Winston Acquisition Corp. v. Blue Valley Apartments, Inc.
2014 Tex. App. LEXIS 7082
| Tex. App. | 2014Background
- Winston, buyer, and Blue Valley, seller, entered a $1,755,000 contract for Phoenix Place Apartments with a December 15, 2010 closing and time‑is‑of‑the‑essence term.
- The contract allowed a $10,000 extension fee to extend closing; they did not agree to an extension on December 15, 2010.
- Winston deposited $150,000 earnest money, which the contract stated was non-refundable and fully earned unless properly terminated by Winston.
- A due diligence period ran Nov 15–Nov 30, 2010; items included environmental concerns and delivery of a Lead-Based Paint Disclosure and EPA Pamphlet (Exhibit I) by seller.
- Blue Valley delivered Exhibit I but did not provide the EPA Pamphlet; Winston did not initial Exhibit I.
- Winston asserted termination by letter on Dec 10, 2010 due to lack of EPA Pamphlet; closing occurred Dec 15, 2010, which Winston did not attend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Winston breach by failing to close on the appointed date? | Winston; argues timely performance excused by EPA Pamphlet issue. | Blue Valley; argues waiver/deemed satisfaction due to no timely objection. | Yes; Winston breached by not closing. |
| Was Blue Valley liable for not delivering the EPA Pamphlet timely? | Winston; contends EPA Pamphlet missing voided closing rights. | Blue Valley; claims EPA Pamphlet not required to prevent closing, timely objection absent. | No; deemed satisfied/approved via due diligence process. |
| Did Winston’s waiver/waiving mechanism apply to the EPA Pamphlet under section 3.4? | Winston; asserts no waiver due to improper interpretation. | Blue Valley; argues waiver by failure to object within the due diligence period. | Yes; waiver by deemed approval applies. |
| Did Winston properly terminate under section 8.2 for Blue Valley’s alleged breach? | Winston; termination timely based on failure to provide EPA Pamphlet. | Blue Valley; termination not proper because EPA Pamphlet issue arose post due diligence or was deemed satisfied. | Termination not properly effective; but breach by Winston proven due to failure to close. |
| Is Blue Valley entitled to the earnest money and attorney’s fees? | Winston; disputes liquidated damages cling to earnest money. | Blue Valley; contract provides liquidated damages to seller upon buyer default and prevailing party fees. | Yes; Blue Valley entitled to earnest money and fees. |
Key Cases Cited
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (unambiguous contract interpretation; act in harmony with whole agreement)
- First Union Nat’l Bank v. Richmont Capital Partners I, LP, 168 S.W.3d 917 (Tex. App.—Dallas 2005) (contract interpretation; four corners of instrument)
- Pratt–Shaw v. Pilgrim’s Pride Corp., 122 S.W.3d 825 (Tex. App.—Dallas 2003) (harmonizing contract provisions; implied meanings)
- Heritage Res., Inc. v. NationsBank, 939 S.W.2d 121 (Tex. 1996) (presumption of effect to all contract clauses)
- MCI Telecomms. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 647 (Tex. 1999) (harmonious construction of contract terms)
- Samano v. Sun Oil Co., 621 S.W.2d 580 (Tex. 1981) (disjunctive 'or' in contract terms denotes alternatives)
- Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) (avoidance of inserting non-existent language into contracts)
- Worldwide Asset Purchasing, L.L.C. v. Rent-A-Center E., Inc., 290 S.W.3d 554 (Tex. App.—Dallas 2009) (interpretation to harmonize entire agreement)