Edward R. Pollard and Sharon Pollard v. Stephen P. Fine and Athena Fine ( 2009 )

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MEMORANDUM OPINION
No. 04-08-00745-CV
Edward R. POLLARD and Sharon Pollard,
Appellants
v.
Stephen P. FINE and Athena Fine,
Appellees
From the 216th Judicial District Court, Kerr County, Texas
Trial Court No. 06-182-A
Honorable Stephen B. Ables, Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Sandee Bryan Marion, Justice
Rebecca Simmons, Justice
Marialyn Barnard, Justice
Delivered and Filed: September 9, 2009
REVERSED AND REMANDED
This is an appeal from the trial court’s order granting the motions for summary judgment
filed by appellees. We conclude appellees were not entitled to summary judgment; therefore, we
reverse the trial court’s final judgment and remand the cause.
04-08-00745-CV
BACKGROUND
Appellees, Stephen and Athena Fine, owned a tract of commercial real estate, and, during
the course of their divorce proceedings, the property was listed for sale. At the time of the listing,
the property was leased by Ferguson Enterprises, Inc. The listing stated the sale of the property was
subject to an existing lease “which expires on January 31, 2007. Present tenant does desire to extend
lease agreement.” Edward Pollard saw the listing and, effective January 3, 2006, Stephen Fine, as
seller, and appellants, Edward and Sharon Pollard as buyers, executed a “Commercial Contract -
Improved Property,” under which the Pollards paid $10,000 in earnest money to the title company.
The contract provided for a forty-five-day “feasibility period” during which the Pollards could
terminate the contract for any reason.
On January 11, 2006, during the “feasibility period,” the Fines and Ferguson Enterprises
executed a lease amendment, which gave Ferguson Enterprises an option to extend the lease for up
to an additional fourteen years. The lease amendment also abated Ferguson Enterprises’s rent for
six months in exchange for Ferguson Enterprises performing certain improvements to the property.
On January 24, 2006, the Fines provided the Pollards’ real estate agent with a copy of the lease
amendment.
On March 24, 2006, the Pollards appeared at the closing; however, they wanted to buy the
property only if it was not subject to the amended lease with Ferguson Enterprises. The Pollards
filed suit against the Fines on that same date. Apparently, in anticipation of problems over the lease
amendment, Mr. Pollard had prepared a petition to file suit prior to attending the closing. In their
third amended petition, the Pollards alleged the Fines breached the Commercial Contract because
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they “were unable to transfer the property as it existed on January 3, 2006, . . . in that the [Fines] had
further encumbered the property with a new lease . . . .” The Pollards also asserted claims for
common law and statutory fraud. The Pollards sought specific performance of the contract, money
damages, and declaratory relief. Stephen and Athena each counter-claimed for declaratory relief and
attorney’s fees.
All parties moved for summary judgment. On September 10, 2007, the parties entered into
a stipulation under which the Pollards dismissed “all fraud claims, whether common law, statutory,
or otherwise . . . .” On October 25, 2007, the trial court granted the motions filed separately by
Stephen and Athena, who by that time were divorced; denied the Pollards’ motion; and entered final
judgment in favor of the Fines. On appeal, the Pollards do not challenge the trial court’s denial of
their motion for summary judgment; however, they assert the trial court erred in granting the Fines’
motions.1
ATHENA’S NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT
Athena moved for summary judgment on the Pollards’ breach of contract claim on the ground
that there was no evidence she was a party to any contract with the Pollards.
There is no dispute Athena did not sign the Commercial Contract. However, there is also no
dispute she owned the property with her soon-to-be former husband, Stephen, and she knew the
property was to be sold. The Pollards responded that because Stephen acted as agent for Athena in
1
… Because the Pollards dismissed their fraud claims before the trial court rendered summary judgment in
favor of the Fines, we do not consider whether summary judgment on these claims was proper.
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the sale of the property, she was bound by the terms of the contract and, therefore, not entitled to
summary judgment on their breach of contract claim.
We review a no-evidence summary judgment de novo by construing the record in the light
most favorable to the non-movant and disregarding all contrary evidence and inferences. Reynosa
v. Huff, 21 S.W.3d 510, 512 (Tex. App.—San Antonio 2000, no pet.). A party may move for a
no-evidence summary judgment on the ground that there is no evidence of one or more essential
elements of a claim or defense on which an adverse party would have the burden of proof at trial.
TEX . R. CIV . P. 166a(i). A no-evidence summary judgment motion is improperly granted when the
non-movant brings forth more than a scintilla of probative evidence that raises a genuine issue of
material fact. Id.; Gomez v. Tri City Cmty. Hosp., Ltd., 4 S.W.3d 281, 283 (Tex. App.—San Antonio
1999, no pet.). More than a scintilla of evidence exists if the evidence would allow reasonable and
fair-minded people to differ in their conclusions. Forbes, Inc. v. Granada Biosciences, Inc., 124
S.W.3d 167, 172 (Tex. 2003). Less than a scintilla of evidence exists if the evidence is so weak as
to do no more than create a mere surmise or suspicion of a fact. Id.
“The relationship of principal and agent does not arise from the mere fact of the marital
relationship, nor does that fact raise a presumption of such a relationship.” Taylor v. Gilbert Gertner
Enters., 466 S.W.2d 337, 339 (Tex. App.—Houston [1st Dist.] 1971, writ ref’d n.r.e.); TEX . FAM .
CODE ANN . § 3.201(c) (Vernon 2006) (“A spouse does not act as an agent for the other spouse
solely because of the marriage relationship.”). However, “[a] person is personally liable for the acts
of the person’s spouse only if . . . the spouse acts as an agent for the person . . . .” TEX . FAM . CODE
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ANN . § 3.201(a). Thus, facts and circumstances might be produced that would require a finding that
the wife is bound by the agreement of her husband. Taylor, 466 S.W.2d at 339. Only if the facts are
uncontroverted or otherwise established, may the existence of an agency relationship be considered
a pure question of law. III Forks Real Estate, L.P. v. Cohen, 228 S.W.3d 810, 815 (Tex.
App.—Dallas 2007, no pet.).
Here, the Pollards presented the following evidence on the issue of whether Stephen acted
as Athena’s agent when he executed the Commercial Contract. The property was considered the
community property of both Stephen and Athena. The couple’s divorce decree provided the property
would remain jointly owned by the Fines until its sale, and Stephen testified in his deposition that
Athena signed the listing agreement for the sale. Larry Richter, the Fines’ real estate agent, testified
in his deposition that both Stephen and Athena signed his listing agreement. Both Stephen and Larry
testified Athena was kept informed of the earnest money contract, and she was aware of the sales
price and terms and conditions of the contract. The Pollards also established that Athena signed the
lease amendment with Ferguson Enterprises, and Stephen testified she was aware of the negotiations
that led to the amendment. We conclude the Pollards met their summary judgment burden of
bringing forth more than a scintilla of probative evidence that raises a genuine issue of material fact
on the question of whether Stephen acted as Athena’s agent in the sale of the property. Therefore,
the Pollards adduced summary judgment evidence sufficient to defeat Athena’s entitlement to a no-
evidence summary judgment on the Pollards’ breach of contract claim against her.
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STEPHEN’S MOTION FOR SUMMARY JUDGMENT2
The dispute between the parties is centered on the issue of whether the Commercial Contract
prohibited the Fines from extending the lease with Ferguson Enterprises. Stephen moved for
summary judgment on several grounds: (1) the Pollards failed to establish the existence of a contract
because there was no meeting of the minds sufficient to form a contract, (2) there was a mutual
mistake, and (3) the contract was ambiguous and such ambiguity should be construed against the
Pollards.3 Stephen’s arguments all focus on the following language contained in the Commercial
Contract:
7.E. Contracts Affecting Operations: Until closing, Seller: (1) will operate the
Property in the same manner as on the effective date under reasonably prudent
business standards; and (2) will not transfer or dispose of any part of the Property,
any interest or right in the Property . . . . After the feasibility period ends, Seller may
not enter into, amend, or terminate any other contract that affects the operations of
the Property without Buyer’s written approval.
2
… In his motion for summary judgment, Stephen asserted there was no evidence on any element of the
Pollards’ fraud claims, which we do not address on appeal because the Pollards dismissed their fraud claims before the
trial court rendered summary judgment in favor of the Fines. As to the Pollards’ breach of contract claim, Stephen did
not state the elements on which there was no evidence. See T EX . R. C IV . P. 166a(i) (no-evidence motion for summary
judgment “must state the elements as to which there is no evidence”); see also T EX . R. C IV . P. 166a(i) cmt (“The motion
must be specific in challenging the evidentiary support for an element of a claim or defense; paragraph (i) does not
authorize conclusory motions or general no-evidence challenges to an opponent’s case.”). Therefore, we treat Stephen’s
motion on the Pollards’ contract claim as a motion for a traditional summary judgment. Amouri v. Southwest Toyota,
Inc., 20 S.W .3d 165, 168 (Tex. App.— Texarkana 2000, pet. denied) (when no-evidence motion for summary judgment
does not specifically state which elements lack evidence, the motion should be treated as a motion for a 166a(c) summary
judgment).
3
… For the first time on appeal, Stephen contends the Pollards offered no evidence a contract existed. Stephen
bases this argument on objections to “form” raised by his attorney during a deposition. This argument is not one of the
grounds upon which he moved for summary judgment, and therefore, we do not consider it on appeal.
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In his motion for summary judgment, Stephen argued paragraph 7.E allowed him and his
wife to extend the lease with Ferguson Enterprises at any time before the forty-five-day feasibility
period expired.
Under traditional summary judgment standards, the movant must show there is no genuine
issue of material fact and that judgment should be granted as a matter of law. KPMG Peat Marwick
v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). A defendant moving for
summary judgment must conclusively negate at least one essential element of each of the plaintiff’s
causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc.
v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Under this traditional standard, we take as true all
evidence favorable to the non-movant and we make all reasonable inferences in the non-movant’s
favor. Id. If the defendant meets this burden, the plaintiff must then raise a genuine issue of material
fact on that element. Gonzalez v. City of Harlingen, 814 S.W.2d 109, 112 (Tex. App.—Corpus
Christi 1991, writ denied).
A. Meeting of the Minds
Whether the parties have come to a “meeting of the minds” is measured objectively according
to what the parties said and did. Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San
Antonio 1999, pet. denied). The parties’ subjective thoughts and beliefs do not control. Id. When
the “meeting of the minds” element is contested, it is a question for the fact finder. Hallmark v.
Hand, 885 S.W.2d 471, 476 (Tex. App.—El Paso 1994, writ denied). “Meeting of the minds”
describes the mutual understanding and assent to the agreement regarding the subject matter and the
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essential terms of the contract. Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.—Dallas
1999, pet. denied). “The parties must agree to the same thing, in the same sense, at the same time.”
Id. The essential elements required, in writing, for the sale of real property are the price, the property
description, and the seller’s signature. See Rus-Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921, 927
(Tex. App.—Tyler 2007, no pet.); Lynx Exploration & Prod. Co. v. 4-Sight Operating Co., 891
S.W.2d 785, 788 (Tex. App.—Texarkana 1995, writ denied). However, this does not mean that a
contract containing these terms would remain enforceable if additional terms are incorporated into
the agreement that are so indefinite that the court could not fix the legal obligation and liabilities of
the parties. Lynx Exploration, 891 S.W.2d at 788.
Here, there is no dispute the Fines agreed to sell and the Pollards agreed to buy the real
property that was the subject matter of the Commercial Contract. The parties agreed on all terms
essential to that sale, including, but not limited to, the sales price, financing, payment of earnest
money, inspection of the property, fees, and details regarding closing and possession of the property.
We conclude Stephen did not conclusively establish that there was no meeting of the minds with
regard to the contract.
B. Mutual Mistake
When parties to an agreement have contracted under a misconception or ignorance of a
material fact, the agreement will be avoided under the doctrine of mutual mistake. Williams v.
Glash, 789 S.W.2d 261, 264 (Tex. 1990). To prove a mutual mistake, the evidence must show that
both parties were acting under the same misunderstanding of the same material fact when the
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agreement was executed. Seymour v. American Engine & Grinding Co., 956 S.W.2d 49, 58 (Tex.
App.—Houston [14th Dist.] 1996, writ denied). “The doctrine of mutual mistake must not routinely
be available to avoid the results of an unhappy bargain.” Williams v. Glash, 789 S.W.2d 261, 265
(Tex. 1990).
On appeal, Stephen contends he believed paragraph 7.E allowed him to extend the lease,
however, in neither his motion for summary judgment nor on appeal does he point to specific
evidence in the summary judgment record supporting any contention he held this belief at the time
the Commercial Contract was executed. There is also no evidence of the Pollards’ purported
misunderstanding of paragraph 7.E at the time the Commercial Contract was executed. We,
therefore, conclude there is no evidence in the record that either the Fines or the Pollards did not
understand the implications of paragraph 7.E when the Commercial Contract was executed. See City
of The Colony v. North Tx. Mun. Water Dist., 272 S.W.3d 699, 736 (Tex. App.—Fort Worth 2008,
pet. filed) (although appellant submitted evidence demonstrating its own thoughts about the parties’
various responsibilities under the contract, it offered no evidence that appellee also suffered from
a mistake of fact regarding any of those responsibilities; therefore, appellant produced no evidence
to support the mutual mistake element requiring that both parties be mistaken about a common
intention). Therefore, Stephen did not conclusively establish that there existed a mutual mistake.
C. Ambiguity
“Whether a contract is ambiguous is a question of law that must be decided by examining
the contract as a whole in light of the circumstances present when the contract was entered.”
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Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). Only
where a contract is ambiguous may a court consider the parties’ interpretation and “admit extraneous
evidence to determine the true meaning of the instrument.” Nat’l Union Fire Ins. Co. of Pittsburgh,
Penn. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (per curiam). A contract is not
ambiguous merely because the parties have conflicting interpretations of the contract. Columbia
Gas, 940 S.W.2d at 589. A contract is ambiguous only when its meaning is uncertain or it is
reasonably susceptible to more than one meaning. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.
1983). When a contract is not ambiguous, the construction of the written instrument is a question
of law for the court that is reviewed de novo. MCI Telecommunications Corp. v. Texas Utilities
Elec. Co., 995 S.W.2d 647, 650-51 (Tex. 1999); Coker, 650 S.W.2d at 393.
Under the contract here, the seller agreed to “sell and convey” its “interest in all leases . . . .”
Also under the contract, the buyers could terminate the contract “for any reason within 45 days after
the effective date (feasibility period) by providing the seller written notice of termination.” During
the feasibility period, the buyers could inspect, study, and assess the property. Within ten days after
the effective date, the seller was obligated to provide the buyers with “a current rent roll of all leases
affecting the Property,” and “copies of all current leases pertaining to the Property, including any
modifications, supplements, or amendments to the leases . . . .” Until the closing date, the seller was
allowed to “operate the Property in the same manner as on the effective date under reasonably
prudent business standards” but could not “transfer or dispose of any part of the Property” or “any
interest in the Property . . . .” After expiration of the feasibility period, the seller had to obtain the
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buyer’s written consent to amend any contract affecting the Property’s operations. Finally, “[e]ach
written lease seller is to assign to buyer under this contract must be in full force and effect according
to its terms without amendment or modification that is not disclosed to buyer in writing.” The seller
was also obligated to provide to the buyers with “any modification, amendments, or default by
landlord or tenant under the leases” that “exist at the time seller provides the leases to the buyer or
subsequently occur before closing.”
We conclude the Commercial Contract unambiguously envisions allowing the seller to
operate the property “under reasonably prudent business standards” at all times prior to closing,
including modifying, supplementing, or amending any existing leases subject only to providing the
Pollards with proper notice. We agree with Stephen that the Commercial Contract unambiguously
allowed him and his former wife to amend the lease with Ferguson Enterprises prior to expiration
of the feasibility period. However, we do not agree Stephen conclusively established his right to
summary judgment on the Pollards’ breach of contract claim because the issue remains whether such
an amendment satisfied “reasonably prudent business standards.” The question of whether the
extension of the lease for up to fourteen years and a six-month abatement of rent satisfies
“reasonably prudent business standards” is a question the fact-finder must determine under all the
circumstances present. See Ridgeline, Inc. v. Crow-Gottesman-Shafer No. 1, 734 S.W.2d 114, 116
(Tex. App.—Austin 1987, no writ) (“[E]xcept in extraordinary circumstances, inquiry as to
reasonable conduct is a question of fact which precludes summary judgment.”). Therefore, Stephen
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did not conclusively establish his entitlement to summary judgment on the Pollards’ breach of
contract claim.
D. Specific Performance
Stephen also argued that, even if he breached the contract, the Pollards were not entitled to
specific performance because (1) they admitted performance of the contract was impossible after the
Fines extended the lease with Ferguson Enterprises, (2) damages are an adequate remedy, (3) the
Pollards failed to perform when they refused to close the sale, and (4) the Pollards lack clean hands.
A purchaser of real estate is entitled to specific performance of a contract for sale of land
when the contract is valid and enforceable, and when the terms of the contract are sufficiently clear
so that the parties know their obligations under the contract. Abraham Inv. Co. v. Payne Ranch, Inc.,
968 S.W.2d 518, 527 (Tex. App.—Amarillo 1998, pet. denied) (citations omitted). A purchaser of
property who seeks specific performance of a real estate contract must prove that he has diligently
and timely performed or tendered performance of all obligations set forth in the contract. See id.
Although the Pollards were prepared to file a lawsuit even before closing, we conclude they
presented sufficient summary judgment evidence to defeat Stephen’s entitlement to summary
judgment as a matter of law. The Pollards appeared at the closing with a cashier’s check, but did not
complete the closing of the sale of the property when they were informed Stephen would not or could
not convey the property without the amended lease. This failure on Stephen’s part constituted, in
their mind, a breach of the contract. See Rus-Ann Dev., 222 S.W.3d at 927 (“It is thoroughly settled
that where a defendant has openly and avowedly refused to perform his part of the contract or
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declared his intention not to perform it, the plaintiff need not make tender of payment of
the consideration before bringing suit.”); Graves v. Alders, 132 S.W.3d 12, 17-18 (Tex.
App.—Beaumont 2004, pet. denied) (when seller has conspicuously breached the contract, “it is only
necessary that the purchaser be ready and willing, and offers to perform within his pleadings.”).
Therefore, Stephen did not conclusively establish his entitlement to summary judgment on whether
the Pollards were entitled to specific performance as a result of any breach of the Commercial
Contract.
CONCLUSION
Because we conclude neither Stephen nor Athena conclusively established their right to
summary judgment on the Pollards’ breach of contract claim, we reverse the trial court’s final
judgment in its entirety and remand for further proceedings.
Sandee Bryan Marion, Justice
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