Gonzalez v. City of Mission

• Decision Date: 20 August 1981
• Docket Number: No. 1723,1723
• Parties: Jose Guadalupe GONZALEZ, et ux, Appellants, v. CITY OF MISSION, Texas, Appellee.
• Court: Texas Court of Appeals

Page 918

620 S.W.2d 918

Jose Guadalupe GONZALEZ, et ux, Appellants, v. CITY OF MISSION, Texas, Appellee.

No. 1723.

Court of Civil Appeals of Texas, Corpus Christi.

Aug. 20, 1981.

Rehearing Denied Sept. 17, 1981.

George Powell, Texas Rural Legal Aid, Inc., Edinburg, for appellants.

H. H. Rankin, Jr., Sara Nell Langland, Rankin & Kern, Inc., McAllen, for appellee.

OPINION

YOUNG, Justice.

This is an appeal of an order granting a summary judgment in favor of appellee, City of Mission (defendant) against appellants, Jose Guadalupe Gonzalez, et ux (plaintiffs). The appellants brought suit for contractual damages arising out of a breach of a fiduciary duty and/or for breach of a contract damaging appellants, who allegedly were third party beneficiaries. The contract on which both causes of action are based was a federal grant agreement between the City of Mission and the Department of Housing and Urban Development, which provided persons in a category such as were the appellants with housing through a rehabilitation project. We affirm.

A review of the pertinent facts reflects the following. The City of Mission, Texas, through its council and mayor, applied for urban rehabilitation funds on March 1, 1977, with the Department of Housing and Urban Development (HUD) under the Community Development Block Program designed to provide low and moderate income families with new or rehabilitated housing. On June 24, 1977, HUD approved the City's application for the program. Under the "Grant Agreement" between the City and HUD, the city received funds to dispense to a designated class of low-income citizens in specifically designated housing areas in need of rehabilitation. The City also promised to provide relocation assistance programs to the recipients of the grants.

Jose Gonzalez and his wife, appellants, lived in an area targeted for rehabilitation in the City of Mission. On April 21, 1977, they submitted their application to the City for rehabilitation funds. On May 11, 1977, the Housing Advisory Commission approved a grant to the appellants in the amount of $9,000.00. The City Council approved this grant on June 8, 1977. Instead of refurbishing their old home, the appellants, on February 17, 1978, agreed to sell their old house and assign the proceeds, $12,000.00, to Alamo Builders for the purpose of constructing a new house under the HUD program. On March 15, 1978, the appellants entered into a construction contract with Alamo Builders in the amount of $21,750.00 for their new home.

The City of Mission was not a party to the construction contract between Alamo and the appellants. Representatives of the City, however, were present during at least one of the negotiations for the contract, and it was the City's duty to periodically check the construction site to assist the families in any way that they could. The City, in its role as administrator of the program, served as disbursing agent for the HUD grants.

The contractor in charge for Alamo Builders, Fred De Leon, completed the project on or about May 15, 1978. Funds were disbursed by the City in a check made payable to the appellants and De Leon at this time. Prior to the date of completion of the house, however, De Leon obtained interim financing with a local bank for construction of the house, which the City was unaware of. He also convinced the appellants to sign a mechanic's and materialman's lien on the house in his favor. De Leon assigned to the Bank this same mechanic's and materialman's lien given by the appellants, thereby giving the Bank a first lien on the property to secure their interim construction note of $21,000.00. Instead of paying off the bank note with the money he received from the City from the sale of the appellants' first home ($12,000.00) and the grant money ($9,000.00), De Leon used the money to pay off the accounts of his suppliers.

The interim financing note at the Bank, which should have been paid off by De Leon after he completed construction, came due the first part of July, 1978. De Leon could not pay off the note, so the Bank foreclosed on its lien and proceeded with a trustee's sale of the new home. Appellants, who were occupying their new home, were evicted by the Bank during the foreclosure sale. Neither De Leon or the appellants had the necessary funds to pay off the bank note. In summary, appellants, believing that they could obtain a new home with federal financial assistance, ended up without any home whatsoever.

The appellants brought suit against Fred De Leon, d/b/a Alamo Builders, the Bank, and the City of Mission. In the suit against De Leon based on fraudulent misrepresentation, the trial court entered a summary judgment in favor of the appellants for full damages. As to the role of the Bank in causing the appellants' damages, the trial court granted a nonsuit. As to the City of Mission, the appellants asserted two theories of recovery: 1) the City, through either implied or apparent agency in dealing with De Leon, breached a fiduciary duty owed the appellants; 2) appellants, as third party beneficiaries of the contract between the City and HUD, have standing to bring suit for breach of the contractual obligation to provide housing for low-income families. It is this suit which is the subject of this appeal.

In response to these causes of action, the City filed its motion for summary judgment on three grounds: 1) the appellants did not comply with the notice requirement of the City Charter; 2) no employee of the City had the authority to act as an agent or in a fiduciary capacity towards the appellants; 3) the appellants are not in the position of third party beneficiaries to the contract between the City and HUD. The trial court granted the City's motion for summary judgment.

In review of a summary judgment, the appellate court must ascertain whether the movant has established his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979). The trial court in this case could have granted summary judgment on any one of the three theories raised by appellee in its motion for summary judgment if evidence was presented to support its defense as a matter of law. See Swilley v. Hughes, 488 S.W.2d 64 (Tex.1972); Kenney v. Porter, 557 S.W.2d 589 (Tex.Civ.App. Corpus Christi 1977, no writ).

About the first ground for summary judgment, the Charter of the City of Mission, relied on by the appellee, contains the following requirements:

"Section 11.07 Special Provisions Covering Damage Suits. Before the city shall be liable for damage on a claim or suit for personal injury, or damage to property, the person who is injured, or whose property is damaged, or someone on his behalf, shall...