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NLD, Inc. v. Huang

Court of Appeals of Texas, First District

December 31, 2019

NLD, INC., Appellant
v.
KENNY HUANG A/K/A KENNY HSIEH-I HUANG, Appellee

          On Appeal from the 333rd District Court Harris County, Texas Trial Court Case No. 2017-02059

          Panel consists of Justices Keyes, Lloyd, and Goodman.

          OPINION ON REHEARING

          EVELYN V. KEYES JUSTICE.

         Appellee, Kenny Huang a/k/a Kenny Hsieh-I Huang, moved for rehearing and en banc reconsideration of our December 6, 2018 opinion in this case. In a previous order, we granted Huang's motion for rehearing, vacated our December 6, 2018 opinion and judgment, and dismissed Huang's motion for en banc reconsideration as moot. We now issue the following opinion and judgment on rehearing.

         In this appeal, we determine whether a real estate broker is entitled to receive a commission in connection with the sale of a motel. The broker, Kenny Huang, sued the seller of the motel, appellant NLD, Inc., claiming that it owed him a commission because he had introduced the parties to the sale and brokered an earlier attempt to sell the property that ultimately resulted in the sale of the property from the same seller, NLD, to the same buyer, Mahendra Bhakta. The trial court rendered summary judgment in favor of Huang, granting him $38, 250 in actual damages and a total of $16, 000 in trial and conditional appellate-level attorney's fees.

         On appeal, NLD argues that the trial court erred in granting summary judgment in favor of Huang because there was no written contract entitling him to a commission, Huang did not perform or tender performance, and NLD did not breach a contract. NLD also argues that the trial court erred by denying its cross-motion for summary judgment. We affirm.

         BACKGROUND

         In August 2014, Kenny Huang, a licensed real estate broker, introduced Lan Nguyen, the president of NLD, who was attempting to sell the West Airport Inn located in Stafford, Texas (the "motel"), to a potential buyer, Bhakta. The parties reached an agreement for the sale of the motel and executed a sales contract on August 24, 2014. The sales contract, a standard Texas Association of Realtors form, was signed by the Buyer (Bhakta) and by the Seller (NLD, Inc.) through Nguyen. The record contains evidence that NLD, not Nguyen, was the owner of the property.

         Section 9 of the standard contract form signed by Nguyen and Bhakta, styled "Brokers," included a realtor's commission in the amount of three percent of the sales price to be paid "at the closing of this sale" to Huang's employer, Champions Real Estate Group. The contract listed Champions as the "Principal Broker" and named Huang as the "Agent." The contract stated that the Principal Broker "is an intermediary between Seller and Buyer." This section also provided as an option that the Seller could pay the Principal Broker the fees specified by a separate written agreement. The parties rejected this option. Instead, as part of the transaction Nguyen agreed to pay Champions a commission of three percent of the sales price "from the Seller's proceeds" "at the closing of this sale." Champions has since assigned its interest in the commission to Huang.

         Under "Parties," the contract listed as Seller "Lan Guyen/West Airport Inn (NLAVICO, Inc.)." A handwritten addendum corrected the spelling of Nguyen's last name. Bhakta was listed as the Buyer. The signature page of the contract again listed the Seller as "Lan [Nguyen]/West Airport Inn. . . . By: Lan [Nguyen]." Evidence in the record indicates that, in operating the motel, NLD conducted business as "Little York Suite A.K.A. West Airport Inn & Suites."

         The sale was made expressly contingent on Bhakta's ability to obtain third-party financing. Specifically, the "Commercial Contract Financing Addendum" to the contract stated:

A. THIRD PARTY FINANCING:
(1) The contract is contingent upon Buyer obtaining a third party loan(s) secured by the Property in the amount of $1, 000, 000.00 for not less than 20 years with the initial interest rate not to exceed 7.000% per annum and payments calculated on an amortization period of no less than 20 years.
(2) Buyer will apply for the third party loan(s) described in Paragraph A(1) promptly after the effective date [of the sales contract, August 26, 2014]. If Buyer cannot obtain the loan(s), Buyer may give Seller written notice within 30 days after the effective date and the contract will terminate and the earnest money . . . will be refunded to Buyer. If Buyer does not give such notice within the time required, this contract will no longer be subject to the contingency described in this Paragraph A.
(3) Each note to be executed under this addendum is to be secured by vendor's and deed of trust liens.

         The sales contract set the closing date for the sale "within 7 days after lender approves of loan." Under the contract, Bhakta paid $10, 000 in earnest money, and he agreed to pay $400, 000 in cash at closing and to borrow the remaining $1, 000, 000 of the $1, 400, 000 purchase price.

         The sale did not close at that time. Contending that a nuisance lawsuit filed by the City of Stafford clouded title to the West Airport Inn, Bhakta declined to go through with the transaction. However, the written notice required within thirty days to terminate the contract was not given. Accordingly, on September 26, 2014, the contract was no longer "contingent," but rather was a fully enforceable and binding contract. This binding agreement included Champions' and Huang's brokers' commission as an integral part of the contract.

         In October 2014, Huang emailed Bhakta and Nguyen's daughter, stating that "because of the property law suit, the title cannot be tran[s]ferred" and that "[b]uyer still want[s] the property if the suit is cleared." Huang circulated a "Release of Earnest Money" form to both Nguyen and Bhakta and secured the parties' signatures. The Release stated:

NOTICE: This form provides for the release of the parties, brokers, and title companies from all liability under the contract (not just for disbursement of earnest money). Do not sign this form if it is not your intention to release all the persons signing this form from all liability under the contract. READ THIS RELEASE CAREFULLY. If you do not understand the effect of this release, consult your attorney BEFORE signing.
A. The undersigned Buyer and Seller release each other, any broker, title company, and escrow agent from any and all liability ...

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