McGehee v. Endeavor Acquisitions, LLC

603 S.W.3d 515

Jake Robert MCGEHEE, a/k/a J. Robert McGehee; and James Thomas Stewart, a/k/a Tommy Stewart, a/k/a James Thomas Stewart III, Individually and as Personal Representative of the Estate of Lynn McGehee Stewart and as Trustee of Those Certain Trusts Established Under the Stewart Revocable Living Trust, u/t/d August 22, 2003, Appellants,

v.ENDEAVOR ACQUISITIONS, LLC, Appellee.

No. 08-18-00166-CV

Court of Appeals of Texas, El Paso.

April 29, 2020

ATTORNEYS FOR APPELLANTS, Don Cruse Jr., Law Office of Don Cruse, 1108 Lavaca St Ste 110-436, Austin, TX 78701-2172, Rex H. White Jr., Attorney at Law, 812 West 11th St., Ste. 203, Austin, TX 79701-2022.

ATTORNEY FOR APPELLEE, David A. Palmer, Moses, Palmer & Howell, L.L.P., 309 W. 7th St., Ste. 815, Fort Worth, TX 76102.

Before Alley, C.J., Rodriguez, and Palafox, JJ.

OPINION

GINA M. PALAFOX, Justice

Appellants Jake Robert McGehee, a/k/a J. Robert McGehee (McGehee); and James Thomas Stewart, a/k/a Tommy Stewart, a/k/a James Thomas Stewart III (Stewart), Individually and as Personal Representative of the Estate of Lynn McGehee Stewart and as Trustee of Those Certain Trusts Established Under the Stewart Revocable Living Trust, u/t/d August 22, 2003 (collectively, "Appellants") appeal from a take-nothing judgment in favor of Appellee Endeavor Acquisitions, LLC (Endeavor). Appellants contend that the trial court erred by granting Endeavor's motion for summary judgment declaring enforceable a Purchase and Sale Agreement (PSA) between the parties, denying Appellants' contrary motion for summary judgment, and awarding Endeavor attorney's fees. We affirm.

I. BACKGROUND

In November 2015, Endeavor sent a solicitation letter to Appellants offering to purchase certain property they owned in Reeves County, Texas. Appellants each owned an undivided 40 acres of surface estate out of a 160 acre portion of described property. Appellants also collectively owned one-half of the bonus and royalty interest under an oil and gas lease then existing on the property's mineral interest. With its mailing, Endeavor included a transmittal letter, two original PSAs, six original General Warranty Deeds (three for each Seller), and two IRS W-9 forms. The letter signed by Endeavor's president instructed that, if the terms of the offer were acceptable to Appellants, they should sign and date the enclosed PSA and General Warranty Deeds in front of a notary public, retain a copy of the originals for their own records, and return the remaining executed originals in the prepaid envelope supplied with the mailing. Also, Endeavor advised Appellants that, upon receipt of the executed documents, it would commence its title review of the identified property.

By its opening lines, the enclosed PSA stated that the agreement was entered into between Endeavor, defined as "Buyer," and McGehee and Stewart, jointly defined as "Seller." As Buyer, Endeavor offered to purchase the entirety of Appellants' surface and mineral interest for a total purchase price of $185,000. The terms further provided that upon Endeavor's receipt of executed originals of the PSA and the Warranty Deeds it would be permitted thirty days to review title to the property. A closing would take place five days after expiration of the title review period, unless Endeavor, in its sole discretion, extended the review period and delayed the closing as reasonably necessary to properly conduct the required title review. The PSA also contained representations stating that it "has been duly executed and delivered on behalf of each of the parties and constitutes their legal and binding obligations enforceable in accordance with its terms" and that, "[a]t Closing, all documents and instruments required to be executed and delivered shall constitute legal, valid, enforceable, and binding obligations of the parties."

On receipt of the PSA, McGehee and Stewart each crossed out the purchase price amount of $185,000, inserted $200,000 instead, and initialed their changes. They then executed and returned the originals to Endeavor without any further changes. Most significantly, Appellants did not alter the term "Seller," as used throughout the PSA, to include both McGehee and Stewart jointly. Appellants additionally executed and returned the original Warranty Deeds that Endeavor had supplied. Those deeds stated by their recitals that the grantor "do[es] hereby grant, bargain, sell, convey, transfer, assign and deliver" to Endeavor all of the grantor's right, title, and interest in the described property.

Additional activity took place for several months afterward. In January 2016, Endeavor informed Appellants that it was extending the title review period and resetting the closing date to a date on or before March 9, 2016. In February 2016, Endeavor filed the executed Warranty Deeds in the property records of Reeves County, Texas. In March 2016, Endeavor sent each Appellant a check in the amount of $100,000. Appellants, however, informed Endeavor that it had refused to negotiate the checks that were tendered, contending that the PSA required payment of $200,000 for each individually. Endeavor disagreed on the ground that the PSA expressly defined the term "Seller" as encompassing both McGehee and Stewart, and specifically provided that the "total Purchase Price shall be $200,000[.]"

After the original checks expired, Endeavor sent Appellants each a second check, dated April 21, 2016, in the amount of $100,000. These checks, like the original checks, stated that they were "VOID AFTER 45 DAYS." Forty-five days following April 21, 2016 fell on June 5, 2016.¹ McGehee deposited his check with his bank on May 31. On June 6, that bank notified him that the check was returned for insufficient funds, but that it was redepositing the check for his benefit. On June 15, McGehee's bank informed him that the redeposited check was returned because of a stop payment order. Stewart deposited his check with his bank on June 3. But on June 8 he learned that it was returned because of a stop payment order.

Endeavor acknowledges that it stopped payment on June 6 on Stewart's check and on June 9 or 10 on McGehee's check, because the 45-day period had ended, and the checks had expired. Endeavor states that it was not aware that Appellants had deposited the checks when it stopped payment.

Endeavor tendered payment to Appellants a third time by initiating two wire transfers of $100,000 each, one to McGehee on July 22, 2016, and one to Stewart on August 1, 2016. Appellants reversed and refused to accept the funds. By affidavit, the president of Endeavor asserted that he communicated to Appellants that the company remained ready, willing, and able to pay the agreed purchase price of $200,000.

Appellants filed suit against Endeavor in September 2016, seeking a judgment that declared the PSA and Warranty Deeds invalid because Endeavor breached the PSA by failing to tender the stated consideration. They requested that the court remove a cloud on their title created by the PSA and Warranty Deeds. Appellants later amended their petition to request rescission of the Warranty Deeds. Appellants requested an award of attorney's fees under the Declaratory Judgments Act.

In answer to Appellants' claims, Endeavor raised affirmative defenses including waiver and estoppel. Endeavor also asserted a counterclaim requesting a declaration that the PSA is a valid and enforceable contract providing for a total purchase price of $200,000. Like Appellants, Endeavor also requested an award of attorney's fees under the Declaratory Judgments Act.

Endeavor then moved for partial summary judgment, asserting as grounds that (1) the PSA is an enforceable contract, (2) the total purchase price under the PSA is $200,000, (3) the stop payment orders do not constitute a breach of the PSA, (4) Appellants are not entitled to rescission, and (5) Endeavor is entitled to recover attorney's fees, in an amount to be determined. Appellants countered with their own summary judgment motion, asserting as their sole ground that the PSA is void and unenforceable because Endeavor did not deliver to them an executed copy of the PSA at or prior to a closing (which never occurred) or prior to stopping payment on the second set of tendered checks.

Endeavor did deliver an executed PSA to Appellants, but not until after this lawsuit was filed.

Appellants amended their pleadings twice more before the summary judgment hearing. At the time of the hearing, they sought a variety of declarations concerning the validity and enforceability of the PSA. Appellants also asserted claims for breach of contract, rescission, removal of a cloud on title, and attorney's fees. In addition, they asserted that Endeavor is estopped from claiming that the PSA is a valid and enforceable contract.

After the trial court heard and considered both sides' summary judgment motions, responses, replies, and evidence, the court signed an order denying Appellants' motion and granting Endeavor's motion on all claims and issues except the amount of Endeavor's attorney's fees. After considering the attorney's fee issue by submission, the court signed its final judgment on August 16, 2018. In that judgment, the court ordered that Appellants take nothing on their claims against Endeavor, declared that the PSA is a valid and enforceable contract providing for a total purchase price of $200,000, and awarded Endeavor attorney's fees in the sum of $51,046, plus contingent fees on appeal. This appeal followed.

II. DISCUSSION

Appellants raise three issues on appeal. They assert that the trial court erred as a matter of law by granting Endeavor's motion for summary judgment and awarding attorney's fees, and by denying their own cross-motion for summary judgment. As a foundation of their arguments, Appellants argue that the PSA is not a valid and enforceable contract.

A. Standard of Review

1. Motions for Summary Judgment

Summary judgments are reviewed de novo. Mann Frankfort Stein & Lipp...