Mandell v. Mandell

• Citation: 214 S.W.3d 682
• Decision Date: 09 January 2007
• Docket Number: No. 14-06-00031-CV.,14-06-00031-CV.
• Parties: David MANDELL, Appellant v. Jeanne MANDELL, Joyce Field, and Susan Alexander, Independent Co-Executrices of the Estate of Sam Field, Deceased, Appellees.
• Court: Court of Appeals of Texas

214 S.W.3d 682

David MANDELL, Appellant v. Jeanne MANDELL, Joyce Field, and Susan Alexander, Independent Co-Executrices of the Estate of Sam Field, Deceased, Appellees.

No. 14-06-00031-CV.

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

January 9, 2007.

Joseph J. Hroch and Joel Scott Shields, Houston, for appellant.

Robert S. MacIntyre, David A. Furlow and Kevin R. Pennell, Houston, for appellees.

Panel consists of Chief Justice HEDGES and Justices FOWLER and EDELMAN.

OPINION

ADELE HEDGES, Chief Justice.

Appellant, David Mandell, appeals a summary judgment granted in favor of appellees, Jeanne Mandell, Joyce Field, and Susan Alexander, executrices of the Estate of Sam Field ("The Estate"). In five issues, appellant contends the trial court erred in (1) granting appellees' motion for summary judgment, (2) denying his motion for summary judgment, (3) overlooking the finality of the partial summary judgment, (4) awarding attorney's fees to appellees, and (5) denying appellant's right to a jury trial. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 1956, William Mandell, David's father, purchased a 15% interest in 240 acres in northwest Houston. In 1966, William purchased the remaining 85% interest in the property and gave a 50% interest to Sam Field, who had lent William the purchase money. In the intervening years, William married Rene Deutser. David Mandell is William and Rene's only child. On August 4, 1972, William shot and killed Rene. William was subsequently convicted of murder without malice and served two years of a two to five year sentence. While his father was incarcerated, David lived with his aunt and uncle, Jeanne and Milton Mandell. Milton was appointed guardian of David's estate.

In 1987, when David reached the age of majority, Milton Mandell, acting in his capacity as guardian, conveyed a 17.5% interest in the 240 acres to David. The 17.5% interest represented David's mother's community interest in the 35% interest William acquired after the marriage. After Sam Field's death, his interest in the property passed to the Estate.

In 1995, David sued William, Jeanne and Milton Mandell, and the Estate for alleged mismanagement of his mother's estate. David hired the law firm of Spencer & Associates ("Spencer") to represent him, and entered into a contingency fee contract in which he agreed to give Spencer 50% of his recovery in the suit. As part of the settlement, David received an additional 7.5% interest in the property, which increased his total interest to 25%. On March 27, 1998, the parties entered into a settlement agreement in which they agreed, among other things, to a preferential purchase right.¹ Specifically, the parties agreed that, "David Mandell and all other owners of the 240 Acre Tract reserve the first right to purchase from the remaining owners the share of that owner at the price offered by any subsequent purchaser."

On November 5, 1998, David executed a general warranty deed transferring 3.75% of the property to Spencer. In his deposition, David admitted he did not inform William or the Estate about the transaction at that time. On July 19, 1999, Spencer sent a letter to William and the Estate advising that, "As part of the fee agreement for our attorney's fees in the representation of [David], Mr. David Mandell will grant to the firm a portion of his ownership interest in the 240 acre tract of land[.]" On July 30, 1999, William and the Estate wrote a letter rejecting David's attempt to convey the property as part of a fee agreement. The letter stated that William and the Estate considered the conveyance a breach of the settlement agreement. On August 5, 1999, in a letter sent to William, but not the Estate, Spencer informed William that the deed had already been executed. On November 18, 1999, David sent a letter to the Estate stating he did not intend to convey any of his ownership interest, but intended to maintain his 25% interest in the property.

More than three years later, on January 31, 2003, the Estate accepted William's offer to purchase its 50% interest in the property. On February 3, 2003, the general warranty deed, executed in 1998, conveying a 3.75% interest in the property to Spencer was recorded. On March 7, 2003, the Estate sold its interest to William for approximately $10,000 per acre. David subsequently filed this suit alleging that the Estate had breached the settlement agreement by not permitting him an opportunity to purchase the Estate's interest. Both parties filed motions for summary judgment alleging that the other party had breached the agreement as a matter of law. The trial court granted the Estate's motion, and entered a partial summary judgment on January 6, 2006. A hearing on attorney's fees was later held and final judgment was entered granting judgment in favor of the Estate, including attorney's fees.

STANDARD OF REVIEW

Under the traditional standard for summary judgment, the movant has the burden to show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). When both parties move for summary judgment, each party "bears the burden of establishing that it is entitled to judgment as a matter of law." Guynes v. Galveston County, 861 S.W.2d 861, 862 (Tex.1993). When, as here, a trial court's order granting summary judgment does not specify the grounds relied upon, we must affirm the summary judgment if any of the summary judgment grounds are meritorious. Oliphint v. Richards, 167 S.W.3d 513, 515-16 (Tex.App.-Houston [14th Dist.] 2005, pet. denied).

BREACH OF CONTRACT

In his first and second issues, David contends the trial court erred in granting the Estate's motion for summary judgment and in denying his motion. Both David and the Estate argue that the other party breached the settlement agreement. The Estate argues that by selling a 3.75% interest in the property within months of signing the settlement agreement, David breached the agreement first, thereby excusing the Estate from performance. David argues he did not breach the settlement agreement because (1) the conveyance of the property did not trigger the preferential purchase right, (2) the Estate had notice of the conveyance because it had notice of David's contingent fee agreement with Spencer, and (3) the Estate waived its right of first purchase by failing to timely assert it.

A preferential right of purchase is a right granted to a party giving him or her the first opportunity to purchase property if the owner decides to sell it. North Central Oil Corp. v. Louisiana Land and Exploration Co., 22 S.W.3d 572, 579 (Tex. App.-Houston [1st Dist.] 2000, pet. denied). A preferential purchase right is essentially a dormant option. A.G.E., Inc. v. Buford, 105 S.W.3d 667, 673 (Tex.App.-Austin 2003, pet. denied). It requires the property owner, before selling it to another, to offer it to the rightholder on the terms and conditions specified in the contract granting the right. West Texas Transmission, L.P. v. Enron Corp., 907 F.2d 1554, 1561-62 (5th Cir.1990). When a sale is made in breach of the right of first purchase, it therefore creates in the rightholder an enforceable option to acquire the property according to the terms of the sale. Koch Indus., Inc. v. Sun Co., 918 F.2d 1203, 1211 (5th Cir.1990). The option is not perpetual, however, and the rightholder must choose between exercising it or acquiescing in the transfer of the property. A.G.E., 105 S.W.3d at 673.

The summary judgment proof shows that David breached the settlement agreement by selling a portion of his interest in the property without first offering William or the Estate the first right to purchase the property. The record reflects a general warranty deed in which David conveyed a 3.75% interest in the property in exchange for ten dollars "and other good and valuable consideration." The settlement agreement states that the "owners of the 240 Acre Tract reserve the first right to purchase from the remaining owners the share of that owner at the price offered by any subsequent purchaser." By its plain language, the settlement agreement required David to give William and the Estate the right to purchase the 3.75% interest at the same purchase price. Because David failed to give the other owners this opportunity, he breached the contract. The fact that David now calls the transfer of the property a "conveyance" instead of a "sale" does not change the nature of the transaction. See A.G.E., 105 S.W.3d at 673-74 (conveyance of property in satisfaction of attorney's fees considered a sale that invoked first right of purchase).

Waiver of Preferential Purchase Right

David argues that even if the conveyance is considered a sale, the Estate waived its preferential purchase right by failing to timely assert it. David contends that the Estate knew of the terms of his agreement with Spencer and was obligated to assert its right at that time. The only summary judgment proof regarding David's contingent fee agreement was his deposition testimony in the 1995 lawsuit and his affidavit in support of summary judgment stating that he agreed to give his attorneys 50% of his recovery in the lawsuit. In his deposition, David testified that he had a written agreement with his attorneys, but did not produce it based on his counsel's advice.

David argues that his testimony concerning his contingent fee agreement put the Estate on notice that he intended to sell a portion of his interest in the property. When a property owner expresses his or her intention to sell the property the holder of a right of preferential purchase is obligated to elect to either purchase the property or permit the property owner to sell it. A.G.E., 105 S.W.3d at 673; Martin v. Lott, 482 S.W.2d 917, 922 (Tex.Civ.App.-Dallas 1972, no writ). By informing the Estate of his contingent fee...