SG/IP Ltd. v. Centers

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT December 17, 2004
_____________________
Charles R. Fulbruge III
No. 04-10504 Clerk
_____________________
SG/IP LTD, a Texas Limited Partnership,
Plaintiff - Counter Defendant - Appellee,
versus
WILLIAM L. CENTERS,
Defendant - Counter Claimant - Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
District Court Cause No. 3:99-CV-556-L
_________________________________________________________________
Before GARWOOD, JONES and PRADO, Circuit Judges.
PER CURIAM.*
This appeal involves the interpretation of the terms of an
option agreement between the appellant, William L. Centers
(Centers), and the appellee, SG/IP Ltd (SG/IP). In the
agreement, SG/IP gave Centers the option to acquire a 50%
interest in an apartment complex that Centers’s wholly-owned
company, Centennial Mortgage, owned. The option agreement
conditioned purchase of the option interest on the sale of the
apartment complex to SG/SC Ltd (SG/SC) who is not a party to the
*
Pursuant to 5TH CIRCUIT RULE 47.5, this court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
1
litigation.
The agreement provided that Centers’s purchase of the option
interest would occur on the date of SG/SC’s purchase and
acquisition of the apartment complex (the closing). The
agreement further provided that SG/IP would convey the option
interest simultaneously with SG/SC’s acquisition of the property.
The agreement required Centers to tender a certified check for
the purchase price of the option interest to SG/IP at the closing
for SG/SC’s purchase of the apartments. Neither Centennial
Mortgage nor Centers attended the closing, and the property
closed in escrow.
After the closing, a dispute arose between SG/SC and
Centennial Mortgage about ownership of the apartment complex.
Ultimately, a Florida state court resolved the dispute by
entering a judgment holding that SG/SC became the sole owner of
the apartments on the closing date. Centers then asked SG/IP to
send him the documents to close on the option agreement.
SG/IP responded that Centers no longer had a right to
purchase the option interest because the option agreement had
terminated. SG/IP then sought declaratory judgment in Texas
state court that Centers had no right to acquire an interest in
the property. Centers removed the lawsuit to federal court and
filed counterclaims for breach of contract and specific
performance.
After considering the parties’ cross-motions for summary
2
judgment, the district court determined that SG/IP was entitled
to summary judgment on Centers’s counterclaims and declared that
Centers had no right to the option. Centers challenges those
determinations in this appeal.
Centers first argues that the district court erred by
determining that SG/IP did not breach the option agreement. To
prevail on his counterclaim for breach of contract, Centers had
to prove that he performed or tendered performance under the
option agreement.1 Centers, however, cannot prove that he
performed under the option agreement because the option agreement
required him to perform at the closing. Centers failed to attend
the closing and failed to tender a check for the purchase of the
option interest. Although Centers maintains that his obligations
under the option agreement did not begin until SG/SC actually
acquired the property, nothing in the option agreement suggests
that Centers was not obligated to perform at the closing.
Regardless of when SG/SC obtained the deed memorializing its
title to the apartment complex, the option agreement required
Centers to perform at the closing.2 Because the summary judgment
1
See Sullivan v. Smith, 110 S.W.3d 545, 546 (Tex.
App.—Beaumont 2003, no pet.) (“The elements of a cause of action
for breach of contract are: 1) the existence of a valid contract;
2) that the plaintiff performed or tendered performance; 3) that
the defendant breached the contract; and 4) that the plaintiff
was damaged as a result of the breach.”).
2
Moreover, it is clear that Centers, through Centennial
Mortgage, his wholly-owned company of which he was CEO, without
legal justification, wrongfully caused SG/SC not to receive the
3
evidence indicates that Centers did not perform under the option
agreement, the district court correctly determined that SG/IP was
entitled to summary judgment on Centers’s counterclaim for breach
of contract.
Centers next argues that the district court erred by
determining that he was not entitled to specific performance of
the option agreement. To be entitled to specific performance,
Centers had to prove that he complied with his obligations under
the option agreement.3 Centers, however, did not perform his
obligations because he did not attend the closing and he did not
tender a check for the purchase of the option interest. Despite
Centers’s efforts to distinguish the opinion on which the
district court relied,4 Texas law clearly indicates that only a
party who has performed his obligations under an agreement is
deed to the property until after the closing date.
3
Graves v. Alders, 132 S.W.3d 12, 18 (Tex. App.—Beaumont
2004, pet. denied) (explaining that party seeking specific
performance of a real estate contract must prove that he has
diligently and timely performed all contractual obligations);
Scott v. Vandor, 671 S.W.2d 79, 84 (Tex. App.—Houston [1st Dist.]
1984, writ ref’d n.r.e.) (determining that a plaintiff is not
entitled to specific performance where the plaintiff commits a
material breach of the contract); Advance Components, Inc. v.
Goodstein, 608 S.W.2d 737, 739 (Tex. Civ. App.—Dallas 1980, writ
ref’d n.r.e.) (stating that a party seeking specific performance
must show that he has taken all proper steps towards
performance).
4
The district court relied upon Ferguson v. von Seggern, 434
S.W.2d 380 (Tex. Civ. App.—Dallas 1968, writ ref’d n.r.e).
4
entitled to specific performance.5 The district court did not
err by entering summary judgment in favor of SG/IP on Centers’s
counterclaim for specific performance.
Finally, Centers complains that the district court erred by
declaring that he was no longer entitled to an option interest.
To show that the district court erred, Centers had to prove that
he performed his obligations under the agreement by the date
specified in the option agreement.6 The agreement gave Centers
until November 4, 1996 to exercise his option. Although Centers
notified SG/IP that he intended to exercise his option on October
14, 1996, he did not attend the closing and he did not tender a
check for the option interest. By failing to perform his
obligations under the option agreement, Centers lost his right to
acquire an interest under the option agreement. Consequently,
the district court did not err by declaring that Centers had no
right under the option agreement.
Because the district court correctly decided the issues
raised in this appeal, this court AFFIRMS the district court’s
judgment.
AFFIRMED.
5
See Goodstein, 608 S.W.2d at 739.
6
See Ferguson, 434 S.W.2d at 386 (determining that where
parties to an option agreement specify when performance must
occur, a party loses his right under the agreement if he fails to
perform by the specified date).
5