GARROD INVESTMENTS INC v. SCHLEGEL

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Court of Appeals of Texas,Corpus Christi-Edinburg.

GARROD INVESTMENTS, INC., Appellant, v. Robert SCHLEGEL and Myrna Schlegel, Appellees.

No. 13-01-830-CV.

Decided: July 15, 2004

Before Justice HINOJOSA, YÃNEZ and GARZA. Keith C. Livesay, Roberto Rene (Bobby) Garcia, Garcia & Rodriguez, McAllen, for appellant. Donald E. Godwin, John F. Martin, Chad M. Ruback, Dallas, for appellees.

OPINION

Garrod Investments, Inc. appeals from a final summary judgment rendered against it on its claims for breach of contract and declaratory judgment against Myrna and Robert Schlegel.   Because we conclude that the Statute of Frauds bars enforcement of any contract that may exist between Garrod and the Schlegels, we affirm the trial court's judgment.

I. Background

This case arises from a series of negotiations that took place between the parties in the fall of 2000 for the sale of a condominium located on South Padre Island.   The undisputed evidence shows that on November 16, following several failed attempts to strike a deal, Myrna Schlegel, the condominium's owner, faxed to Garrod's real estate agent a written and signed offer to sell the condominium to Garrod for $285,000, a price which included the condominium, its fixtures, and furnishings.   On November 17, Garrod returned the document, bearing initials and signatures authorized by Garrod, to Myrna Schlegel.   On November 20, Garrod tendered earnest money in the amount of $2,500.   After notifying Garrod in writing that Garrod's “acceptance” of November 17 had altered the agreement's financing terms and was therefore actually a counteroffer, to which the Schlegels would not agree, Myrna Schlegel returned the earnest money on December 8 and informed Garrod that the negotiations were over.

Garrod filed this suit to enjoin Myrna Schlegel and her husband, Robert, from selling the condominium to a third party.   In its live petition, Garrod asserted two claims:  one for a declaratory judgment that a binding contract exists between Garrod and the Schlegels and the other for breach of contract and an award of specific performance.   The Schlegels moved for summary judgment on both claims, and the trial court ruled in their favor.   Garrod now appeals.

II. Summary Judgment

 When a trial court's order granting summary judgment is silent as to the reasoning upon which the ruling is based, as in this case, the appellate court should affirm the summary judgment if any ground advanced in the motion is meritorious.  Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173 (Tex.1995);  Larson v. Family Violence & Sexual Assault Prevention Ctr., 64 S.W.3d 506, 515 n. 8 (Tex.App.-Corpus Christi 2001, pet. denied).   In their motion for summary judgment, the Schlegels argued that they were entitled to judgment as a matter of law because the Statute of Frauds rendered any contract between them and Garrod unenforceable.

A. Standard of Review

In reviewing a traditional summary judgment, we must determine whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact as to one or more of the essential elements of the plaintiff's cause of action or whether the defendant has conclusively established all elements of an affirmative defense.  Pech v. Estate of Tavarez, 112 S.W.3d 282, 285 (Tex.App.-Corpus Christi 2003, no pet.);   see also Crain v. Smith, 22 S.W.3d 58, 59 (Tex.App.-Corpus Christi 2000, no pet.).   We take as true all evidence favorable to the non-movant and indulge every reasonable inference in the non-movant's favor.  Trigo v. Munoz, 993 S.W.2d 419, 421 (Tex.App.-Corpus Christi 1999, pet. denied).   Our review is de novo.  Texas Commerce Bank-Rio Grande Valley, N.A. v. Correa, 28 S.W.3d 723, 726 (Tex.App.-Corpus Christi 2000, pet. denied).

B. Analysis

 The Statute of Frauds is an affirmative defense.   Cuddihy Corp. v. Plummer, 876 S.W.2d 424, 426 (Tex.App.-Corpus Christi 1994, writ denied).   Contracts for the sale of real property are enforceable only if they comply with the Statute of Frauds.  Tex. Bus. & Com.Code Ann. § 26.01(b)(4) (Vernon 2002);  see Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex.1978).   The statute requires that the contract be in writing and signed by the party to be charged.  Tex. Bus. & Com.Code Ann. § 26.01(a) (Vernon 2002);  EP Operating Co. v. MJC Energy Co., 883 S.W.2d 263, 266-67 (Tex.App.-Corpus Christi 1994, writ denied).   The written memorandum must be complete within itself in every material detail and must contain all the essential elements of the agreement, so that the contract can be ascertained from the writing without resorting to oral testimony.  Cohen, 565 S.W.2d at 232.

 In their motion for summary judgment, the Schlegels argued that on November 16, Myrna Schlegel used a standard form contract to make a written and signed offer to sell the condominium to Garrod.   According to the Schlegels, Garrod altered the financing terms and closing date of the offer and thus rejected it.   They alleged that Garrod then signed the document and returned it to them, actions which, they argued, amounted to a counteroffer based on the new terms.   The Schlegels claimed that they never signed the altered document and that, therefore, they never accepted Garrod's counteroffer.

To establish their assertions regarding the changes in financing terms, the Schlegels submitted the standard form contract, which lacked their initials and signatures where Garrod allegedly made changes.   They also offered the deposition of Yolanda Flores, Garrod's real estate agent, who testified that a representative of Garrod changed the financing terms of Myrna Schlegel's offer of November 16.   Flores further testified that the Schlegels did not initial Garrod's changes to the financing terms.   This testimony was corroborated by Alta Monroe, the Schlegels real estate agent, who testified that the document returned to the Schlegels by Garrod on November 17 had different financing terms than Myrna Schlegel's offer of November 16 and that the Schlegels would not agree to sign those changes.   Finally, the Schlegels offered the testimony of Myrna Schlegel to the effect that she never agreed to Garrod's proposed changes to the financing terms.

The Schlegels offered substantially less evidence to prove that Garrod altered the closing date.   In their motion for summary judgment, the Schlegels relied on the standard form contract as proof that the closing date was changed and that they did not agree to it.   The document shows that the original closing date of November 30 was scratched out and that a new closing date of December 10 was written in above the old date.   The new date is initialed, but the Schlegels provided no evidence to establish who made the change or who initialed it.   Although they offered the testimony of Myrna Schlegel to prove that Garrod altered the closing date and that she did not approve or initial the change, Myrna Schlegel's testimony does not provide any such evidence.   In fact, she never mentioned the change in the closing date but instead testified only that she did not agree to the financing terms offered by Garrod.   Thus, the Schlegels' summary judgment proof regarding the altered closing date was limited to the document itself, which showed that the closing date had been changed and that only one party initialed the change.

On appeal, however, Garrod's brief states that the Schlegels never signed the new closing date.   Since this fact is recited by Garrod's brief and not contradicted by the Schlegels, we will accept it at as true.   See Tex.R.App. P. 38.1(f).  The Schlegels' evidence thus shows that a change was made to the closing date and that they never initialed or signed the change.

Based on this evidence, we must determine whether as a matter of law the Schlegels were entitled to summary judgment because the contract on which the suit was based failed to meet the requirements of the Statute of Frauds.   See Alejandro v. Bell, 84 S.W.3d 383, 390 (Tex.App.-Corpus Christi 2002, no pet.)  (“A defendant moving for summary judgment on an affirmative defense has the burden to conclusively establish that defense.”).   The Dallas Court's opinion in Capital Bank v. Am. Eyewear, Inc., 597 S.W.2d 17 (Tex.App.-Dallas 1980, no writ) guides our decision, as that case involved facts similar to those presented by the instant case.   In Capital Bank, the defendant, a bank, held a lease on a building which the plaintiff sought to sublease.   Id. at 18.   The plaintiff drafted a sublease and submitted it to the bank's president.   The president made some changes to the sublease, signed it, and had it delivered to the plaintiff.  Id. Upon receipt, an officer for the plaintiff initialed the changes made by the president and then made some additional changes.  Id. The document was then executed by the plaintiff and returned to the bank, which did not sign it again.  Id.

On appeal, the bank claimed that even though there was evidence that it had orally agreed to the changes, the Statute of Frauds rendered the contract unenforceable.   See id. at 18-19.   The court agreed, holding that when the plaintiff made changes in the lease form executed by the bank and sent it back to the bank, it became a counteroffer that was not binding on the bank without the bank's acceptance.  Id. at 19.   According to the court, the document had the same status as if the bank had never signed it because “for the purpose of the Statute of Frauds, the signature of the ‘person to be charged’ is the act which authenticates the document as reliable evidence of that person's agreement to the transaction.”  Id.;  see also Sterrett v. Jacobs, 118 S.W.3d 877, 880 (Tex.App.-Texarkana 2003, pet. denied).   It concluded, “If changes have been made so that the signature no longer provides such evidence, to admit proof of an oral agreement to be bound by it would frustrate the purpose of the statute because the existence of the agreement would then depend on the recollection of witnesses.”  Capital Bank, 597 S.W.2d at 19.

 In the case at bar, the evidence shows that Garrod changed the standard form contract after Myrna Schlegel used it to make a signed and written offer.   These changes altered the financing provisions of the sales agreement, which are material terms.   See Lloyd v. Holland, 659 S.W.2d 103, 105 (Tex.App.-Houston [14th Dist.] 1983, no writ.) (holding that the method of payment is a material term in a contract for the sale of real property);  see also Smith v. Thorne, No. 01-01-01241-CV, 2003 WL 21357297, *2, 2003 Tex.App. LEXIS 4975, at *6-8 (Houston [1st Dist.] June 12, 2003, no pet.) (memorandum opinion) (upholding the trial court's conclusion that financing terms are material contract terms in the sale of real property).   The evidence also shows that the closing date of Myrna Schlegel's offer was changed, and Garrod's appellate brief concedes that the Schlegels did not sign or initial the new date.   The closing date of a contract for the sale of real estate is a material term.  Paxton v. Spencer, 503 S.W.2d 637, 646 (Tex.Civ.App.-Corpus Christi 1973, no writ).   Any material change in a proposed contract constitutes a counteroffer, which must be accepted by the other party for a contract to exist.  Antonini v. Harris County Appraisal Dist., 999 S.W.2d 608, 611 (Tex.App.-Houston [14th Dist.] 1999, no pet.);   see also United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d 360, 364 (Tex.1968).   Where “negotiations” are in writing, as in this case, the question of whether an offer was unconditionally accepted is primarily a question of law for the court.  Gilbert v. Pettiette, 838 S.W.2d 890, 893 (Tex.App.-Houston [1st Dist.] 1992, no writ).   Based on the Schlegels' summary judgment evidence and Garrod's appellate brief, we conclude that on November 17, Garrod materially altered Myrna Schlegel's offer and thus made a counteroffer.

The Schlegels' evidence shows that they never signed the standard form contract after changes were made to it.   We conclude that the document therefore has the same status as if Myrna Schlegel had never signed it.   See Capital Bank, 597 S.W.2d at 19.   As a matter of law, the standard form contract does not satisfy the Statute of Frauds and cannot be enforced.   See id.;   see also Smith v. Jones, 638 S.W.2d 17, 20 (Tex.App.-Houston [1st Dist.] 1982), rev'd in part on other grounds, 649 S.W.2d 29, 29 (Tex.1983) ( “A contract required by the Statute of Frauds to be in writing that is altered after it is signed is not ․ a binding contract.”).

 Having concluded that the Schlegels established their entitlement to summary judgment based on the affirmative defense of the Statute of Frauds, the burden shifts to Garrod to show why summary judgment is improper.   See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (“The nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense.”).   We may not reverse the trial court's award of summary judgment based on grounds not expressly set forth in the non-movant's response.   Tex.R. Civ. P. 166a(c);  see City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex.1979);  City of Mission v. Ramirez, 865 S.W.2d 579, 581 (Tex.App.-Corpus Christi 1993, no writ).   To raise an issue of fact precluding summary judgment, Garrod was required to produce summary judgment proof in avoidance of the affirmative defense.   See Gonzalez v. City of Harlingen, 814 S.W.2d 109, 112 (Tex.App.-Corpus Christi 1991, writ denied).   Any issue which the non-movant claims would justify denying summary judgment must be included in its response.  Stewart v. Tex. Lottery Comm'n, 975 S.W.2d 732, 735 (Tex.App.-Corpus Christi 1998, no pet.);   see also Swoboda v. Swoboda, 17 S.W.3d 276, 279 (Tex.App.-Corpus Christi 2000, no pet.).   The non-movant's mere reference to summary judgment evidence does not expressly present grounds precluding summary judgment.  McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993).   Likewise, we are not allowed to review the summary judgment evidence to determine whether grounds are expressly presented in the written response.   See McCord v. Dodds, 69 S.W.3d 230, 232 (Tex.App.-Corpus Christi 2001, pet. denied).   We determine whether grounds are expressly presented by looking at the written response itself.   See Cisneros v. Central Power & Light Co., 24 S.W.3d 378, 380 (Tex.App.-Corpus Christi 1999, no pet.).

Garrod's response failed to specifically address the Schlegels' Statute of Frauds defense.   It did not challenge the allegations that Garrod had changed the financing terms and closing date of Myrna Schlegel's offer.   More importantly, Garrod's response did not allege that the Schlegels signed the standard form contract after Garrod changed it.   This is the heart of the Schlegels' defense.   They contend, and their summary judgment evidence shows, that the written and signed document on which Garrod bases its claims does not satisfy the Statute of Frauds because the signature and initials of Myrna Schlegel are no longer effective to authenticate the document as reliable evidence of her agreement to the contract.   The document was changed after she executed it.   Her previous signature and initials do not evidence her approval of those changes.

Garrod's response did not challenge these facts.   Instead, it contended that “[t]he final terms were accepted on November 17, 2000 and all terms were agreed to and finalized in an Earnest Money Contract with Defendants.” 1  This statement does not raise a fact issue because it wholly avoids the substance of the Schlegels' defense:  that Garrod changed the document on November 17 and the Schlegels never signed it after those changes were made.   Even if Garrod's allegations were true, they would not raise a fact issue or otherwise defeat the Schlegels' Statute of Frauds defense.   The acts of “accepting,” “agreeing to,” and “finalizing” terms in a contract do not necessarily produce a signed and written contract that satisfies the Statute of Frauds.   The Schlegels could have orally accepted and agreed to Garrod's changes, which Garrod finalized in a written contract by making alterations to Myrna Schlegel's offer.   Even if the Schlegels had made an unequivocal oral acceptance of the changes, the fact that they never signed the changes would itself be enough to avoid enforcement of the contract.   See Capital Bank, 597 S.W.2d at 18 (“We hold that the document is not effective as a lease under the Statute of Frauds because the substance of the document was changed after it was signed by the bank's president, and the bank's agreement to the lease terms as changed was oral.”) (citations omitted).

 Garrod's response did not argue that the Schlegels signed the document after changes were made to it.   Its response did not even mention the changes.   We are not allowed to scour a non-movant's summary judgment evidence to uncover fact issues that were not raised in its response.   See Tex.R. Civ. P. 166a(c);  Hay v. Shell Oil Co., 986 S.W.2d 772, 777 (Tex.App.-Corpus Christi 1999, pet. denied).   Garrod's response raised no fact issues on the Schlegels' defense.   We overrule its first issue.

III. Award of Attorney's Fees

Garrod also challenges the trial court's award of attorney's fees to the Schlegels.   First, it claims that it did not receive notice from the trial court that a hearing would be held on the Schlegels' request for attorney's fees.   Second, Garrod complains that “the amounts awarded definitely cause nose bleeds.”   We address the notice argument first.

A. No Notice of Hearing on Attorney's Fees

 The law presumes that the trial court will hold a hearing only after proper notice to the parties.   See Delgado v. Hernandez, 951 S.W.2d 97, 99 (Tex.App.-Corpus Christi 1997, no writ);  Bruneio v. Bruneio, 890 S.W.2d 150, 155 (Tex.App.-Corpus Christi 1994, no writ).   To rebut this presumption, appellant has the burden to affirmatively show a lack of notice by affidavit or other competent evidence.  Delgado, 951 S.W.2d at 99;  Bruneio, 890 S.W.2d at 155.   Garrod has not met this burden.   To support its claim that the trial court did not give notice of the hearing on attorney's fees, Garrod cites this Court to the trial court's order awarding fees.   The order does not establish that the trial court did not notify Garrod of the hearing.   It is not an affidavit or other competent evidence upon which we could find a lack of notice.   We overrule Garrod's issue regarding proper notice.

B. Excessive Award of Attorney's Fees

 Garrod also claims that the attorney's fees awarded by the trial court were excessive.   A trial court's award of attorney's fees is reviewed for an abuse of discretion.  First Fed. Sav. & Loan Ass'n v. Ritenour, 704 S.W.2d 895, 902 (Tex.App.-Corpus Christi 1986, writ ref'd n.r.e.).   A trial court abuses its discretion when it acts arbitrarily and unreasonably and without reference to guiding rules and principles.  Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985);  Garcia v. Barreiro, 115 S.W.3d 271, 274 (Tex.App.-Corpus Christi 2003, no pet.).   When reviewing matters reserved for the trial court's discretion, a court of appeals may not substitute its own judgment for that of the trial court.   See Flores v. Fourth Court of Appeals, 777 S.W.2d 38, 41 (Tex.1989).

 The determination of reasonable attorney's fees is a question for the trier of fact.   See, e.g., Gonzalez v. Nielson, 770 S.W.2d 99, 102 (Tex.App.-Corpus Christi 1989, writ denied).   Factors to be considered in determining the amount of reasonable attorney's fees include:  1) the time and labor required, novelty, and difficulty of the question presented, and the skill required to properly perform the legal service;  2) the likelihood that the acceptance of employment precluded other employment by the lawyer;  3) the fee customarily charged in the locality for similar services;  4) the amount involved and the results obtained;  5) the time limitations imposed by the client or by the circumstances;  6) the nature and length of the professional relationship with the client;  7) the experience, reputation, and ability of the lawyer performing the services;  and 8) whether the fee is fixed or contingent.  Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.1997).   The court is free to look at the entire record, the evidence presented on reasonableness, the amount in controversy, the common knowledge of the participants as lawyers and judges, and the relative success of the parties.  Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877, 896 (Tex.App.-San Antonio 1996, writ denied).

The record shows that the Schlegels submitted affidavits by their attorneys in support of their request for an award of attorney's fees.   These affidavits document the time spent by each attorney for the Schlegels, the hourly rates charged, the work undertaken and accomplished, and the costs incurred in their representation.   The trial court awarded attorney's fees in the amounts established by the affidavits.

On appeal, Garrod argues that the trial court's award was excessive.   As we have already explained, however, the proper amount of attorney's fees to be awarded is within the trial court's discretion.   See, e.g., Dail v. Couch, 99 S.W.3d 390, 391-92 (Tex.App.-Corpus Christi 2003, no pet.).   Based on the aforementioned evidence and factors available for the trial court's consideration, we cannot conclude that the trial court abused its discretion in making an award of attorney's fees consistent with the uncontested evidence.   Garrod put on no testimony or evidence to show that reasonable attorney's fees in this case would be less than what the Schlegels requested and what their evidence established.   We have before us no basis for finding an abuse of discretion other than Garrod's claim that we should reverse the award because it was too generous.   This we cannot do.

IV. Conclusion

We affirm the trial court's judgment, including its award of attorney's fees, and overrule all of Garrod's appellate issues.

FOOTNOTES

1.   The document Garrod refers to as the “Earnest Money Contract” is the same document that Myrna Schlegel used to convey her signed offer;  it is the standard form contract.

Opinion by Justice GARZA.

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