROUND

VIP owned five tracts of land secured by a senior note held by PMC Commercial Trust (PMC) and a subordinate note held by Sunburst Hotel Corporation (Sunburst). Having trouble paying off the matured notes on the property, which totaled approximately $2.7 million, VIP entered into negotiations with Ragira for the purchase of the property. On May 6, 2004, the parties agreed to a purchase price of $3.5 million and executed three separate contracts the following day.

The first contract provided for the purchase of tracts four and five at a price of $1 million and named the closing date as May 31, 2004. The second contract was for the purchase of tract one at a price of $1.5 million with a closing date of November 30, 2004. And the third contract was for the purchase of tracts two and three at a price of $1 million and a closing date of February 28, 2005. Each contract, drafted by Ragira's attorney, required Ragira to deposit earnest money and pay a $100 review-period fee by May 18, 2004, the fifth business day following the execution of the contracts. If Ragira failed to do either, the contracts were rendered null and void.

On May 25, 2004, the parties amended the first contract to extend the review period to June 2, 2004, and to move the closing date to June 7, 2004. Ragira's obligation to provide the earnest money and review fees was not modified. However, on June 2, 2004, Ragira advised VIP that he did not have financing ready for closing and cancelled the contract. Nevertheless, due to threatened foreclosure by PMC, VIP and Ragira entered into further negotiations, and the first contract was reinstated on June 21, 2004, with a reduced purchase price of $900,000, and a closing date of June 30, 2004. Also on June 21, 2004, the second and third contracts were amended with a reduced purchase price of $1.35 million and $900,000, respectively. Although Ragira deposited the earnest money for each contract, he did not pay any of the review-period fees.

The contracts also required VIP to provide Ragira with a survey or a phase one environmental report if Ragira so desired. Whether Ragira or VIP was to prepare the survey and environmental assessment was contested at trial. VIP claimed that Ragira accepted the existing surveys and was responsible for having the environmental assessments performed by the closing date, with subsequent reimbursement from VIP. Ragira disagreed, indicating that he never agreed to accept an existing survey, since the contracts entitled him to a new survey, nor did he agree that he would accept the responsibility of performing the environmental assessment. However, the record reflects that Ragira requested, at the end of June, that MAS-D perform a phase one environmental assessment for all of the properties, and MAS-D's written report, which VIP paid for, was issued on July 7, 2004. That same day, the parties met with the MAS-D representative, and although the representative gave VIP a copy of the reports, VIP did not give a copy of the report to the title company.

The parties did not close on the first contract on June 30, 2004. Ragira claimed this was because VIP had not furnished the survey or environmental report, but VIP asserted Ragira lacked financing. However, in the middle of July, Ragira contacted VIP for purposes of proceeding with closing on the first contract. VIP responded that it had no obligation to close since Ragira did not close on June 30, 2004, and that it would not go forward on the subsequent contracts believing those were contingent on closing on the first contract.

VIP later contacted Paramount Investments and listed the properties for sale. On August 19, 2004, the Dallas Cowboys announced plans to move its stadium to Arlington, Texas, and Ragira, upon learning of the Cowboys' intentions, contacted VIP about the properties. In September, Ragira forwarded VIP a new proposal that if agreed, would merge the first and second contracts into the third with a purchase price for all tracts at $3.2 million. The proposal provided that Ragira would pay $1.7 million in cash and that VIP would owner-finance the remaining balance at 3 percent interest. VIP would not consider the proposal because the $2.7 million debt owed to PMC and Sunburst had to be paid to avoid foreclosure. Consequently, on September 23, 2004, Ragira notified VIP that because it failed to provide a new survey and the environmental report prior to closing, VIP was in breach, and Ragira intended to seek specific performance. Ragira filed memoranda of contracts for the first, second, and third contracts with the Tarrant County Deed Records on October 25, 2004.

Meanwhile, Paramount located two purchasers, ATMEX and J. Santos Espinoza, for some of the tracts. On September 24, 2004, VIP contracted to sell tract two, part of tract three, and tract five to ATMEX for a total price of $875,000, and on November 1, 2004, VIP contracted to sell tract four to Espinoza. VIP did not advise either ATMEX or Espinoza of Ragira's intent to seek specific performance despite Ragira's letter dated September 23, 2004. Moreover, in the sales contracts, VIP represented that there was no pending or threatened ligation relating to the properties. Further, at closing on November 3, 2004, VIP executed affidavits of debts and liens, and special warranty deeds to ATMEX and Espinoza, representing that to the best of its knowledge and belief there were no unrecorded contracts affecting the property.

On November 8, 2004, Ragira notified VIP of the memoranda of contracts and indicated that he was ready to perform under all the contracts and wanted to close on them by November 30, 2004. Later, VIP, ATMEX, and Espinoza entered into contracts to sell their properties to the City of Arlington with a closing date of January 31, 2006. However, the parties were prevented from doing so because of the clouds on the titles.

In December, Ragira filed suit seeking specific performance of the contracts and the imposition of a trust on all tracts, including those conveyed to ATMEX and Espinoza. VIP, ATMEX, and Espinoza filed counterclaims against Ragira to remove clouds on the real estate involved, damages for slander of title, and attorneys' fees. ATMEX and Espinoza also asserted cross-claims against VIP seeking direct and consequential damages stemming from breach of warranty, fraud, negligent misrepresentation, and for breach of contract. VIP, ATMEX, and Espinoza each moved for and were granted instructed verdicts as to all claims asserted by Ragira. VIP's directed verdict was granted on grounds that there was no evidence that Ragira was ready, willing, and able to close on the contracts, nor was there evidence of any lost profits suffered by Ragira. ATMEX's and Espinoza's directed verdict was granted on grounds that specific performance was not an available remedy for Ragira as he had other, adequate remedies at law against VIP, and that Ragira produced no evidence to demonstrate that he was ready, willing, and able to close on the second and third contracts.

The remaining claims were submitted to the jury. The jury determined that Ragira did not slander the title and answered zero dollars on damages. Concerning the claims alleged against VIP by AMTEX and Espinoza, the jury found that VIP breached warranties, committed statutory fraud, and made negligent misrepresentations resulting in damages of $19,500 to ATMEX and $23,800 to Espinoza. In addition, ATMEX and Espinoza were awarded $57,197.50 in attorneys' fees against VIP. VIP was also awarded $131,196 in attorneys' fees charged against Ragira, the fees necessary to defend the main suit at trial. In the trial court's modified judgment, it found that all of the underlying contracts involving Ragira were null and void, and the court quieted the title of all properties in dispute.

Both Ragira and VIP appeal the adverse judgments against them. We address each in turn.

DISCUSSION

Ragira, in ten issues, alleges that the trial court erred by granting the directed verdicts and awarding attorneys' fees to VIP. VIP, in addition to refuting Ragira's allegations, alleges the trial court erred in rendering judgment against it on claims of slander of title, breach of warranty, statutory fraud, and negligent misrepresentation, and in awarding damages and attorneys' fees to ATMEX and Espinoza. We address Ragira's claims first.

Ragira's Claims

Ragira's first, fourth, and seventh issues concern the directed verdict on the first contract, his second, fifth, and eighth issues concern the directed verdict on the second contract, and his third, sixth, and ninth issues concern the directed verdict on the third contract. In essence, Ragira argues that because he was ready, willing, and able to close on the three contracts, he demonstrated his entitlement to the remedy of specific performance. He further asserts that he presented legally sufficient evidence to support his claim for actual damages under the contracts. Ragira's tenth issue alleges the trial court's award of attorneys' fees to VIP was improper.

The Directed Verdict Claims

A court may grant an instructed verdict if no evidence of probative force raises a fact issue on the material questions in the suit. See ...