449 S.W.3d 512
Tex. App.2014Background
- RP West (seller) contracted to build The Villas and sell to IRI (purchaser) for $21.5M; IRI deposited $215,000 earnest money. Closing due by April 1, 2008; contract was not contingent on buyer financing.
- IRI sought to assign purchase rights to Trimarchi; parties executed an amendment assigning Trimarchi earnest money to RP West and releasing IRI’s original earnest money, with redeposit obligations if conditions failed.
- Trimarchi defaulted; title released $74,579 to IRI, which kept the funds; IRI failed to obtain financing and did not close. RP West demanded redeposit and reserved all remedies.
- Section 8.2 of the contract provided three "sole and exclusive" seller remedies on buyer breach: (i) terminate and keep earnest money (liquidated damages), (ii) “put” the property to purchaser and sue for purchase price (with offsets), or (iii) seek specific performance.
- RP West sued; a jury found RP West elected the "put" remedy, that the Trimarchi assignment was not unconditional, that impossibility did not excuse IRI, and awarded RP West $4M. Trial court entered judgment for RP West; IRI appealed.
Issues
| Issue | RP West (Plaintiff) Argument | IRI (Defendant) Argument | Held |
|---|---|---|---|
| 1. Contract interpretation — meaning of "put the Property to Purchaser and sue Purchaser for the Purchase Price" | "Put" reasonably construed to permit RP West to sue for the purchase price and offset receipts from a mitigation sale; jury question of fact if ambiguous. | "Put" requires actual conveyance/transferral of title to IRI before suing; thus sale to third party forecloses "put." | Court: RP West’s interpretation is a reasonable construction; jury resolved ambiguity for RP West. Affirmed. |
| 2. Impossibility defense | N/A — RP West argues IRI breached and seller’s mitigation/sale does not retroactively create impossibility. | Sale to third party made performance (conveying to IRI) impossible; impossibility bars recovery under "put." | Court: Impossibility defense not established; contractual "put" not identical to specific performance, so no requirement seller hold property until suit concluded. Overruled. |
| 3. Waiver and estoppel | RP West reserved rights, repeatedly demanded performance, and mitigated damages; accepting earnest money was consistent with "put." | RP West’s conduct (taking earnest money, marketing/selling, statements) impliedly waived or estopped enforcement of the "put." | Court: No clear evidence of intent to relinquish "put" remedy; RP West expressly reserved rights; directed verdict on estoppel proper. Overruled. |
| 4. Damages measure & sufficiency | Damages under the "put" equal contract purchase price less offsets (earnest money and amount received from mitigation sale); evidence supported $4M award. | Jury’s verdict legally/factually insufficient; court should have instructed differently; RP West limited to $215,000 liquidated damages if "put" unavailable. | Court: IRI waived some charge objections; evidence (contract price, $215k, $16.9M sale) legally and factually sufficient to support ~$4M. Overruled. |
Key Cases Cited
- Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 164 (Tex. 2009) (definition and effect of contractual ambiguity)
- In re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex. 2006) (ambiguity and when construction is a fact issue)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract ambiguity standard)
- Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) (primary concern is parties’ intent; give effect to writing)
- In re Serv. Corp. Int’l, 355 S.W.3d 655 (Tex. 2011) (harmonize contract provisions to avoid rendering any meaningless)
- Reeder v. Wood Cnty. Energy, LLC, 395 S.W.3d 789 (Tex. 2012) (plain meaning rule for contract terms)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency standard for jury evidence)
- DiGiuseppe v. Lawler, 269 S.W.3d 588 (Tex. 2008) (requirements for specific performance; readiness, willingness, ability)
- Centex Corp. v. Dalton, 840 S.W.2d 952 (Tex. 1992) (impossibility/impracticability doctrine)
- Phillips v. Phillips, 820 S.W.2d 785 (Tex. 1991) (enforcement of liquidated damages clauses)
- U.S. Rest. Props. Operating L.P. v. Motel Enters., Inc., 104 S.W.3d 284 (Tex. App.—Beaumont 2003) (real-estate "put" option damages theory)