Trinh T. Nguyen v. Terra Nostra Realty Inc. and Rene Castillo ( 2022 )

Opinion issued September 15, 2022
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-20-00668-CV
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TRINH NGUYEN, Appellant
V.
TERRA NOSTRA REALTY, INC. AND RENE CASTILLO, Appellees
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2017-00772
MEMORANDUM OPINION
After a bench trial, the trial court rendered judgment against Trinh Nguyen for
breach of an oral agreement to share commissions earned in real estate transactions
with Rene Castillo and his brokerage firm Terra Nostra Realty, Inc. (Terra Nostra)
(collectively, Castillo). On appeal, Nguyen contends the trial court erred by
(1) granting a new trial and reinstating Castillo’s claims after first granting Nguyen
a no-evidence summary judgment; (2) ultimately denying her no-evidence motion
for summary judgment when it was reset; (3) rendering judgment on an agreement
that is unenforceable under the statute of frauds; and (4) concluding that the Texas
Real Estate Licensing Act (RELA) did not require the commission-sharing
agreement to be in writing.1
We affirm.
Background
Nguyen and Castillo worked together in real estate before Castillo filed his
breach-of-contract and quantum-meruit suit against Nguyen, alleging she had not
complied with an agreement to give Castillo ten percent of the real estate sales
commissions she earned in a two-year period.2 According to Castillo, the
commission-sharing agreement was intended to compensate him for acting as
Nguyen’s sponsoring broker.
After answering the lawsuit and asserting affirmative defenses, including that
the statute of frauds barred enforcement of any commission-sharing agreement,
1
Castillo has not filed a brief responding to Nguyen’s issues on appeal.
2
Initially, Castillo pleaded additional claims against Nguyen for tradename and
service mark infringement, injury to business reputation, unfair competition,
misappropriation, and fraud, requesting both damages and injunctive relief. These
additional claims were abandoned in an amended pleading, leaving only the
breach-of-contract and quantum-meruit claims at the time of trial.
2
Nguyen moved for a no-evidence summary judgment on all claims against her.3
Castillo did not respond, and the trial court granted Nguyen’s no-evidence motion.
Castillo timely moved for a new trial and asked the trial court to set aside the
summary judgment because his counsel was “duped into” not responding by
Nguyen’s counsel’s representation that the no-evidence motion would be “passed.”
Castillo also complained about pending discovery.
Although Nguyen disputed her counsel had agreed to pass the no-evidence
motion, the trial court granted Castillo’s new-trial motion and reinstated the claims
against Nguyen. Nguyen reset her no-evidence motion, and Castillo responded.
Without stating its reasons, the trial court denied the motion.
The case proceeded to a bench trial.4 Castillo testified that he founded his
brokerage firm, Terra Nostra, in 2012 and hired Nguyen the same year. They agreed
Nguyen would open and manage a Terra Nostra office in Bellaire, Texas. Nguyen
would collect sales commissions from Terra Nostra agents and share ten percent of
those commissions with Castillo, keeping 90 percent for herself. Castillo explained
that the 90/10 split was more generous to Nguyen than a typical brokerage
3
Nguyen also pleaded counterclaims against Castillo, alleging that he breached a
promise to transfer ownership of Terra Nostra to her in exchange for her promise to
forgive a loan between them. Her counterclaims included causes of action for breach
of contract, promissory estoppel, unjust enrichment, and breach of fiduciary duty.
4
Before the trial, Nguyen’s counsel withdrew. She appeared pro se at trial.
3
arrangement because she was going to cover the costs of the Bellaire office. No
writing memorializing the commission-sharing agreement was introduced into
evidence.
Castillo further testified that he took a two-year “hiatus” from real estate to
pursue a food business; however, he continued to supervise Nguyen during that time.
Issues arose during Castillo’s hiatus that suggested to him that Nguyen was
mismanaging the business. Castillo returned to Terra Nostra and investigated
whether Nguyen had not complied with their agreement by withholding
commissions. Based on his review of Nguyen’s sales history, Castillo determined
that $60,761 was owed to him. Nguyen did not cross-examine Castillo or present
any evidence contradicting his testimony.
The trial court rendered judgment for Castillo and ordered Nguyen to pay
$60,397.89 in damages and $51,180 in attorney’s fees.5 The trial court also entered
findings of fact and conclusions of law:
Findings of Fact
1. The relevant time period is January 1, 2014, through
March 8, 2016.
2. [Castillo] was at all relevant times[] a real estate broker
licensed by the State of Texas.
5
Though it did not expressly reference Nguyen’s counterclaims, the trial court’s
judgment included finality language disposing of “all claims and all parties” and
indicating that “all relief not granted” was denied. Nguyen does not challenge the
denial of her counterclaims on appeal.
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3. [ Nguyen] was at all relevant times[] a licensed real estate
sales agent.
4. [Castillo] sponsored [Nguyen’s] license during the
relevant time, which required [Castillo] to provide supervision over
each of [Nguyen’s] real estate transactions.
5. [Castillo] was at all relevant times[] the owner of [Terra
Nostra], a licensed real estate brokerage.
6. On or about January 1, 2014, [Castillo] took a hiatus from
real estate to pursue a restaurant venture.
7. [Nguyen] expressed an interest in managing [Terra
Nostra] while [Castillo] was on hiatus. [Castillo] agreed, and the two
entered into an oral agreement.
8. [Castillo] agreed to allow [Nguyen], under [his]
supervision, to manage and develop the business of [Terra Nostra]
while he was on hiatus. [Nguyen] would operate [Terra Nostra] out of
her own offices located in Bellaire, and [she] would be responsible for
all overhead and expenses.
9. In addition to the above terms, [Castillo] and [Nguyen]
agreed to a commission split of 90%/10%, in favor of [Nguyen].
10. In late 2012, [Castillo] offered to sponsor [Nguyen’s] real
estate license for free, but [she] agreed to pay [him] a commission. . . .
11. Additionally, all of the agents hired by [Nguyen] agreed to
sign a commission agreement with [Castillo], under the same terms [he]
alleges [she] agreed to on or about January 1, 2014. . . .
12. On or about March 2, 2016, [Castillo] returned from his
hiatus and discovered [Nguyen] had cleaned out [Terra Nostra’s] bank
account.
13. Despite numerous demands by [Castillo], [Nguyen] has
continued to refuse to pay [him] any of the commissions due and owing.
14. [Castillo] calculated the commissions due him by
[Nguyen] by obtaining data from the HAR.com website.
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15. [Castillo] calculated the total commissions due equal
$60,397.89. . . .
16. [Castillo and Terra Nostra] are also entitled to an award of
attorney’s fees in the amount of $51,180. . . .
(Emphasis in original.)
Conclusions of Law
17. On or about January 1, 2014, [Castillo and Nguyen]
entered into a valid and enforceable contract regarding the development
of [Terra Nostra] while [he] was on hiatus, including the commission
split between [them].
18. The contract allowed [Nguyen] to develop the Bellaire
office of [Terra Nostra], including allowing her to hire her own agents.
[She] was responsible for all of the Bellaire office’s operating expenses.
Additionally, [she] agreed to pay [Castillo] 10% of all commissions
[she] received during the period January 1, 2014 to March 8, 2016.
19. [Nguyen] breached the contract by failing to pay [Castillo]
any commissions due, entitling [him] to damages.
Nguyen timely moved for a new trial, challenging the sufficiency of the
evidence and the enforceability of the commission-sharing agreement under two
statutes of frauds. She argued the commission-sharing agreement was unenforceable
under the Texas Business and Commerce Code because it was not in writing and not
to be performed within one year. See TEX. BUS. & COMM. CODE § 26.01(b)(6)
(requiring “agreement which is not to be performed within one year from the date of
making the agreement” to be in writing and signed by party to be charged). She also
argued that the Texas Real Estate License Act (RELA) prohibited Castillo’s
recovery of real estate commissions based on an oral agreement. See TEX. OCC.
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CODE § 1101.806(c) (“A person may not maintain an action in this state to recover
a commission for the sale or purchase of real estate unless the promise or agreement
on which the action is based, or a memorandum, is in writing and signed by the party
against whom the action is brought or by a person authorized by that party to sign
the document.”). The trial court denied Nguyen’s motion for new trial by written
order, and she appealed.
Appealability
In her first and second issues, Nguyen challenges the trial court’s orders
granting Castillo’s motion for new trial, which had the effect of setting aside the
no-evidence summary judgment the trial court had previously granted, and then
denying her no-evidence motion for summary judgment when it was reset. After the
trial on the merits, neither of these orders is reviewable on appeal.
Here, after initially granting Nguyen a no-evidence summary judgment, the
trial court reinstated Castillo’s claims against Nguyen on Castillo’s motion for new
trial. An order granting a motion for new trial rendered within the trial court’s
plenary power is not reviewable on appeal. See Wilkins v. Methodist Health Care
Sys., 160 S.W.3d 559, 563 (Tex. 2005); Cummins v. Paisan Constr. Co., 682 S.W.2d
235, 235–36 (Tex. 1984). When a motion for new trial is granted, “the court
essentially wipes the slate clean and starts over.” Wilkins, 160 S.W.3d at 563.
Castillo’s new trial motion was timely filed, and the trial court granted the motion
7
during its period of plenary power over the judgment. See TEX. R. CIV. P. 329b.
Consequently, the order is not subject to review on appeal. See Shrewsbury v. Por,
No. 08-13-00364-CV, 2015 WL 3898801, at *1 (Tex. App.—El Paso June 24, 2015,
no pet.) (mem. op.) (order granting new trial on claims dismissed on summary
judgment was not reviewable on appeal).
The same is true of the trial court’s ultimate decision to deny Nguyen’s
no-evidence motion for summary judgment. The general rule is that a denial of a
summary judgment cannot be reviewed on appeal. See Cincinnati Life Ins. Co. v.
Cates, 927 S.W.2d 623, 625 (Tex. 1996); Williams v. Colthurst, 253 S.W.3d 353,
359–60 (Tex. App.—Eastland 2008, no pet.). More specifically, when, as here, a
motion for summary judgment is denied by the trial court and the case is tried on the
merits, the order denying the summary judgment cannot be reviewed on appeal. See
Ackermann v. Vordenbaum, 403 S.W.2d 362, 365 (Tex. 1966); see also TEX. R. CIV.
P. 166a cmt. (“The denial of a motion under paragraph (i) [no-evidence motion for
summary judgment] is no more reviewable by appeal or mandamus than the denial
of a motion under paragraph (c) [traditional motion for summary judgment].”). “The
party’s remedy is to assign error to the trial court’s judgment ultimately rendered
following trial on the merits.” United Parcel Serv., Inc. v. Tasdemiroglu, 25 S.W.3d
914, 916 (Tex. App.—Houston [14th Dist.] 2000, pet. denied); see also Williams,
253 S.W.3d at 360 n.3.
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Accordingly, we overrule Nguyen’s first and second issues.
Statute of Frauds
In her remaining issues, Nguyen argues the trial court erred by rendering
judgment for Castillo because the oral commission-sharing agreement was
unenforceable under two statutes of frauds. See TEX. BUS. & COM. CODE § 26.01(a),
(b)(6) (statute of frauds for agreements “not to be performed within one year from
the date of making the agreement”); TEX. OCC. CODE § 1101.806(c) (RELA statute
of frauds for actions “to recover a commission for the sale or purchase of real
estate”).
A. Standard of Review
The statute of frauds is an affirmative defense and renders a contract that falls
within its purview unenforceable. TEX. R. CIV. P. 94; see also TEX. BUS. & COM.
CODE § 26.1(a); TEX. OCC. CODE § 1101.806(c); S & I Mgmt., Inc. v. Choi, 331
S.W.3d 849, 854 (Tex. App.—Dallas 2011, no pet.) (“Under the statute of frauds,
certain contracts are not enforceable unless they are in writing and signed by the
person against whom enforcement of the contract is sought.”). The party pleading
the statute of frauds bears the initial burden of establishing its applicability. See
Dynegy, Inc. v. Yates, 422 S.W.3d 638, 642 (Tex. 2013) (citing TEX. R. CIV. P. 94).
The application of the statute of frauds to a given contract is a question of law.
See id. An appellate court may review whether a trial court’s legal conclusions drawn
9
from the facts are correct. See BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d
789, 794 (Tex. 2002); Choice! Power, L.P. v. Feeley, 501 S.W.3d 199, 208 (Tex.
App.—Houston [1st Dist.] 2016, no pet.). In an appeal from a bench trial, we review
the conclusions of law de novo and will uphold them if the judgment can be sustained
on any legal theory supported by the evidence. BMC Software, 83 S.W.3d at 794. If
we determine a conclusion of law is erroneous, but the trial rendered the proper
judgment, the erroneous conclusion of law does not require reversal. Id.
B. Section 26.01 of the Business and Commerce Code
In her third issue, Nguyen argues that the oral commission-sharing agreement
is unenforceable under Section 26.01 of the Texas Business and Commerce Code
because Castillo sought compensation for commissions earned during a two-year
period, making the agreement one that could not be performed within one year and
therefore subject to the statute of frauds. See TEX. BUS. & COM. CODE § 26.01(a),
(b)(6). We disagree.
Section 26.01 encompasses agreements that are “not to be performed within
one year from the date of making the agreement.” Id. § 26.01(a), (b)(6). When a
promise or agreement, either by its terms or by the nature of the required acts, cannot
be performed within one year, it falls within the statute of frauds and is
unenforceable unless it is in writing and signed by the person to be charged. See id.
§ 26.01(a), (b)(6); Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483, 489 (Tex.
10
1991), overruled on other grounds by In re United Servs. Auto Ass’n, 307 S.W.3d
299 (Tex. 2010); Niday v. Niday, 643 S.W.2d 919, 920 (Tex. 1982) (per curiam);
Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149 (Tex. App.—Houston [1st Dist.]
2005, pet. denied). But if the agreement is capable of being performed within one
year, it is not within the statute of frauds. See Beverick, 186 S.W.3d at 149.
In deciding whether an agreement is capable of being performed within one
year, we compare the date of the agreement to the date when the performance under
the agreement is to be completed. See TEX. BUS. & COM. CODE § 26.01(b)(6); Young
v. Ward, 917 S.W.2d 506, 508 (Tex. App.—Waco 1996, no writ). When the date
performance will be completed cannot be readily ascertained, the law provides that
a writing is not required if performance could conceivably be completed within one
year of the agreement’s making. See, e.g., Niday, 643 S.W.2d at 920 (stating general
rule that statute of frauds does not apply when “the parties do not fix the time of
performance and the agreement itself does not indicate that it cannot be performed
within one year,” but does apply if “the agreement, either by its terms or by the
nature of the required acts, cannot be completed within one year” (emphasis in
original)); Beverick, 186 S.W.3d at 149. That is, “[a] contract that could possibly be
performed within a year, however improbable performance within one year may be,
does not fall within the statute of frauds.” Beverick, 186 S.W.3d at 149 (emphasis in
original). For example, in Miller v. Riata Cadillac Company, 517 S.W.2d 773, 775
11
(Tex. 1974), the Texas Supreme Court concluded that an indefinite term
employment contract was performable within one year and, therefore, did not fall
within the statute of frauds.
Here, although Castillo sought compensation for commissions earned during
a two-year period, the record does not eliminate the possibility that the performance
under the oral commission-sharing agreement could have been completed in one
year. Stated differently, although it was her burden, Nguyen did not present any
evidence that her agreement to share commissions with Castillo could not be
performed within a year. See Dynegy, 422 S.W.3d at 642. No evidence established
that performance under the agreement was for a fixed period only. Rather, the only
evidence of the potential duration of the agreement to share commissions was
Castillo’s testimony, which supported an inference that the agreement was effective
for the duration of his hiatus from Terra Nostra. But again, even if Castillo’s hiatus
lasted two years, no testimony or other evidence established that it was not possible
it would last only one year. See Beverick, 186 S.W.3d at 149–50 (statute of frauds
did not apply even though actual performance of oral agreement took two years to
complete because evidence established possibility that appellant could have
completed project in one year, even if only under very favorable conditions).
Consequently, we cannot say that Nguyen conclusively proved that the oral
commission-sharing agreement was unenforceable under Section 26.01. See id.; see
12
also Chacko v. Mathew, No. 14-07-00613-CV, 2008 WL 2390486, at *3 (Tex.
App.—Houston [14th Dist.] June 12, 2008, pet. denied) (mem. op.) (“A contract
does not fall within the statute of frauds based on the absence of a requirement to
complete performance within a year; the lack of any expectation that performance
will be completed within a year; or the fact that completion within a year proved to
be impossible in light of later circumstances.”).
Accordingly, we overrule Nguyen’s third issue.
C. Section 1101.806 of RELA
In her fourth issue, Nguyen asserts that the oral commission-sharing
agreement was unenforceable under Section 1101.806 of RELA. See TEX. OCC.
CODE § 1101.806(c). Again, we disagree.
Subsection (c) of Section 1101.806 bars judicial recovery of a real estate
commission that is not based on a written promise, agreement, or memorandum. See
id.; see also Givens v. Dougherty, 671 S.W.2d 877, 878 (Tex. 1984) (interpreting
predecessor statute as statute of frauds); Prime Income Asset Mgmt., Inc. v. Marcus
& Millichap Real Est. Inv. Servs. of Tex., Inc., No. 01-13-00020-CV, 2014 WL
7473801, at *3 (Tex. App.—Houston [1st Dist.] Dec. 30, 2014, no pet.) (mem. op.)
(interpreting current statue as statute of frauds); Lawrence v. Reyna Realty Grp., 434
S.W.3d 667, 673 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (same). It provides:
A person may not maintain an action in this state to recover a
commission for the sale or purchase of real estate unless the promise or
13
agreement on which the action is based, or a memorandum, is in writing
and signed by the party against whom the action is brought or by a
person authorized by that party to sign the document.
TEX. OCC. CODE § 1101.806(c); see Tex. Builders v. Keller, 928 S.W.2d 479, 481
(Tex. 1996) (“A real estate broker may not sue for a commission unless the
agreement is evidenced by a writing complying with the Real Estate License Act.”).
Courts have required strict compliance with this provision, holding that an
“agreement to pay a real estate commission must be in writing or it is not
enforceable.” Brice v. Eastin, 691 S.W.2d 54, 47 (Tex. App.—San Antonio 1985,
no writ); see also Trammel Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 637
(Tex. 1997) (Texas courts strictly adhere to RELA’s statute of fraud requirements).
However, by its plain language, Section 1101.806 does not “apply to an
agreement to share compensation among license holders.” TEX. OCC. CODE
§ 1101.806(a)(1); see also Ryland Enter., Inc. v. Weatherspoon, No.
01-10-00715-CV, 2012 WL 6754966, at *9 (Tex. App.—Houston [1st Dist.] Dec.
28, 2012, no pet.) (mem. op.); Puckett v. Burris, No. 13-07-00703-CV, 2009 WL
4051975, at *9 n.25 (Tex. App.—Corpus Christi–Edinburg Nov. 24, 2009, pet.
denied) (mem. op.). “License holders” include “a broker or sales agent licensed”
under RELA. TEX. OCC. CODE § 1101.002(4); see also id. § 1101.002(1), (7)
(defining “[b]roker” and “[s]ales agent”).
14
Here, based on Castillo’s testimony that he was a real estate broker who
sponsored Nguyen at his brokerage firm when she became a sales agent, the trial
court found that at all relevant times Castillo was a licensed broker and Nguyen was
a licensed sales agent. Because these findings have evidentiary support and are
unchallenged by Nguyen, we are bound by them. See McGalliard v. Kuhlmann, 722
S.W.2d 694, 696 (Tex. 1986) (unchallenged findings of fact are binding on the party
and the appellate court, unless the contrary is established as a matter of law or there
is no evidence to support the finding). And because these findings establish that both
Castillo and Nguyen were “license holders,” as defined by RELA, Castillo and
Nguyen’s oral agreement to share commissions fell outside the purview of Section
1101.806. See TEX. OCC. CODE § 1101.806(a)(1). We therefore hold that Section
1101.806 did not prohibit Castillo’s action to recover commissions under his oral
agreement with Nguyen.
Accordingly, we overrule Nguyen’s fourth issue.
Conclusion
We affirm the trial court’s judgment.
Amparo Guerra
Justice
Panel consists of Justices Landau, Guerra, and Farris.
15