Appeal from the 334th District Court Harris County, Texas
Trial Court Case No. 2013-48461
consists of Justices Keyes, Brown, and Lloyd.
V. Keyes, Justice
real property dispute arises out of an attempt to purchase a
piece of property through a contract for deed. Appellant,
Leonel Ferrara, sued appellees, Joan Nutt and Maick S. Dalu,
for several causes of action including breach of contract,
fraud, violations of the Deceptive Trade Practices Act,
violations of the Texas Property Code, and a suit to quiet
title after Nutt sold the property at issue to Dalu despite
having previously executed a contract for deed with Ferrara.
Nutt did not answer or appear, and, after a bench trial, the
trial court rendered a default judgment against Nutt on
Ferrara's breach of contract claim and awarded damages.
The trial court dismissed all other claims against Nutt as
well as all claims against Dalu.
three issues, Ferrara argues on appeal that (1) the trial
court erroneously concluded that he was not entitled to the
protective provisions of the Texas Property Code concerning
certain executory contracts involving residential property;
(2) the dismissal of his suit to quiet title "produces a
manifestly unjust result" and "condones the very
conduct that [the relevant sections of the Property Code]
intends to prevent"; and (3) Dalu is required to convey
the property to Ferrara under the terms of the contract for
deed, which bind the parties' successors and assigns.
2011, Ferrara and Nutt entered into a "Contract for the
Lease and Mandatory Purchase of Real Estate" ("the
Contract") concerning a residential property in north
Houston. The parties agreed that Ferrara would lease the
property from Nutt beginning in August 2011 and that the
lease term would terminate on August 1, 2024. The Contract
provided that Ferrara would pay $847.17 per month in rent to
Nutt, and Nutt agreed to pay the assessed property taxes
during the lease term.
"mandatory purchase" portion of the Contract
provided that Nutt would sell the property to Ferrara on or
before August 30, 2024. The Contract required Ferrara to pay
$3, 000 in earnest money and provided that the purchase price
for the property was $55, 000. The Contract allowed Ferrara
to deduct the earnest money deposit and all rents that he
paid during the lease term from the purchase price. The
Contract also required Ferrara to execute a promissory note
at closing for the balance of the purchase price at an
interest rate of 4.5% per year. The Contract included a
provision stating that "[a]ll covenants, conditions and
agreements and undertakings" stated in the Contract
"shall extend to and be binding on the respective heirs,
successors and assigns of the respective parties hereto the
same as if they were in every case named and expressed."
The second-to-last page of the Contract included a
handwritten notation above Nutt's signature stating,
"After 12 years or 55, 000.000[, ] fifty five thousand
paid, the lessor [sic] shall own the property." Nutt did
not record the Contract in the Harris County real property
property required extensive repairs to be habitable, and
Ferrara spent approximately $13, 700 on these repairs
beginning in August 2011. Ferrara's expenditures included
installing a new air conditioning unit, fixing drywall in the
garage and the living room, making repairs to the kitchen and
bathrooms, installing new carpet, painting the interior and
exterior, landscaping, and removing beehives on the exterior.
November 2011, Nutt modified the terms of the Contract in an
e-mail to Ferrara. Nutt lowered Ferrara's monthly
payments to $540.72, but extended the lease term to fifteen
years, or until October 1, 2026, and raised the annual
interest rate to 9.1%. Nutt stated in the e-mail, "If 2
months of payments are missed after November 1, 2011, I will
have to consider our contract of lease to own void."
the unexpected expenditures to make the property habitable,
Ferrara decided to rent the property to Leticia Rodriguez
beginning in 2012 to recoup the money that he had spent
repairing the house. Rodriguez paid Ferrara $850 per month in
rent. Ferrara continued making his monthly payments, now at
the lower rate of $540.72 per month, to Nutt.
2013, Nutt sold the property to Dalu for approximately $40,
000. Rodriguez continued living at the property after this
sale, and, beginning in July 2013, she made her monthly
rental payments to Dalu instead of Ferrara.
August 2013, Ferrara sued Nutt and Dalu. Ferrara brought a
suit to quiet title, asserting that the deed conveying the
property from Nutt to Dalu was invalid because Nutt "had
no title or interest in the [p]roperty at the time of the
conveyance, and had no authority, actual or apparent, to
convey [Ferrara's] property." Ferrara alleged that
Nutt violated the Deceptive Trade Practices Act
("DTPA") by "advertis[ing] goods or services
with intent not to sell them as advertised" and
"represent[ing] that an agreement confers or involves
rights, remedies, or obligations which it does not have or
involve, or which are prohibited by law." Ferrara also
alleged that Nutt engaged in false, misleading, or deceptive
acts by violating eleven provisions of the Texas Property
Code relating to executory contracts for residential
property, which are considered "tie in" statutes
under the DTPA. Further, Ferrara asserted causes of action
for fraud in a real estate transaction, breach of fiduciary
duty, money had and received, and breach of contract against
Nutt, and causes of action for common law fraud and tortious
interference with contract against Nutt and Dalu. Ferrara
sought actual damages, treble damages under the DTPA, and
did not file an answer and did not appear at trial. Dalu
answered and appeared at trial, representing himself pro se.
At a bench trial, Ferrara testified that he purchased the
property from Nutt because he was going to live there with
his family. He stated that, at the time he entered into the
Contract with Nutt, Nutt told him that Dalu had wanted to buy
the house, but Nutt preferred to sell it to Ferrara because
he and his children lived in a mobile home and needed a
larger space, whereas Dalu did not need the house. Ferrara
testified that he lived in a mobile home next to his business
and that he rented the house to Rodriguez because he had
spent a significant amount of money fixing up the house and
he "wanted to recover the money that [he] had invested
in the house."
testified that Dalu knew that Ferrara had purchased the
property from Nutt prior to the June 2013 deed between Nutt
and Dalu. Ferrara testified that he had known Dalu
for over fifteen years and that he went into one of
Dalu's convenience stores on a near-daily basis. On one
occasion, Dalu asked Ferrara if he had purchased the house
from Nutt, and Ferrara explained the lease-to-own agreement
he had made with Nutt. Dalu then suggested that he loan
Ferrara $25, 000 to purchase the house, the house could
belong to both of them, and they could rent out the house.
Ferrara declined this offer, testifying that he told Dalu
that Nutt wanted Ferrara to purchase the property for his
children, whom Nutt had known for years.
testified that she began living at the property in 2012. She
stated that she first spoke with Dalu around April or May of
2013 when Dalu stopped by the house and asked if she was
renting or buying the house. Rodriguez told Dalu that she
rented the house and that "the owner lives a couple [of]
streets down. His name is Leonel [Ferrara]. He's the
owner of the house, not me."
testified that, before he purchased the house from Nutt, he
stopped by the house and asked Rodriguez if she was renting
the house and how much her rental payments were each month.
Rodriguez told him that she paid $850 per month, and Dalu
testified that Nutt had told him that Ferrara paid her around
$500 per month, so his understanding was that Ferrara leased
the property from Nutt and then made around $200 or $300 as a
commission by leasing the property to Rodriguez. He testified
that he was never told that Ferrara had an ownership interest
in the property. Dalu denied knowing specific information
about the contractual relationship between Nutt and Ferrara.
trial court entered a take-nothing judgment on Ferrara's
claims against Dalu and dismissed those claims with
prejudice. The trial court also granted a default judgment
against Nutt and awarded Ferrara judgment on his breach of
contract claim against Nutt in the amount of $13, 772.78,
plus costs and pre- and post-judgment interest.
trial court also entered findings of fact and conclusions of
law. Relevant to this appeal, the trial court found that
"[n]either Ferrara nor his family members lived at the
Property" and that "Ferrara rented the Property to
Ms. Leticia Rodriguez, who lived there continuously from
early 2012 through all times relevant to this suit." The
trial court also found that Ferrara presented no evidence
"that he paid the earnest money [deposit] required by
the Contract." The trial court entered the following
conclusions of law, among others:
3. The evidence presented does not support recovery on any
other causes of action pled against Nutt, and all of
Plaintiff's claims against Nutt other than breach of
contract should be dismissed.
4. The protective provisions of Texas Property Code Section
5, Subchapter D, which relate generally to executory
contracts for the conveyance of residential real property, do
not apply to the Contract because the Property was not
"used or to be used as the purchaser's residence or
as the residence of a person related to the purchaser within
the second degree by consanguinity or affinity."
See Tex. Prop. Code § 5.062(a). There was no or
insufficient evidence that the Property was being used as
Ferrara's residence or that Ms. Leticia Rodriguez is
related to him.
5. There was no or insufficient evidence presented to support
Plaintiff's claims against Dalu for breach of contract,
fraud, DTPA (if and to the extent pled against him), breach
of fiduciary duty, tortious interference with contract, money
had and received or for exemplary damages, and all such
claims against Dalu should be dismissed.
6. Because the Contract does not comply with Section 5,
Subchapter D of the Texas Property Code, Plaintiff's suit
to quiet title should be denied.
of Provisions Relating to Residential ...