Grace v. Zimmerman

• Decision Date: 25 March 1993
• Docket Number: No. C14-92-00360-CV,C14-92-00360-CV
• Court: Texas Court of Appeals
• Parties: 20 UCC Rep.Serv.2d 1201 H. Stephen GRACE, La Colombe d'Or Development Co., & Dane Development Inc., Appellants, v. Stephen N. ZIMMERMAN, Appellee. (14th Dist.)

Page 92

853 S.W.2d 92

20 UCC Rep.Serv.2d 1201

H. Stephen GRACE, La Colombe d'Or Development Co., & Dane Development Inc., Appellants, v. Stephen N. ZIMMERMAN, Appellee.

No. C14-92-00360-CV.

Court of Appeals of Texas Houston (14th Dist.).

March 25, 1993.

Rehearing Denied May 6, 1993.

Donna C. Kline, Houston, for appellants.

Henry P. Giessel, Alice M. Giessel, T. Lynne Eckels, Houston, for appellee.

Before ROBERTSON, CANNON and BOWERS, JJ.

OPINION

BOWERS, Justice.

This is an appeal from an order granting appellee's motion for summary judgment. Appellants bring six points of error, four of which challenge the trial court's grant of summary judgment. Appellants also challenge the trial court's refusal to grant appellants' motion for permission to conduct discovery and appellants' motion for partial summary judgment. We affirm.

Appellee originally owned the lot containing the restaurant, La Colombe d'Or. Robert Erwin owned the rest of the block. In 1982, appellee applied for sufficient sewer capacity for a large high-rise condominium on the entire block. He received from the City of Houston a letter granting him a commitment in June 1982. This letter stated that, within twelve months of the date of the letter, the "project must be under construction or a sewer connection charge must be paid." The letter further stated that "[i]f this project is not under construction within twelve months, a new commitment must be secured." Soon thereafter, appellee and Erwin transferred their property and the sewer capacity rights to the Westhaven Corporation. Westhaven Corporation was to develop the property with financing from Mainland Savings.

In November 1982, Erwin and Westhaven Corporation received a letter from the City issuing a commitment for sewer capacity to the property and noting that a sewer connection charge of $560.00 had been paid. The letter stated that Erwin would have to secure a new commitment if the project was not under construction within twelve months. Finally, the letter advised Erwin of a proposed city ordinance requiring additional charges for connection to the City's wastewater system. If passed, this ordinance might require the payment of additional fees before the issuance of a building permit. The City passed this ordinance in May 1983.

The condominium development never occurred. Mainland Savings acquired the real estate through foreclosure. Appellants contend that Mainland hired them to continue development of the project. The record contains documents indicating that appellants performed some development tasks. Mainland Savings subsequently failed and the FSLIC took over its assets.

In 1987, appellee repurchased the property from the FSLIC. In the earnest money contract, the FSLIC agreed that "said property will be sold with all existing sewer permits and all architectural plans and specifications for the proposed La Colombe d'Or Condominium." Next to this statement were the handwritten words, "if available." The FSLIC contacted the City and learned that one tap fee had been paid by Erwin and that "wastewater capacity [had] not been reserved for development on this site."

Appellee then met with Henry Gregory, Manager of the City Waste Load Control Branch. The City asked appellee to submit an application for a wastewater capacity reservation within 30 days after closing on the property. The City further stated, "A one time opportunity will be given to pay the Capital Recovery Charge for the wastewater capacity, with payment due within six (6) months of our letter." Appellee received a deed to the property in December 1987. In January 1988, appellee sent the City his application for wastewater capacity reservation and officially asked for an opportunity to pay the Capital Recovery Charge.

Appellant Grace advised appellee that the permits were the property of La Colombe d'Or Development, Inc. and that only it had the right to pay the Capital Recovery Charge to the City. Grace offered to sell appellee the sewer permits for $125,000.00. Appellee's attorney responded to this letter, advising Grace that appellee, as the owner of the property, had the right to obtain the wastewater capacity by payment of the capital recovery fee and that La Colombe d'Or Development, Inc. had no rights to the capacity units.

In March 1988, Grace wrote to the City, advising of the offer to sell the capacity to appellee and asking the City to refrain from taking any capital recovery fee payment from appellee. In August 1988, the City advised Grace that the Wastewater Capacity Reservation would be issued only to the fee simple owner of the property, appellee. Grace responded that appellee had earlier assigned his rights to the capacity and that appellee's repurchase of the property from the FSLIC did not include the wastewater capacity assignment. The City replied that the commitment issued in 1982 was not issued in perpetuity, but was valid for one year, requiring renewal. The City further stated that the 1983 ordinance required the the payment of a capital recovery charge by April 2, 1984, to transform the temporary commitment into a permanent one. Because this was not done, the City concluded that the commitment had expired. The City also advised Grace that appellee had paid the capital recovery charge and secured sufficient capacity for the originally planned condominium development.

Appellants then filed suit against appellee, alleging interference with a business expectancy, interference with a property right, conversion, constructive fraud, and breach of the duty of good faith. Appellants further charged that appellee's conduct was inconsistent with the express or implied terms of the contracts by which he conveyed away the permits in question. The trial court granted appellee's motion for summary judgment and denied appellants' motion for partial summary judgment.

In point of error one, appellants claim the trial court erred in granting appellee's motion for summary judgment because appellee's central claim, that the sewer capacity allocation had expired, is irrelevant as a matter of law to appellants' causes of action. Under this point, appellants contend that appellee's motion for summary judgment did not negate a single element of appellants' causes of action.

Because this is an appeal from a summary judgment, we must determine whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact as to one or more of the essential elements of appellants' causes of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). In deciding whether or not there is a disputed material fact issue precluding summary judgment, we must accept as true all evidence favorable to the non-movant, indulging reasonable inferences and resolving doubts in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).

In his motion for summary judgment, appellee addressed interference with a business expectancy, breach of contract, interference with a property right, conversion, actual or constructive fraud, breach of the duty of good faith and fair dealing, and inconsistent conduct with expressed or implied terms of a contract. As to interference with a business expectancy, appellee contended that there were no material fact issues as to any of the required elements.

The elements of this tort are:

(1) a reasonable probability that the parties would have entered into a contractual relationship;

(2) an intentional and malicious act by the defendant that prevented the relationship from occurring, with the purpose of harming plaintiff;

(3) the defendant lacked privilege or justification to do the act; and

(3) actual harm or damage resulted from the defendant's interference.

Exxon Corp. v. Allsup, 808 S.W.2d 648, 659 (Tex.App.--Corpus Christi 1991, writ denied).

Appellee contends that the temporary wastewater capacity commitment issued in 1982 expired and thus, appellants had no interest in the capacity that could support a cause of action for interference with a business expectancy. Appellants counter that the capacity allocation had not expired, but even if it did, appellants argue that this did not resolve all fact issues. We disagree with appellants' contention.

The original capacity commitment letter required the owner to initiate construction within twelve months of the date of the letter or pay a sewer connection charge. Because construction did not begin within twelve months, a sewer connection charge was paid in 1982. A new ordinance was passed in 1983, however, transforming commitments issued before May 3, 1983 into temporary reservations. Holders of temporary reservations could convert these into a permanent reservation by April 2, 1984 by submitting an application demonstrating they had paid the sewer connection charge and by paying part or all of the capital recovery charge, as required under the terms of the ordinance. Gregory testified that if the project had been completed before April 2, 1984, no capital recovery charge would have been due.

Because the commitment issued for this property was not converted to a permanent reservation by April 2, 1984, the City advised appellant, Stephen Grace, that the commitment expired and "neither Mr. Zimmerman, FSLIC, Mainland Savings nor LCD Development, Inc. owned the wastewater capacity." The City allowed appellee, as the property owner, to re-apply for a wastewater capacity reservation.

Consequently, the summary judgment proof indicates that the 1982 commitment had expired as of April 2, 1984. If appellants were the successors in interest to Westhaven Corporation's rights in the 1982 wastewater capacity commitment, which is not conclusively established by the record, they did not attempt to convert that interest into a permanent reservation as required by the ordinance. Once the commitment expired, appellants had no interest with which appellee could tortiously...