Carpenter (Texas) Realty Corp. v. Allen Center Co. 4 , 1998 Tex. App. LEXIS 3509 ( 1998 )

OPINION

EDELMAN, Justice.

Carpenter (Texas) Realty Corporation (“Carpenter”) appeals a judgment entered in favor of Allen Center Co. # 4, Metropolitan Life Insurance Company, and Metropolitan Tower Realty Company, Inc. (collectively “MetLife”) on the grounds that: (1) the trial court erred by permitting MetLife to elicit parol testimony concerning the intent of an unambiguous agreement; and (2) the jury’s verdict was against the great weight and preponderance of the evidence. We affirm.

Background

In 1986, Enron entered into a lease with MetLife (the “MetLife lease”) for office space in Four Allen Center, a building Met-Life owned in downtown Houston. The lease contained a twenty-year base term and six five-year renewal options. MetLife and Carpenter also entered into a commission agreement (the “commission agreement”) whereby Carpenter would be paid a commission on the aggregate rentals over the twenty year base term of the MetLife lease and for each renewal, extension, or expansion of it. In the event of a sale of Four Allen Center, MetLife would remain liable to Carpenter for future commissions unless MetLife arranged for the buyer to assume payment of those commissions.

Enron eventually occupied the entire Four Allen Center and agreed to buy it from Met-Life. However, to achieve “off balance sheet” financing, Enron structured the transaction so that a consortium of banks paid for the building, a trustee held title to it, and Enron leased the building from the trustee. In simultaneous transactions on September 27, 1991, the sale was closed for $281.5 million, Enron and MetLife terminated the Met-Life lease, and Enron entered into a three-year lease with the trustee.

MetLife agreed to pay Carpenter $5.75 million for the remaining commission on the base term of the MetLife Lease. However, Carpenter claimed that it was also entitled to commissions on rents for renewal periods, the value of which were reflected in the sale price of the building. MetLife neither paid nor arranged for anyone to assume liability of those commissions.

In 1992, Carpenter sued MetLife and Enron for breach of the commission agreement and tortious interference, respectively, asserting that they had arranged the sale of Four Allen Center as a sham to deprive Carpenter of commissions for future renewals or extensions. MetLife and Enron moved for and were granted summary judgment on Carpenter’s claims.

On appeal, this court affirmed the judgment in favor of Enron on the affirmative defense of justification¹ but reversed and remanded the judgment for MetLife holding that: (a) a broker is entitled to his commission notwithstanding the failure of a condition precedent if the lessor gets the benefit of the tenant’s obligation to pay rent or if the lessor is responsible for the failure of the condition;² (b) MetLife’s termination of the MetLife lease made the condition precedent of an exercise of the renewal options impossible; and (c) a fact issue remained whether MetLife received a benefit from the projected occupancy of Enron beyond the base term of the lease such that some of the renewal options in the MetLife lease had been constructively exercised. See Carpenter (Texas) Realty Corp. v. Metropolitan Life Ins. Co., No. 14-92-01287-CV, 1993 WL 312079, at *3 (Tex.App.—Houston [14 th Dist.], August 19, 1993, writ denied).

At trial on remand, the following liability question was submitted to the jury:

Did MetLife receive a present benefit from Enron’s projected occupancy of Four Allen Center beyond the base term of the MetLife/Enron Lease in the form of an elevated sales price for Four Allen Center?

You are instructed that the termination of the Lease did not extinguish Carpenter’s rights under the Commission Agreement.

You are instructed that there need not be an actual exercise of lease renewal options by Enron in order to find that Met-Life failed to comply with the Commission Agreement. Rather, if MetLife received a benefit in the form of an elevated sales price for the projected occupancy of Enron beyond the base term of the Lease, the law will deem the renewal options constructively exercised. The fact that the benefit MetLife received was in the form of an elevated sales price rather than as payment of rent is not significant.

The jury answered “no” to this question, and a take nothing judgment was entered on Carpenter’s claims against MetLife.

Intent Evidence

Carpenter’s first point of error argues that the trial court erred in repeatedly permitting MetLife’s counsel, over objection, to elicit testimony concerning the intent of the commission agreement because that agreement was not ambiguous and had already been construed by this court.

The admission or exclusion of evidence is reviewed for abuse of discretion. See City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex.1995). No judgment may be reversed and remanded unless the error complained of was reasonably calculated to cause and probably did cause rendition of an improper judgment or prevented appellant from making a proper presentation of the case to the appellate court. See Tex. R. App. P. 81(b) (current version at Tex. R. App. P. 44.1).³ A successful challenge to an evidentiary ruling usually requires the appellant to show that the judgment turns on the particular evidence admitted or excluded. See City of Brownsville, 897 S.W.2d at 753-54.

When a written agreement is unambiguous, parol evidence is inadmissible to vary, add to, or contradict its terms. See Stauffer v. Henderson, 801 S.W.2d 858, 863 (Tex.1990); Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 31 (1958). Only after a contract is found to be ambiguous may parol evidence be admitted for the purpose of ascertaining the intentions of the parties expressed in the contract. See Friendswood Development Co. v. McDade + Co., 926 S.W.2d 280, 283 (Tex.1996).

In this case, during MetLife’s cross-examination of Mary Wyatt, a lead negotiator for Enron on the purchase of Four Allen Center, the following exchange occurred:

Q. Did you ever hear before this deal closed [that] Mr. Carpenter was claiming $9.8 million?

A. I did not know what the number was.

Q. When you started out at 270 and the price finally got to 280, that’s a ten-million-dollar difference, isn’t it?

A Yes.

Q. Did you in your wildest dreams think that Mr. Carpenter would want to get 98 percent of it as a commission?

MR. GIBBS: I’m going to object_ This Court has already made pretrial orders as to what the meaning of the contract is and that question is an attempt to vary the contract.

THE COURT: Objection will be overruled.

Q. Did you in your wildest dream think Mr. Carpenter thought as a leasing commission person who would get 2 percent of the rent that he would get 98 percent of the increased [sale] price?

A. No. Frankly, I wouldn’t have thought about it, period.

During MetLife’s questioning of George Carpenter about the commission agreement, the following exchange took place:

Q. Well, the thought didn’t occur to you to make a run on renewals when you sat down and talked to Mr. Schneider in March of ’91, and the reason is no one ever intended that you would get an advanced payment for renewal options just because the building sold, did they?

A. Mr. Joyce, I was looking to the commission agreement and for the parties to honor what was in the commission agreement.

Q. Yes, sir. And no one ever intended that you would get an answer [sic] advanced payment for renewal commissions ... when the building sold, did you?

A. I’m not sure what they knew because I was kept totally in the dark about the entire transaction

Q. I’m asking you about the intent in the commission agreement. No one ever intended—

MR. REYNOLDS: Objection, Your Hon- or. There’s no allegation that it’s — it’s ambiguous and it’s an attempt to modify or vary it by parol evidence.

MR. JOYCE: I’m asking about what this witness knew when the deal was going on and why he didn’t say anything, Your Hon- or.

MR. REYNOLDS: My objection is simply the Court has construed what rights exist in the event of a sale and this man’s testimony concerning this intent is therefore improper under the parol evidence rule.

MR. JOYCE: My response is this relates to what Miss Wyatt had in her mind when she first heard Mr. Carpenter was going to make a run on renewals.

THE COURT: Objection will be overruled.

Q. Mr. Carpenter, no one ever intended that this commission agreement would provide for advanced payment to you of renewal commissions just because the building sold, did they?

A. I believe the commission agreement speaks for itself. Whatever the commission agreement says is what I was expecting the parties to live up to.

sjt ‡

Q. Now, not even you intended that if Enron bought that building ... that that would automatically mean you’d get renewal option years paid in advance, did you?

A. I never even had that thought because I expected the parties who signed the agreement to live by the agreement.

Q. Yes, sir. But the agreement doesn’t provide that you automatically get triggered advance renewal commissions, does it, sir?

MR. REYNOLDS: Your Honor, I object. The Court has construed the agreement and testimony about this man’s understanding of it is just irrelevant and contemplated to slow this down.

THE COURT: It’s overruled.

Viewed in the light most favorable to Carpenter, the foregoing questioning can be interpreted as an attempt to portray his commission claim as an unreasonable and unintended windfall, inconsistent with this court’s opinion in Carpenter.⁴ However, even though the objections were overruled and the questions were allowed to be asked, the thrust of the witnesses’ answers was that Wyatt had not thought about the contention, and Carpenter countered it. Under these circumstances, Carpenter has not demonstrated that it was harmed by the complained of questions or answers. Therefore, we overrule Carpenter’s first point of error.

Factual Sufficiency

Carpenter’s second point of error claims that the jury’s negative answer to the liability question was against the overwhelming weight of the evidence, and the trial court therefore erred in overruling Carpenter’s motion for new trial. In reviewing factual sufficiency, we weigh all of the evidence in the record and overturn a finding only if it is so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996).

In this ease, Carpenter claims that it was undisputed that only a portion of the $281.5 million paid for Four Allen Center was attributable to the value of the base term of the MetLife lease and that MetLife expressly refused to sell the building until Enron agreed to pay a price that included a substantial premium for the renewal periods under that lease.⁵

However, the value of the building was independently appraised at $287 million by valuing the remaining base term of the Met-Life lease at $235 million and the “reversion” value of the building, vacant and available for lease at the end of the base term, at $52 million. In addition, the information memorandum prepared for Enron’s prospective lenders stated “The Purchase Price for the Property represents the $250.0 million present value of Enron’s current lease payments ... plus the present value of the residual value for the Property of $31.5 million.” Moreover, a June 26, 1991 letter from Carpenter to Enron states in part:

Per my conversations Tuesday afternoon with Brian Schneider of [MetLife], please find outlined below the economics, as [Met-Life] views them, regarding the prospective sale of The Enron Building.

[MetLife’s] Price $ 285 Million

Enron Lease Value $(239) Million

Value of Building* $ 46 Million

Value/1,250,000 RSF $ 36.80/RSF

Enron Corp.’s Price $ 275 Mihion

Enron Lease Value $(239) Million

Value of Building* $ 36 Million

Value/1,250,000 RSF $ 28.80/RSF

* Empty building with no income stream.

With respect to this June 26 letter, Wyatt testified on cross-examination:

Q. And it’s reported by Mr. Carpenter that [MetLife’s] view at the time was that residual value is based on an empty building with no income stream, right?

A. Right.

Q. In other words, Mr. Carpenter is telling his friend Mr. Barnhart, [MetLife] says the deal is worth this even if you assume Enron moves out and the building is empty in 2006?

A. That’s right.

Q. Meaning [that] Enron doesn’t exercise any renewal options?

A. That’s right.

The foregoing is evidence that the portion of the $281.5 million elevated sales price above the value of the base term of the MetLife lease was attributable to the value of the empty building at the end of the base term rather than to any projected revenues from renewals of the lease thereafter. Thus, it was evidence that MetLife received no benefit from the elevated sales price for the projected occupancy of Enron beyond the base term of the lease. In light of this evidence supporting the jury’s negative answer to the liability question, we are not persuaded that the jury’s verdict is so against the great weight of the evidence as to be manifestly wrong or unjust. Accordingly, we overrule Carpenter’s second point of error and affirm the judgment of the trial court.

1 . Carpenter did not appeal the affirmance of the judgment as to Enron.

2 . See Stitt v. Royal Park Fashions, Inc., 546 S.W.2d 924, 927 (Tex.Civ.App.—Dallas 1977, writ ref'd n.r.e.).

3 . Because this appeal was perfected before September 1, 1987, it is generally governed by the Texas Rules of Appellate Procedure in effect before that date.

4 . See Carpenter, 1993 WL 312079 at *4, 5 (holding that, because MetLife’s termination of the MetLife lease made actual exercise of the renewal options impossible, if MetLife derived a present benefit from the projected occupancy of Enron beyond the base period of the lease, then Carpenter would be entitled to the present value of its commissions on the constructive renewals or extensions).

5 . The arguments and evidence supporting this position are described further in the dissenting opinion.