509 S.W.3d 379
Tex. App.2014Background
- Capcor agreed to buy unimproved commercial land from Moody Kirby using a standard TREC contract; closing date moved to the Tuesday after Memorial Day weekend. Capcor deposited $25,000 earnest money with Moody Title (the escrow agent), owned by Moody Kirby’s owner.
- The contract required the buyer to pay the sales price in “good funds acceptable to the escrow agent.” If a party failed to close by the closing date, the non‑defaulting party could terminate and keep earnest money as liquidated damages.
- The buyer’s lender wired its portion, but the buyer’s own funds had not arrived by afternoon of closing. Moody Title’s escrow officer, Kay Street, had told Capcor the day before and the morning of closing that a wire was required.
- Late on closing day Capcor attempted to deliver a cashier’s check; Street, after consulting her underwriter (Fidelity) and the Texas DOI, refused, saying she needed collected funds (a wire) to be able to disburse and issue title that day.
- Capcor’s principal dropped the cashier’s check on Street’s desk after she said she would leave; the transaction could not fund that day. The next morning Moody Kirby gave notice terminating the contract; Moody Kirby sued for earnest money and liquidated damages; Capcor sued for breach of fiduciary duty and tortious interference. The jury found Capcor breached and Moody Title did not breach fiduciary duties.
- The trial court awarded Moody Kirby the earnest money, liquidated damages, and fees. Capcor appealed, arguing factual insufficiency on the fiduciary/tortious‑interference findings and that the court erred by refusing a jury instruction on material breach.
Issues
| Issue | Capcor’s Argument | Moody’s Argument | Held |
|---|---|---|---|
| Whether Moody Title breached fiduciary duty by failing to disclose it would not accept a cashier’s check | Moody: Street failed to disclose material facts (underwriter policy) and timing made nondisclosure harmful | Moody: Street told Capcor a wire was required the day before and morning of closing; cashier’s checks are uncommon in commercial closings and not material | Court: Jury could credit Moody Title; nondisclosure not against great weight of evidence — no breach of disclosure duty |
| Whether requiring wired funds breached fiduciary duty or was tortious interference | Moody: Requiring a wire was arbitrary and interfered with the contract | Moody: Contract gave escrow discretion; rule P‑27 lists cashier’s checks as good funds but does not force acceptance; collected funds were required to disburse same day; underwriter instructions and practice justified wire requirement | Court: Jury reasonably found wired‑funds requirement was in good faith and within discretion — no breach or tortious interference |
| Whether Rule P‑27 (good funds) compelled acceptance of cashier’s checks | Capcor: Rule P‑27 lists cashier’s checks as good funds and thus title company must accept them | Moody: P‑27 prevents disbursement before collected funds are received; it does not mandate acceptance of every listed good‑fund form | Held: P‑27 does not require acceptance; escrow retained discretion consistent with contract wording |
| Whether the trial court erred by refusing Capcor’s instruction on material breach | Capcor: Its failure to provide wired funds was not necessarily a material breach; jury should have been instructed | Moody: Contract expressly allowed seller to terminate and take earnest money if buyer failed to close by the date; materiality irrelevant to that remedy | Held: No error — contract unambiguously allowed termination for failure to close, so instruction unnecessary |
Key Cases Cited
- Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) (standard for factual‑sufficiency review)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (jury as factfinder and scope of appellate factual‑sufficiency review)
- Gonzales v. Am. Title Co. of Hous., 104 S.W.3d 588 (Tex. App.—Houston [1st Dist.] 2003) (escrow agent is neutral and owes fiduciary duties)
- Trevino v. Brookhill Capital Res., Inc., 782 S.W.2d 279 (Tex. App.—Houston [1st Dist.] 1989) (elements of escrow fiduciary duties)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (elements of tortious interference)
- Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (effect of material breach and when time is of the essence)
- Limestone Group, Inc. v. Sai Thong, L.L.C., 107 S.W.3d 793 (Tex. App.—Amarillo 2003) (contractual language can bar remedies regardless of materiality)