Mike S. Khader v. Mohamed Aziz Momin ( 1999 )

Mike S. Khader v. Mohamed Aziz Momin

  IN THE

TENTH COURT OF APPEALS

No. 10-98-186-CV

     MIKE S. KHADER,

                                                                              Appellant

     v.

     MOHAMED AZIZ MOMIN,

                                                                              Appellee

From the 37th District Court

Bexar County, Texas

Trial Court # 96-CI-12429

O P I N I O N

      Mohamed Momin sued Mike Khader for breach of a lease agreement. After a bench trial, the court rendered judgment for Momin and awarded damages of $27,259.65. Khader’s sole point of error is the trial court erred in calculating damages. We modify the judgment of the trial court and affirm, as modified.

FACTUAL BACKGROUND

      In 1998, Mohamed Momin agreed to lease from Mike Khader a convenience store located at 3107 M. L. King Drive, San Antonio, Texas. Khader agreed to protect Momin’s use and enjoyment of the lease premises and to pay all real estate taxes levied against the property in consideration for monthly rent of $1,750. Momin also had a right to purchase the property for $174,000, with a possible credit of $10,000 for rents paid during the first 10 months of the lease. Khader failed to pay $27,259.65 in property taxes. Khader also failed to make payments on a mortgage of $136,000 due to the Small Business Finance Corporation, which caused the property to be sold at a foreclosure sale. Momin purchased the property at the sale for $150,500, but was required to pay $27,259.65 in back taxes, which effectively raised the total purchase cost to $177,759.65. The trial court found Khader breached the lease and awarded damages of $27,259.65.

ANALYSIS

      Khader’s sole point of error asserts the trial court incorrectly calculated the damages. Khader maintains the damages should have been $3,759.65 using the “benefit of the bargain” rule. He arrives at this amount by subtracting $174,000, the purchase price under the lease, from $177,759.65, the amount paid to buy the property out of foreclosure and to pay back taxes. Momin asserts he was damaged $27,259.65 when he paid the back taxes that were Khader’s responsibility under the contract.

      Whether the trial judge applied the proper measure of damages is a question of law. Johnson v. Willis, 596 S.W.2d 256 (Tex. Civ. App.—Waco 1980, writ ref’d n.r.e.). When a vendor is unable to convey title through no fault of his own, the buyer’s damages are limited to a return of the purchase price plus interest and expenses. Ryan Mortgage Investors v. Fleming-Wood, 650 S.W.2d 928, 935 (Tex. App.—Fort Worth 1983, writ ref’d n.r.e.). But when the vendor is guilty of fraud, or has otherwise disabled himself from performing his contractual obligations, the buyer is entitled to recover for the loss of his bargain. Matthewson v. Fluhman, 41 S.W.2d 204, 207 (Tex. Comm’n App. 1931). Momin contracted to purchase the property for $174,000. Khader’s failure to make mortgage payments resulted in foreclosure, thus preventing Khader from conveying title. Momin is therefore entitled to recover for the loss of his bargain. See Matthewson, 41 S.W.2d at 207. Momin and his brother eventually obtained the property at the foreclosure sale for $150,500 plus $27,259.65 in back taxes, totaling $177,759.65. Although Momin had to satisfy the tax debt to purchase the property, that amount is considered part of the purchase price in determining whether Momin received the benefit of his bargain. Because Momin eventually procured the property for $3,759.65 more than he agreed to pay under the contract, his damages are $3,759.65.

      The trial court’s judgment is modified to allow Momin to recover from Khader $3,759.65 plus interest at the rate of 10% per annum from February 9, 1998.

      Appellee Momin also asserts by cross-point that appellant failed to plead the affirmative defense of accord and satisfaction and that appellant’s allegation is based on discharge of a smaller amount. We do not understand appellant to be asserting a defense of accord and satisfaction; rather, he asserts the trial court erred in applying the wrong measure of damages. Momin’s cross-point is overruled.

      The judgment of the trial court is affirmed as modified.

                                                                         ROBERT M. CAMPBELL

                                                                         Justice (Sitting by Assignment)

Before Justice Vance,

      Justice Gray and

      Justice Campbell (Sitting by Assignment)

      (Justice Gray dissenting)

Affirmed as modified

Opinion delivered and filed June 9, 1999

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