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Range v. Calvary Christian Fellowship

Court of Appeals of Texas, Fourteenth District

June 29, 2017

CONNIE RANGE, TRUSTEE OF THE MARTHA RANGE TRUST D/B/A RELIANT ENGINEERING AND MACHINE, US, AND SAMUEL RANGE, Appellants
v.
CALVARY CHRISTIAN FELLOWSHIP, Appellee

         On Appeal from the 234th District Court Harris County, Texas Trial Court Cause No. 2014-09494.

          Panel consists of Justices Christopher, Jamison, and Donovan.

          OPINION

          Tracy Christopher Justice.

         In this dispute between a commercial tenant and its landlord, both sides appeal from the judgment rendered after a jury trial. The tenant and a related party maintain that the landlord breached an agreement to sell the property to one or both of them and additionally breached a lease provision giving the tenant the right to lease additional space. The tenant and the related party sued the landlord for breach of contract, common-law fraud, statutory fraud, and promissory estoppel, prevailing only on the promissory-estoppel claim. The landlord unsuccessfully counterclaimed for breach of the lease, but received some of the declaratory relief it sought. The trial court refused each side's requests for a contractual award of attorney's fees.

         On appeal, the tenant and the related party contend the evidence conclusively establishes that the landlord breached the agreement to sell the property and that they are entitled to specific performance, or in the alternative, an award of damages. The tenant similarly contends that the evidence conclusively establishes that the landlord breached an agreement to lease additional space, and seeks rendition of judgment for those damages as well. The tenant and related party further argue that the trial court abused its discretion in denying their motion to disqualify the landlord's law firm.

         The landlord also appeals the judgment, arguing inter alia that there is no evidence that the tenant and the related party sustained damages recoverable for promissory estoppel. Finally, each side challenges the trial court's refusal to award attorney's fees.

         We agree only with the landlord. Because its opponents presented no evidence that they sustained damages recoverable for a promissory-estoppel claim, we modify that portion of the judgment to eliminate the damages awarded. We further agree that the landlord is entitled to recover its attorney's fees; however, the parties have not addressed the question of whether the fees are recoverable only from the tenant or from both the tenant and the related party. We therefore reverse the portion of the judgment concerning attorney's fees and remand the case for the trial court to determine the fee issue.

          I. Background

         We summarize the background of this case in accordance with the legal-sufficiency standard of review. First, however, we will clarify the parties' identities and their respective roles.

         Defendant/appellee Calvary Christian Fellowship ("Calvary") owns a commercial building, a portion of which it leased to Reliant Engineering and Machine U.S. ("Reliant"). When Calvary entered into the lease agreement in the spring of 2011, it believed that Reliant was the assumed name of sole proprietor Sam Range, who signed the lease. According to the evidence at trial, however, Reliant is the name under which the Martha Range Trust, through its trustee Connie Range, does business. Thus, when we speak of "Reliant, " we are speaking of plaintiff/appellant Connie Range in her capacity as trustee of the Martha Range Trust.[1] When we refer to Sam, we are referring to intervenor/appellant Sam Range in his individual capacity.[2]

         A. The Lease's Key Terms

         The lease contains three provisions that are especially pertinent to this appeal. First, a special provision states that if Calvary decides to sell the property during the original 60-month term of the lease, Reliant has a thirty-day first right of refusal to enter into a sales contract to purchase the property on the specific terms in the lease. Second, another special provision states that if additional space becomes vacant, Reliant has a thirty-day first right of refusal to lease the additional space on the same terms on which it leased the original space, except that the lease of the additional space will expire with the expiration of the original sixty-month lease. And third, a clause in the lease states that any person who prevails in a legal proceeding "related to the transaction described in this lease" is entitled to recover reasonable attorney's fees from the non-prevailing party.

         B. The Purchase Negotiations

         In March 2012, Sam began to discuss with Calvary's Mark Brocato whether Reliant would lease additional space that was about to become available, or alternatively, whether Calvary would agree to sell the property on terms differing from those stated in the lease. Brocato sent an email to Sam on March 29, 2012 describing the terms they discussed and concluding, "I will have the contract drawn up and get it to you as quickly as possible."

         The terms Sam and Brocato discussed differed significantly from the purchase terms stated in the lease. The lease states that if Calvary decides to sell the property during the original 60-month term of the lease, then Reliant "has a first right of refusal to enter into a sales contract to purchase [the] property at $1, 200, 000 with 20% down with 5% interest with a 30 year amortization with a 5 year balloon." The terms stated in the email list the same purchase price of $1.2 million, a 30-year amortization, and a 5-year balloon payment, but the interest rate stated in the email is 6% and the $240, 000 down payment is eliminated entirely. The email also specifies that the monthly payments would be $10, 007, and that "all lease contracts are sold with the building." According to Sam and Reliant, this email was itself an offer to sell, which one or both of them accepted.

         Calvary's attorney Duke Keller at Weycer, Kaplan, Pulaski & Zuber, P.C. ("Weycer Kaplan") drew up the contract and sent it to Sam. The contract called for Sam to pay earnest money of $10, 000, which was to be applied to the first monthly payment. Sam's and Reliant's attorney Frank Svetlik reviewed the contract and sent it back with revisions. Among other things, Sam and Reliant (1) crossed out Sam's name as "Buyer" and instead identified the buyer as "New Entity"; (2) reduced the total monthly payment by 18%, from $10, 007, as stated in the email, to $8, 200; (3) required Calvary to provide the buyer a recent survey; (4)required Calvary to provide the buyer with estoppel letters from the tenants; (5)required Calvary to pay for a title policy; (6) eliminated the earnest-money requirement; (7) deleted the requirement for any financial statements from the buyer; (8) eliminated Calvary's right to declare the outstanding principal and interest due if the buyer sold or conveyed the property without Calvary's consent; and (9) made the Calvary's loan to the buyer a non-recourse loan. Calvary did not accept the revisions and further negotiations eventually were abandoned.

         C. The Lease of Additional Space

         When the parties were unable to agree on the terms of the sales contract, their discussions turned to Reliant's right to lease additional space. Reliant wanted the additional space separately metered for electricity at Calvary's expense, but Calvary refused. Although the thirty-day first right of refusal was extended while the parties continued negotiations, they were unable to reach an agreement.

         D. The Parties' Claims

         To resolve these disputes, Reliant sued Calvary for breach of the alleged agreement to sell the property, breach of the lease, promissory estoppel, common-law fraud, statutory fraud, fraudulent inducement, negligent misrepresentation, and violations of the Deceptive Trade Practices-Consumer Protection Act. Reliant also asked for an injunction to prevent Calvary from selling the property to anyone other than Reliant or Reliant's assignee, and sought specific performance of Calvary's alleged promise to sell the property to Reliant on the terms stated in the March 29, 2012 email.

         Calvary disputed whether Reliant or Sam was the tenant under the lease, so Sam intervened in the action, after which the trial court generally referred to both Reliant and Sam as "the plaintiffs." Pleading in the alternative, Sam stated that if Reliant was not the tenant, or Reliant did not do business at the material time, or Sam lacked authority to execute the lease as Reliant's agent, then Sam was the tenant and did business as Reliant. Under the alternative pleading that Sam was the tenant, Sam asserted the same claims Reliant had asserted.

         Calvary counterclaimed against both Reliant and Sam for declaratory judgment and for breach of the lease, but later abandoned its claim for money damages.

         E. Reliant's Motion to Disqualify Calvary's Counsel

         Before trial, Reliant moved to disqualify Weycer Kaplan from representing Calvary. According to Reliant, Weycer Kaplan had a twenty-year history of representing it and companies or entities formed or owned by Reliant jointly or individually. Reliant also alleged that Weycer Kaplan acted as an intermediary in the sales negotiations between Calvary and Reliant, and that when the law firm prepared the proposed sales contract, the firm was representing both Calvary and Reliant. Based on these allegations, Reliant argued that it was not only a former client of the law firm, but also a current client. The trial court denied the motion to disqualify the firm.

         F. The Trial's Outcome

         At the close of evidence, the jury was asked to determine (1) if Calvary intended to bind itself to an agreement with Reliant and/or Sam requiring Calvary to sell the property and the leases to either or both of them on the terms stated in the March 29, 2012 email; (2) if Calvary failed to comply with the lease; (3) if Reliant failed to comply with the lease; (4) if Calvary committed fraud against Sam, Reliant, or both; and (5) if Calvary committed statutory fraud against Sam, Reliant, or both. The jury answered all of these questions, "No." The jury also was asked whether Reliant or Sam substantially relied to their respective detriment on Calvary's promise to sell the property, if any, and whether the reliance was foreseeable by Calvary. The jury answered "yes" as to both Sam and Reliant. The jury found that the amount of $6, 350 was necessary to restore Reliant to the position it would have occupied had it not acted in reliance on that promise in the past, and that $5, 000 was necessary to restore Sam to his pre-reliance position. The jury assessed no damages for Sam's and Reliant's reliance on the promise in the future. Finally, the jury was asked to determine each side's reasonable and necessary attorney's fees.[3] The jury assessed identical amounts for "Reliant and/or Sam Range's" attorney's fees and for Calvary's attorney's fees: $232, 000 for representation in the trial court, and up to an additional $80, 000 for appeals.

         The trial court initially rendered judgment awarding Sam and Reliant damages on their promissory-estoppel claims but denying each side's request for attorney's fees. Both sides moved to modify the judgment and for judgment notwithstanding the verdict. The trial court modified the judgment to include certain declarations that Calvary had requested and to add, "The Plaintiffs only recovered on a claim for promissory estoppel for which no award of attorney's fees is permitted. And, even if such an award was permitted, it would be offset by an award in favor of the Defendant as the prevailing party under the Lease."

         Both sides appeal the judgment.

         II. Issues Presented

         In their first three issues, Sam and Reliant contend that the trial court erred in allowing the jury to determine whether Calvary intended to bind itself to sell the property and the leases to one or both of them on the terms stated in Brocato's March 29, 2012 email. Sam and Reliant maintain that the email is a contract and its enforceability is a question of law. They further argue that the evidence conclusively establishes that the email was a binding offer, which one or both of them accepted. In their fourth issue, they assert that Reliant is entitled either to specific performance of Calvary's promise to sell the property on the terms stated in the email or to an award of damages for breach of that promise. Sam and Reliant argue in their fifth issue that the evidence conclusively establishes that Calvary breached the lease by failing to lease additional space to Reliant. In their sixth and seventh issues, Sam and Reliant challenge the trial court's refusal to award them attorney's fees, and in their eighth issue, they argue that the trial court abused its discretion by denying Reliant's motion to disqualify Weycer Kaplan from representing Calvary.

         Calvary presents two issues in its cross-appeal, arguing that Sam and Reliant are not entitled to judgment on their promissory-estoppel claim and that the trial court erred in failing to award Calvary its attorney's fees.

         III. The Alleged Purchase Agreement

         In each of Sam's and Reliant's first three issues, they challenge the jury's negative answers to two questions on which they bore the burden of proof at trial. Both jury questions are concerned with whether Brocato's March 29, 2012 email is a binding agreement; the difference between the two is that one question allowed the jury to find that the email was a stand-alone agreement while the other question permitted the jury to find that the email was a modification of the lease. Because Sam and Reliant make the same arguments for disregarding the jury's answers to each of those answers, we address the arguments regarding these questions together.

         A. The Evidence Does Not Conclusively Establish that Calvary Agreed to Sell the Property on the Terms Stated in the March 29, 2012 Email.

         To overcome an adverse fact-finding on a matter on which it bears the burden of proof, a party must demonstrate on appeal that the evidence conclusively establishes the disputed fact in that party's favor. See Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 n.7 (Tex. 1998). To determine whether the evidence conclusively establishes a fact, we review all of the evidence in the light most favorable to the finding, indulging every reasonable inference that would support it. See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. See id. at 827. Evidence is conclusive if it would not permit reasonable jurors to differ about the factual determination. See Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 340 (Tex. 1998). Testimony from interested witnesses is conclusive "only if the testimony could be readily contradicted if untrue, and is clear, direct, and positive, and there are no circumstances tending to discredit or impeach it." Lofton v. Tex. Brine Corp., 777 S.W.2d 384, 386 (Tex. 1989); Ramco Oil & Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 911 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

         Sam and Reliant assert that there was no question of fact about whether the parties had an enforceable agreement that Calvary would sell the property on the terms stated in the email because whether an enforceable agreement exists is a question of law. They therefore contend that the trial court abused its discretion in asking the jury if Calvary intended to be bound by the email. See Grohman v. Kahlig, 318 S.W.3d 882, 887 (Tex. 2010) (per curiam) ("A trial court commits error if it submits a question of law to the jury."). Sam and Reliant further argue that the evidence conclusively establishes that Calvary intended to bind itself to sell the property to one or both of them on the terms stated in the email. See id. ("Whether a party has breached a contract is a question of law for the court, not a question of fact for the jury, when the facts of the parties' conduct are undisputed or conclusively established."). For all of these reasons, Sam and Reliant conclude that the jury's answers to these questions are immaterial and that the trial court erred in failing to disregard them. See Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994) (explaining that a jury finding may be disregarded if it is unsupported by evidence or is immaterial, and that a question is immaterial if it should not have been submitted, has been rendered immaterial by other findings, or calls for a finding beyond the jury's province).

         Although Sam and Reliant are correct in stating that whether a contract is enforceable is a question of law, [4] they overlook the preliminary factual question of whether the email was intended to be a contract at all.

         When parties anticipate signing a formal contract, the question of whether they intended to bind themselves before the formal contract is executed is usually a question of fact. See R.R. Comm'n of Tex. v. Gulf Energy Expl. Corp., 482 S.W.3d 559, 572-73 (Tex. 2016); Foreca, S.A. v. GRD Dev. Co., Inc., 758 S.W.2d 744, 744-46 (Tex. 1988); Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 555-57 (Tex. 1972). The face of the email shows that Calvary intended there to be a later formal contract, because Brocato stated in the email, "I will have the contract drawn up and get it to you as quickly as possible." Thus, whether Calvary intended the email to be binding in advance of the contract is a question of fact. It therefore was appropriate for the trial court to submit that issue to the jury. Compare Scott, 489 S.W.2d at 557 (reversing and remanding a contract cause of action where the trial court failed to ask "whether the parties intended for there to be a contract of employment under the basic terms set out in the 'purchase agreement'") with Murphy v. Seabarge, Ltd., 868 S.W.2d 929, 933-34 (Tex. App.-Houston [14th Dist] 1994, writ denied) ("[T]he question of the parties' intent was not established as a matter of law and was properly submitted to, and answered by, the jury in fulfillment of its fact finding responsibilities.").

         In the instructions accompanying the question about whether Calvary intended to be bound, the jury was told it could consider "what [the parties] said and did in light of the surrounding circumstances, including any earlier course of dealing. You may not consider the parties' unexpressed thoughts or ...


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