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

KATIM ENDEAVORS, INC., Appellant v. LOCKHEART CHAPEL, INC., Appellee

No. 02-18-00358-CV

Court of Appeals Second Appellate District of Texas at Fort Worth

August 29, 2019

On Appeal from County Court at Law No. 3 Tarrant County, Texas

Trial Court No. 2017-007142-3

Before Kerr, Birdwell, and Womack, JJ.

Memorandum Opinion by Justice Womack MEMORANDUM OPINION

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 copyof 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 ofLockheart, 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 perform the contract?

Katim's summary judgment evidence included an affidavit of Hays, an affidavit of Katim's attorney—Rick Disney, and the deposition of Garcia. Hays's affidavit included the contract with the blank "Escrow Receipt," the September 26, 2017 letter from Katim's attorney, the December 12, 2017 letter from Lockheart terminating the contract, the December 15, 2017 letter from Katim's attorney conveying the contract and earnest money to the title company, and the contract with the completed "Escrow Receipt." In addition, Hays testified in his affidavit, "We have the funds readily available to close on this transaction for the agreed purchase price of $25,000.00," and "[t]he Buyer is ready, willing and able to complete the sale." Attached to the affidavit was a copy of the unsigned "second contract." Based on the summary judgment evidence, Katim argued that it was entitled to specific performance.

By "Final Judgment" signed October 5, 2018, the trial court stated that it had signed an August 16, 2018 order³ granting Lockheart's motion for partial summary judgment that denied all relief sought by Katim⁴ and "determined that Plaintiff Katim. . . had breached the contract." The judgment ordered that Katim recover nothing on its claim for specific performance against Lockheart. Further, the judgment reflected stipulated attorneys' fees to be recovered by Lockheart against Katim. Katim appeals from this judgment.

III. DISCUSSION

A. General Standard of Review for Motions for Summary Judgment and General Law on Construing Contracts

We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). Under the summary judgment standard set forth in Texas Rule of Civil Procedure 166a(c), the movant has the burden to show that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).

A plaintiff is entitled to summary judgment on a cause of action if it conclusively proves all essential elements of the claim. See Tex. R. Civ. P. 166a(a), (c);MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (1986). A defendant that conclusively negates at least one essential element of a plaintiff's cause of action is entitled to summary judgment on that claim. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). A defendant moving for summary judgment on the plaintiff's cause of action assumes the burden of showing as a matter of law that the plaintiff has no cause of action. See Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991); Griffin v. Rowden, 654 S.W.2d 435, 435-36 (Tex. 1983). Once the defendant produces sufficient evidence to establish the right to summary judgment, the burden shifts to the plaintiff to come forward with competent controverting evidence that raises a fact issue. Phan Son Van v. Peña, 990 S.W.2d 751, 753 (Tex. 1999).

When, as here, both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both parties' summary-judgment evidence and determine all questions presented. Mann Frankfort, 289 S.W.3d at...