LUFKIN MALL REALTY HOLDING LLC v. LUFKIN INVESTMENT PARTNERS LLC (2025)

OPINION

Lufkin Mall Realty Holding LLC (Lufkin Mall) challenges the trial court's partial declaratory summary judgment in favor of Appellee, Lufkin Investment Partners LLC (Investment Partners), and its award of attorney's fees to Investment Partners. We affirm.

Background

Investment Partners and Lufkin Mall executed a purchase and sale agreement (PSA), pursuant to which Lufkin Mall agreed to purchase from Investment Partners the shopping center known as “Lufkin Mall.” Section 5.3 of the PSA provided as follows:

5.3 Closing Credits, Prorations and Adjustments. Purchaser and Seller shall prorate all income, taxes and expenses with respect to the Property on a cash basis (i.e., based solely upon amounts payable in the year in which Closing occurs regardless of when they accrue) as of the Closing Date, if Purchaser were vested with title to the Property during the entire day upon which the Closing occurs, including, without limitation:

(a) Real estate and other applicable taxes, levies and charges and assessments applicable to the Property (“Taxes”) will be prorated between Purchaser and Seller on a cash basis (i.e., Taxes first coming due during the year in which the Closing occurs will be prorated at the Closing, regardless of the year to which such Taxes apply or are accrued). If Taxes due during the year in which the Closing occurs have not been billed or ascertainable as of the Closing Date, proration of Taxes shall be based upon the most recently available tax bill․ Notwithstanding the foregoing, Seller shall be responsible and shall pay all Taxes due prior to the Closing Date and Purchaser shall be responsible and shall pay all Taxes due on or after the Closing Date.

Additionally, Section 8.7 of the PSA states, “This Agreement shall in all respects be governed by, and construed in accordance with[,] the laws of the State of Texas.” The parties agree that closing occurred in December 2022.

In November 2023, Lufkin Mall sued Investment Partners, alleging that Investment Partners failed to pay its prorated portion of the real property taxes for 2022. Lufkin Mall asserted claims for declaratory relief and breach of contract. Investment Partners counterclaimed, seeking (1) a declaratory judgment that Lufkin Mall is fully responsible for the 2022 property taxes and (2) attorney's fees. Investment Partners filed a traditional motion for partial declaratory summary judgment, in which it sought a declaration that Lufkin Mall “is responsible for the 2022 taxes as a matter of law.”¹ Investment Partners argued that the PSA “required the parties to prorate the property's taxes on a cash basis during the year that closing occurs.” Investment Partners maintained that the PSA “required that the proration be done on a cash basis, meaning that the taxes which must be prorated are those that are actually paid—not merely accrued or billed—during the year of closing. And the provision in question required that the buyer be responsible for all property taxes due on or after closing.” According to Investment Partners, because it paid the 2021 property taxes in January 2022, and closing occurred in December 2022, the PSA required the parties to prorate the 2021 taxes at closing, but Lufkin Mall was responsible for the 2022 property taxes because the 2022 taxes were due after closing. Investment Partners provided the following as evidence: (1) the declaration of Steven Higdon, Chief Financial Officer for GK Real Estate (the entity that manages Investment Partners), in which Higdon averred, among other things, that Investment Partners paid the 2021 property taxes in January 2022; (2) the PSA; (3) a Buyer/Seller Settlement Statement from Chicago Title Insurance Company; (4) the 2022 tax statement from the Angelina County Tax Office Tax Assessor-Collector; (5) various emails between the parties; (6) a declaration regarding attorney's fees by the attorney in charge for Investment Partners, accompanied by his firm's billing records; and (7) the 2021 property tax statement from the Angelina County Tax Office Tax Assessor-Collector.

Lufkin Mall filed a response to the motion for partial summary judgment, in which it asserted that the 2022 property taxes “first came due” on October 1, 2022, and closing occurred in 2022. Lufkin Mall likewise maintained that the 2021 taxes first came due in 2021, when Investment Partners “received the tax bill on or about October 1, 2021, not when delinquency would occur after January 31, 2022.” Lufkin Mall contended that (1) the key language in the PSA is the phrase “taxes first coming due during the year in which the [c]losing occurs[,]” (2) Investment Partners’ argument incorrectly equates “due” with “delinquent[,]” and (3) Investment Partners’ “strained reading” of the proration provision would result in Lufkin Mall paying a portion of the 2021 property taxes despite the fact that Lufkin Mall did not take possession of the property until the end of 2022. Lufkin Mall provided the following as evidence: (1) the PSA; (2) the 2022 property tax statement; (3) a statement of account from the Angelina County Tax Office as of November 20, 2023; and (4) the affidavit of Joseph M. Saponaro, which authenticated the PSA and the 2022 property tax statement.

The trial court signed an order granting Investment Partners’ motion for partial summary judgment, in which the court (1) declared that Lufkin Mall was responsible for the full amount of the 2022 property taxes pursuant to Section 5.3 of the PSA; (2) dismissed Lufkin Mall's causes of action for declaratory judgment and breach of contract with prejudice; (3) assessed costs against Lufkin Mall; and (4) ordered Lufkin Mall to pay Investment Partners’ attorney's fees in the amount of $50,424.50. Additionally, the trial court signed an order severing the claims resolved in its order granting partial judgment from the remainder of the cause. This appeal followed.

Partial Declaratory Summary Judgment

In issue one, Lufkin Mall argues that the trial court erred by granting partial declaratory summary judgment in favor of Investment Partners. Specifically, Lufkin Mall contends the trial court misinterpreted the PSA's unambiguous language.

Standards of Review

We review declaratory judgments under the same standards as other judgments and decrees. Tex. Civ. Prac. & Rem. Code Ann. § 37.010 (West 2020). “In reviewing a declaratory judgment, we refer to the procedure for resolution of the issue at trial to determine the applicable standard of review on appeal.” Roddy v. Holly Lake Ranch Ass'n, Inc., 589 S.W.3d 336, 341 (Tex. App.—Tyler 2019, no pet.). Accordingly, we review the trial court's order granting partial declaratory summary judgment under the same standards applicable to review of summary judgments. See id.; Farmers Ins. Exch. v. Rodriguez, 366 S.W.3d 216, 222 (Tex. App.—Houston [14th Dist.] 2012, pet. denied). Summary judgment is appropriate in cases involving only questions of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999) (holding that summary judgment is appropriate “when it clearly appears that only a question of law is involved and that there is no genuine fact issue.”).

We review summary judgment orders de novo, and we “examine the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion.” City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005); see Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009) (citing Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)). The movant for traditional summary judgment bears the burden of demonstrating that (1) no genuine issue of material fact exists and (2) it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Knott, 128 S.W.3d at 216; KPMG Peat Marwick v. Harris. Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). If the movant demonstrates that it is entitled to summary judgment, the burden shifts to the nonmovant to respond to the motion and present any issues that would preclude summary judgment. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex. 1979); see also Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). We must affirm a summary judgment “if any of the summary judgment grounds are meritorious.” Tex. Workers’ Comp. Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex. 2004).

Applicable Law

“Parties to a contract are ‘masters of their own choices and are entitled to select what terms and provisions to include in a contract.’ ” Birnbaum v. SWEPI LP, 48 S.W.3d 254, 257 (Tex. App.—San Antonio 2001, pet. denied) (quoting Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d 24, 27 (Tex. App.—Amarillo 2000, no pet.)). When possible, courts avoid interpreting a contract in a manner that leads to an absurd, unreasonable, inequitable, or oppressive result, but absent compelling reasons, courts must respect and enforce the terms of a contract that the parties entered freely and voluntarily. ROC-Houston, P.A. v. Parameswaran, No. 01-22-00613-CV, 2024 WL 3762479, at *8 (Tex. App.—Houston [1st Dist.] Aug 13, 2024, no pet.) (mem. op.) (citing Philadelphia Indem. Ins. Co. v. White, 490 S.W.3d 468, 471 (Tex. 2016)); Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 313 (Tex. 2005). Courts cannot rewrite the agreement to mean something it did not; that is, “we cannot change the contract merely because we or one of the parties comes to dislike its provisions or thinks that something else is needed in it.” Birnbaum, 48 S.W.3d at 257; see also In re Davenport, 522 S.W.3d 452, 457 (Tex. 2017) (orig. proceeding) (holding that courts “cannot make new contracts between the parties and must enforce the contract as written.”).

The construction of an unambiguous contract is a question of law. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). In construing contracts, our primary concern is to ascertain the parties’ true intentions as expressed in the instrument. Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp., 640 S.W.3d 195, 198-99 (Tex. 2022); Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To achieve this objective, we examine and consider the entire agreement in an effort to harmonize and give effect to all of its provisions so that none will be rendered meaningless. Italian Cowboy, 341 S.W.3d at 333; Coker, 650 S.W.2d at 393. We must presume that the parties to a contract intended every clause to have some effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996); Healthcare Cable Sys., Inc. v. Good Shepherd Hosp., Inc., 180 S.W.3d 787, 791 (Tex. App.—Tyler 2005, no pet.). Therefore, we consider each part of the contract with every other part of the contract so that we may determine the effect and meaning of one part on any other part. See Heritage Res., 939 S.W.2d at 121; Healthcare Cable Sys., 180 S.W.3d at 791; Birnbaum, 48 S.W.3d at 257.

Courts give terms used in a contract their plain, ordinary, generally accepted, and grammatical meanings unless the contract itself shows that they were used in a different or technical sense or doing so would clearly defeat the parties’ intent. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005); Coghill v. Griffith, 358 S.W.3d 834, 837 (Tex. App.—Tyler 2012, pet. denied) (citing Moon Royalty, LLC v. Boldrick Partners, 244 S.W.3d 391, 394 (Tex. App.—Eastland 2007, no pet.)). Courts may look to dictionaries to discern the meaning of commonly used terms that the contract does not define. In re Davenport, 522 S.W.3d at 457. We presume that a word or phrase bears the same meaning throughout an instrument. Farmers Grp., Inc. v. Geter, 620 S.W.3d 702, 709 (Tex. 2021) (holding that words used in one sense in one part of contract are generally deemed to be used in same sense in another part of contract when context does not indicate otherwise); Eisen v. Capital One, Nat'l Ass'n, 232 S.W.3d 309, 313 (Tex. App.—Beaumont 2007, pet. denied) (holding that when testator uses same words with reference to same subject matter in different parts of will, court presumes testator intended words to have same meaning unless context indicates otherwise); see Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 170-173 (2012).

Whether a contract is ambiguous is a question of law. In re Deepwater Horizon, 470 S.W.3d 452, 464 (Tex. 2015) (orig. proceeding). If, after applying the pertinent rules of contract construction, a contract can be given a certain or definite legal meaning or interpretation, then it is unambiguous. Frost Nat'l Bank, 165 S.W.3d at 312. On the other hand, if a contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, then it is ambiguous. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). A contract is not ambiguous merely because the parties disagree concerning its meaning. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006).

Analysis

The instant case turns upon whether the trial court properly construed the provisions of the PSA that govern proration of taxes, which is a question of law. See Tawes, 340 S.W.3d at 425. We begin our analysis by determining the plain, ordinary, generally accepted, and grammatical meaning of the words and phrases used in Section 5.3 of the PSA. See Dorsett, 164 S.W.3d at 662; Coghill, 358 S.W.3d at 837. Both the initial portion of Section 5.3 and subsection (a) state that Lufkin Mall and Investment Partners shall prorate all taxes on a “cash basis.” Black's Law Dictionary defines “cash-accounting method” as “[a]n accounting method that considers only cash actually received as income and cash actually paid out as an expense. – Also termed cash-basis accounting method; cash accounting. Cf. accrual accounting method.” Black's Law Dictionary 25 (12th ed. 2024) (defining various accounting methods). “Accrual accounting method” is “[a]n accounting method that records entries of debits and credits when the revenue or liability arises, rather than when the income is received or an expense is paid. – Also termed accrual basis. Cf. cash-accounting method.” Id. “Due” is defined, in pertinent part, as either “2. [i]mmediately enforceable < payment is due on delivery>” or “3. [o]wing or payable, constituting a debt [.]” Id. at 630. Similarly, Merriam-Webster defines “due” as, in pertinent part, either “owed or owing as a debt” or “having reached the date at which payment is required: PAYABLE[.]” “Due,” http://merriam-webster.com/dictionary/due (last visited July 29, 2025). Moreover, American Heritage College Dictionary defines “due” in pertinent part as either “[p]ayable immediately or on demand” or “[o]wed as a debt; owing.” The American Heritage College Dictionary 424 (3d ed. 1997). According to Black's Law Dictionary, “payable” refers to “a sum of money ․ that is to be paid.” Black's Law Dictionary 1360 (12th ed. 2024). In its definition of “payable,” Black's Law Dictionary further states as follows: “An amount may be payable without being due. Debts are commonly payable long before they fall due. Cf. DUE AND PAYABLE.” Id. On the other hand, “due and payable” is defined as a debt that is “owed and subject to immediate collection because a specified date has arrived or time has elapsed, or some other condition for collectability has been met. Cf. DUE (3); PAYABLE.” Id. at 630.

Both the introductory portion of Section 5.3 and subsection 5.3(a) contain parenthetical phrases beginning with “i.e.” that immediately follow the term “cash basis.” “I.e.” is an abbreviation for “[t]hat is” and is derived from the Latin phrase “id est.” Id. at 891; see also The American Heritage College Dictionary 675 (3d ed. 1997). Accordingly, “i.e.” “is used to introduce a word or phrase that restates what has been said previously. What follows the i.e. is meant to clarify the earlier statement[,]” and “[i].e. is similarly useful for defining or explaining a term or concept whose meaning readers might not know[.]” The Difference Between “i.e.” and “e.g.,” http://merriam-webster.com/grammar/ie-vs-eg-abbreviation-meaning-usage-difference (last visited July 29, 2025). Both of said parenthetical phrases clarify that the parties intended to adopt a cash basis for calculating proration of taxes; that is, the first parenthetical phrase clarifies that parties will calculate proration of taxes based solely upon amounts “payable in the year in which [c]losing occurs, regardless of when they accrue,” and the second parenthetical phrase states that the parties will prorate taxes “first coming due” during the year in which closing occurs.

In determining whether the trial court correctly construed the proration provisions of the PSA, we consider the entire agreement, including (1) the two different potential meanings of “due,” (2) both occurrences of the term “cash basis” in the PSA, (3) the clarifying parenthetical phrases beginning with “i.e.” that follow each use of the term “cash basis” in the PSA, and (4) the last phrase of Section 5.03(a). We attempt to harmonize all of the provisions of the PSA and presume that the parties intended each to have some effect. See Italian Cowboy, 341 S.W.3d at 333; Coker, 650 S.W.2d at 393; Heritage Res., 939 S.W.2d at 121 (Tex. 1996); Healthcare Cable Sys., 180 S.W.3d at 791. In addition, we presume that the parties intended the word “due” to have a consistent meaning each time it occurs in the PSA. See Geter, 620 S.W.3d at 709. As explained above, “due” may mean either (1) immediately enforceable or (2) a debt that is owing or payable. The PSA twice explicitly provides that the parties will prorate the taxes “on a cash basis.” The introductory portion of Section 5.3 states that the parties shall prorate taxes on a “cash basis (i.e. based solely upon amounts payable in the year in which [c]losing occurs regardless of when they accrue)” as of the closing date, and subsection 5.3(a) states that the parties will prorate taxes “on a cash basis (i.e. [t]axes first coming due during the year in which the [c]losing occurs will be prorated at the [c]losing, regardless of the year to which such [t]axes apply or are accrued).” Moreover, the last sentence of Section 5.3(a) states: “Notwithstanding the foregoing, Seller shall be responsible and shall pay all [t]axes due prior to the [c]losing [d]ate” and “Purchaser shall be responsible and shall pay all [t]axes due on or after the [c]losing [d]ate.” Both of the parenthetical phrases that clarify the term “cash basis” expressly disclaim any intent to prorate the taxes based upon when the obligation to pay them accrued.

Considering each provision of Section 5.3, harmonizing them, and giving each of them effect, we conclude that (1) the terms “due” and “first coming due” in the PSA mean “immediately enforceable” or, in other words, having reached the date upon which payment is required to avoid delinquency (i.e. January 31), and (2) the term “payable” in the phrase “payable in the year in which [c]losing occurs regardless of when they accrue” likewise refers to the property taxes that had to be paid by January 31, 2022, to avoid delinquency (i.e. the 2021 property taxes). Although this construction requires Lufkin Mall to pay a portion of the 2021 property taxes despite not possessing the property until December 2022, to conclude otherwise would require rewriting the parties’ agreement to adopt an accrual method of accounting, which we cannot do. See In re Davenport, 522 S.W.3d at 457; Parameswaran, 2024 WL 3762479, at *8; Birnbaum, 48 S.W.3d at 257. Had the parties desired to prorate the 2022 property taxes as of the date they were assessed and statements were mailed (i.e. the obligation to pay the taxes accrued), they could have easily done so by adopting an accrual method of accounting in the PSA, but they instead expressly adopted the cash basis method of accounting. See generally Birnbaum, 48 S.W.3d at 257-58.

Additionally, as mentioned above, the PSA states that it shall be governed by, and construed in accordance with, Texas law. Under Texas law, the assessor for each taxing unit must mail a tax bill to each person in whose name the property is listed on the tax roll “by October 1 or as soon thereafter as practicable.” Tex. Tax Code Ann. § 31.01(a) (West Supp. 2024). Section 31.02(a) of the Texas Tax Code provides as follows: “taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed.” Id. § 31.02(a). Our sister court in Austin construed Section 31.02 and held that a common sense reading of Section 31.02 and the tax statements “leads not to confusion but to a conclusion that tax bills are mailed around or soon after October 1, are due at any[ ]time between October 1 and January 31, and become delinquent on February 1.” Amos v. Ferretti, No. 03-03-00274-CV, 2005 WL 1489651, at *4-5 (Tex. App.—Austin Jun. 23, 2005, no pet.) (mem. op.). In other words, the Amos court held that a tax bill is “due” between October 1 and January 31 rather than on or about October 1 or when the taxpayer receives the statement, and the date by which the taxpayer must pay the bill to avoid becoming delinquent is January 31. See id. We agree with our sister court's reasoning and holding in Amos.

The 2021 property tax statement from the tax assessor-collector for the tax office in Angelina County, Texas, set forth an amount of taxes that were “due by January 31, 2022[.]” The bottom of the statement provided that “[p]roperty taxes in Texas are assessed as of January 1st each year and cover a period of one year from that date.” Additionally, the statement also included a two-section box, the top section of which stated, “In January Pay [$]320,439.57[,]” and the bottom section of which stated, “Taxes are payable October 1, 2021[,] and become delinquent on February 1, 2022[.]” The statement also set forth increasing amounts, including penalties and interest, that would be owed if the taxes were paid in February, March, April, May, or June of 2022. The 2022 property tax statement set forth taxes that were “due by January 31, 2023” and contained the same statements as the 2021 property tax statement regarding when taxes are payable, when taxes become delinquent, and amounts that would be owed if the taxes were filed in February, March, April, May, or June of 2023.

We conclude that, like the applicable rules of contract construction discussed above, Texas law supports the conclusion that although property taxes are “due” between October 1 and January 31, January 31 is the date by which payment must be made, as evidenced by the fact that on February 1 of each year, unpaid property taxes become delinquent. See id.; see also Tex. Tax Code Ann. § 31.02. The 2021 property taxes had to be paid on or before January 31, 2022, to avoid delinquency (i.e. January 31, 2022, was the date on which payment was required) and Investment Partners paid the 2021 property taxes in January 2022. Therefore, the 2021 taxes were the taxes “first coming due” in 2022 using a cash basis method of accounting as required by the PSA.

For all these reasons, we conclude that the trial court did not err by granting partial summary judgment in favor of Investment Partners and declaring that Lufkin Mall is responsible for the full amount of the 2022 property taxes. Accordingly, we overrule issue one.

Attorney's Fees

In issue two, Lufkin Mall argues that the trial court erred by awarding attorney's fees to Investment Partners. Specifically, Lufkin Mall asserts that the trial court erred by awarding summary judgment in favor of Investment Partners, and an award of attorney's fees is not proper in the absence of liability.

Standard of Review and Applicable Law

In a declaratory judgment action, the trial court “may award ․ reasonable and necessary attorney's fees as are equitable and just.” Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 2020). “A trial court's decision to grant or deny attorney's fees will not be disturbed absent an abuse of discretion.” Roddy, 589 S.W.3d at 347 (citing Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998)). A trial court abuses its discretion when it acts arbitrarily or unreasonably, without reference to guiding rules and principles. Id.

Analysis

Lufkin Mall does not challenge the sufficiency of the evidence supporting the award of attorney's fees or the reasonableness of the amount of the attorney's fees; rather, its argument relies upon its contention that the trial court erred by granting partial summary judgment to Investment Partners. Because we determined that the trial court did not err by granting Investment Partners’ motion for partial declaratory summary judgment and declaring that Lufkin Mall is solely responsible for the 2022 property taxes, we likewise conclude that the trial court did not abuse its discretion by awarding attorney's fees to Investment Partners. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009; Roddy, 589 S.W.3d at 347. Accordingly, we overrule issue two.

Disposition

Having overruled issues one and two, we affirm the trial court's partial declaratory summary judgment.

FOOTNOTES

1.   The record indicates that Lufkin Mall also filed a traditional motion for partial summary judgment, but Lufkin Mall does not challenge the trial court's ruling on said motion.

James T. Worthen, Chief Justice