Carlos M. Reyes and Molly J. Reyes, Trustees And the Carlos M. and Molly J. Reyes Trust v. Simple Capital, LLC ( 2024 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-23-00218-CV
Carlos M. Reyes and Molly J. Reyes, Trustees; and The Carlos M. and Molly J. Reyes
Trust, Appellants
v.
Simple Capital, LLC, Appellee
FROM THE 421ST DISTRICT COURT OF CALDWELL COUNTY
NO. 22-0-026, THE HONORABLE CHRIS SCHNEIDER, JUDGE PRESIDING
MEMORANDUM OPINION
This appeal arises from a suit to enforce a contract for the sale of an apartment
complex. Carlos M. Reyes and Molly J. Reyes, as trustees of the Carlos M. and Molly J. Reyes
Trust and the Trust itself (collectively, “Trust”), appeal from the district court’s grant of
summary judgment in favor of Simple Capital, LLC. We affirm.
BACKGROUND
On October 21, 2021, Simple Capital entered a contract with the Trust to purchase
an apartment complex in Luling for $1,050,000. The Contract contained a provision that
allowed Simple Capital to terminate the contract for any reason within sixty days of the
agreement’s effective date. 1 The closing date for the sale was January 21, 2022.
1 Simple Capital paid an additional $1,000 in exchange for this option.
Simple Capital used the sixty-day feasibility period to investigate the complex
and its management operations. On December 7, 2021, Simple Capital emailed Carlos Reyes
that its investigation revealed significant issues with the property, including a recent murder, a
“tremendous amount of drug and other criminal activity” on the property, exterior stairs and
walkways “near collapse” from rotting support beams, “countless plumbing and electrical
problems,” and the property manager’s inability to provide accurate records for more than five or
six tenants. 2
In the final section of the email, Simple Capital proposed reducing the purchase
price to $650,000 in return for Simple Capital foregoing the remainder of the feasibility period
and agreeing to assume liability for any “potential or pending lawsuits” against the Trust related
to the Trust’s ownership of the property. Attached to the email was a proposed amendment on
the Texas Association of Relators’ form entitled “Amendment to Contract” reflecting the
proposed amendments.
Carlos Reyes testified by deposition that he understood the email to be a proposed
amendment to the Contract and that he rejected it. On December 20, 2021—the last day of the
feasibility period—Simple Capital emailed another amendment form to the Trust, proposing to
reduce the price to $800,000 in exchange for the same terms. The Trust also rejected
that proposal.
By letter dated December 29, 2021, Simple Capital informed the Trust that it
intended to close on the sale according to the terms of the original Contract. Simple Capital
2 Simple Capital attached the email and all materials we discuss in the remainder of
this section to its motion for summary judgment or to its response to appellants’ motion for
summary judgment.
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arrived at the title company’s office on the day of the closing and tendered a cashier’s check for
the full sales price. No representative of the Trust appeared, and the closing did not proceed.
Simple Capital sued the Trust for breach of contract and sought specific
performance and attorney’s fees. Simple Capital filed a traditional motion for summary
judgment and attached, among other items, an affidavit from its representative that handled the
purchase, the Contract, the December 7, 2021 letter, the two amendment forms, and various
documents executed by Simple Capital on the closing date. The Trust filed a cross-motion
arguing there was no enforceable contract because the December 7, 2021 email from Simple
Capital terminated the Contract. The Trust attached Carlos’s declaration, the Contract, and the
December 7, 2021 email from Simple Capital.
The district court signed orders granting Simple Capital’s motion and ordering the
Trust to close the sale and denying the Trust’s motion. Following a bench trial on attorneys’
fees, the district court signed a final judgment incorporating its summary-judgment orders and
awarding Simple Capital $125,000 in attorneys’ fees. This appeal ensued.
DISCUSSION
Appellants argue in one issue that the district court erred by granting Simple
Capital’s motion for summary judgment because the Contract is not enforceable.
Standard of Review
“We review summary judgments de novo, viewing the evidence in the light most
favorable to the non-movant, crediting evidence favorable to the non-movant if reasonable jurors
could, and disregarding contrary evidence unless reasonable jurors could not.” Zive v. Sandberg,
644 S.W.3d 169, 173 (Tex. 2022). To prevail on a motion for traditional summary judgment, the
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movant must show that “there is no genuine issue as to any material fact” and that it is “entitled
to judgment as a matter of law.” Tex. R. Civ. P. 166a(c). When both parties move for summary
judgment on the same issue and the trial court grants one motion and denies the other, “we
review both sides’ summary judgment evidence and render the judgment the trial court should
have rendered.” Rosetta Res. Operating, LP v. Martin, 645 S.W.3d 212, 218 (Tex. 2022) (citing
Southern Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676, 678 (Tex. 2013)).
A genuine issue of material fact exists if the conflict “rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions.” First United
Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (citing Merrell
Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). Evidence does not create an
issue of material fact if it is “so weak as to do no more than create a mere surmise or suspicion”
that the fact exists. Id. (citing Kia Motors Corp. v. Ruiz, 432 S.W.3d 865, 875 (Tex. 2014)).
Analysis
The Trust argues in its sole issue that the district court erred because there is at
least an issue of fact on whether the Trust breached the contract. The elements of a breach-of-
contract claim are “(1) the existence of a valid contract; (2) the plaintiff performed or tendered
performance as the contract required; (3) the defendant breached the contract by failing to
perform or tender performance as the contract required; and (4) the plaintiff sustained damages
as a result of the breach.” USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 502 n.21 (Tex.
2018). The Trust argues that there is a fact issue on the first element.
A valid contract requires that “(1) an offer was made”; (2) “the other party
accepted in strict compliance with the terms of the offer”; (3) “the parties had a meeting of the
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minds on the essential terms of the contract”; (4) “each party consented to those terms”; and
(5) “the parties executed and delivered the contract with the intent that it be mutual and binding.”
Scientific Mach. & Welding, Inc. v. FlashParking, Inc., 641 S.W.3d 454, 462 n.6 (Tex. App.—
Austin 2021, pet. denied) (citing Menchaca, 545 S.W.3d at 502 n.21). The Trust argues that the
Contract was valid until Simple Capital “nullified that Contract when it sent two subsequent
counteroffers,” i.e. the communications of December 7 and December 20, 2021. Simple Capital
responds that proposing to modify a contract does not terminate it.
We agree with Simple Capital. The Trust relies on the rule that “[a]n acceptance
must not change the terms of an offer; if it does, the offer is rejected.” Coleman v. Reich,
417 S.W.3d 488, 491 (Tex. App.—Houston [14th Dist.] 2013, no pet.). In such a situation, the
purported acceptance “constitutes a counteroffer, which must be accepted by the other party for
there to be a valid contract.” Id. A counteroffer is different from proposing modification of an
existing valid contract. To be valid, a modification “must include a meeting of the minds
supported by consideration.” Blackstone Med., Inc. v. Phoenix Surgicals, L.L.C., 470 S.W.3d 636,
647 (Tex. App.—Dallas 2015, no pet.). If accepted, a modification “to a contract creates a new
contract that includes the new modified provisions and the unchanged old provisions.” Id.While a modified contract “constitutes a new agreement that takes the place of the original,”
Miller v. McCarty, 323 S.W.3d 612, 615 (Tex. App.—Texarkana 2010, no pet.), merely
proposing a modification does not necessarily terminate the existing agreement, see generally
Blackstone Med., 470 S.W.3d at 647; Miller, 323 S.W.3d at 615. The Trust characterizes the
December 7, 2021 email as a “counteroffer” that “terminated” the Trust’s “purported ability to
accept the original Contract” but also says the parties had “a signed and fully executed Contract”
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on October 21, 2021. The December 7, 2021 and December 20, 2021 emails were proposed
modifications, not counteroffers, and neither one terminated the Contract.
The Trust also argues that Simple Capital repudiated the contract. 3 “Repudiation
or anticipatory breach is an unconditional refusal to perform the contract in the future, which can
be expressed either before performance is due or after partial performance.” Scientific Mach. &
Welding, 641 S.W.3d at 462. “A party repudiates a contract if the party manifests, by words or
actions, a definite and unconditional intention not to perform the contract according to its terms.”
West Loop Hosp., LLC v. Houston Galleria Lodging Assocs., 649 S.W.3d 461, 492 (Tex. App.—
Houston [1st Dist.] 2022, pet. denied). The Trust argues that Simple Capital repudiated the
Contract because it was “emphatic” in the December 7, 2021 email that “the property was
riddled with criminal activity,” the local police department recommended evicting the majority
of the tenants, there were no more than “5 to 6 good tenants who are paying that have accurate
paperwork,” the property needed significantly more maintenance than anticipated, and there are
“some serious liability issues.” The Trust argues that these statements “could be reasonably
inferred to mean that Simple Capital was not willing to proceed under the original Contract
terms.” But Simple Capital notes in the email that it is operating within the existing option
3 Simple Capital argues that we may not consider this argument on appeal because the
Trust failed to raise it in the summary-judgment motion. See Wells Fargo Bank, N.A. v. Murphy,
458 S.W.3d 912, 916 (Tex. 2015) (“[I]n the summary judgment context, ‘[i]ssues not expressly
presented to the trial court by written motion, answer or other response shall not be considered
on appeal as grounds for reversal.’” (quoting Tex. R. Civ. P. 166a(c)). Although the Trust did
not use the words “anticipatory breach” or “repudiation,” the Trust asserted in its motion for
summary judgment that Simple Capital communicated that it would not move forward unless the
Trust agreed to the proposed changes. We conclude this was sufficient to preserve the Trust’s
repudiation argument. See Li v. Pemberton Park Cmty. Ass’n, 631 S.W.3d 701, 704 (Tex. 2021)
(“This Court has ‘often held that a party sufficiently preserves an issue for review by arguing the
issue’s substance, even if the party does not call the issue by name.’” (quoting St. John
Missionary Baptist Church v. Flakes, 595 S.W.3d 211, 214 (Tex. 2020))).
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period—thereby acknowledging the existence of a valid contact—and states that it will respect
the Trust’s decision on the proposed amendments “either way.” Nothing in the December 7, 2021
email, the accompanying amendment form, or the amendment form sent on December 20, 2021,
raises even a surmise or suspicion that Simple Capital repudiated the Contract.
We conclude the district court did not err in granting Simple Capital’s motion for
summary judgment and denying the Trust’s motion, and we overrule the Trust’s sole issue.
CONCLUSION
We affirm the district court’s judgment.
__________________________________________
Rosa Lopez Theofanis, Justice
Before Chief Justice Byrne, Justices Kelly and Theofanis
Affirmed
Filed: April 4, 2024
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