Humphrey v. Camelot Retirement Community

• Decision Date: 29 December 1994
• Docket Number: No. 13-93-057-CV,13-93-057-CV
• Citation: 893 S.W.2d 55
• Parties: Charles E. HUMPHREY, Independent Executor of the Estate of Betty Jane Merrifield, Deceased, Appellant, v. CAMELOT RETIREMENT COMMUNITY, a Texas Limited Partnership, Appellee.
• Court: Texas Court of Appeals

Page 55

893 S.W.2d 55

Charles E. HUMPHREY, Independent Executor of the Estate of Betty Jane Merrifield, Deceased, Appellant, v. CAMELOT RETIREMENT COMMUNITY, a Texas Limited Partnership, Appellee.

No. 13-93-057-CV.

Court of Appeals of Texas,

Corpus Christi.

Dec. 29, 1994.

Michael R. Garatoni, Foster, Lewis & Langley, Roger D. Kirstein, Foster, Lewis, Langley, Gardner & Banack, Inc., San Antonio, for appellant.

Randell W. Friebele, Harlingen, for appellee.

Before GILBERTO HINOJOSA, FEDERICO G. HINOJOSA, Jr., and YANEZ, JJ.

OPINION

GILBERTO HINOJOSA, Justice.

This is a suit on an earnest-money contract. Charles E. Humphrey, Jr., Independent Executor of the Estate of Betty Jane Merrifield, sued Camelot Retirement Community, A Texas Limited Partnership, to recover $16,750 earnest money which Merrifield allegedly paid to Camelot for the purchase of a new home. After a bench trial, the court granted a rescission of the contract and awarded Humphrey $13,750. Camelot appeals by 15 points of error. We reform the judgment, and as reformed, we affirm.

Camelot Retirement Community rented apartments and sold apartment houses to retirees in Cameron and Hidalgo County, Texas. In 1988 and 1989, Betty Jane Merrifield came to Camelot inquiring about buying a garden home. On March 8, 1989, she and Camelot entered into an Earnest Money Contract in which she had agreed to buy a home from Camelot for $67,000 and to pay it $16,750 earnest money. Camelot began building the home on August 8, 1989 and finished it on December 20, 1989. However, Merrifield died before she and Camelot could close on the home. Article 6.2 of the Contract provided: "In the event of a default by Seller hereunder, Purchaser may, as Purchaser's sole remedy terminate this Contract by written notice delivered to Seller at or prior to the Closing, and receive back the earnest money deposit." By letter dated June 5, 1990, counsel representing Merrifield's estate informed Linda Finch ¹ that Camelot had defaulted on the Contract and demanded the return of the $16,750 earnest money. Camelot allegedly failed to timely deliver the title policy to Merrifield.

On June 27, 1990, Charles Humphrey filed suit against Camelot, alleging that it had defaulted on the Contract, and, therefore, had wrongly retained Merrifield's earnest money. He requested a rescission of the Contract and the return of the $16,750 earnest money. The trial court did not file findings of fact and conclusions of law in this case.

Camelot's points of error challenge the factual and legal sufficiency of the evidence. In considering a "no evidence," "insufficient evidence" or "against the great weight and preponderance of the evidence" point of error, we follow the well-established test set forth in Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986); Dyson v. Olin Corp., 692 S.W.2d 456, 458 (Tex.1985); Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400, 401-02 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965); Allied Fin. Co. v. Garza, 626 S.W.2d 120, 125 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.); and Calvert, No Evidence and Insufficient Evidence Points of Error, 38 Texas L.Rev. 361 (1960).

By points one and two, Camelot asserts that it had established an oral modification to the Contract as a matter of law or by the great weight and preponderance of the evidence. Article 8.2 of the Contract provided that it could not "be modified, or any of the terms hereof waived, except by an instrument in writing (referring specifically to this Contract) executed by the party against whom enforcement of the modification or waiver is sought." Camelot tried to show that Merrifield had agreed to orally modify the Contract with respect to the time of closing and the time which it was to provide a title commitment to her.

John Luther, Camelot's marketing director, testified that the week following the Contract's execution date (March 8, 1989), he had met with Merrifield to discuss modifications to the closing date and the date Camelot would have provided the title policy to her. His testimony showed that he and she had a verbal agreement to extend the closing deadline and to extend the time for providing the title commitment. He extended the deadline for about 150 days or until the house was completed. He indicated that Merrifield had lived up to that agreement and that she did not ask for the return of her earnest money. According to Luther, no one had asked for the return of the earnest money or for rescission of the contract after construction had started, and no one had alleged that Camelot had defaulted on the Contract for not closing or for not providing a title policy within the initial 30-day period.

Paul Montaine had taken part in building Merrifield's home. His testimony showed that Merrifield had known that he had started building the home after expiration of the Contract's 30-day period. She had contacted him regarding some of the things involving the home's construction. He said that she had not asked to rescind the Contract, nor had she advised him to stop construction because she was claiming a default of the Contract. She did not ask him for the return of the earnest money.

Humphrey's evidence showed that the parties did not extend the closing date in writing.

The trier of fact has the duty to weigh the evidence, draw inferences from the facts, and choose between conflicting inferences. Ramo, Inc. v. English, 500 S.W.2d 461, 467 (Tex.1973); Hudson v. Winn, 859 S.W.2d 504, 508 (Tex.App.--Houston [1st Dist.] 1993, writ denied). When acting as the trier of fact, the trial judge may accept or reject any witness's testimony in whole or in part. While an appellate court may not have reached the same findings, it may not substitute its judgment for the trial court's judgment. Hudson, 859 S.W.2d at 508; Roberts Express, Inc. v. Express Transp., Inc., 842 S.W.2d 766, 770 (Tex.App.--Dallas 1992, no writ); Forscan Corp. v. Dresser Indus., Inc., 789 S.W.2d 389, 394 (Tex.App.--Houston [14th Dist.] 1990, writ denied).

By granting a rescission of the Contract, the trial court made an implied finding that Camelot and Merrifield had not agreed to an oral modification. The trial judge, as the fact finder, had the right to reject the evidence relating to the alleged oral modification. The trial judge could have believed that the parties had not modified the Contract either by written instrument or by oral declarations. The evidence supports the trial court's findings. We overrule points one and two.

By points three and four, Camelot challenges the legal and factual sufficiency of the evidence to support rescission of the Contract. Rescission is an equitable remedy that operates to set aside a contract that is legally valid but is marred by fraud, mistake, or for some other reason, the court must set it aside to avoid unjust enrichment. Lowrey v. University of Texas Medical Branch, 837 S.W.2d 171, 174 (Tex.App.--El Paso 1992, writ denied); Country Cupboard, Inc. v. Texstar Corp., 570 S.W.2d 70, 73 (Tex.Civ.App.--Dallas 1978, writ ref'd n.r.e.). Rescission works to avoid the contract, return any consideration paid, and to return the parties to their respective positions as if no contract had ever existed. Lowrey, 837 S.W.2d at 174; Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 696 (Tex.App.--Austin 1989, no writ).

A trial court can grant unilateral rescission of a contract if a party shows that a breach had occurred in a material part of the contract. Costley v. State Farm Fire & Casualty Co., 894 S.W.2d 380 (Tex.App.--Amarillo 1994, writ denied); Ennis v. Interstate Distribs., Inc., 598 S.W.2d 903, 906 (Tex.Civ.App.--Dallas 1980, no writ); see also Allen v. Allen, 751 S.W.2d 567, 575 (Tex.App.--Houston [14th Dist.] 1988, writ denied). A partial breach is sufficient to grant rescission if it goes to the essence of the contract. Ennis, 598 S.W.2d at 906; Atkins v. Beasley, 544 S.W.2d 505, 507 (Tex.Civ.App.--Waco 1976, no writ).

The decision whether to grant rescission lies within the trial court's sound discretion. Schenck v. Ebby Halliday Real Estate, Inc., 803 S.W.2d 361, 366 (Tex.App.--Fort Worth 1990, no writ); Ebberts v. Carpenter Prod. Co., 256 S.W.2d 601, 627 (Tex.Civ.App.--Beaumont 1953, writ ref'd n.r.e.). An appellate court may reverse a trial court for abuse of discretion only if, after searching the record, it clearly shows that the trial court's decision was arbitrary and unreasonable. Simon v. York Crane & Rigging Co., 739 S.W.2d 793, 795 (Tex.1987). We are required to view the evidence in the light most favorable to the trial court's action, and indulge in every presumption which would favor the trial court's action. Adams v. Reagan, 791 S.W.2d 284, 287 (Tex.App.--Fort Worth 1990, no writ); Parks v. U.S. Home Corp., 652 S.W.2d 479, 485 (Tex.App.--Houston [1st Dist.] 1983, writ dism'd.).

In this case, article 3.1 of the Contract required that within 30 days of the date Merrifield and Camelot had entered into the Contract, Camelot "shall cause to be furnished to Purchaser [Merrifield] a standard Commitment for Owner Policy of Title Insurance (the "Title Binder"), issued through the Title Company, describing the Property, listing Purchaser as the prospective named insured and showing as the policy amount the total purchase price for the property." The evidence showed that Camelot did not cause to be furnished to Merrifield, a Title Binder issued through the Title Company within 30 days from the date the parties had entered into the Contract. Due to its failure to comply with article 3.1, Camelot breached the Contract. Camelot's failure to provide Merrifield the Title Binder prevented her designation as beneficiary of the title insurance on the property upon which she had planned to build her new home. This is a breach that goes to the essence of the Contract.

We hold that the evidence is sufficient to support rescission. Viewing the evidence in the light most...