718 S.W.3d 203
Tex.2025Background
- White Knight Development (WKD) contracted to sell land to Dick and Julie Simmons, including a "buy-back" clause allowing WKD to require the Simmonses to repurchase the property if certain restrictions were extended by residents.
- When the restrictions were extended, WKD invoked the buy-back, but the Simmonses refused to repurchase the property within the contract’s required time, resulting in delay.
- WKD subsequently suffered financial consequences, including defaulting on loans and incurring fees, interest, and tax penalties related to both the subject property and other properties, according to trial evidence.
- Trial court awarded WKD both specific performance (requiring the Simmonses to repurchase the property) and over $300,000 in damages identified as "actual/consequential damages."
- The court of appeals struck the damages, holding that monetary awards could not be combined with specific performance unless expressly identified as equitable.
- Supreme Court of Texas granted review to clarify when, if ever, equitable expenses may accompany specific performance in real property contract breaches.
Issues
| Issue | Plaintiff's Argument (White Knight) | Defendant's Argument (Simmonses) | Held |
|---|---|---|---|
| Can specific performance and monetary relief both be awarded in a real estate contract breach? | Both should be awarded if money is needed to fully restore WKD due to delay. | Only one remedy is available—specific performance or damages, not both. | Both may be awarded in limited circumstances where money compensates for delay not covered by specific performance. |
| What kinds of monetary awards are permissible with specific performance? | Damages for all direct and indirect financial consequences suffered due to delay. | No damages if specific performance is granted, especially for non-property expenses. | Only expenses directly traceable to the property and delay, foreseeable, and commercially reasonable can be awarded. |
| Were all categories of damages awarded by the trial court proper? | Yes, they all stem from the breach and delay. | Many items (e.g., unrelated property loan interest) are too remote or indirect. | Only direct, foreseeable, and property-related expenses are recoverable; others must be excluded. |
| Did the court of appeals err by striking the entire monetary award? | Yes, some portion was justified even if not all of it. | No, none were permitted without express equitable reasoning. | Yes, some damages are appropriate; the award must be reconsidered under clarified standards. |
Key Cases Cited
- Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882 (Tex. 2019) (specific performance is an alternative to damages; damages generally not awarded when specific performance is granted)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (specific performance foreclosed if adequate remedies at law exist)
- Stuart v. Bayless, 964 S.W.2d 920 (Tex. 1998) (damages must be directly traceable to the breach)
- Basic Cap. Mgmt, Inc. v. Dynex Com., Inc., 348 S.W.3d 894 (Tex. 2011) (damages must be reasonably foreseeable at contract formation)