Tregellas v. Archer
507 S.W.3d 423
Tex. App.2016Background
- In 2003 the Cook family conveyed surface rights to the Archer trusts and separately granted the trustees a right of first refusal (ROFR) on various mineral tracts; Tract 4 was misdescribed as being in Ochiltree County though it lay in Hansford County.
- A 2004 correction instrument, signed by two grantors (the Tidwells) and recorded in Hansford County, sought to correct the county error; other grantors did not sign.
- In 2007 Sharon Sue Farber and Rodney Farber sold their undivided mineral interest in the west half of Section 85 to Tregellas without notifying the trustees; the trustees discovered the conveyance in May 2011 and sued for specific performance.
- After suit, Tregellas purchased additional Smith family minerals via a loan secured by deed of trust and later foreclosed; trustees alleged the loan/foreclosure was a subterfuge to evade the ROFR and sought specific performance as to the Smith interest as well.
- The trial court ordered specific performance for both the Farber and Smith interests and awarded attorney’s fees; on appeal the court addressed (1) effectiveness of the 2004 correction instrument/statute of frauds, (2) accrual/limitations for the Farber claim, (3) voluntariness/subterfuge concerning the Smith foreclosure, and (4) attorney’s fees/funds on deposit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 2004 correction instrument under Property Code §5.028 (statute-of-frauds concern) | Correction instrument substantially complied and effectively corrected county error | Instrument failed statutory requirements (basis of signers’ knowledge, notice, recording in all counties) | Court: substantial compliance satisfied; correction instrument effective to cure county error |
| Accrual and statute-of-limitations for Farber sale (specific performance) | Accrual deferred until trustees received notice; right was a dormant option until notice, so suit timely | Cause accrued when Farbers closed sale (2007); suit filed May 2011 was too late | Court: accrual occurred at latest by the sale date (2007); discovery rule inapplicable; Farber claim barred by limitations; reverse judgment for Farber interest |
| Validity of Smith foreclosure sale and whether it was a subterfuge to evade ROFR | Smiths’ restructuring into a loan + foreclosure was a device; trustees entitled to specific performance | ROFR expressly subordinated to mortgages; foreclosure is involuntary under Draper and does not trigger ROFR | Court: evidence supported finding Smiths were willing to sell and failed to notify trustees; trial court’s specific performance for Smith interest affirmed despite mortgage-subordination language |
| Attorney’s fees and disposition of funds on deposit | Trustees sought fees and clerk-held funds consistent with judgment | Tregellas sought remand for recalculation given reversal on Farber interest | Court: severed fee/funds issues, reversed trial court’s fee award, remanded those issues for redetermination |
Key Cases Cited
- Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640 (Tex. 1996) (describing nature of rights of first refusal)
- Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) (discovery rule for contract claims should be applied rarely)
- Draper v. Gochman, 400 S.W.2d 545 (Tex. 1966) (foreclosure sale generally not a voluntary sale that triggers a ROFR)
- Barker v. Eckman, 213 S.W.3d 306 (Tex. 2006) (accrual principles for breach and when causes may accrue upon inconsistent acts)
- Wagner & Brown v. Horwood, 58 S.W.3d 732 (Tex. 2001) (definition and limits of inherently undiscoverable injuries under the discovery rule)
- HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (discussing objectively verifiable injuries and discovery-rule parameters)
- Riley v. Campeau Homes (Tex.), Inc., 808 S.W.2d 184 (Tex. App.-Houston [14th Dist.] 1991) (remedy of specific performance for breach of ROFR)