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Katim Endeavors, Inc. v. Lockheart Chapel, Inc.

Court of Appeals of Texas, Second District, Fort Worth

August 29, 2019

Katim Endeavors, Inc., Appellant
Lockheart Chapel, Inc., Appellee

          On Appeal from County Court at Law No. 3 Tarrant County, Texas Trial Court No. 2017-007142-3

          Before Kerr, Birdwell, and Womack, JJ.



         I. Introduction

         Appellant Katim Endeavors, Inc. ("Katim") complains about the denial of its right to specific performance of a real estate contract entered into with Appellee Lockheart Chapel, Inc. ("Lockheart"). In two issues, Katim is appealing both the trial court's denial of its motion for summary judgment and the trial court's granting of Lockheart's motion for partial summary judgment. Because Lockheart did not prove its entitlement to summary judgment as a matter of law and because there is a fact issue regarding whether Katim was "ready, willing, and able to perform," we reverse and remand to the trial court for further proceedings.

         II. Background

         On February 4, 2016, Katim, as buyer, and Lockheart, as seller, entered into a commercial real estate contract whereby Katim would purchase real property located at 3005 Merrick Street in Fort Worth for $25, 000. The contract provided in paragraph 5, "Not later than 3 days after the effective date, buyer [Katim] must deposit $1.00 as earnest money with Texas Secure Title . . . ." The effective date of the contract was "the date the title company receipts this contract after all parties execute the contract." Page 14 of the contract provided a form of an "Escrow Receipt." Pursuant to paragraph 10 of the contract, closing was to occur "[w]hen under a seperate [sic] contract another buyer is found." All closing costs were to be paid by Katim and the new buyer.

         By letter dated September 26, 2017, Katim's attorney stated that Katim had received the second contract to sell the property, that it was depositing the $25, 000 purchase price in the attorney's trust account, and that it was asking Lockheart to close on the property.

         On November 14, 2017, Katim filed suit for specific performance against Lockheart. In the petition, Katim alleged that it "ha[d] performed all of the obligations imposed on [Katim] by the Agreement except payment of the purchase price," which Katim alleged was tendered on September 26, 2017, but Lockheart refused to accept. The petition goes on to state that Katim is "ready, willing, and able to pay the purchase price." In addition to specific performance, Katim sought to recover attorneys' fees and costs.

         In response, Lockheart filed an original answer and counterclaim, which it amended twice. In "Defendant's Third Amended Answer and Second Amended Counterclaims," Lockheart set out special exceptions, [1] a general denial, a request for declaratory judgment, and an allegation of breach of contract, which Lockheart stated entitled it to attorneys' fees.

         Lockheart, on December 12, 2017, sent a "notice" to Katim claiming the contract was terminated because Katim "did not make the earnest money deposit with Texas Secure Title Company as required by Paragraph 5.A." Three days later, a copy of the contract and the $1 earnest money were delivered to the title company. On the same day, Nancy Gonzalez, a bookkeeping assistant with the title company, acknowledged receipt of the contract and the earnest money by signing the "Escrow Receipt" on page 14 of the contract. The "Escrow Receipt" states, "The title company acknowledges receipt of: A. the contract on this day 12-15-17 (effective date); B. earnest money in the amount of $1.00 [i]n the form of cash on 12-15-17."

         Thereafter, both sides filed competing traditional motions for summary judgment.[2] Lockheart's motion for partial summary judgment identified two "issues":

1. Is Katim Endeavors' claim for specific performance defeated as a matter of law based on the judicial admission in the petition for specific performance that the contract attached to its petition is the contract Katim Endeavors seeks to specifically enforce and the undisputed facts [sic] it failed to meet the conditions it agreed to meet in the contract?
2. Has Katim Endeavors breached the contract as a matter of law by filing suit on an unenforceable contract?

         In its motion for partial summary judgment, Lockheart attached the original petition, deposition of Martin Garcia-the corporate representative of Texas Secure Title Company, affidavit of Garcia, affidavit of David M. Lewis-President of Lockheart, and deposition excerpts of William Hays corporate representative of Katim. In his deposition, Garcia testified that while the title company had "received" the contract in January or February of 2016, Nancy Gonzalez, who is in "HR" and is a "bookkeeping assistant" with the title company, acknowledged "receipt" of the contract and $1 earnest money on December 15, 2017. However, in his affidavit, Garcia stated that the title company's records "reveal[] no executed or unexecuted copy of [the contract.]" Further, he testified that the title company never received the second contract with another buyer.

         By affidavit, Lewis also stated that Lockheart's records "reveal[] no executed or unexecuted copy of [the contract.]" Hays testified in his deposition that the first time any earnest money was submitted to the title company was on December 15, 2017, which was a few days after Katim received written notice that Lockheart canceled the contract.

         Based on the summary judgment evidence, Lockheart argued that specific performance was defeated as a matter of law because Katim "never timely paid the earnest money and it never tendered the contract of the third party to the title company along with the purchase price." Further, Lockheart contended that "[b]ecause Katim wrongly sued Lockheart whereby its suit for specific performance is defeated," Lockheart is entitled to its reasonable and necessary costs.

         In its motion for summary judgment, Katim presented four "issues":

1. What is the proper interpretation of Paragraph 24 of the contract defining the "effective date" of the contract?
2. Is Buyer entitled to specific performance in this case?
3. Did Buyer tender performance or was tender excused?
4. Has Buyer established that it is willing and able to ...

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