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Burrus v. Reyes

Court of Appeals of Texas, Eighth District, El Paso

March 8, 2017


         Appeal from the 346th District Court of El Paso County, Texas (TC# 2012-DCV-03532)

          Before McClure, C.J., Rodriguez, and Hughes, JJ. Hughes, J., not participating


          YVONNE T. RODRIGUEZ, Justice.

         David Reyes and Sonia Valenzuela ("the Reyes Family") thought they were buying a mobile home and a one-half acre lot from Annette Burris under an oral contract for deed. Burrus, on the other hand, contended the Reyes Family was only renting the property. After the Reyes Family had lived on the property for 17 years and had made numerous improvements to the property, Burrus sold the lot to a third party and ordered the Reyes Family to vacate. The Reyes Family sued for breach of contract, statutory fraud, money had and received, and for violations of the Texas Property Code. The jury found, among other things, that Burrus had agreed to sell the property to the Reyes Family, had breached that agreement, and that her oral agreement to sell was enforceable under the partial-performance exception to the statute of frauds. The jury also found Burrus was liable for statutory fraud, for money had and received, and for liquidated damages under the Texas Property Code.

         Burrus appeals on multiple grounds, contending the evidence is insufficient to show that the Reyes Family made the necessary permanent improvements to take an oral agreement out of the statute of frauds, to show that there was a meeting of the minds on the essential terms of the agreement, or to show that the parties intended to enter into a contract for deed. Burrus also contends that the trial court submitted the contract question to the jury improperly, that the statutory fraud claim is barred by limitations, and that the Reyes Family failed to prove they were entitled to liquidated damages under the Property Code or entitled to recover damages for money had and received. We affirm.


         Burris is a licensed real estate agent with over 40 years of experience. In 1988, she purchased 10.75 acres of land in Tornillo, Texas as investment property. [1] Burrus then approached several individuals who had been renting from the prior owner, and inquired whether they wanted to purchase their rental property from her. It appears that most of the individuals entered into oral agreements to purchase their property through seller-financed, contract-for-deed transactions, in which Burrus agreed to finance the purchase price by allowing the individuals to make monthly payments until the amount financed was paid off, after which she would transfer title to them.[2]

         The Oral Agreement with the Reyes Family

         In 1993, the Reyes Family, who had been living in government-subsidized housing with their two children, approached Burrus about the possibility of purchasing one of her lots. Burrus acknowledged that the Reyes Family initially asked to purchase rather than rent a lot from her. However, according to Burrus, she advised them that she had no lots for sale at the time and instead offered to rent them an unoccupied portion of her 10.75 acre tract. Burrus testified that she offered to purchase the Reyes Family a mobile home of their choice, which she would have moved to the property at her expense, and to rent the mobile home and lot to them on a month-to-month basis. Burrus claimed the Reyes Family orally agreed to the rental arrangement.

         Both parties agreed that Burrus purchased a mobile home chosen by the Reyes Family and had the mobile home moved to the lot. Both parties also agreed that the Reyes Family paid Burrus $500 before moving into the mobile home in September 1994, and thereafter paid Burrus $200 a month until November 2011.[3] The parties, however, disagreed as to the purpose of those payments and the intent of their oral agreement. Burrus contended they had agreed to a landlord-tenant relationship, asserting that the money they paid her was for rent. The Reyes Family contended they had agreed to purchase the mobile home and lot for $21, 000 with Burrus financing the purchase. They further believed that their initial $500 payment was a down payment on the property, pointing out they had put the notation "down payment" on their money orders to Burrus, and that the $200 monthly payments were to be applied to pay off their seller-financed mortgage loan from Burrus. As would be the case in a contract-for-deed transaction, the Reyes Family believed they would receive title to the property from Burrus once they paid off the loan.

         According to the Reyes Family, throughout the 17 years they lived on the property, they repeatedly asked Burrus for documentation of the purchase, for receipts of their payments, and for additional information regarding the terms of their loan, as well as for an accounting of how much they owed on their loan, all of which Burrus failed to provide. Nevertheless, they testified that they trusted Burrus because she was the expert in real estate, and they believed that she would let them know when they had paid off the balance of their loan. Burrus, on the other hand, claimed she never gave them an accounting because she viewed the Reyes Family as renters and not purchasers of the property.

         The Improvements on the Property

         Shortly after moving in, the Reyes Family began making improvements to the property, including installing a chain link fence around the perimeter of the lot, installing plumbing fixtures, lighting, and ceramic tile in the home, building a shed and a dog kennel, and planting trees. They also added a porch and several rooms to the mobile home, doing much of the work themselves. In order to make the additions, they paid to have the mobile home moved to the center of the half-acre lot and paid to have a concrete slab poured on which to build the additions. In all, the Reyes family spent over $22, 000 in materials for the improvements on the property with no reimbursement from Burrus.

         Burrus acknowledged that she had agreed to allow the Reyes Family to install a fence around the property and that the Reyes Family had paid for the installation and did not seek reimbursement from her. The Reyes Family contended that before the fence was installed, Burrus sent her father to assist the Reyes Family in ascertaining the dimensions of the lot and that her father pointed out the stakes that had been placed at the property's boundary lines during an earlier survey Burrus had done on the property. After ascertaining the dimensions, the Reyes Family installed the fence around the perimeter of the half-acre lot at a cost of $2, 400.

         Burrus acknowledged that she was also aware of the other improvements the family made on the property because she had driven by the property several times during the 17 years the Reyes Family lived there. Burrus testified that she did not require them to tear down the improvements, or penalize them for making the changes to the mobile home, because she allegedly advised them that any improvements made on the property would belong to her as the owner.[4] The Reyes Family also paid for all needed repairs on the property. Burrus claimed she had a similar agreement with all of her tenants.

         The Sale to Tornillo DTP

         In March 2011, Burrus began negotiating to sell 1.76 acres of her original 10.75 acre tract to Tornillo DTP VI, L.L.C., which included the half-acre lot where the Reyes family was living and a vacant lot next door. Tornillo DTP was buying the property to fulfill a lease obligation it had made to Dollar General, which intended to build a store on the property. Burrus claims that she contacted David Reyes in May 2011 to advise him that she was considering selling the property, and told him the family would have to move if she sold the property. According to Burrus, David Reyes initially agreed to move, and she thereafter kept him apprised of her negotiations with Tornillo DTP.

         Burrus signed a final contract with Tornillo DTP on January 31, 2012, in which she was to receive $90, 000 for the sale, with a closing date of February 24.[5] Burrus testified that she informed David Reyes that same month that the contract had been finalized and that he was initially cooperative and agreed to move by March 31-the date on which she was required to convey the property to Tornillo DTP without any encumbrances. Burrus claims that the Reyes Family informed her on March 16 that they were refusing to move and were claiming ownership of the land.

         The Reyes Family, on the other hand, contended that Burrus did not advise them of the sale until February 2012 after she had already signed the final contract with Tornillo DTP. In November 2011, however, the Reyes Family had become suspicious that something unusual was occurring when Sonia Valenzuela noticed surveyors on the lot next door. Sonia Valenzuela testified that the surveyors informed her that a Dollar General store was going to be constructed on that property. The Reyes Family decided to suspend making payments to Burrus until they could speak to her and resolve the issue. Consequently, their final payment to Burrus was made in November 2011.

         According to the Reyes Family, Burrus initially offered to relocate them to another lot on her tract. They refused the offer, however, because they wanted to retain their property, in part because of the difficulty involved in removing the improvements they had made to the property.

         The Initial Stages of the Litigation

         Shortly after Burrus informed the Reyes Family of the sale, demolition crews hired by Tornillo DTP came onto their property and began removing some of the improvements they had made on the land, including the fence, trees, and the dog kennel. In April 2012, the Reyes Family sued both Burrus and Tornillo DTP, seeking a temporary restraining order, as well as a temporary and permanent injunction, restraining Burris and Tornillo DTP from entering the property and from any further destruction of their property. The Reyes family alleged they had an oral contract with Burrus to purchase the property, and sought declaratory relief naming them as the true owners of the property. They also sought compensation for the damages that had already suffered during Tornillo DTP's initial demolition efforts. In response, Tornillo DTP filed a forcible detainer lawsuit against the Reyes Family, attempting to evict them so that they could begin construction. Tornillo DTP also filed a breach of contract claim against Burrus for her failure to fulfill her obligation to transfer the property to them in an unencumbered state.

         The trial court entered a temporary restraining order enjoining both Burrus and Tornillo from entering and damaging any property, which effectively stopped the construction of the Dollar General Store. Tornillo DTP thereafter entered into a settlement agreement with the Reyes Family, in which the Reyes Family agreed to vacate the property by June 9, 2012, and in exchange Tornillo DTP agreed to pay them $64, 600 once they vacated the property. As part of the settlement agreement, the Reyes family agreed to execute a deed without warranty to Tornillo DTP, purporting to convey any interest they might have in the 1.76 acres Tornillo DTP purchased from Burrus. The Reyes Family subsequently nonsuited Tornillo DTP from the lawsuit.

         Burrus was not part of the settlement agreement. Nevertheless, Burrus subsequently transferred ownership of the mobile home to the Reyes Family for $10, which allowed them to move the mobile home and its attachments to their new lot. Burrus testified that she signed the bill of sale because she felt that she had already "lost" the mobile home to Tornillo DTP since it had not been moved off the property as contemplated by the contract. Tornillo DTP thereafter obtained a summary judgment against Burrus on its breach of contract claim and recovered $166, 000 in damages. This Court later affirmed Tornillo DTP's judgment against Burrus. Burrus v. Tornillo DTP VI, L.L.C., No. 08-13-00333-CV, 2015 WL 8526539, at *3 (Tex.App. - El Paso Dec. 11, 2015, pet. denied) (mem. op. on reh'g, not designated for publication).

         The Remaining Claims Against Burrus

         In its lawsuit against Burrus, the Reyes Family brought: (1) a claim for declaratory relief that prior to their settlement with Tornillo DTP, they were the sole owners of the property in question, based on a theory of either oral contract or adverse possession; (2) a claim for breach of contract alleging that Burrus breached their oral agreement to purchase the property and mobile home; (3) violations of Chapter 5 of the Texas Property Code for Burrus's failure to provide them with annual accountings and her failure to transfer title to the Reyes Family upon receipt of their final payment; (4) violations of Section 27.01 of the Texas Business and Commerce Code for statutory fraud for engaging in a fraudulent real estate transaction; (5) a claim for trespass to try title; and (6) a claim for money had and received, seeking to recover a portion of the profit Burrus had made on her sale of the property to Tornillo DTP.[6] Burrus counterclaimed for (1) tortious interference with an existing contract, claiming that the Reyes Family had interfered with her contract with Tornillo DTP, and (2) money had and received, claiming that the $64, 600 Tornillo DTP had paid the Reyes Family belonged to her. Burrus also asserted that the statute of limitations had expired on the Reyes Family's claims against her.

         The Jury's Verdict and the Final Judgment

         Following trial, the jury returned a verdict, finding that Burrus had orally agreed to the sale of the mobile home and lot to the Reyes Family and that Burrus had breached that oral agreement. The jury also found that the oral agreement came within the partial-performance exception to the statute of frauds. The jury awarded the Reyes Family $10 on the breach of contract claim. The jury also found that Burrus had committed statutory fraud and awarded the Reyes family $22, 802 on that claim. The jury awarded the Reyes Family $24, 000 on their claim for money had and received, finding that this was the amount money that "in equity and good conscience" belonged to the Reyes Family. Finally, the jury found that Burrus had conducted two or more contract for deed transactions in a 12-month period. The jury awarded the Reyes family $92, 842 in attorney's fees, but denied their request for exemplary damages. They also rejected Burrus's counterclaims.

         The trial court entered a final judgment on the jury's verdict, awarding the Reyes family a total of $70, 052 in damages, together with attorney's fees of $92, 842. Based on the jury's "two transactions" finding, the judgment included an award of liquidated damages pursuant to Section 5.077(d)(1) of the Property Code for Burrus's failure to provide an accounting to the Reyes Family from 1994 to 2011.[7]


         Statute of Frauds

         Burrus contends that any oral agreement regarding the sale of the property was subject to the statute of frauds, and that the evidence was factually insufficient to support the jury's implicit finding that the partial-performance exception applied, thereby barring enforcement of the agreement. We disagree.

         Applicable Law

         The general statute of frauds requires that contracts for the sale of real estate must be in writing and signed by the parties in order to be enforceable. Tex. Bus. & Com. Code Ann. § 26.01(a), (b)(4) (West 2015). Similarly, Section 5.072 of the Texas Property Code, which addresses contracts for deed, provides that an "executory contract is not enforceable unless the contract is in writing and signed by the party to be bound or by that party's authorized representative." Tex. Prop. Code Ann. § 5.072(a) (West 2014). It is uncontroverted that the oral contract for the sale in this case was not in writing or signed by either party.

         However, in Texas, an oral contract for the sale of real estate may be removed from the statute of frauds when the parties have performed the contract to such a degree that application of the statute would defeat its true purpose. See Zaragoza v. Jessen, __S.W.3d__, 2016 WL 3194769, at *4 (Tex.App. - El Paso June 8, 2016, no pet.) (citing Carmack v. Beltway Dev. Co., 701 S.W.2d 37, 40 (Tex.App. - Dallas 1985, no writ) ("Under this exception, contracts that have been partly performed, but do not meet the requirements of the statute of frauds, may be enforced in equity if denial of enforcement would amount to a virtual fraud in the sense that the party acting in reliance on the contract has suffered a substantial detriment, for which he has no adequate remedy, and the other party, if permitted to plead the statute, would reap an unearned benefit.")). In accordance with this doctrine, an oral contract for the purchase of real property is enforceable if the purchaser: (1) pays the consideration; (2) takes possession of the property; and (3) makes permanent and valuable improvements on the property with the consent of the seller, or, without such improvements, other facts are shown that would make the transaction a fraud on the purchaser if the oral contract were not enforced. See Boyert v. Tauber, 834 S.W.2d 60, 63 (Tex. 1992) (citing Hooks v. Bridgewater, 111 Tex. 122, 127, 229 S.W. 1114, 1116 (1921)); see also Ratsavong v. Menevilay, 176 S.W.3d 661, 667-69 (Tex.App. - El Paso 2005, pet. denied) (requiring a showing of "valuable and permanent improvements").

         Standard of Review

         We may set aside the jury's finding for factual insufficiency only if, after considering and weighing all of the evidence, we determine that the credible evidence supporting the finding is so weak, or so contrary to the overwhelming weight of all the evidence, that the finding should be set aside and a new trial ordered. Crosstex N. Texas Pipeline, L.P. v. Gardiner, S.W.3d., 2016 WL 3483165, at *24 (Tex. June 24, 2016); Baker v. Peace, 172 S.W.3d 82, 87 (Tex.App. - El Paso 2005, pet. denied) (an appellate court will only set aside the jury's verdict if it is so contrary to the overwhelming weight of the evidence that it is clearly wrong and unjust). In resolving a factual sufficiency challenge, we bear in mind that the jury is the sole judge of the weight and credibility of the evidence and is entitled to resolve any conflicts in the evidence and to choose which testimony to believe. Telesis/Parkwood Ret. I, Ltd. v. Anderson,462 S.W.3d 212, 223 (Tex.App. - El Paso 2015, no pet.) (citing City of Keller v. Wilson,168 S.W.3d 802, 819 (Tex. 2005)). We therefore assume that the jury decided questions of credibility or conflicting evidence in favor of the verdict if it could reasonably do so, and we do not substitute our judgment for that of the jurors if the evidence falls within the zone of ...

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