Appeal from the County Civil Court at Law No. 3 Harris
County, Texas Trial Court Cause No. 971598
consists of Justices Christopher, Jamison, and Donovan.
an appeal from a judgment rendered after a trial by jury. The
dispositive issue is whether the trial court committed charge
error when it submitted a question for breach of contract
that was based on the parties' alleged oral agreement,
rather than on their fully integrated written agreement.
Concluding that the trial court did so err, we reverse the
trial court's judgment and remand the case for additional
proceedings consistent with this opinion.
Contract. Brandon Bailey entered into a contract to
purchase a home from Kliebert Development, LLC. The contract
was reduced to writing, and the parties' chosen terms
were standard in nearly every way, except one. The parties
inserted into their form contract a special provision, which
read: "Builder to have salvage rights on materials
removed from the home." Both parties agree that the
"Builder" in this provision refers to Kliebert.
further describe Kliebert's salvage rights, the parties
executed an amendment, which read: "Salvage rights to
include: mantel in master, plumbing fixtures to include
master bath fixtures (plumbing) and kitchen faucet. Bar sink
and faucet." For ease of reference, we identify the
objects listed in this amendment collectively as the
the parties closed on the property, a dispute arose over
Kliebert's salvage rights. Kliebert anticipated that
Bailey would remodel the home at some time before he moved
in. Kliebert also anticipated that, as part of this remodel,
Bailey would replace the salvage items because they did not
comport with his design aesthetic. Kliebert wanted to reclaim
the salvage items because they were brand new, except the
mantel, which was an antique. If the salvage items were
returned undamaged, Kliebert hoped to reuse them in another
home that it was then constructing. Kliebert contacted Bailey
about reclaiming the salvage items, but Bailey's
responses were evasive.
eventually moved into the home without tendering any of the
salvage items to Kliebert. When Kliebert learned that the
home was being occupied, Kliebert notified Bailey that the
fixtures could not be installed in a new home if the fixtures
were not in original condition. Believing that it had been
entitled to a return of the fixtures in their original
condition, Kliebert sent Bailey an invoice for more than $39,
000. This figure represented the supposed cost of both the
fixtures and the mantel. Kliebert later increased this
invoice to more than $59, 000.
did not pay the invoice. Instead, he informed Kliebert that
the salvage items would be available for pick up when they
are actually removed from the home. Months later, Bailey
removed the mantel and the kitchen fixtures, and he offered
them to Kliebert. Bailey did not remove the remaining
fixtures. Of those salvage items that were returned, Kliebert
complained that the mantel had been damaged and that the
kitchen fixtures were worthless.
sued for breach of contract, alleging that it had agreed to
reduce the purchase price of the home by $50, 000 in exchange
for Bailey's promise to return the salvage items. The
contract did not memorialize the terms of this
price-reduction agreement-at least, not in the promissory
language of Kliebert's allegation. The contract merely
reflected the final, bargained-for price of the home, which
was $2.55 million. Nevertheless, Kliebert claimed that Bailey
had breached the contract by failing to return all of the
salvage items as he allegedly had promised.
Motion to Exclude. Before trial, Bailey filed a motion
to exclude, wherein he identified the crux of the litigation
as follows: "The parties disagree as to whether the
special provision required the items to be removed or,
rather, simply gave Plaintiff the salvage rights if
the items were removed."
then explained that Kliebert's case was based on an
invalid theory. Bailey asserted that there was no separate
agreement to reduce the purchase price of the home by $50,
000 in exchange for the salvage items. According to Bailey,
there was only one agreement-the written contract that both
he and Kliebert had signed.
also explained that, during the negotiation phase, Kliebert
had sought $2.6 million for the home, which is exactly $50,
000 more than the actual contract price. Bailey argued that
if there was an oral agreement that he would remove the
salvage items and return them to Kliebert in exchange for a
reduction in Kliebert's desired price, then that oral
agreement did not survive the written contract's merger
clause. That merger clause provided: "This contract
contains the entire agreement of the parties and cannot be
changed except by their written agreement." In light of
this clause, Kliebert explained that the written contract did
"not expressly provide for any independently enforceable
concluded that Kliebert's contractual claim "fails
as a matter of law, " but he had not previously
requested a summary judgment on that point, and he did not
request one in his motion to exclude. Instead, Bailey asked
the trial court "to exclude Plaintiff's arguments as
to the Plaintiff's breach of contract theory."
the trial court conducted a hearing on the motion to exclude,
Bailey began the hearing with more legal points. He argued
that Kliebert's case was based entirely on an oral
agreement that "didn't make it into the written
agreement." Bailey then addressed Kliebert's damages
claim for $50, 000, which he characterized as a request for
liquidated damages. Bailey said that this request was invalid
because it, too, could not be found in the written contract.
responded that the oral agreement was "part of the
contract." The trial court expressed concern with that
position: "It sounds like to me you want to proceed with
an oral and written contract. . . . If there is a merger
clause in here and the contract is unambiguous, then you
can't use parol evidence to describe or address the
contents of the party's intention to include or not to
include those items."
Kliebert then asserted, for the first time, that the contract
was ambiguous. Kliebert did not identify a particular word or
phrase that it believed was subject to more than one
reasonable interpretation. Rather, Kliebert argued that the
contract was ambiguous because "it did not give a
certain time frame" in which the salvage items must be
objected at this point, alerting the trial court that
Kliebert had not pleaded an ambiguity. The trial court then
asked Bailey for the relief that he sought, to which he
answered: "The relief sought is that the plaintiffs do
not present evidence or make an argument that the price of
the home should have been $2.6 million."
trial court granted Bailey's motion, but it clarified
that Kliebert would be allowed to present evidence that the
fair market value of the salvage items was $50, 000 at the
time of closing. Bailey responded, "If that's the
argument, then I disagree, but I can live with that."
Trial. Kliebert ultimately presented evidence to the
jury that the contract price should have been $2.6 million.
Kliebert explained that it had reduced the contract price to
$2.55 million because it had bargained with Bailey for a
return of the salvage items, which Kliebert had valued at
$50, 000. Kliebert also explained that the parties had
reached an oral agreement that the salvage items were
supposed to have been delivered immediately after the
closing. Kliebert's co-owner testified as follows:
Q. You are alleging that basically there was an agreement
that the salvaged items were to ...