Thomas E. Ott v. Harold Touchstone, Clyde E. Hicks and Carolyn S. Hicks

Affirmed in Part, Reversed and Rendered in Part and Memorandum Opinion filed August 25, 2005

Affirmed in Part, Reversed and Rendered in Part and Memorandum Opinion filed August 25, 2005.

In The

Fourteenth Court of Appeals

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NO. 14-04-00517-CV

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THOMAS E. OTT, Appellant

V.

HAROLD TOUCHSTONE, CLYDE E. HICKS AND CAROLYN S. HICKS, Appellees

On Appeal from the 165th District Court

Harris County, Texas

Trial Court Cause No. 01-41046

M E M O R A N D U M   O P I N I O N

This is a suit brought by Thomas E. Ott against Harold Touchstone, Clyde E. Hicks, and Carolyn S. Hicks, for specific performance of a contract to purchase real estate, or alternatively, for money damages.  A jury found in favor of Ott, the purchaser under the contract, but the trial court initially granted judgment notwithstanding the verdict (JNOV) in favor of both Touchstone, the seller, and the Hicks, who purchased the property when Ott and Touchstone failed to close on the sale.  The trial court later amended its judgment to deny Touchstone=s motion for JNOV and to award $100 in damages to Ott.  On appeal, Ott contends the trial court erred by (1) entering a second judgment without withdrawing the first judgment, (2) granting JNOV for Touchstone, (3) granting JNOV for the Hicks, (4) failing to award specific performance or the damages found by the jury, and (5) failing to award attorney=s fees.  For the reasons explained below, we affirm in part and reverse and render in part.

Background

Ott entered into an earnest money contract with Touchstone to purchase a piece of property near his restaurant in Humble, Texas, for $100,000, and gave Touchstone a $100 check as earnest money.^[1]  The earnest money contract provided that the sale was to close on or before July 30, 2001. It also provided that, if financing was obtained, the closing date could be extended Aup to fifteen days if necessary@ to comply with the lender=s closing requirements.^[2]  Although there is some evidence that the closing was originally set for July 30, 2001, Ott testified that the title company handling the closing, Stewart Title, contacted him on July 24th and informed him that the closing was scheduled for July 31. 

Also on July 24, 2001, Ott saw Clyde Hicks near the property, and walked over to speak to him.  Ott told Hicks that he was purchasing the property and that the closing was to occur on the 31st.  Hicks, who apparently had been interested in purchasing the property for some time, called Touchstone to inquire about the property.  When Hicks did not reach Touchstone, he left a message. Touchstone, who had been out of town, returned Hick=s call on July 30, and confirmed that he was selling the property to Ott and that the closing was to take place on July 31.  Hicks told him that, if the sale did not go through, he would be interested in buying the property.

The closing on the 31st was originally scheduled to take place at 10:00 a.m., but because some of the closing documents required revision, it was delayed. According to Ott, he had obtained the financing and everything was ready for closing by 3:00 p.m. that day. However, around noon or 1:00 p.m., Touchstone called Ott and told him that he was not going to sell the property to him.  Ott went to Stewart Title at 3:00 p.m., but when a Stewart Title employee called Touchstone to tell him that they were ready to close, he did not come.^[3]

Some time that afternoon, Touchstone called Hicks and told him that the buyer had not fulfilled the contract and he was putting the property back on the market. The next day, August 1, Touchstone called Hicks again and told him he would sell the property to him for $105,000. They entered into a contract that day,^[4] and closed the sale on August 9.  The closing took place at the same Stewart Title office that Ott had used.  In preparing for the closing, Stewart Title used a number of the documents previously prepared for Ott=s closing, and merely changed the buyer=s name to Clyde and Carolyn Hicks.  Also included with the closing documents was an affidavit executed by Touchstone in which he affirmatively represented that there were no leases, contracts to sell the land, or other parties in possession of the property. 

On August 9, Ott=s attorney sent a letter to Touchstone demanding specific performance of their earnest money contract.  After Touchstone received the letter on August 27, he told Ott that he had already sold the property to the Hicks.  Ott then brought this lawsuit against Touchstone and the Hicks, seeking either specific performance of the earnest money contract from Touchstone and a judgment voiding any deed to the Hicks, or, alternatively, money damages. Ott also sought attorney=s fees as provided in the earnest money contract.

The case was tried in August of 2003, and the jury returned a verdict in favor of Ott and against Touchstone and the Hicks.  Touchstone and the Hicks filed motions for JNOV, and on March 2, 2004, the trial court entered a final judgment granting both of their motions.  Eight days later, on March 10, 2004, the trial court wrote on the final judgment AThis order is void@; the court then entered another final judgment granting the Hicks= motion for JNOV, but denying Touchstone=s motion for JNOV.  The court also awarded Ott $100 to be paid by Touchstone.  Although not expressly stated in the judgment, by denying Touchstone=s JNOV the trial court let stand the jury=s findings that Touchstone breached the earnest money contract.^[5]  This appeal followed.

Analysis of the Issues

On appeal, Ott contends the trial court erred by (1) entering a second judgment without withdrawing the first judgment, (2) granting JNOV for Touchstone, (3) granting JNOV for the Hicks, (4) failing to award either specific performance or the damages found by the jury, and (5) failing to award attorney=s fees. As we explain below, we find that the trial court did not err by entering the second final judgment and that it is the valid, final judgment in this case.  In addition, because the second judgment denied Touchstone=s motion for JNOV, we need not consider Ott=s contention that the JNOV in favor of Touchstone was error.^[6]  Regarding the Hicks= motion for JNOV, which the trial court granted, we find no error.  We also hold that the trial court did not err in refusing to award specific performance or in refusing to award the $105,000 damages the jury awarded to Ott. However, we hold that, as the prevailing party against Touchstone, Ott is entitled to attorney=s fees.

1.       The Trial Court Did Not Err in Entering the Second Judgment, Which is the Valid, Final Judgment in this Case.

In his first issue, Ott contends the trial court erred in entering a second final judgment on March 10, 2004, without withdrawing the March 2 final judgment it entered earlier.  Ott argues that there can be only one final judgment in a case, and cites Mullins v. Thomas for the proposition that Athe entry of a second judgment in the same case is not a vacation of the first, and that if there is nothing to show the first was vacated, the second is a nullity.@  136 Tex. 215, 150 S.W.2d 83, 84 (1941).  However, as this court explained in Quanaim v. Frasco Restaurant & Catering, the general rule expressed in Mullins and its progeny has been eroded over the past decade by later Texas Supreme Court cases.  See 17 S.W.3d 30, 37B39 Tex. App.CHouston [14th Dist.] 2000, pet. denied).  We also find that Quanaim disposes of this issue.

In Quanaim, the trial court entered one summary judgment order on May 11, 1998, and then entered another order on May 18, 1998, identifying different grounds for summary judgment than the May 11 order.  See id at 34, 36B37.^[7]  On appeal, the Quanaim court was required to determine whether the May 18 order vacated the May 11 order or whether the May 11 should be reinstated, when there was nothing in the record to suggest that the trial court intended to vacate the May 11 order.  Id. at 39B40.  After extensively examining the evolution of the applicable law post-Mullins, the Quanaim court held that the May 18 order constituted a modification, correction, or reformation of the May 11 order, and that, by entering the May 18 order, the trial court presumptively vacated the May 11 order, making the May 18 order the only final judgment in the case.  Id. at 40. 

The Quanaim court=s reasoning applies here.  But this case is even stronger than Quanaim because we have more information regarding the judge=s intent than the Quanaim court had.  The trial court in this case wrote AThis order is void@ on the March 2 judgment on the same day she signed the second judgment.  Therefore, unlike Quanaim, the record contains a clear indication, apart from the denial of Touchstone=s motion for JNOV, that the trial court intended to replace the March 2 judgment with the March 10 judgment.  We therefore hold that the March 10 order is the only valid, final judgment in this case.  Ott=s first issue is overruled.

2.       The Trial Court Did Not Err by Granting the Hicks= Motion for JNOV.

In his fourth issue, Ott contends the trial court erred in granting the Hicks= motion for JNOV.  Question No. 4, the only question directed to the Hicks= conduct, read as follows: AAt the time they purchased the property on August 9th, 2001 did Clyde or Carolyn Hicks know that the agreement found by you in Question No. 1 was still in effect?@  The jury answered AYes.@  The trial court granted JNOV, determining that no evidence supported the jury=s answer.  On appeal, Ott contends the jury was entitled to infer from direct and circumstantial evidence that, when they closed on August 9, the Hicks knew the earnest money contract was effective through August 14.  The Hicks respond with two points: (1) no evidence supports an inference that they actually knew the contract remained in effect when they closed on the property; and (2) Ott is impermissibly stacking inferences that relate to an issue irrelevant to this appeal:  whether the Hicks should have or could have known about the August 14 date. We agree with the Hicks. 

a.       Applicable standard of review

A trial judge may grant a motion for JNOV only when there is no evidence to support one or more of the jury=s findings of fact necessary to the judgment.  Brown v. Bank of Galveston, Nat=l Ass=n, 963 S.W.2d 511, 513 (Tex. 1998).  No evidence exists, and a judgment notwithstanding the verdict should be entered, when the record discloses one of the following: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a scintilla of evidence; or (4) the evidence establishes conclusively the opposite of a vital fact.  See Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 666 n.9 (Tex. 1990). 

As an appellate court, we consider the evidence in the light most favorable to the verdict and indulge every reasonable inference that supports it.  See City of Keller v. Wilson, ___ S.W.3d ___, No. 02-1012, 2005 WL 1366509, at *10 (Tex. June 10, 2005).  The evidence is legally sufficient if it would enable reasonable and fair-minded people to reach the verdict under review.  See id. at *14.  We credit favorable evidence if reasonable jurors could consider it in a favorable light, and disregard contrary evidence unless reasonable jurors could not discard it. See id.  We cannot substitute our judgment for that of the jury, so long as the evidence falls within the zone of reasonable disagreement. See id. at *10.  But, Aif the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it.@  Id. 

Both direct and circumstantial evidence may be used to establish any material fact. Lozano v. Lozano, 52 S.W.3d 141, 149 (Tex. 2001) (per curiam); Browning‑Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).  To raise a genuine issue of material fact, however, the evidence must transcend mere suspicion.  Evidence that is so slight as to make any inference a guess is in legal effect no evidence.  Lozano, 52 S.W.3d at 148; Browning‑Ferris, Inc., 865 S.W.2d at 928.  Meager circumstantial evidence from which equally plausible but opposite inferences may be drawn is speculative and legally insufficient to support a finding.  See City of Keller, 2005 WL 1366509, at *4B5; Wal‑Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998); Entex v. Gonzalez, 94 S.W.3d 1, 7B8 (Tex. App.CHouston [14th Dist.] 2002, pet. denied).  In this regard, a vital fact may not be established by piling inference upon inference.  Schlumberger Well Surveying Corp. v. Nortex Oil & Gas Corp., 435 S.W.2d 854, 858 (Tex.1968).  Thus, facts from which an inference may properly be drawn must be established by direct evidence, not by other inferences.  Entex, 94 S.W.3d at 8 (citing Rounsaville v. Bullard, 154 Tex. 260, 276 S.W.2d 791, 794 (Tex. 1955)).

b.       Review of the facts

We have reviewed the evidence carefully and find that the trial court did not err in granting the Hicks= JNOV.  The evidence shows only that the Hicks knew that Ott and Touchstone had a contract to purchase the property and that it was to close on July 31st.  On that day, Touchstone called Ott and told him the sale did not occur, and he was putting the property back on the market.  Ott contends that the jury could infer that the Hicks knew the earnest money contract was still in effect because the Hicks knew Ott had a contract to purchase the property, they closed within days of Ott=s failed closing, and they paid $5,000 more for the property than Ott offered.  However, none of the evidence Ott points to, whether reviewed individually or in total, raises a scintilla of evidence or permits a reasonable inference to support the jury=s finding that the Hicks knew, when they closed on the property on August 9th, that the earnest money contract allegedly was still in effect.

When Ott and Hicks spoke on July 24th, Ott did not tell Hicks the purchase price or other terms of the earnest money contract, and he did not give Hicks a copy of his contract.  Ott told Hicks only that the contract was to close on July 31st.  Likewise, when Touchstone and Hicks spoke, Touchstone merely confirmed that he was selling the property on July 31st.  On the afternoon of the 31st, Touchstone told Hicks the buyer did not fulfill the contract and he was putting it back on the market. Both Hicks and Touchstone testified that they did not discuss the terms of the sale of the property until August 1st, when they signed their earnest money contract.  Ott contends, however, that the jury could infer that Clyde Hicks and Touchstone discussed terms, including the higher purchase price, on the 31st, because Hicks= earnest money check was dated July 31st.  However, even if the jury inferred that Hicks and Touchstone discussed terms at that point, no evidence showed that Hicks knew anything more than what Touchstone told him that afternoonCthat Ott no longer had a contract to purchase the property.

There also is no evidence that Ott, Touchstone, or anyone else ever told the Hicks that Ott=s earlier contract was still in effect.  Ott argues the jury nonetheless could infer that the Hicks knew the earnest money contract was still pending when they closed, because Clyde Hicks was familiar with earnest money contracts generally and was aware of the standard language providing for an extension of up to fifteen days to comply with the lender=s requirements.  This argument is riddled with problems, the first being that Hicks did not know the terms of the contract.  The second problem is that the terms of the contract provided for an extension of Aup to 15 days if necessary@ to comply with the lender=s requirements.  At most, lender requirements extended the earnest money contract to July 31st.^[8]  And, while the jury found that the earnest money contract extended beyond July 30th, it made no finding as to how far beyond the 30th the contract extended.  The jury could have concluded that the earnest money contract was extended to the 31st, and that Touchstone breached the earnest money contract when he did not close on that day.  Thus, on this record, Hicks could not know if the earnest money contract contained the fifteen-day extension period, if the provision had been triggered, or, if triggered, how many days it extended the earnest money contract.

Likewise, other evidence Ott points toCthat Stewart Title used some of Ott=s closing documents in the Hicks= closingCneither proves nor disproves that the Hicks knew the earnest money contract was still in effect on August 9th.  At most, this evidence shows that the Hicks knew that Ott had a contract with TouchstoneCa fact no one disputes and a fact that does not prove Ott=s necessary ultimate issue.  It is no evidence that the Hicks knew on August 9th that the earnest money contract allegedly was still in effect. 

For these reasons, we conclude that the trial court did not err in granting the Hicks= motion for JNOV.  We overrule Ott=s fourth issue.

3.       The Trial Court Did Not Err by Failing to Award Specific Performance or Money Damages.

In his fifth issue, Ott contends the trial court erred when it awarded neither specific performance nor the damages found by the jury.  To resolve this issue, we first look to the earnest money contract to determine the parties= agreement regarding damages for failing to comply with the contract.  In relevant part, the earnest money contract provides that, if Touchstone fails to comply with the contract for any reasonCother than certain specified reasons that are not relevant hereChe will be in default and Ott may, Aas sole remedy,@ either enforce specific performance, or terminate the contract and receive the earnest money.  A statement giving Ott the third remedy of Aseek[ing] such other relief as may be provided by law@ was crossed out.  Thus, Ott=s only remedy under the earnest money contract was either specific performance or termination of the contract and the return of the earnest money.  Touchstone and Hicks contend that return of the earnest money is all the relief Ott is entitled to receive.  We agree.

a.       Ott is not entitled to specific performance.

In his prayer for relief, Ott requests that we declare the deed from Touchstone to Hicks void and enter judgment that Touchstone shall sell the property to Ott. However, Ott neither argues nor cites authorities holding that he is entitled to specific performance. Therefore, he has waived this contention.  See Tex. R. App. P. 38.1(h).  Moreover, specific performance is an equitable remedy, and to succeed, the party seeking to compel specific performance must show that granting this relief will not operate inequitably on the defendant.  See Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703, 704 (1953).  An award of specific performance rests in the sound discretion of the trial judge, whose action will not be disturbed unless an abuse of discretion is shown.  Walzem Dev. Co., Inc. v. Gerfers, 487 S.W.2d 219, 222 (Tex. App.CSan Antonio 1972, writ ref=d n.r.e.).  It is not a matter of absolute right.  Id.

We already have determined that the Hicks were entitled to JNOV because they did not know the earnest money contract was still in effect when they closed on the property.  The evidence also showed that, after buying the property, the Hicks spent more than $80,000 improving it.  To require the Hicks to divest themselves of the property, when they were innocent purchasers who made substantial improvements to the property, would be inequitable.  See Kress, 261 S.W.2d at 706.  Therefore, we cannot say that the trial court abused its discretion by failing to award specific performance.

b.       Ott is not entitled to the damages found by the jury.

Similarly, the trial court did not err in refusing to award the damages found by the jury.^[9]  As noted above, the earnest money contract provided that, if Touchstone defaulted, Ott=s remedies were limited to specific performance or return of his earnest money.  We have already determined that Ott was not entitled to specific performance. Therefore, he was entitled only to the return of his earnest money.  He may not recover money damages for the breach of the earnest money contract other than to secure the return of his earnest money.  See Buhler v. McIntire, 365 S.W.2d 237, 239B40 (Tex. Civ. App.CAustin 1963, writ ref=d n.r.e.) (holding that party whose contract for sale of real property limited his damages to specific performance or return of cash deposit could not recover monetary damages for breach of contract). 

The trial court=s judgment awarded Ott the earnest money he paid.  We find no error and overrule this issue.

4.       Ott is Entitled to Attorney=s Fees as the Prevailing Party Against Touchstone.

Finally, in Ott=s third issue, he contends he is entitled to attorney=s fees because he established a valid breach of contract claim and because the parties stipulated to the amounts and reasonableness of the attorney=s fees.  This is a valid point.  The earnest money contract provided that the prevailing party in a legal proceeding could recover reasonable attorney=s fees.  At trial, the parties stipulated as to attorney=s fees.  Thus, the only remaining question is whether Ott is a prevailing party.  See Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc., 938 S.W.2d 102, 118 (Tex. App.CHouston [14th Dist.] 1996, no writ) (basing attorney=s fees on underlying contract rather than statutory requirements). 

On this jury charge and this judgment, Ott clearly is the prevailing party.  The jury found that Touchstone breached the agreement with Ott, and the trial court denied Touchstone=s motion for JNOV. 

At oral argument, Touchstone contended Ott was not entitled to attorney=s fees, claiming some evidence showed that Touchstone returned Ott=s earnest money check shortly after July 31st.  However, this claim has three major impediments: (1) Ott testified the check was not returned to him; (2) Touchstone did not plead payment, see Tex. R. Civ. P. 94, 95; and (3) Touchstone did not secure any jury findings on the issue, see Brown, 963 S.W.2d at 515 (recognizing that when resolution of fact issue was required to establish theory of recovery or defense, failure to request jury instruction on that issue waived claim on appeal).

In short, Ott was the prevailing party under his contract with Touchstone and, as a result, is entitled to reasonable attorney=s fees.  See Sanchez-O=Brien Oil & Gas Corp. v. Austin Res. Corp., No. 14-96-00240-CV, 1998 WL 322686, at *5 (Tex. App.CHouston [14th Dist.] June 18, 1998, pet. denied) (AA prevailing party is >one of the parties to a suit who successfully prosecutes the action or successfully defends against it, prevailing on the main issue, even though not to the extent of its original contention.=@) (citing FDIC v. Graham, 882 S.W.2d 890, 900 (Tex. App.CHouston [14th Dist.] 1994, no writ)).  We therefore sustain Ott=s third issue, reverse in part, and render judgment that Ott recover attorney=s fees against Touchstone in the amounts of $17,000 through trial, $10,000 for this successful appeal, and $5,000 if Ott is successful in an appeal to the Texas Supreme Court.  The remainder of the trial court=s judgment is affirmed.

Conclusion

We hold that the trial court=s March 10 judgment is the valid, final judgment in this case.  We further hold that the trial court did not err in granting the Hicks= motion for judgment notwithstanding the verdict, and in denying Ott either specific performance or money damages.  Because Touchstone did not file a notice of cross-appeal, we do not address his cross-point that the trial court=s original grant of his motion for judgment notwithstanding the verdict was correct.  Because Ott was the prevailing party against Touchstone on his breach of contract claim, we hold that the trial court erred in failing to award Ott attorney=s fees.  We therefore affirm in part and reverse and render in part to award Ott the attorney=s fees to which he and Touchstone stipulated.

/s/                Wanda McKee Fowler

Justice

Judgment rendered and Memorandum Opinion filed August 25, 2005.

Panel consists of Chief Justice Hedges and Justices Fowler and Guzman.

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^[1]  Ott testified that he intended to use the property as additional parking for his customers.

^[2]  The relevant portion of the provision at issue, as highlighted, reads as follows:

CLOSING: The closing of the sale will be on or before 7-30-01 or within 7 days after objections to matters disclosed in the Commitment or by the survey have been cured, whichever date is later (the Closing Date).  If financing or assumption approval has been obtained pursuant to Paragraph 4, the Closing Date will be extended up to 15 days if necessary to comply with lender=s closing requirements (for example, appraisal, survey, insurance policies, lender-required repairs, closing documents). If either party fails to close this sale by the Closing Date, the non-defaulting party will be entitled to exercise the remedies contained in Paragraph 15. 

^[3]  Touchstone testified that he refused to sell to Ott because he felt he was getting Athe run around@ after the closing date and time had been changed several times.

^[4]  Touchstone testified that Hicks made out an earnest money check when he met with him on August 1, but the check was dated July 31.

^[5]  The jury answered AYes@ to the following questions: (1) Did Thomas Ott and Harold Touchstone have an agreement for the purchase and sale of real property in Humble, Harris County, Texas?; (2) Did the agreement between Mr. Touchstone and Mr. Ott extend past July 30, 2001?; and (3) Did Harold Touchstone fail to comply with the agreement?

^[6]  In its appellate brief, Touchstone briefed a cross-point that it was entitled to JNOV.  However, as conceded at oral argument, Touchstone did not file a notice of cross-appeal, and so withdrew the cross-point.  See Tex. R. App. P. 25.1(c).  Consequently, we do not address Ott=s second issue, in which he contends the JNOV in favor of Touchstone was error.

^[7]  The trial court had also entered a summary judgment order on May 5, but this order was interlocutory because, at the time it was signed, other claims and parties remained in the suit.  See 17 S.W.3d at 36.  The May 11 order, however, granted summary judgment on grounds that terminated the outstanding claims and rights of all parties.  Id. at 36B37. Therefore, it was only necessary for the Quanaim court to determine the effect of the May 18 order on the May 11 order.  Id. at 38B40.

^[8]  The evidence shows that the closing scheduled for the morning of July 31 was delayed because Ott=s loan documents provided for an escrow account, which he did not want, and so the documents had to be redrafted.  At oral argument, Ott conceded that the evidence shows that, at most, lender requirements extended the earnest money contract to July 31st.

^[9]  The jury found that, to fairly and reasonably compensate Ott for his damages resulting from Touchstone=s failure to comply with the earnest money contract, Ott was entitled the difference between the contract price and the market value of the property at the time of the breach in the amount of $5,000.  The jury also found Ott was entitled to consequential damages to acquire similar property in the amount of $100,000.