John Stockton v. Mitchell Mortgage Company, L.L.C.

Opinion issued May 11, 2006 In The Court of Appeals For The First District of Texas NO. 01-04-00831-CV JOHN STOCKTON, Appellant V. MITCHELL MORTGAGE COMPANY, L.L.C., Appellee On Appeal from the 240th District Court Fort Bend County, Texas Trial Court Cause No. 03-CV-132282 MEMORANDUM OPINION In a dispute over entitlement to escrow funds after a real estate transaction failed, appellant, John Stockton, challenges a summary judgment rendered in favor of appellee, Mitchell Mortgage Company, L.L.C. (MMC). In three issues on appeal, Stockton argues that (1) MMC’s summary judgment evidence did not prove as a matter of law that it had accepted the sales contract and (2) MMC did not present competent summary judgment evidence that was clear, positive and direct, credible, and free from contradictions and inconsistencies. We affirm. Background In August 2003, Stockton (the buyer) entered into a standard commercial contract for improved property with MMC (the seller) for real property located in Houston. As part of the contract, Stockton was required to pay $25,000 in earnest money not later than three days after the effective date of the contract. Stockton was also required to pay an additional $75,000 in earnest money on or before his right to terminate expired, or in this case, 15 days after the contract’s effective date. The contract provided that, if Stockton failed to comply with the contract, MMC could terminate the contract and receive the earnest money as liquidated damages. Stockton initially tendered $25,000 in escrow and tendered another $75,000 on September 12, 2003. Before the September 25, 2003 closing on the contract, Stockton backed out. When both Stockton and MMC made a request for the escrow money, the escrow agent, Bruce Badger of the Badger Law Office, filed a petition in interpleader, filed a suit against MMC and Stockton, and deposited the earnest money into the registry of the trial court. MMC and Stockton filed cross-actions against each other. MMC sought summary judgment which the trial court granted, without stating its reasons, and awarded MMC the earnest money funds. Stockton filed a motion for new trial, which the trial court denied. Summary Judgment We review the appeal under the usual standards of review applicable to traditional motions for summary judgment. Tex. R. Civ. P. 166a(c); see Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995) (stating that all evidence favorable to non-movant taken as true and reasonable inferences indulged in nonmovant’s favor); Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985) (defendant-movant bears burden to show no genuine issue of material fact and entitlement to judgment as matter of law). Breach of Contract Acceptance In his first issue on appeal, Stockton argues that MMC’s summary judgment evidence did not prove as a matter of law that it had accepted the sales contract. Specifically, Stockton argues that the contract required acceptance no later than 5:00 p.m. on August 28, 2003 and that MMC failed to show that this happened or that the MMC representative had the authority to act on behalf of MMC. MMC responds that the affidavit of John Lingor, the Senior Vice President at Southwest Bank of Texas, shows that the contract was accepted. His affidavit stated the following: On or about August 28, 2003, I witnessed John Stockton sign the Contract, and I informed him that his offer had been accepted by Mitchell Mortgage Company, and that it would be signed by Donald Hickey, Senior Vice President of [MMC] later that afternoon. Later that same day, I witnessed Mr. Donald Hickey of [MMC] sign the Contract, which I then forwarded to Badger Law Office, the escrow agent for the transaction. The elements of a valid contract are (1) an offer; (2) an acceptance; (3) a meeting of the minds; (4) each party’s consent to the terms; and, in the case of a written contract, (5) execution and delivery of the contract with the intent that it be mutual and binding. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). The determination of a meeting of the minds, and thus offer and acceptance, is based on the objective standard of what the parties said and did, not on their subjective states of mind. Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San Antonio 1999, pet denied). To form a binding contract, it must appear that the party to whom the offer was made accepted the offer and communicated his acceptance to the person making the offer. Mann v. Risinger, 423 S.W.2d 626, 633 (Tex. App.—Beaumont 1968, writ ref’d n.r.e.). An acceptance must not change the terms of the offer; if it does, the offer is rejected. Gilbert v. Pettiette, 838 S.W.2d 890, 893 (Tex. App.—Houston [1st Dist.] 1992, no writ); Chapman v. Mitsui Eng’r and Shipbuilding Co., 781 S.W.2d 312, 316 (Tex. App.—Houston [1st Dist.] 1989, writ denied). When “negotiations” are in writing, the question of whether an offer was unconditionally accepted is primarily a matter of law for the court. Gilbert, 838 S.W.2d at 893. Lingor’s affidavit states that, after Stockton signed the contract, he told Stockton that MMC accepted the contract and that Donald Hickey, Senior Vice President of MMC, would sign the contract later that day. The contract, attached to MMC’s motion for summary judgment, is signed by both Stockton and Hickey, dated August 28, 2003, and provides that it is “Executed effective as of August 28, 2003.” Lingor’s affidavit also states that he was designated by the senior management of Southwest Bank of Texas to act as agent for sale of any commercial real estate by MMC. We conclude that MMC presented competent summary judgment evidence that it timely accepted the contract. Moreover, the evidence indicates that Stockton proceeded as though MMC had timely accepted the contract. Specifically, Stockton’s own affidavit attached to his response to the motion for summary judgment states that he was not informed that the offer had been accepted until he received an e-mail from Badger on September 3, 2004. Despite the late notice, Stockton paid $75,000 in earnest money on approximately September 12, 2003 in accordance with the contract’s terms. Stockton also agreed to allow Victor Melton of MMC to access Stockton’s credit report on September 23, 2003. Stockton also sought financing from another bank besides Southwest Bank of Texas. Finally, Stockton hired a real estate consultant to assist him in evaluating the property. In light of Stockton’s conduct, we conclude that even if acceptance had not been made on August 28, 2003, Stockton waived the time-is-of-the-essence clause. See Puckett v. Hoover, 202 S.W.2d 209, 212 (Tex. 1947) (stating that “waiver not only may be shown by parol, but may be made to appear from the circumstances or course of dealing”); 17090 Parkway, LTD. v. McDavid, 80 S.W.3d 252, 255–56 (Tex. App.—Dallas 2002, pet. denied); Wilson v. John Frantz Co., 723 S.W.2d 189, 193 (Tex. App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.). Stockton next argues that MMC failed to prove acceptance because it had not approved financing for the purchase by August 28, 2003. Stockton contends that MMC’s agreement to provide financing was part of the contract and that there could be no acceptance if the financing was not in place. To support his contention, Stockton relies on the financing addendum to the contract. We disagree that the financing addendum requires MMC to provide financing to Stockton prior to August 28, 2003. The addendum contains no such language; rather, it contemplates financing at closing pursuant to “Loan Documents to be drafted by counsel for seller; Buyer to pay all legal fees associated therewith.” Accordingly, we conclude that MMC presented competent summary judgment evidence of acceptance. We overrule Stockton’s first issue on appeal. Compliance with Conditions Precedent In his second issue on appeal, Stockton argues that MMC’s summary judgment evidence failed to show that it provided Stockton with a survey within three days after the effective date of the sales contract and a list of personal property within five days of the effective date of the contract. Here, section six of the contract provides as follows: (1) Within 3 days after the effective date: . . . (c) Seller will deliver a true and correct copy of Seller’s existing survey of the Property dated June 3, 2003. Exhibit B, an addendum to the contract, provides the following: Within five (5) days of the date of this contract, Seller shall deliver to Buyer a list of personal property that is to be conveyed by the Bill of Sale and Assignment, including, but not specifically limited to uninstalled HVAC equipment, tub/shower units, windows and doors. Stockton argues that these requirements were conditions precedent to his own duty to perform, that MMC failed to comply with these provisions, and that, therefore, the parties did not have an enforceable contract. MMC responds that Lingor’s affidavit shows that MMC provided the survey and a list of personal property approximately five to seven days prior to August 28, i.e., before the effective date of the contract. The provisions requiring MMC to provide a survey and a list of personal property are not conditions precedent. A condition precedent may be either a condition to the formation of a contract or to an obligation to perform an existing agreement. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976). A condition precedent to an obligation to perform is an act or event, which occurs subsequently to the making of a contract, that must occur before there is a right to immediate performance and before there is a breach of contractual duty. Id. However, when the intent of the parties is doubtful or when a condition would impose an absurd or impossible result, then the agreement will be interpreted as creating a covenant rather than a condition. Id. Because of their harshness in operation, conditions are not favorites of the law. Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex. 1990). Thus, in construing a contract, forfeiture by finding a condition precedent is to be avoided when another reasonable reading of the contract is possible. Id. Normally, in order to create a condition precedent, an agreement must use a term such as “on condition that,” “if,” “provided that,” or some similar conditional phrase. Id.; Cal-Tex Lumber Co. v. Owens Handle Co., 989 S.W.2d 802, 809 (Tex. App.—Tyler 1999, no pet.). By contrast, “a covenant is a formal agreement or promise, usually in a contract.” Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 850 n.6 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) (citations omitted). These two provisions are not conditions precedent to Stockton’s performance of the contract because neither provision contains any language that would indicate that failure to comply would render the contract void. Rather, we interpret these provisions as covenants that require MMC to provide the documents. Stockton does not contend that he did not receive the documents. Instead, he asserts that he did not receive the documents until after the effective date of the contract. Because Lingor’s affidavit demonstrated that MMC provided the documents called for in these provisions, MMC performed its part of the contract. We overrule Stockton’s second issue on appeal. Credible Evidence In his third issue on appeal, Stockton argues that MMC’s “affidavit evidence is riddled with inconsistencies and contradictions that it fails to meet the standards required to grant a traditional motion for summary judgment,” and thus it is not “clear, positive and direct, otherwise credible and free from contradictions and inconsistencies.” Specifically, Stockton complains about Lingor’s affidavit and a letter from Lingor to Bruce Badger, the escrow agent, that was attached to MMC’s motion for summary judgment. Although Stockton objected to these documents in his response to MMC’s motion for summary judgment, there is no order in the record sustaining Stockton’s objections, and the order granting summary judgment did not reflect that the trial court considered his objections. A party objecting to the competency of summary judgment proof must obtain a ruling on its objection or obtain a written order signed by the trial judge and entered of record, or the objection is waived and the proof remains a part of the summary judgment record. Rogers v. Continental Airlines, Inc., 41 S.W.3d 196, 200 (Tex. App.—Houston [14th Dist.] 2001, no pet.) (party waived objections to summary judgment evidence when there was no order in the record sustaining objections, and the order granting summary judgment did not reflect that the trial court considered objections); Well Solutions, Inc. v. Stafford, 32 S.W.3d 313, 317 (Tex. App.—San Antonio 2000, no pet.) (“In short, a trial court’s ruling on an objection to summary judgment evidence is not implicit in its ruling on the motion for summary judgment; a ruling on the objection is simply not ‘capable of being understood’ from the ruling on the motion for summary judgment.”). Accordingly, Stockton has waived his complaint. We overrule Stockton’s third issue on appeal. Conclusion We affirm the judgment of the trial court. Laura Carter Higley Justice Panel consists of Justices Nuchia, Hanks, and Higley.