BLM of Brownwood, Inc. v. Mid-Tex Cellular, Ltd. ( 2014 )

Opinion filed March 31, 2014
In The
Eleventh Court of Appeals
__________
No. 11-11-00311-CV
__________
BLM OF BROWNWOOD, INC., Appellant
V.
MID-TEX CELLULAR, LTD., JOHN BOYSEN,
MARCUS BOYSEN, AND JERRY BOYSEN, Appellees
On Appeal from the 35th Judicial District Court
Brown County, Texas
Trial Court Cause No. CV1009295
MEMORANDUM OPINION
BLM of Brownwood, Inc. (BLM) appeals from a take-nothing summary
judgment entered in favor of Mid-Tex Cellular, Ltd. (Mid-Tex) and a take-nothing
summary judgment in favor of John Boysen, Marcus Boysen, and Jerry Boysen
(the Boysens). In five issues, BLM challenges the trial court’s grant of the
Boysens’ motion for summary judgment as to BLM’s claims of breach of contract,
conversion, statutory fraud, and negligence, as well as the trial court’s grant of
Mid-Tex’s motion for summary judgment as to BLM’s claim of tortious
interference. We affirm in part and reverse and remand in part.
I. Background
This is a contract dispute over the alleged sale of a four-acre piece of
property in Brown County (the Boysen Property). The summary judgment
evidence indicated that on or about March 3, 2010, BLM learned that the Boysen
Property would be placed on the market for sale. Three brothers—John, Jerry, and
Marcus Boysen—were co-owners of the property. William Ruth, in his individual
capacity and in his capacity as BLM’s attorney, contacted John by telephone and
inquired about the Boysen Property.
BLM was primarily interested in the existing tower on the property and
intended to incorporate the tower into its business. John acknowledged he and his
brothers owned the property and that it was available for purchase. Ruth was
informed that an appraisal of the property had been obtained and that the appraised
value of the property would be the selling price. Ruth agreed to the price, and John
told him that John’s attorney, Darrell Haynes, would prepare the contract for sale.
John instructed Ruth to provide the Haynes Law Firm with earnest money in the
amount of $1,000.
On or about March 17, 2010, Angela Schum, an officer and director of
BLM, at the direction of Ruth, delivered the $1,000 in earnest money to the
Haynes Law Firm and informed them that the money was for the “Boysen Property
on Bang’s Hill.” Schum confirmed that Haynes would be preparing the contract
for the sale of the Boysen Property. The Haynes Law Firm provided Schum with a
cash receipt, which indicated that $1,000 had been paid by BLM as earnest money
for the Boysen Property. The receipt contained no further description regarding
the property or terms of sale. In reliance on the payment of earnest money and
representations made to BLM regarding the sale of the Boysen Property, BLM
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pursued the purchase of a second tract of land, comprising 12.4 acres that
surrounded the Boysen Property on three sides.
Thereafter, both Ruth and Schum made multiple inquiries regarding the
status of the contract for sale of the Boysen Property. Each time an inquiry was
made, the Haynes Law Firm said that the contract was not available but would be
forthcoming. On or about March 30, 2010, Ruth contacted John directly regarding
the status of the contract. John told Ruth that the earnest money had never been
paid as instructed and that, therefore, the property was being sold to “the lady”
who had paid the earnest money. Ruth informed John that “the lady” was, in fact,
Schum, who had paid the earnest money on BLM’s behalf. John agreed there had
been a misunderstanding and that he was glad the issue had been clarified. John
confirmed to Ruth that the property and tower would be sold to BLM accordingly.
On or about May 7, 2010, the Haynes Law Firm informed Schum there was
a problem. Haynes contacted Schum and told her there was a third party, Mid-Tex,
seeking to purchase the Boysen Property. This was the first time that BLM or its
representatives learned of Mid-Tex as a prospective purchaser of the property.
Although BLM objected to the sale, the Boysens and Mid-Tex entered into a
written contract for the sale of the Boysen Property, and the transaction closed on
June 24, 2010.
On or about August 23, 2010, BLM went forward with its plans to purchase
the second tract of land that surrounded the Boysen Property on three sides. BLM
purchased the second tract for $30,000 in reliance that the dispute over the Boysen
Property would be resolved in BLM’s favor.
BLM filed its original petition against Mid-Tex, John, and Marcus. BLM
added Jerry as a defendant in its Plaintiff’s First Amended Petition after learning
Jerry was a co-owner of the Boysen Property. After some discovery, all parties
filed motions for summary judgment. The trial court denied BLM’s motion for
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summary judgment and, on both traditional and no-evidence grounds, granted the
motions for summary judgment filed by the Boysens and Mid-Tex. The trial court
disposed of all claims and entered final judgment. BLM now appeals the trial
court’s grant of the Boysens’ and Mid-Tex’s motions for summary judgment.
II. Issues Presented
BLM presents five issues for review in which it contends that the trial court
erred when it granted summary judgment because there was sufficient evidence to
create a genuine issue of material fact on each of its claims. The claims at issue
are the following: (1) breach of contract; (2) conversion; (3) statutory fraud; (4)
negligence and gross negligence; and (5) tortious interference with a contract.
BLM’s first four claims apply to the Boysens, while the claim for tortious
interference with a contract applies to Mid-Tex.
III. Standard of Review
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 862 (Tex. 2010). The movant for traditional summary judgment
must show there is no genuine issue of material fact and that it is entitled to
judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Mann Frankfort Stein &
Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). A defendant
who moves for traditional summary judgment must either negate at least one
essential element of the nonmovant’s cause of action or prove all essential
elements of an affirmative defense. See Randall’s Food Mkts., Inc. v. Johnson,
891 S.W.2d 640, 644 (Tex. 1995). When summary judgment is granted on
traditional grounds, we take the evidence adduced in favor of the nonmovant as
“true” and draw every reasonable inference and resolve all doubts in the
nonmovant’s favor. Id. (citing El Chico Corp. v. Poole, 732 S.W.2d 306, 315
(Tex. 1987)).
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The party that files a no-evidence motion for summary judgment alleges
there is no evidence of one or more essential elements of a claim or defense on
which the adverse party would have the burden of proof at trial. See TEX. R.
CIV. P. 166a(i). The adverse party then must respond with evidence to raise a
genuine issue of material fact on each of the challenged elements in the claim or
defense. See id. A no-evidence summary judgment is essentially a pretrial
directed verdict, and we apply the same legal sufficiency standard in reviewing a
no-evidence summary judgment as we apply in reviewing a directed verdict. King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750–51 (Tex. 2003).
With a no-evidence motion, we review the evidence in the light most
favorable to the nonmovant, disregarding all contrary evidence and inferences. Id.
at 751 (citing Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.
1997)). “A no evidence point will be sustained when (a) there is a complete
absence of evidence of a vital fact, (b) the court is barred by rules of law or of
evidence from giving weight to the only evidence offered to prove a vital fact, (c)
the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the
evidence conclusively establishes the opposite of the vital fact.” Id. (quoting
Merrell Dow, 953 S.W.2d at 711).
A no-evidence summary judgment is improperly granted if the respondent
brings forth more than a scintilla of probative evidence to raise a genuine issue of
material fact. Id. (citing TEX. R. CIV. P. 166a(i) and Wal-Mart Stores, Inc. v.
Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002)). Less than a scintilla of evidence
exists when the evidence is “so weak as to do no more than create a mere surmise
or suspicion” of a fact. Id. (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63
(Tex.1983)). More than a scintilla of evidence exists when the evidence “rises to a
level that would enable reasonable and fair-minded people to differ in their
conclusions.” Id. (quoting Merrell Dow Pharm., 953 S.W.2d at 711).
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When competing summary judgment motions have been filed and one
motion is granted and the other is denied, we consider all of the summary judgment
evidence and determine all the questions presented. Comm’rs Court of Titus
Cnty. v. Agan, 940 S.W.2d 77, 81 (Tex. 1997). If the trial court’s order on
summary judgment does not specify the grounds on which it is based, the appellant
must negate all grounds on appeal. See Star-Telegram, Inc. v. Doe, 915 S.W.2d
471, 473 (Tex. 1995).
IV. Analysis
A. Statute of Frauds
Both the Boysens and Mid-Tex moved for traditional summary judgment on
the affirmative defense of the statute of frauds. We will first consider whether the
alleged oral contract between BLM and the Boysens was barred by the statute of
frauds.
The statute of frauds exists to prevent fraud and perjury in certain kinds of
transactions by requiring agreements to be set out in a writing and signed by the
party to be charged with the agreement. Haase v. Glazner, 62 S.W.3d 795, 799
(Tex. 2001); see also TEX. BUS. & COM. CODE ANN. § 26.01 (West 2009).
Whether a contract is barred by the statute of frauds is a question of law for the
court to decide. Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 555 (Tex.
App.—Eastland 2010, pet. denied). By its express terms, the statute of frauds
applies to a contract for the sale of real property. BUS. & COM. § 26.01(b)(4).
Therefore, the contract for sale of the Boysen Property to BLM was valid and
enforceable if it was in writing and signed by the Boysens or if it fell within an
exception to the statute of frauds. See Bank of Tex., N.A. v. Gaubert, 286 S.W.3d
546, 555 (Tex. App.—Dallas 2009, pet. dism’d).
BLM argues that the written memorandum of the deposit of earnest money
is sufficient to satisfy the writing requirement of the statute of frauds. Under the
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statute of frauds, the writing that evidences a contract for the sale of real property
must contain a sufficient description of the property to be conveyed. Long
Trusts v. Griffin, 222 S.W.3d 412, 416 (Tex. 2006). The property description must
“furnish within itself or by reference to other identified writings then in existence,
the means or data by which the particular land to be conveyed may be identified
with specific certainty.” Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983).
The parties do not dispute that the receipt for the earnest money deposit is
the only relevant writing associated with the alleged transaction for the sale of the
Boysen Property. The information on the receipt is scant and does not identify the
type of transaction the receipt purports to memorialize. The only descriptive text
on the receipt reads: “ernest (sic) money Boysen.” This language fails to identify
the property to be conveyed and makes no reference to other writings that may
contain a sufficient description of the property.
We conclude that the only writing associated with the alleged sale of the
Boysen Property to BLM does not satisfy the statute of frauds. See Fears v. Tex.
Bank, 247 S.W.3d 729, 736–37 (Tex. App.—Texarkana 2008, pet. denied)
(holding contract for sale of land invalid under statute of frauds due to insufficient
property description). For the alleged oral contract for sale of the Boysen Property
to BLM to be valid and enforceable, it must fall within an exception to the statute
of frauds. See Gaubert, 286 S.W.3d at 555. BLM had the burden to adduce
evidence that raised a genuine issue of material fact as to any exceptions or
defenses to the statute of frauds. See “Moore” Burger, Inc. v. Phillips Petroleum
Co., 492 S.W.2d 934, 937 (Tex. 1972).
BLM first raises the equitable doctrine of partial performance as an
exception to the statute of frauds. Under the partial performance exception,
contracts that do not satisfy the statute of frauds but have been partially performed
may be enforced in equity if the denial of enforcement would amount to a virtual
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fraud. Chambers v. Pruitt, 241 S.W.3d 679, 687 (Tex. App.—Dallas 2007, no
pet.). When the oral agreement relates to the sale of real property, courts utilize a
three-prong test to determine whether to remove the agreement from the statute of
frauds. See Boyert v. Tauber, 834 S.W.2d 60, 63 (Tex. 1992). The three-prong
test requires (1) the payment of the consideration; (2) the surrender of possession;
and (3) the making of valuable and permanent improvements on the land with the
owner’s consent or, without such improvements, the existence of other facts
demonstrating that non-enforcement of the agreement would defraud the
purchaser. Id.
BLM paid the $1,000 earnest money price but did not pay the alleged
agreed-upon price of $30,000 for the sale of the Boysen Property. There is no
evidence that BLM ever took possession of the Boysen Property or made any
improvements upon the property, and BLM has not provided evidence to show it
would be the victim of fraud if the agreement were not enforced. We hold that the
doctrine of partial performance fails to remove the alleged oral agreement from the
requirements of the statute of frauds.
BLM also raises the doctrine of promissory estoppel as an applicable
exception to the statute of frauds. The elements of promissory estoppel are as
follows: (1) a promise; (2) foreseeability of reliance thereon by the promisor; and
(3) substantial reliance by the promisee to his detriment. English v. Fischer, 660
S.W.2d 521, 524 (Tex. 1983); Barnett v. Legacy Bank of Tex., No. 11-02-00114-
CV, 2003 WL 22358578, at *6 (Tex. App.—Eastland Oct. 16, 2003, pet. denied)
(mem. op.).
To invoke the doctrine as an exception to the statute of frauds, BLM must
have presented evidence of an oral promise to sign an existing written contract that
satisfies the statute of frauds. Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982);
Providence Land Servs., LLC v. Jones, 353 S.W.3d 538, 542 (Tex. App.—Eastland
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2011, no pet.). A mere promise to prepare a written contract is insufficient. 1001
McKinney Ltd. v. Credit Suisse First Boston Mortg. Capital, 192 S.W.3d 20, 29
(Tex. App.—Houston [14th Dist.] 2005, pet. denied).
The summary judgment evidence indicated that John informed Ruth that
John’s local attorney, Haynes, would prepare the contract for the sale of the
Boysen Property. After BLM delivered the earnest money, the Haynes Law Firm
confirmed it would prepare the contract. However, BLM never produced any
summary judgment evidence that indicated that a contract was ever completed or
that a writing satisfying the statute of frauds had been prepared when John
promised to sell the Boysen Property to BLM.
The summary judgment evidence showed that John and his attorney merely
promised to prepare a written contract, which is insufficient to invoke the doctrine
of promissory estoppel as an exception to the statute of frauds. BLM’s promissory
estoppel argument fails. Because BLM failed to raise a genuine issue of material
fact as to any exceptions to the statute of frauds, we hold that the alleged oral
contract for the sale of the Boysen Property was invalid and unenforceable under
the statute of frauds. Having concluded that the statute of frauds bars any oral
contract for the sale of the Boysen Property, we now address how this conclusion
affects the propriety of summary judgment on each of BLM’s claims.
B. BLM’s Claims Against the Boysens
1. Breach of Contract
BLM challenges, in its first issue, the trial court’s grant of summary
judgment on its claim for breach of contract. To prevail on a breach of contract
claim, a plaintiff must prove (1) the existence of a valid contract, (2) performance
or tendered performance by the plaintiff, (3) defendant’s breach of contract, and
(4) damages because of the breach. Better Bus. Bureau of Metro. Dallas, Inc. v.
BH DFW, Inc., 402 S.W.3d 299, 310 (Tex. App.—Dallas 2013, pet. denied). As
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we have previously concluded, there was no valid contract between BLM and the
Boysens because the alleged oral agreement was barred by the statute of frauds.
BLM has therefore failed to establish a genuine issue of material fact as to an
essential element of its claim for breach of contract; the trial court properly granted
summary judgment in favor of the Boysens. We overrule BLM’s first issue.
2. Conversion
BLM contends, in its second issue, that there was sufficient evidence to
create a genuine issue of material fact as to its claim of conversion against the
Boysens regarding the earnest money. BLM claims summary judgment was
improper because BLM indisputably paid the earnest money, and the Boysens
offered no evidence to establish as a matter of law that conversion of the earnest
money did not occur. We agree.
Conversion is the wrongful exercise of dominion and control over another’s
property in denial of or inconsistent with the property owner’s rights. Bandy v.
First State Bank, Overton, Tex., 835 S.W.2d 609, 622 (Tex. 1992); Paschal v.
Great W. Drilling, Ltd., 215 S.W.3d 437, 456 (Tex. App.—Eastland 2006, pet.
denied). A claim of conversion is not based in contract, and the statute of frauds is
inapplicable as a defense thereto. The Boysens never addressed BLM’s conversion
claim in their motion for summary judgment.
Given that the Boysens’ motion for summary judgment did not address
BLM’s claim for conversion, that the Boysens relied solely on their contention that
the oral contract for the sale of the Boysen Property was unenforceable under the
statute of frauds, and that the Boysens attached no summary judgment evidence
relating to BLM’s claim for conversion of the earnest money, the Boysens failed to
show that no genuine issue of material fact existed as to an element of BLM’s
claim of conversion. The trial court erred when it entered summary judgment
against BLM on the conversion claim. We sustain BLM’s second issue.
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3. Fraud
BLM challenges, in its third issue, the trial court’s grant of summary
judgment with respect to the claim of statutory fraud. Although BLM has labeled
its claim as “statutory fraud,” BLM has not identified the statute it relied upon for
its claim of fraud. BLM’s brief on appeal cites In re First Merit Bank, N.A., 52
S.W.3d 749, 758 (Tex. 2001), for the elements of fraud, but that case concerns a
cause of action for common-law fraud rather than statutory fraud. See In re
Guardianship of Patlan, 350 S.W.3d 189, 198 (Tex. App.—San Antonio 2011, no
pet.). In light of our duty to construe the parties’ briefs liberally, we will address
each cause of action. See TEX. R. APP. P. 38.9.
Section 27.01(a) of the Texas Business and Commerce Code creates a
statutory cause of action for fraud in a real estate transaction. See BUS. & COM.
§ 27.01(a). The actionable fraud statute is applicable only when a conveyance of
the property has been made or, in the very least, when there is a valid real estate
contract. See Tukua Invs., LLC v. Spenst, 413 S.W.3d 786, 796–97 (Tex. App.—El
Paso 2013, pet. filed). The Boysen Property was never conveyed to BLM, and we
have previously held that a valid and enforceable contract for the sale of the
Boysen Property to BLM did not exist given that the alleged oral agreement failed
to satisfy the statute of frauds. Because there was no conveyance and no valid
contract for the sale of the Boysen Property, BLM has no cause of action for
statutory fraud under Section 27.01.
We now turn to BLM’s claim of common-law fraud against the Boysens.
The applicability of the statute of frauds on a claim of common-law fraud depends
on the nature of damages requested by the plaintiff. See Baylor Univ. v.
Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007); ISG State Operations, Inc. v. Nat’l
Heritage Ins. Co., 234 S.W.3d 711, 718 (Tex. App.—Eastland 2007, pet. denied).
When the application of the statute of frauds invalidates an oral contract, a
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common-law fraud claim based on the same facts also fails. See Sonnichsen, 221
S.W.3d at 636. Where a plaintiff seeks to recover what it would have had if the
promise had been performed, the gravamen of his cause of action is the breach of
an unenforceable promise. See id.; Haase, 62 S.W.3d at 799.
BLM sought to enforce the alleged oral promise by specific performance,
i.e., the conveyance of the Boysen Property. Specific performance was the benefit
of BLM’s bargain, and its bargain was barred by the statute of frauds. We hold
that BLM has no viable cause of action for common-law fraud to the extent its
claim requests specific performance. But to the extent that BLM seeks out-of-
pocket damages incurred in relying upon the Boysens’ alleged fraudulent conduct
and is not merely attempting to enforce an otherwise unenforceable contract,
BLM’s common-law fraud claim may not contravene the statute of frauds. See
Sonnichsen, 221 S.W.3d at 636. In addition to specific performance, BLM sought
“actual damages, in excess of the minimum jurisdictional limits of the Court but
not to exceed $250,000 jointly and severally, against [the Boysens] for their
conduct” (emphasis added).
These kinds of damages are not part of the benefit of any alleged bargain
between BLM and the Boysens. Further, the Boysens addressed none of BLM’s
claims for damages in their motion for summary judgment; the Boysens’ motion
for summary judgment was limited to whether the alleged oral contract was barred
under the statute of frauds. Consequently, BLM’s common-law fraud claim should
have survived the Boysens’ motion for summary judgment to the extent that BLM
seeks to recover these kinds of out-of-pocket damages. We sustain BLM’s third
issue in part.
4. Negligent Misrepresentation
BLM contends, in its fourth issue, that, if the Boysens’ conduct does not
amount to intentional fraud, there was at least sufficient evidence to raise a genuine
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issue of material fact as to whether the Boysens were negligent in their
representations made to BLM. Like BLM’s claim of common-law fraud, the
propriety of summary judgment on BLM’s claim of negligent misrepresentation
turns on the nature of damages requested. A claim of negligent misrepresentation
may not be used to circumvent the statute of frauds. See Fed. Land Bank Ass’n of
Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991); Collins v. Allied Pharmacy
Mgmt., Inc., 871 S.W.2d 929, 936 (Tex. App.—Houston [14th Dist.] 1994, no
writ).
When a party claims negligent misrepresentation with respect to an alleged
promise to sell real estate and the alleged promise is unenforceable under the
statute of frauds, the party may not recover the benefit of the bargain because such
a remedy frustrates the purpose of the statute of frauds. See Lam v. Phuong
Nguyen, 335 S.W.3d 786, 791–92 (Tex. App.—Dallas 2011, pet. denied); Collins,
871 S.W.2d at 936. Because we have previously held that the alleged oral contract
for the sale of the Boysen Property is unenforceable under the statute of frauds,
summary judgment was properly granted against BLM on its claim of negligent
misrepresentation to the extent it seeks specific performance of the alleged oral
contract.
But a statute of frauds defense does not summarily defeat a claim of
negligent misrepresentation if the plaintiff is seeking damages other than those
related to the benefit of the unenforceable promise. See Lam, 335 S.W.3d at 790.
As we have previously stated, in addition to specific performance, BLM sought
monetary damages as compensation for the Boysens’ conduct. Applying the same
reasoning we relied upon for BLM’s claim of common-law fraud, we hold that
summary judgment was improper as to BLM’s claim of negligent
misrepresentation to the extent that BLM seeks out-of-pocket damages. We
therefore sustain BLM’s fourth issue in part.
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C. BLM’s Claim Against Mid-Tex
We now address BLM’s final issue, which concerns its claim against Mid-
Tex for tortious interference with a contract. Although in its issues-presented
section of its brief BLM refers to the trial court’s ruling on this claim, there is no
reference to it otherwise in the brief. We determine that BLM has waived the
issue. See TEX. R. APP. P. 38.1(i); see also Fredonia State Bank v. Gen. Am. Life
Ins. Co., 881 S.W.2d 279, 284–85 (Tex. 1994). BLM’s fifth issue is overruled.
V. Conclusion
We hold that summary judgment was properly granted in favor of the
Boysens on BLM’s breach of contract claim because the statute of frauds bars the
enforcement of the alleged oral contract between BLM and the Boysens for the
sale of the Boysen Property. Likewise, we hold that summary judgment was
properly granted in favor of the Boysens on BLM’s statutory fraud claim and, to
the extent BLM seeks benefit-of-the-bargain damages, on its claims of common-
law fraud and negligent misrepresentation.
We also hold that, to the extent BLM seeks out-of-pocket damages for its
claims of common-law fraud and negligent misrepresentation, the trial court erred
when it granted summary judgment in favor of the Boysens. We hold that the trial
court also erred when it granted summary judgment against BLM on its claim of
conversion because the Boysens failed to negate an essential element of the claim.
Finally, we hold that BLM’s issue with respect to tortious interference with a
contract against Mid-Tex has been waived.
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VI. This Court’s Ruling
The judgment of the trial court is affirmed in part and reversed in part. We
remand the cause to the trial court for further proceedings in accordance with this
opinion.
MIKE WILLSON
JUSTICE
March 31, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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