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Pasol v. D&C Jewelry Shop, Inc.

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

April 4, 2019


          On appeal from the 444th District Court of Cameron County, Texas.

          Before Chief Justice Contreras and Justices Rodriguez and Benavides [1]



         By five issues, appellants Carlos Pasol[2] and REE Family Limited Partnership (collectively Pasol) challenge the jury verdict in favor of appellee D&C Jewelry Shop, Inc. (Ayala). [3] Ayala sued Pasol for common law fraud, statutory fraud, negligent misrepresentation, partial performance, promissory estoppel, and quantum meruit. The jury awarded Ayala $235, 438 in damages, the exact out-of-pocket amount Ayala claimed.

         On appeal, Pasol alleges that (1) the statute of frauds precludes the enforceability of an oral promise relating to the sale of real estate unless equitable exceptions are made; (2) the parol evidence rule precludes the admission of prior or contemporaneous collateral agreements or negotiations that change the terms of a final agreement unless an exception is met; (3) the evidence was legally and factually insufficient to prove common law fraud, statutory fraud, negligent misrepresentation, and promissory estoppel; (4) Ayala is not entitled to recovery of damages because he failed on his causes of action; and (5) the finding of quantum meruit was not applicable and should be reversed. We affirm.

         I. Background

         Pasol was in the business of financing loans on property for individuals. Pasol and Ayala had conducted multiple transactions in the past where Pasol would finance a property that Ayala wanted to purchase for ten percent down, a trust lien against the property, and monthly payments at an interest rate of around 8%. Ayala testified that most of the terms were verbally negotiated and then memorialized in writing.

          A. Executed Land Contract

         Although the specific facts of what transpired are disputed between the parties, at some time during 2012, Ayala and Pasol discussed the purchase of a tract of land Pasol owned off Paredes Line Road between Brownsville and Los Fresnos. According to Ayala, at some point in early 2013, Pasol showed him a plat which depicted improvements to the property that allowed the land to operate as a flea market. The original plot of land Pasol owned was sixty acres, but Ayala was interested in purchasing a smaller portion (around fifteen and a half acres). Ayala alleged that Pasol represented to him that the property was a functioning flea market, had a certificate of occupancy from the county, was in compliance with water and sewer requirements, and was available for immediate use. Ayala claimed that Pasol told him that the flea market was in operation under the name "Sapito Market." Ayala also alleged that he and Pasol together calculated potential gross income from the flea market and wrote those calculations on the plat. Pasol told Ayala to visit the land first and then they would discuss pricing and terms. Ayala testified that based on the verbal representations and negotiations, he agreed to purchase the land.

         At some point before mid-February 2013, Pasol and Ayala agreed to the terms which were: (1) the sale was owner-financed; (2) the sale price was $600, 000; (3) the term was for twenty-five years at an interest rate of 6.5%; (4) Ayala would purchase under D&C Jewelry, Pasol would convey to REE, and REE would be the seller; and (5) Ayala's first payment of $4, 189.18 would not be due until September 2013, although interest would accrue during that time. On February 14, 2013, Ayala and Pasol's wife executed the purchase documents at a law office, which included: (1) a warranty deed with vendor's lien, (2) a deed of trust, (3) a real estate lien note, (4) a closing statement, and (5) an acknowledgment regarding attorney representation disclosure. The deed of trust included the metes and bounds description of the property and Ayala was provided with a settlement statement and survey of the property.

         B. Ayala's Reliance on Pasol's Statements

         Two months after the purchase, Ayala discovered the property did not have a certificate of occupancy from the county. According to Ayala, Pasol had been unable to locate the certificate of occupancy upon request prior to Ayala's discovery at the county office. Later, nearly five months after the purchase, Ayala also discovered the property did not have potable water or a proper septic system. Ayala admitted during trial that prior to purchasing the property, he drove by one time, but never inspected it further.

         Ayala stated that he went to Pasol after his discoveries and Pasol told him to "open [the flea market] anyway." When Ayala refused, Ayala claimed that Pasol told him to continue with the required improvements and Pasol would either reimburse Ayala for the expenses or deduct that amount from the loan on the property. Pasol disputed this conversation occurred. Ayala continued making improvements, presenting invoices at trial from Zarsky Lumber, Godel Construction, G & T Paving, Peralez Construction, and Montemayor Engineering. Ayala also presented testimony from a laborer on his project. As the work projects progressed, Ayala ran out of money and had to sell some of his other properties.

          Ayala obtained his certificate of occupancy on April 25, 2014. Ayala testified he then approached Pasol and requested reimbursement and modification of the terms of the note between them, but no agreement materialized.

         On July 31, 2014, Pasol mailed Ayala a registered letter requesting payment on the property. No payments were made. On August 19, 2014, Pasol made a demand for payment and notice of intention to accelerate the note. Again, no payments were made by Ayala. Ayala claimed that following the August letter, he went to speak with Pasol to "confront" him about their previous agreement to reimburse for expenses. Ayala stated that Pasol again agreed to ...

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