Tim P. Dittman and Debbie L. Dittman v. Anthony A. Cerone and Ootzie Properties - Hou, LLC Formerly Named Ootzie of Texas, Llc ( 2013 )

NUMBER 13-11-00196-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
TIM P. DITTMAN AND DEBBIE L. DITTMAN, Appellants,
v.
ANTHONY A. CERONE AND OOTZIE
PROPERTIES – HOU, LLC FORMERLY
NAMED OOTZIE OF TEXAS, LLC, Appellees.
On appeal from the 80th District Court
of Harris County, Texas.
MEMORANDUM OPINION ON REHEARING
Before Justices Rodriguez, Garza and Benavides
Memorandum Opinion On Rehearing by Justice Benavides
We grant the appellants’ motion for rehearing, withdraw our opinion and judgment
dated March 7, 2013, and issue this memorandum opinion on rehearing.
This case involves an option contract for the sale of property in Harris County.
Appellants Tim and Debbie L. Dittman contend the trial court erred when it ordered that
the Dittmans sell one of their properties to appellees Anthony Cerone and Ootzie
Properties—Hou, LLC, formerly named Ootzie of Texas, LLC. By eighteen issues, the
Dittmans argue that the trial court’s ruling violates basic tenets of contract law by
construing certain e-mail messages as one contract. They also contend the trial court’s
ruling violates the statute of frauds, the Texas Family Code, and the statute of
conveyances. Finally, the Dittmans argue that the trial court erred in finding fraud and
denying their affirmative defense. We affirm.
I. BACKGROUND
Tim and Debbie Dittman owned a piece of property totaling nearly 3.78 acres in
Seabrook, Harris County, Texas. This property contained horse stables and is referred
to by all parties as the “Stable Property.” The Dittmans also owned an approximately
seventeen-acre piece of land adjacent to the Stable Property. Immediately next to the
Dittmans’ seventeen-acre property existed another nearly seventeen-acre parcel owned
by Joe Baccus and Vicki Rihm.
In 2006, the Dittmans, Baccus, and Rihm decided to market their respective
seventeen-acre properties as a single parcel totaling approximately thirty-four acres.
This thirty-four acre property is referred to as the “Pasture Property.” The Dittmans,
Baccus, and Rihm listed the Pasture Property with real estate broker David Lee in July
2007. Lee was a real estate broker with Transwestern. Cerone, who lives in New
Jersey and works in Pennsylvania but owns a transportation company in Houston,
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Texas, contacted Lee regarding the Pasture Property. Cerone was looking for property
to expand his Houston company, Ootzie of Texas, LLC. Cerone and Lee exchanged
several e-mail messages and phone calls regarding the Pasture Property; in the midst of
these exchanges, Cerone learned about the Dittmans’ Stable Property, as well. Cerone
expressed interest in the Stable Property, even though it was not for sale.
Cerone visited the Pasture Property on October 11, 2007. The next day, Cerone
signed an earnest money contract to purchase the Pasture Property from the Dittmans,
Baccus, and Rihm. The earnest money contract set forth, among other things, that
Cerone would: (1) pay $2.65 per square foot on the Pasture Property; (2) close within
60 days; and (3) pay $100,000 of non-refundable earnest money for the right to
terminate prior to the closing date. After signing the earnest money contract, Cerone
asked Lee about the Stable Property again. Lee responded by e-mail that the Dittmans
were not interested in selling the Stable Property at the time but could offer him a “right of
first refusal.” The parties, however, never signed a document granting Cerone a right of
first refusal.
One week later, Stewart Title Company issued a title showing several recorded oil
and gas leases on the Pasture Property. Cerone sought the advice of an oil and gas
attorney regarding these leases, and was informed that removing the oil and gas leases
would cost approximately $50,000 to $200,000 in payments to lease holders, not
including attorney’s fees. Cerone asked the Dittmans, Baccus, and Rihm to lower their
asking price to cover these costs. The sellers refused.
Later, the sellers agreed to lower the asking price of $2.65 per square foot to
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$2.50 per square foot on the Pasture Property, if Cerone agreed to close on the Pasture
Property within thirty days instead of sixty. Cerone continued to ask for concessions
because of the possible expense to handle the oil and gas leases, and he asked for an
option contract to buy the Stable Property. The following e-mails were exchanged:
E-mail # 1:
From: David Lee
Sent: Tuesday, October 30, 2007 4:32 PM
To: Anthony Cerone
Subject: Stable Property
Importance: High
Anthony, I was able to confirm with Tim and Debbie Dittman that they will
agree to a 2 year option at $2.75 s.f. on the 3.78 acre tract. As-is. This
is subject to you closing on the 35 acre tract tomorrow.
In addition, he is prepared to lease the 35 acre tract for that same period
for $300 per month plus he will carry necessary insurance.
Anthony, in my professional opinion, the Dittmans just put over $200,000
on the table that is available to you today should you decide to flip the
property. They perceive this to be a big concession.
Tim and Debbie were planning to list the property with me and I was
attaching a $5.00 s.f. asking price hoping to achieve $4.00 s.f.
David
E-mail # 2:
From: David Lee
Sent: Wednesday, October 31, 2007 9:56 AM
To: Anthony Cerone
Subject: Bayport Property
Good Morning Anthony:
Contrary to your instructions to Stewart Title Company to revise the
paperwork to reflect a $125,000 price reduction (which had not even been
presented to the sellers for consideration), throughout the late afternoon
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and early evening my client’s [sic] debated and considered the totality of
the deal on the table. They have decided they will not revise the price
from the agreed $2.50 s.f. number.
Each of them will be traveling to the title company later this morning to sign
necessary documentation for the closing to take place today. Cynthia
Haggard can e-mail you documentation for your signature today.
Sufficient funds will need to be wired today.
We can work immediately thereafter to prepare the necessary material to
reflect the agreement reached in principal [sic] yesterday concerning the 2
year option on the 3.7 +/- acre stable property at $2.75 s.f. plus the 2 year
lease on the 34.59 acre property at $300 per month, including necessary
insurance protection.
If the closing does not take place today then the original contract remains
in effect should you choose to keep it in effect.
It would be helpful to have an understanding as to your intentions today.
One or more of the sellers will be leaving town tomorrow and won’t be
available for the next week.
Sincerely,
David
E-mail # 3:
From: 1shasta2 [Debbie Dittman]
Sent: Wednesday, October 31, 2007 2:35 PM
To: David Lee
Subject: Seabrook
Hi David,
Tim and I wanted to let you know that we are working on getting the
following agreements ready for Mr. Cerone’s review.
The first will be the Lease Agreement for the 34.59 acres. The term is to
be a twenty-four (24) month period at the rate of $300.00 per month.
The second will be the twenty-four (24) month option to purchase the 3.78
acre tract of ours in Seabrook at $2.75 p.s.f.
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We will keep you posted on the progress of both items and please pass
along to Mr. Cerone that we wish to get these executed as soon as
possible.
Thanks,
Debbie
Cerone accepted the Dittmans’ offer of a two-year option to purchase the Stable
Property for $2.75 per square foot and agreed not to terminate the Pasture Property
contract. He closed on the Pasture Property on October 31, 2007, and wired the
appropriate funds that same day.
At or near the same time as the closing, the City of Seabrook (where both the
Pasture Property and Stable Property were located) and the Port of Houston Authority
settled a long-standing lawsuit. It was commonly believed that this settlement would
have a positive effect on the value of commercial properties in the Bayport Terminal
Area.
In November 2007, Cerone attempted to exercise his option to purchase the
Stable Property. The Dittmans, through an attorney, informed Cerone that they never
gave him an option contract. Instead, they believed they had offered him a “right of first
refusal.” Consequently, Cerone sued the Dittmans for specific performance on the
option contract upon which he believed the parties had agreed. After a bench trial, the
trial court issued a detailed order with fifty-three findings of fact and seventeen
conclusions of law, ultimately concluding that the three e-mails constituted a valid option
contract and ordering the Dittmans to convey their Stable Property to Cerone and Ootzie
of Texas, LLC. This appeal ensued.
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II. APPLICABLE STANDARDS OF REVIEW
Appellants challenge several of the trial court’s findings of fact and conclusions of
law. Findings of fact in a nonjury trial have the same force and dignity as a jury's
verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). When a complete
reporter's record is filed, the trial court's fact findings may be reviewed for legal and
factual sufficiency under the same standards as jury verdicts. Ortiz v. Jones, 917
S.W.2d 770, 772 (Tex. 1996) (per curiam); Catalina, 881 S.W.2d at 297. We do not
substitute our judgment for that of the fact finder, even if we would have reached a
different conclusion when reviewing the evidence. FDIC v. F & A Equip. Leasing, 854
S.W.2d 681, 684 (Tex. App.—Dallas 1993, no writ).
In addressing a legal sufficiency challenge, we view the evidence in a light most
favorable to the finding, consider only the evidence and inferences that support the
finding, and disregard all evidence and inferences to the contrary. Catalina, 881
S.W.2d at 297; City of Keller v. Wilson, 86 S.W.3d 693, 710 (Tex. 2002). We uphold the
finding if more than a scintilla of evidence exists to support it. City of Keller, 86 S.W.3d
at 710. In reviewing a factual sufficiency challenge, we examine all of the evidence and
set aside a finding only if the evidence is so weak or the finding so against the great
weight and preponderance of the evidence that it is clearly wrong and unjust. Cain v.
Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam).
We review a trial court's challenged conclusions of law as legal questions. BMC
Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Accordingly, we
apply a de novo standard. In re Humphreys, 880 S.W.2d 402, 404 (Tex. 1994). An
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appellant may not challenge a trial court's conclusions of law for factual sufficiency.
BMC Software, 83 S.W.3d at 794. However, we determine the correctness of the trial
court's legal conclusions drawn from the facts. Id. If we determine that a conclusion of
law is not correct, but the trial court rendered the proper judgment, the incorrect
conclusion of law does not require reversal. Id. In other words, in reviewing
challenges to a trial court's conclusions of law, we sustain the judgment on any legal
theory supported by the evidence. In re A.M., 101 S.W.3d 480, 484 (Tex.
App.—Corpus Christi 2002, no pet.).
III. CONSTRUING THE E-MAIL MESSAGES AS ONE CONTRACT
In issues one, two, and five, the Dittmans argue that the e-mails should not be
construed together to create an option contract. The Dittmans cite Halper v. University
of the Incarnate Word for the proposition that unsigned papers may be incorporated by
reference into another document only when they plainly refer to each other. 90 S.W.3d
842, 845 (Tex. App.—San Antonio 2002, no pet.) (citing Owen v. Hendricks, 433 S.W.2d
164, 166 (Tex. 1968); Castroville Airport, Inc. v. City of Castroville, 974 S.W.2d 207, 211
(Tex. App.—San Antonio 1998, no pet.)). Because none of the e-mails “plainly” refer to
each other, the Dittmans aver that they cannot be construed together as one contract.
See Owen, 433 S.W.2d at 166.
Texas law, however, allows us to construe these e-mail messages together to
comprise one instrument. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22
S.W.3d 831, 840 (Tex. 2000) (finding that "a court may determine, as a matter of law,
that multiple documents comprise a written contract”). “It is well-established law that
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instruments pertaining to the same transaction may be read together to ascertain the
parties' intent." City of Houston v. Williams, 353 S.W.3d 128, 137 (Tex. 2011) (citing
Fort Worth Indep. Sch. Dist., 22 S.W.3d at 840) (internal quotations omitted). “This rule
is echoed in statute of frauds jurisprudence: in order to satisfy a statute of frauds,
multiple documents can be read together.” Id. at 137 n.9 (citing the RESTATEMENT
(SECOND) OF CONTRACTS § 132). “The multiple documents need not contain all of the
terms; instead, only the essential terms are required.” Id. at 137.
The essential terms of the option contract are found by analyzing the three
e-mails together. The Dittmans offered to provide a two-year option to Cerone to
purchase their Stable Property. The price of their offer was $2.75 per square foot of
their 3.78 acre parcel of property. The consideration for this option contract was that
Cerone had to close on the Pasture Property by October 31, 2007, and not terminate the
Pasture Property deal. Based on the foregoing, we hold that the essential terms of the
option contract were evident. See Advantage Physical Therapy, Inc. v. Cruse, 165
S.W.3d 21, 24 (Tex. App.—Houston [14th Dist.] 2005, no pet.) (setting forth the basic
elements of a contract). We conclude that the trial court did not err when it construed
the three e-mails together to comprise the option contract, and we overrule issues one,
two, and five.
IV. STATUTE OF FRAUDS
A. Applicable Law
By issues three, four, six, and seven, the Dittmans contend that the three e-mails,
interpreted together as an option contract, did not satisfy the statute of frauds. See TEX.
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BUS. & COM. CODE ANN. § 26.01(b)(4) (West 2009). The statute of frauds requires that
all contracts for the sale of real estate be in writing and signed by the person to be
charged. Id.; see also TEX. PROP. CODE ANN. § 5.021 (West 2004) (setting forth that the
conveyance of land must be in writing and "subscribed and delivered by the conveyor").
The Dittmans argue that the e-mails did not meet the statute of frauds because: they
used “futuristic language”; they did not identify the property with reasonable certainty;
they were signed with electronic signatures; and Lee did not have authority to bind the
Dittmans to an option contract.
B. Discussion
1. “Futuristic” Language
In their third issue, the Dittmans argue that the option contract was “futuristic” and
thus unenforceable. “Under Texas law, a writing that contemplates a contract or
promise to be made in the future does not satisfy the requirements of the statute of
frauds.” Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 778 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied) (citing Martco, Inc. v. Doran Chevrolet, Inc.,
632 S.W.2d 927, 928–29 (Tex. App.—Dallas 1982, no writ)). Writings that contain
"futuristic" language are insufficient to confirm that a contract or promise is already in
existence. Id. (citing Martco, 632 S.W.2d at 928). The Dittmans state that the
language in e-mail number 3, for example, “refers solely to the creation of a future
contract for Mr. Cerone’s review.” E-mail number 3 also states that the Dittmans “will
keep [Cerone] posted on the progress” and that they wished to get the contract for the
Pasture Property and the alleged option contract “executed as soon as possible.”
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Assuming arguendo that some of these statements could be considered
“futuristic,” we note that an agreement to make a future contract is enforceable “if it is
specific as to all essential terms, and no terms of the proposed agreement may be left to
future negotiations.” Fort Worth Indep. Sch. Dist., 22 S.W.3d at 146. Here, as we held
in section III of our opinion, the three e-mails construed together revealed all of the
essential terms of the option contract. See id. We overrule this issue.
2. The Sufficiency of the Property Description
In their fourth issue, the Dittmans argue the trial court erred in concluding that the
three e-mails satisfied the statute of frauds because they failed to identify the Stable
Property with reasonable certainty. The statute of frauds requires that the writing
furnish the data to identify the property with reasonable certainty. Tex. Builders v.
Keller, 928 S.W.2d 479, 481 (Tex. 1996) (citing Morrow v. Shotwell, 477 S.W.2d 538,
539 (Tex. 1972)). In Morrow, the Texas Supreme Court set forth the applicable test for
sufficiency of property description:
The rule by which to test the sufficiency of the description is so well settled
at this point in our judicial history, and by such a long series of decisions by
this court, as almost to compel repetition by rote: To be sufficient, the
writing must furnish within itself, or by reference to some other existing
writing, the means or data by which the land to be conveyed may be
identified with reasonable certainty.
Morrow, 477 S.W.2d at 539.
While the sufficiency of the writing under the statute of frauds is a question of law,
"[i]f enough appears in the description so that a person familiar with the area can locate
the premises with reasonable certainty, it is sufficient to satisfy the statute of frauds."
Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 237 (Tex. App.—Dallas 2004, pet. denied)
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(citing Gates v. Asher, 154 Tex. 538, 280 S.W.2d 247, 248–49 (1955)). To determine
the sufficiency of the description, the trial court may consider evidence to determine
whether "a person familiar with the area can locate the premises with reasonable
certainty." Id. Parol evidence may be used to explain or clarify the written agreement,
but not to supply the essential terms. Tex. Builders, 928 S.W.2d at 481. A
description's validity under the statute is not affected by the knowledge or intent of the
parties. See Morrow, 477 S.W.2d at 540.
A writing need not contain a metes and bounds property description to be
enforceable, but it must furnish the data to identify the property with reasonable certainty.
Tex. Builders, 928 S.W.2d at 481 (citing Morrow, 477 S.W.2d at 539). "The legal
description in the conveyance must not only furnish enough information to locate the
general area as in identifying it by tract survey and county, it need contain information
regarding the size, shape, and boundaries." Reiland v. Patrick Thomas Props., Inc.,
213 S.W.3d 431, 437 (Tex. App.—Houston [1st Dist.] 2006, pet. denied).
The Dittmans argue that there is no metes and bounds description for the Stable
Property, nor is there any mention of the county or state in which the Stable Property is
located. The trial court, however, in its conclusions of law, held that the terms “stable
property,” “3.78 Acre tract,” and the “3.78 acre tract of ours in Seabrook” used in the
three e-mails were sufficient to identify the land to be conveyed with reasonable
certainty. We agree.
Like the trial court, we find the Texas Supreme Court’s opinion in Pickett v. Bishop
dispositive of this question. 223 S.W.2d 222, 223 (Tex. 1949). In Pickett, Bishop, the
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owner of the land in question, described the land he wanted to sell as “my property
described on the opposite side hereof.” Id. On the reverse side of this writing was the
description, “20.709 acres out of John Stephens 60 acres survey in Tarrant County,
Texas.” Id. The Texas Supreme Court held that “the words ‘my property’ in the body
of the instrument are not to be ignored.” Id. The supreme court went on to elaborate:
The settled rule in this state is that such a description, by reason of the use
in the memorandum or contract of such words as “my property”, my land,
or “owned by me”, is sufficient when it is shown by extrinsic evidence that
the party to be charged and who has signed the contract or memorandum
owns a tract of property and only one tract of land answering the
description in the memorandum. The stated ownership of the certain
property is in itself a matter of description which leads to the certain
identification of the property and brings the description within the terms of
the rule that “the writing must furnish within itself, or by reference to some
other existing writing, the means or data by which the particular land to be
conveyed may be identified with reasonable certainty.
Id. (internal citations omitted) (emphasis in original).
Here, the trial court found that the Dittmans only owned three pieces of real
property—their residential home, the Pasture Property, and the Stable Property. The
court’s finding of fact number 29 set forth that, “Debbie Dittman testified that the Stable
Property was the only piece of real property in the world owned by her and Tim Dittman
that was 3.78 acres in size.” Accordingly, we find that the description of the Stable
Property in the three e-mails satisfied the statute of frauds. Although the description
contained neither metes and bounds information, nor the county and state where the
property was located, see Morrow, 477 S.W.2d at 539, the e-mails provided the means
by which the Stable Property could be identified. See Pickett, 223 S.W.2d at 223.
Extrinsic evidence, such as Debbie Dittman’s testimony, allowed the Stable Property to
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be identified with reasonable certainty. Id. We overrule the Dittmans’ fourth issue.
3. Use of Electronic Signature
By their sixth issue, the Dittmans contend that the e-mails do not satisfy the
statute of frauds because the parties did not agree to conduct transactions by electronic
means. Under Texas law, “whether the parties agree to conduct a transaction by
electronic means is determined from the context and surrounding circumstances,
including the parties’ conduct.” TEX. BUS. & COM. CODE ANN. § 322.005(b) (West 2011).
The Dittmans argue that all of the e-mails were signed with electronic signatures only,
and this was never contemplated by the parties. The first two e-mails were signed by
“David”, or David Lee, the Dittmans’ real estate agent, and the last e-mail was signed by
“Debbie.”
We disagree with the Dittmans’ assessment that the parties did not intend to
conduct some of their transactions electronically. The trial court’s findings of facts are
replete with instances where the parties exchanged communications regarding offers
and counteroffers about the Stable Property via e-mail messages. The following
findings of fact demonstrate this conduct:
14. On October 30, 2007, David Lee sent an e-mail to Anthony Cerone
(Plaintiff’s Exhibit 6, page 2) with the Dittmans’ offer. The Dittmans
both testified that they had offered David Lee to send that e-mail.
Debbie Dittman testified that that e-mail was copied to them
contemporaneously, that they saw it the afternoon or early evening of
October 30, 2007, that the statements in the first paragraph were
accurate, and that neither she nor Tim Dittman communicated either
to David Lee or to Anthony Cerone that anything in that e-mail was
incorrect or that David Lee had not been authorized to send it.
15. Within a few minutes after receipt of David Lee’s e-mail, Anthony
Cerone responded by a reply e-mail (Plaintiff’s Exhibit 6, Page 1). In
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that e-mail, Anthony Cerone stated that he accepted the Dittmans’
offer of a two year option to purchase the Stable Property for $2.75
per square foot to waive his right to terminate the Contract and close
the next day. . . .
We hold that the evidence is legally sufficient to support a finding that the parties
intended to conduct certain business electronically. See City of Keller, 86 W.3d at 710.
We further hold that the evidence to support this finding is not so weak so as to go
against the great weight and preponderance of the evidence or to be clearly wrong and
unjust. See Cain, 709 S.W.2d at 176. We overrule the Dittmans’ sixth issue.
4. Lee’s Authority to Act for the Dittmans
The Dittmans’ seventh issue challenges Lee’s authority to bind the Dittmans to an
option contract. This issue is yet another factual question upon which the trial court
issued findings of fact. See Catalina, 881 S.W.2d at 297. The trial court made the
following findings of fact: that “Tim Dittman instructed David Lee to tell Anthony Cerone
that they would give him a two year option contract to purchase the Stable Property”
(finding of fact 14); that the “Dittmans both testified that they had authorized David Lee to
send” the October 30, 2007 e-mail regarding the option contract (finding of fact 15); and
that Lee’s e-mail to Cerone regarding the option contract “was sent with their knowledge
and consent, and that after they received a copy, they did not communicate either to
David Lee or to Anthony Cerone that anything contained in that e-mail was incorrect or
that David Lee was not authorized to send it” (finding of fact 19).
Considering only the evidence and inferences that support this finding and
disregarding all the evidence and inferences to the contrary, we hold that these findings
are supported by legally sufficient evidence. See City of Keller, 86 S.W.3d at 710. We
15
further conclude these findings are not against the great weight and preponderance of
the evidence, nor are they clearly wrong and unjust. See Cain, 709 S.W.2d at 176.
We overrule the Dittmans’ seventh issue.
V. CONTRACT LAW
A. Applicable Law
The Dittmans, in issues nine through fourteen and seventeen, challenge several
of the trial court’s findings of fact and conclusions of law concerning contract law. We
determine the correctness of the trial court's legal conclusions—in this case, whether a
proper option contract existed—from the findings of fact. See BMC Software, 83
S.W.3d at 794. The elements of an enforceable contract are: (1) an offer; (2)
acceptance that mirrors the terms of the offer; (3) consideration; (4) meeting of the
minds; (5) communication that each party has consented to the terms of the agreement;
and (6) execution or delivery of the contract with the intent that it be mutually binding.
Advantage Physical Therapy, Inc., 165 S.W.3d at 24.
B. Discussion
1. Offer, Acceptance, and Consideration
In issues nine through thirteen, the Dittmans contest that the “alleged option
contract” set forth a sufficient offer, acceptance, and consideration. The trial court, in its
extensive findings of fact and conclusions of law, documented that all of these elements
had been found in its consideration of the evidence and the law:
3. The surrender by Anthony Cerone of his right to terminate the [Pasture
Property] Contract in exchange for an option to purchase the Stable
Property constituted sufficient and valid consideration for the option.
....
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7. Anthony Cerone’s October 30, 2007 e-mail (page 1 of Plaintiff’s Exhibit
6) did not constitute a rejection of the offer contained in David Lee’s
e-mail (page 2 of Plaintiff’s Exhibit 6). Even if Anthony Cerone’s
e-mail were to be considered a rejection of the offer of an option, the
option was offered again and accepted again the next day, October 31,
2007.
8. The three October 30 and 31, 2007 e-mails (page 2 of the Plaintiff’s
Exhibit 6, Plaintiff’s Exhibit 7 and Plaintiff’s Exhibit 8) contained every
term material to an enforceable option and every term required to be in
writing.
Viewing the trial court’s findings in a light favorable to the conclusion that an
enforceable contract existed, we hold that this finding is supported by legally sufficient
evidence. See City of Keller, 86 S.W.3d at 710. We further conclude that the finding
that a valid option contract existed was not against the great weight and preponderance
of the evidence or clearly wrong and unjust. Cain, 709 S.W.2d at 176. We overrule
the Dittmans’ ninth, tenth, eleventh, twelfth, and thirteenth issues.
2. Meeting of the Minds
In their fourteenth issue, the Dittmans challenge whether there was a “meeting of
the minds” because the Dittmans thought they were offering a right of first refusal, as
opposed to an option contract. “A right of first refusal, also known as a preemptive or
preferential right, empowers its holder with a preferential right to purchase the subject
property on the same terms offered by or to a bona fide purchaser.” Tenneco, Inc. v.
Enterprise Prods. Co., 925 S.W.2d 640, 644 (Tex. 1996). An option contract, on the
other hand, is a “privilege or right which the owner of property gives another to buy
certain property at a fixed price within a certain time.” State v. Clevenger, 384 S.W.2d
207, 210 (Tex. Civ. App.—Houston 1964, writ ref’d n.r.e.).
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“Whether the parties reached an agreement is a question of fact.” Beal Bank,
S.S.B. v. Schleider, 124 S.W.3d 640, 653 n.8 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied). Here, the trial court made the following factual findings:
39. The term “option” as used in David Lee’s October 30, 2007 e-mail to
Anthony Cerone (Plaintiff’s Exhibit 6, page 2), David Lee’s October
31, 2007 e-mail to Anthony Cerone (Plaintiff’s Exhibit 7) and Debbie
Dittman’s October 31, 2007 e-mail to David Lee (Plaintiff’s Exhibit 8)
is not ambiguous and is susceptible to only one reasonable meaning.
40. The Dittmans knew, by no later than the end of the day on October
30, 2007, that by giving Anthony Cerone an option, they were giving
him the right to buy the Stable Property for $2.75 a square foot at any
time within two years.
There was also evidence in the trial record that Baccus had explained what an
option contract was to Tim Dittman during these e-mail negotiations. Further, the trial
court made the following conclusions of law on this issue:
4. The term “option” as used in David Lee’s e-mails to Anthony Cerone
and Debbie Dittmans’s e-mail to David Lee to be passed on to Anthony
Cerone is not ambiguous.
5. The determination of the meeting of the minds, and thus offer an[d]
acceptance, is based on the objective standard of what the party said
and did and not on their subjective state of mind. Since there is no
dispute that the word “option” was used, the Dittmans’ construction of
the meaning of that term is immaterial. There was a meeting of the
minds—the Dittmans agreed that Anthony Cerone or his assignee had
the right, for a period of two years, to buy the Stable Property for $2.75
per square foot.
Viewing the trial court’s findings that the term “option” was not ambiguous and that
the Dittmans understood what the term meant in a light favorable to the verdict, we hold
that these findings are supported by legally sufficient evidence. See City of Keller, 86
S.W.3d at 710. We further conclude that the evidence to support these findings is not
18
against the great weight and preponderance of the evidence or clearly wrong and unjust.
See Cain, 709 S.W.2d at 176. We overrule the appellants’ fourteenth issue.
3. “Not Brought Under or With Relation To” Language
In issue seventeen, the Dittmans argue the trial court erred in holding that the
lawsuit over the option contract was “not brought under or with relation to” the earnest
money contract on the Pasture Property. This was a conclusion of law made by the
trial court. In reviewing challenges to a trial court's conclusions of law, we sustain the
judgment on any legal theory supported by the evidence. In re A.M., 101 S.W.3d at
484. Because this conclusion is amply supported by the trial court’s findings of fact on
the evidence, we overrule issue seventeen.
VI. THE STATUTE OF CONVEYANCES AND TEXAS FAMILY CODE
In their eighth issue, the Dittmans aver that the alleged option contract violates the
statute of conveyances and section 3.102 of the Texas Family Code. See TEX. PROP.
CODE ANN. § 5.021 (West 2011) (providing that any conveyance of real property must be
in writing and delivered by the conveyor or by the conveyor’s agent authorized in writing);
TEX. FAM. CODE ANN. § 3.102 (West 2011) (prohibiting the conveyance of title to
community property unless it is signed to or agreed by both spouses).
With regard to the statute of conveyances, as we held earlier, the trial court did
not err when it construed the three e-mails together to comprise the option contract.
Because the option contract is in writing, the statute of conveyances is met. See TEX.
PROP. CODE ANN. § 5.021. Further, and as previously observed, an option contract
“gives another [the option] to buy certain property at a fixed price within a certain time.”
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Clevenger, 384 S.W.2d at 210. “The owner does not sell the property, but sells the
privilege to buy at the option of the other person . . . . It conveys no title to the thing sold.”
Knox v. Brown, 277 S.W. 91, 94 (Tex. Comm’n App. 1925, judgm’t adopted).
Consequently, as the trial court correctly noted in its conclusions of law, an option
contract conveys no title. See Gasperson v. Madill Nat’l Bank, 455 S.W.2d 381, 391
(Tex. Civ. App.—Fort Worth 1970, writ ref’d n.r.e.) (holding that the statute of
conveyances does “not even enter into the picture” with an option contract).
Because we conclude that no conveyance occurred, Texas Family Code section
3.102, which deals with the conveyance of title of community property, is not triggered.
See TEX. FAM. CODE ANN. § 3.102. However, even if this statute was implicated, there
is no evidence in the record to show that it was violated. Section 3.102 provides that
“community property is subject to the joint management, control, and disposition of the
spouses unless the spouses provide otherwise by power of attorney in writing or other
agreement.” Id. The Dittmans argue that Debbie had no right to convey or encumber
the community property at issue without a written power of attorney from her husband
Tim. See id. It is uncontested that there was no written power of attorney between the
Dittmans. However, the trial court made several findings of fact that there was some
“other agreement” between Debbie and Tim Dittman. See id. Here is one such
finding:
36. Debbie Dittman’s October 31, 2007 e-mail to David Lee, Plaintiff’s
Exhibit 8, was sent with the prior knowledge, consent and authorization of
Tim Dittman, was sent with the intent that it be forwarded or others provide
to Anthony Cerone, was intended by Tim Dittman to be from him as well as
from Debbie Dittman, and was sent by the Dittmans to induce Anthony
Cerone to waive his right to terminate the Contract and consummate the
20
purchase of the 34.59 Acre Tract with the outstanding oil, gas, and mineral
leases.”
The Dittmans cited Alamo Country Club Owners Association v. Shelton, No.
13-10-00300-CV, 2012 WL 3792753, at **23–24 (Tex. App.—Corpus Christi Aug. 31,
2012, no pet.) (mem. op.), and Vallone v. Miller, 663 S.W.2d 97, 99 (Tex. App.—Houston
[1st Dist.] 1983, writ ref’d n.r.e.), for the proposition that one spouse cannot encumber
another’s property without agreement. In Alamo Country Club, a husband conveyed a
warranty deed to a home on a golf course without his wife’s signature. See Alamo
Country Club, 2012 WL 3292753, at *24. Similarly, Vallone dealt with a husband who
attempted to transfer property without his wife’s signature. Vallone, 663 S.W.2d at 99.
However, those cases are distinguishable from this case because in both cases, there
was no evidence to show that that the wives knew what was occurring with regard to the
conveyance of the community property. Here, the trial court made specific findings of
fact that both Tim and Debbie Dittman had an “agreement” to bind each other’s interests
regarding the sale of the Pasture Property. See generally Muller v. Evans, 516 S.W.2d
923, 923–24 (Tex. 1974) (noting that section 3.102 was amended in 1973 to no longer
require that spousal agreements regarding the disposition of property had to be in
writing).
We overrule this eighth issue.
VII. FRAUD
In issues fifteen and sixteen, the Dittmans argue the trial court erred when it
determined that the Dittmans committed fraud. A fraud cause of action requires a
material misrepresentation, which was false, which was either known to be false when
21
made or was asserted without knowledge of its truth, which was intended to be acted
upon, which was relied upon, and which caused injury. Formosa Plastics Corp. USA v.
Presidio Eng’rs and Contractors, Inc., 960 S.W.2d 41, 47–48 (Tex. 1998).
The trial court found that despite numerous e-mail messages from the Dittmans
and their authorized agent Lee offering a two-year option contract for the Stable Property
to Cerone in exchange for closing on the Pasture Property sooner, “on November 15,
2007, the Dittmans’ attorney e-mailed Anthony Cerone’s attorney and advised him that
the Dittmans denied having given Anthony Cerone an option to purchase the Stable
Property.” The trial court also found that, after considering testimonial and
documentary evidence, both Anthony Cerone’s and David Lee’s testimonies were
“consistent, credible and persuasive,” while “the Dittmans’ testimony was at times
inconsistent and in conflict with their actions and the other evidence.” Critically, the
trial court also made the following finding of fact on the fraud issue:
41. When the Dittmans told David Lee to tell Anthony Cerone that they
would give him a two year option to purchase the Stable Property for
$2.75 a square foot if he would close and consummate the purchase of
the 34.59 Acre Tract on October 31, 2007, they had no intention of
fulfilling that agreement. (Emphasis added).
Here, considering only the evidence and inferences that support this finding of
fraud and disregarding all the evidence and inferences to the contrary, we hold that this
finding is supported by legally sufficient evidence. See City of Keller, 86 S.W.3d at 710.
Further, we conclude that the fraud finding is not against the great weight and
preponderance of the evidence or clearly wrong and unjust. See Cain, 709 S.W.2d at
176. We overrule the Dittmans’ fifteenth and sixteenth issues.
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VIII. AFFIRMATIVE DEFENSE
By their eighteenth issue, the Dittmans contend the trial court erred in ignoring
their affirmative defense based on the Texas Occupations Code, which provides that
clients cannot be held liable for any damages caused by the misrepresentation or
concealment of material facts by their real estate broker. See TEX. OCC. CODE ANN.
1101.805 (West 2004). The Dittmans argue that “Lee as the real estate license holder[]
made misrepresentations to the Dittmans” and “knew or had reason to know that the
Dittmans did not understand the difference between an option and a right of first refusal.”
Here again, we rely on the trial court’s findings of fact:
31. David Lee’s testimony was consistent, credible and persuasive.
32. The Dittmans’ testimony was at times inconsistent and in conflict with
their actions and the other evidence.
....
39. The term “option” as used in David Lee’s October 30, 2007 e-mail to
Anthony Cerone (Plaintiff’s Exhibit 6, page 2), David Lee’s October
31, 2007 e-mail to Anthony Cerone (Plaintiff’s Exhibit 7) and Debbie
Dittman’s October 31, 2007 e-mail to David Lee (Plaintiff’s Exhibit 8)
is not ambiguous and is susceptible to only one reasonable meaning.
40. The Dittmans knew, by no later than the end of the day on October
30, 2007, that by giving Anthony Cerone an option, they were giving
him the right to buy the Stable Property for $2.75 a square foot at any
time within two years.
....
44. Neither David Lee nor Transwestern had any knowledge[,] notice[,] or
reason to suspect that Tim Dittman or Debbie Dittman believed an
option was the same as, or a variation of, a right of first refusal, or
understood it to mean anything other than the right to buy property at
a fixed price within a certain time.
23
Considering only the evidence and inferences that support these factual findings,
we hold that they are supported by legally sufficient evidence. See City of Keller, 86
S.W.3d at 710. Further, we conclude that the evidence to support these findings is not
so weak so as to go against the great weight and preponderance of the evidence or to be
clearly wrong and unjust. See Cain, 709 S.W.2d at 176. We overrule the Dittmans’
eighteenth issue.
IX. CONCLUSION
Having overruled all of appellants’ issues on appeal, we affirm the trial court
judgment.
__________________________
GINA M. BENAVIDES,
Justice
Delivered and filed the
31st day of October, 2013.
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