839 E. 19th Street, L.P. v. Scott Friedson D/B/A National Income Property, LLC

Reversed and Rendered and Majority and Dissenting Opinions filed May 10, 2012.
In The
Fourteenth Court of Appeals
NO. 14-11-00349-CV
839 E. 19TH STREET, L.P., Appellant
V.
SCOTT FRIEDSON D/B/A NATIONAL INCOME PROPERTY, LLC, Appellee
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Cause No. 2007-74965
MAJORITY OPINION
Appellant, 839 E. 19th Street, L.P., appeals the trial court’s judgment in favor of
appellee, Scott Friedson d/b/a National Income Property, LLC, on Friedson’s claim for an
unpaid broker’s commission. We reverse and render judgment that Friedson take nothing
on his claims.
BACKGROUND
Scott Friedson, who is a licensed broker and was doing business as National
Property Income, LLC, entered into a listing agreement with Waloon Properties, the
owner of the Mesa Ridge apartment complex. The listing agreement ended on April 30,
2006, with a ―protection period‖ covering the ninety days after the ending date.
Nachman Borenstein of 839 E. 19th Street found the Mesa Ridge property in an internet
search, and contacted Friedson about the property. Friedson delivered a copy of a title
insurance policy, financial information, rent rolls, and other due diligence materials to
Borenstein. Friedson brokered an offer from 839 E. 19th Street dated April 7, 2006, to
purchase the property for $5,800,000. Waloon Properties rejected this offer.
After the primary term of the listing agreement with Waloon Properties expired,
Borenstein contacted Friedson. Friedson entered into a buyer representation agreement
with 839 E. 19th Street, covering only the Mesa Ridge property. The agreement provided
for a four percent commission to be paid by the buyer. The term of the buyer
representation agreement ran from May 9, 2006, through September 29, 2006, with a
―protection period‖ extending for 120 days after the termination of the agreement.
Friedson brokered a second offer from 839 E. 19th Street dated May 30, 2006, to
purchase the property for $6,250,000. This offer expired for lack of acceptance by
Waloon Properties. After the second offer expired, Waloon Properties told Friedson that
it had decided not to sell the property, but, instead, refinance it. Borenstein represented
to Friedson that he was no longer interested in purchasing the property or dealing with its
owner.
Friedson did not list the prospects to be protected under the buyer representation
agreement during the 120-day ―protection period.‖ 839 E. 19th Street placed the property
under contract with Waloon Properties on November 6, 2006, which was during the 120-
day ―protection period.‖ Waloon Properties sold the property to 839 E. 19th Street for
$6,350,000.00. The closing and transfer of the property occurred on January 29, 2007.
Friedson was not paid a commission on the transaction. Friedson affixed a lien to
the property to secure his commission and gave notice pursuant to section 62.024 of the
Texas Property Code. Friedson sued 839 E. 19th Street for breach of contract, equitable
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estoppel, tortious interference, and civil conspiracy.1 839 E. 19th Street asserted the
affirmative defense of failure to perform a condition precedent, and counterclaimed for
breach of fiduciary duty and fraud. After holding a bench trial, the trial court entered
findings of fact and conclusions of law on November 30, 2010, and entered a final
judgment on January 19, 2011, in favor of Friedson for breach of the buyer representation
agreement. The trial court awarded Friedson $254,000, which represents a four percent
commission on the $6,350,000 sales price.2 839 E. 19th Street filed a motion for new
trial, which was overruled by operation of law. This appeal followed.
ANALYSIS
Standard of Review
Findings of fact entered in a case tried to the court have the same force and dignity
as a jury’s verdict on jury questions. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.
1994). We apply the same standards in reviewing the legal and factual sufficiency of the
evidence supporting the trial court’s fact findings as we do when reviewing the legal and
factual sufficiency of the evidence supporting a jury’s answer to a jury question. Ortiz v.
Jones, 917 S.W.2d 770, 772 (Tex. 1996) (per curiam).3
In reviewing the legal sufficiency of the evidence, we view the evidence in the
light most favorable to the fact finding, crediting favorable evidence if reasonable
persons could, and disregarding contrary evidence unless reasonable persons could not.
City of Keller v. Wilson, 168 S.W.3d 802, 822, 827 (Tex. 2005). We may not sustain a
1
Friedson also sued Waloon Properties, Xin Ling Zhoa, William G. Wang, and Chauyen Chang
a/k/a Tony Chang, but nonsuited them on February 6, 2009.
2
Although Friedson also sued Borenstein and 839 East 19 Street G.P. Corp., the general partner
of 839 E. 19th Street, the trial court entered judgment against only 839 E. 19th Street.
3
Friedson claims that 839 E. 19th Street waived its issues on appeal by failing to present them to
the trial court. 839 E. 19th Street challenges the legal and factual sufficiency of the evidence supporting
the trial court’s judgment. In a nonjury trial, complaints regarding the legal and factual sufficiency of the
evidence can be raised for the first time on appeal. TEX. R. APP. P. 33.1(d).
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legal sufficiency, or ―no evidence‖ point unless the record demonstrates that: (1) there is
a complete absence of a vital fact; (2) the court is barred by the rules of law or of
evidence from giving weight to the only evidence offered to prove a vital fact; (3) the
evidence to prove a vital fact is no more than a scintilla; or (4) the evidence established
conclusively the opposite of the vital fact. Id. at 810.
To evaluate the factual sufficiency of the evidence, we consider all the evidence
and will set aside the finding only if the evidence supporting the finding is so weak or so
against the overwhelming weight of the evidence that the finding is clearly wrong and
unjust. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998); Cain v.
Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam).
We review the trial court’s conclusions of law de novo. Busch v. Hudson &
Keyse, LLC, 312 S.W.3d 294, 299 (Tex. App.—Houston [14th Dist.] 2010, no pet.). We
review conclusions of law to determine whether the conclusions drawn from the facts are
correct. Zagorski v. Zagorski, 116 S.W.3d 309, 314 (Tex. App.—Houston [14th Dist.]
2003, pet. denied) (op. on reh’g). Even if we determine that the trial court made an
erroneous conclusion of law, we will not reverse if the trial court rendered the proper
judgment. Busch, 312 S.W.3d at 299. We uphold conclusions of law if the judgment can
be sustained on any legal theory supported by the evidence. Id.
In its first and second issues, 839 E. 19th Street contends that the agreement
contained a written-notice condition precedent which Friedson failed to satisfy, and that
such failure was not excused. In its third and fourth issues, 839 E. 19th Street contends
that the trial court erred by applying the ―procuring cause‖ standard rather than the
contractual ―called attention to‖ standard, and determining that Friedson was entitled to
recover his broker’s fee though he did not show that he ―called to [839 E. 19th Street’s]
attention‖ the subject property.
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Whether the Protection Period Applies
Because we find 839 E. 19th Street’s fourth issue dispositive, we address it first.
Paragraph 11B of the buyer representation agreement between Friedson and 839 E. 19th
Street provides, in relevant part:
Protection Period: ―Protection Period‖ means that time starting the day
after this agreement ends and continuing for 120 days. Not later than 10
days after this agreement ends Broker may send Client written notice
identifying the properties in the market area called to Client’s attention
during this agreement. If during the protection period Client agrees to
acquire all or part of any such property, Client will pay Broker, upon
closing, an amount equal to the fees Broker would have been entitled to
receive had Client acquired the property during the term of this agreement.
This Paragraph 11B survives termination of this agreement.
839 E. 19th Street claims that Friedson was not entitled to recover his broker’s fee
because he did not show that he ―called to [839 E. 19th Street’s] attention‖ the subject
property. Our primary concern when we construe a written contract is to ascertain the
parties’ intent as expressed in the contract. In re Serv. Corp. Int’l, 355 S.W.3d 655, 661
(Tex. 2011) (per curiam) (orig. proceeding). We agree that the contractual protection
period does not apply to the Mesa Ridge property or this dispute. It is undisputed, and
the trial court specifically found, that the Mesa Ridge property is the property that the
parties made the subject of their agreement. It is further undisputed, and the trial court
specifically found, that Friedson brokered an offer from 839 E. 19th Street on the Mesa
Ridge property on April 7, 2006. The agreement period began May 9, 2006, and ended
September 29, 2006. Under the plain language of paragraph 11B, the ―protection period‖
only applies to ―such property‖ that Friedson called to 839 E. 19th Street’s attention
between May 9, 2006, and September 29, 2006. Therefore, even if Friedson called the
Mesa Ridge property to 839 E. 19th Street’s attention,4 he did so prior to the agreement.
The parties agree that Friedson called other properties to 839 E. 19th Street’s attention
4
839 E. 19th Street urges that inasmuch as it initially discovered the property on the internet and
then itself contacted Friedson, Friedson could not have contractually called the property to its attention.
5
during the agreement, but after the Mesa Ridge sale fell through. However, because
Friedson is not attempting to recover commissions on any property ―called to Client’s
attention during this agreement,‖ paragraph 11B does not apply here. We sustain 839 E.
19th Street’s fourth issue.5
CONCLUSION
Having sustained 839 E. 19th Street’s fourth issue, we reverse the trial court’s
judgment and render judgment that Friedson take nothing on his claims against 839 E.
19th Street.
/s/ Sharon McCally
Justice
Panel consists of Chief Justice Hedges and Justices Jamison and McCally. (Jamison, J.,
dissenting).
5
Because we hold that the contractual protection period does not apply to this dispute, we need
not decide whether paragraph 11 B is condition precedent. Moreover, because the undisputed facts show
that 839 E. 19th Street learned of the property before entering into the buyer representation agreement, we
need not decide whether the ―procuring cause‖ or ―called attention to‖ standard applies in this case.
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