Affirmed and Memorandum Opinion filed December =
18,=20
2007.
In The
Fourteenth Court=20
of Appeals
____________
NO. 14-07-00211-CV
____________
FEDGESS=20
SHOPPING CENTERS, LTD., =
Appellant
V.
MNC SSP,=20
INC.; MNC MCT, INC.; MNC MEMORIAL CITY TERRACE, L.P.; AND MNC =
SPRING=20
SHADOWS PLACE, L.P., =
Appellees
On Appeal from the =
190th District Court
Harris County, =
Texas
Trial Court Cause =
No. 2006-02381
M E M O R=20
A N D U M O P I N I O N
This appeal arises =
out of a=20
dispute over the proper disposition of funds held in escrow =
pursuant to a=20
sale of real property. Appellant, FedGess Shopping Centers, =
Ltd.=20
(AFedGess@), appeals a summary =
judgment=20
in favor of appellees, MNC SSP, Inc., MNC MCT, Inc., MNC Memorial =
City=20
Terrace, L.P., and MNC Spring Shadows Place, L.P. (collectively=20
AMNC@). We=20
affirm.
I. =20
BACKGROUND
FedGess owned two =
tracts of=20
land, one known as the I-10 Gessner Shopping Center (the =
AProperty@), and the other the =
Federal=20
East Plaza Shopping Center. MNC Terrace at Willowbrook, L.P. =
(AWillowbrook@) became interested =
in=20
acquiring the Property. During negotiations with =
Willowbrook, the=20
Texas Department of Transportation (ATXDOT@) was conducting a =
condemnation=20
proceeding and sought to take a portion of the Property (the =
ATXDOT =
Tract@). TXDOT first =
offered=20
$1,975,850 to compensate FedGess for the taking of the TXDOT =
Tract, but=20
FedGess declined the offer and hired attorney Stephen I. Adler to =
obtain a=20
higher award. Adler and FedGess executed an =
attorney=3Ds fees contract that =
would pay=20
Adler twenty-five percent of the amount he obtained for the TXDOT =
Tract=20
above TXDOT=3Ds original offer of=20
$1,975,850. Adler=3Ds efforts prompted =
TXDOT to=20
make another offer in the amount of $2,285,761.
On January 14, 2005,=20
Willowbrook and FedGess executed a Purchase and Sale Agreement =
(the=20
APSA@); Willowbrook =
immediately=20
assigned its interest to MNC. While the sale of the =
Property=20
was pending, it became clear that the condemnation proceedings =
would not=20
be concluded prior to closing. Additionally, the parties =
anticipated=20
that the condemnation award would exceed the amount of the second =
$2.2=20
million offer. In response, FedGess and MNC signed an =
amendment to=20
the PSA and an escrow agreement (the AEscrow =
Agreement@). The purpose =
of the PSA=20
amendment and the Escrow Agreement was to ensure that FedGess =
would=20
receive a fair value of the TXDOT Tract award in the condemnation=20
proceeding, which the parties believed was worth at least=20
$4,000,000.
Pursuant to the =
amendment, MNC=20
agreed to pay FedGess $2.2 million for the TXDOT Tract at closing, =
and=20
agreed to deposit an additional $1.8 million in an interest =
bearing escrow=20
account, subject to the terms of the Escrow Agreement. The =
amendment=20
also required MNC to hire Dixon Montague of Vinson & Elkins to =
represent MNC in the condemnation proceeding after closing on the=20
Property. (Prior to closing on the Property, Adler had =
represented=20
FedGess in the condemnation proceeding.)
According to the =
relevant=20
portions of the Escrow Agreement, FedGess was entitled to the $1.8 =
million=20
(plus interest) in escrow less legal fees and expenses associated =
with the=20
condemnation proceeding after closing if the condemnation award =
was more=20
than $4 million. Before the condemnation proceeding was =
settled with=20
TXDOT, FedGess and MNC closed on the Property, and $1.8 million =
was=20
deposited in an escrow account with Alamo Title Company =
(AAlamo@). MNC did not =
hire=20
Montague; Adler ultimately settled the condemnation proceeding for =
$4,510.844. MNC paid Adler=3Ds fee at the closing =
of the=20
final condemnation settlement. Thereafter, FedGess refused =
to allow=20
Adler=3Ds post-closing=20
attorney=3Ds fees to be deducted =
from the=20
$1.8 million (plus interest) escrow account. It based its =
refusal on=20
MNC=3Ds failure to hire=20
Montague. As a result, this lawsuit arose over the =
disposition of=20
the funds held in escrow by Alamo and whether Adler=3Ds post-closing=20
attorney=3Ds fees were to be =
paid by MNC=20
or by FedGess from the escrow deposit.
FedGess filed suit =
against MNC=20
for breach of contract and sought a declaratory judgment regarding =
the=20
rights of the parties under the PSA, the PSA amendment, and the =
Escrow=20
Agreement. MNC counter-claimed for breach of contract and=20
declaratory judgment. Both parties moved for summary =
judgment. =20
The trial court denied FedGess=3Ds motion for summary =
judgment=20
and granted MNC=3Ds summary judgment=20
motion. The trial court found that FedGess was obligated to =
pay MNC,=20
from the escrow deposit, all of Adler=3Ds =
attorney=3Ds fees and expenses, =
including=20
his post-closing fees and expenses, associated with the =
condemnation=20
proceeding.
On appeal, FedGess =
argues that=20
the trial court erred in granting MNC=3Ds motion for summary =
judgment=20
because: (1) appellant=3Ds affirmative defense =
of prior=20
material breach is a question of fact for the jury; and (2) the =
PSA=20
amendment and the Escrow Agreement are ambiguous regarding which =
party is=20
required to pay post-closing attorney=3Ds fees since Montague =
was not=20
hired for the condemnation proceeding.
II. =20
STANDARDS OF REVIEW
Summary judgment =
under rule=20
166a(c) is proper only when a movant establishes that there is no =
genuine=20
issue of material fact and that he is entitled to judgment as a =
matter of=20
law. Tex. R. Civ. P. 166a(c); Randall=3Ds Food Mkts., Inc. v. =
Johnson, 891=20
S.W.2d 640, 644 (Tex. 1995). We review a summary judgment de =
novo. Valence Operating Co. v. Dorsett, 164 S.W.3d =
656, 661=20
(Tex. 2005). A defendant is entitled to summary judgment if =
the=20
evidence disproves as a matter of law at least one element of each =
of the=20
plaintiff=3Ds causes of action or =
if the=20
evidence conclusively establishes all elements of an affirmative=20
defense. See Randall=3Ds, 891 S.W.2d at =
644. =20
When both parties, as =
here,=20
move for summary judgment on the same issues and the trial court =
grants=20
one motion and denies the other, the reviewing court considers the =
summary=20
judgment evidence presented by both sides, determines all =
questions=20
presented, and renders the judgment the trial court should have=20
rendered. Dorsett, 164 S.W.3d at 661; FM Props. =
Operating=20
Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. =
2000). In=20
reviewing a summary judgment, we must indulge every reasonable =
inference=20
in favor of the nonmovant and resolve any doubts in its =
favor. =20
Randall=3Ds, 891 S.W.2d at 644; =
Lawson=20
v. B Four Corp., 888 S.W.2d 31, 33 (Tex. App.CHouston [1st Dist.] =
1994, writ=20
denied). Declaratory judgments decided by summary judgment =
are=20
reviewed under the same standards of review that govern summary =
judgments=20
generally. Lidawi v. Progressive County Mut. Ins. =
Co., 112=20
S.W.3d 725, 730 (Tex. App.CHouston [14th Dist.] =
2003, no=20
pet.).
III. =
AFFIRMATIVE=20
DEFENSE
In =
FedGess=3Ds first issue, it =
argues that=20
the trial court erred in granting MNC=3Ds motion for summary =
judgment=20
because FedGess=3Ds affirmative defense =
of prior=20
material breach is a question of fact for the jury. More=20
specifically, FedGess contends that MNC breached the PSA amendment =
and the=20
escrow agreement when if failed to hire Montague after =
closing. =20
According to FedGess, it was material to the PSA amendment and the =
Escrow=20
Agreement that Montague (not Adler) prosecute the condemnation=20
proceeding. Materiality arises from the facts that (1) =
FedGess=20
considered Montague the best condemnation attorney in the State of =
Texas,=20
and (2) FedGess wanted to recover as high an amount as possible =
from TXDOT=20
in the condemnation proceeding. FedGess argues that a jury =
is=20
required to determine whether MNC=3Ds breach was =
material. =20
A party breaches a =
contract=20
when it neglects or refuses to perform a contractual =
obligation. =20
Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.CHouston [14th Dist.] =
2006, pet.=20
denied). If the breach is material, the other party is =
excused from=20
further performance of the contract. See Hernandez v. =
Gulf Group=20
Lloyds, 875 S.W.2d 691, 692 (Tex. 1994). Texas courts =
apply the=20
considerations set forth in Restatement (Second) of =
Contracts=20
' 241(a) (1981) in =
determining=20
whether the breach was material. Mustang Pipeline Co., =
Inc v.=20
Driver Pipeline Co., Inc., 134 S.W.3d 195, 199 (Tex. =
2004). The=20
factors are:
(1) the extent to which the injured =
party will be=20
deprived of the benefit which he reasonably expected;
(2) the extent to which the injured =
party can be=20
adequately compensated for the part of that benefit of which he =
will be=20
deprived;
(3) the extent to which the party =
failing to=20
perform or to offer performance will suffer forfeiture;
(4) the likelihood that the party =
failing to=20
perform or to offer to perform will cure his failure, taking =
account of=20
all the circumstances including any reasonable assurances; and =
(5) the extent to which the behavior of =
the party=20
failing to perform or to offer to perform comports with standards =
of good=20
faith and fair dealing.
Id.; Restatement (Second) of =
Contracts=20
' 241(a). =
=
A court=3Ds primarily =
consideration in=20
determining the materiality of a breach is the extent to which the =
non-breaching party will be deprived of the benefit it reasonably =
could=20
have anticipated had the breach not occurred. =
Hernandez, 875=20
S.W.2d at 693. The less the non-breaching party is deprived =
of the=20
expected benefits, the less likelihood the breach is =
material. =20
Id. In the =
present=20
case, appellant failed to produce evidence that raises a disputed =
fact=20
issue as to whether appellees=3D breach caused it to =
be=20
deprived of the benefit it reasonably anticipated. FedGess =
anticipated a=20
condemnation award exceeding $4 million; MNC settled the =
condemnation=20
proceeding for $4.5 million. Though the issue of whether a =
breach=20
rises to the level of a material breach is generally a fact =
question,=20
appellant must still produce evidence showing deprivation of the=20
anticipated benefit to put this material fact in dispute. =
See=20
Seale v. Nichols, 505 S.W.2d 251, 253-54 (Tex. 1974); =
Richardson v.=20
Office Bldgs. of Houston, 704 S.W.2d 373, 376 (Tex. =
App.CHouston [14th Dist.] =
1985, no=20
writ) (to show there was a disputed fact issue to preclude summary =
judgment, appellant was required to offer summary judgment proof =
on each=20
element of the affirmative defense). Here, FedGess has =
failed=20
to prove the existence of a fact issue on the question of=20
materiality. It simply makes conclusory statements that the =
breach=20
was material because it considered Montague the best condemnation =
attorney=20
in Texas. FedGess produced no evidence showing how it was =
materially=20
injured by Adler=3Ds representation, or =
how it was=20
deprived of the benefit it reasonably could have anticipated had =
Montague=20
been hired. Instead, the record reflects that FedGess =
received what=20
it reasonably anticipated: a condemnation award exceeding $4=20
million. Because FedGess has failed to produce evidence =
implicating=20
materiality, there is no disputed fact issue as to whether MNC =
committed a=20
material breach. See id. Accordingly, =
the trial=20
court did not err is granting summary judgment. We overrule=20
FedGess=3Ds first issue.=20
IV. =20
AMBIGUITY
In =
FedGess=3Ds second issue, it =
argues that=20
the trial court erred in granting MNC=3Ds motion for summary =
judgment=20
because the PSA amendment and escrow agreement are ambiguous =
regarding=20
which party is required to pay post-closing attorney=3Ds fees if Montague is =
not hired=20
for the condemnation proceeding.
The law in regard to =
contract=20
interpretation is clear and well-settled. The interpretation =
of an=20
unambiguous contract is a question of law, which is reviewed de =
novo. MCI Telecomms. Corp. v. Tex. Utils. Elec. =
Co., 995=20
S.W.2d 647, 650-51 (Tex. 1999). Whether a contract is =
ambiguous is=20
also a question of law. Columbia Gas Transmission Corp. =
v. New=20
Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). To =
determine=20
whether a contract is ambiguous, we look at the agreement as a =
whole in=20
light of the circumstances present when the parties entered into =
the=20
contract. Nat=3Dl Union Fire Ins. Co. =
v. CBI=20
Indus., Inc.,=20
907 S.W.2d 517, 520 (Tex. 1995). We examine and consider the =
entire=20
writing in an effort to harmonize and to give effect to all the =
provisions=20
of the contract so that none will be rendered meaningless. =
Forbau=20
v. Aetna Life Ins. Co., 876 S.W.2d 132, 133-35 (Tex. 1994);=20
CenterPoint Energy Houston Elec., L.L.P. v. Old TJC Co., =
177 S.W.3d=20
425, 430 (Tex. App.CHouston [1st Dist.] =
2005, pet=20
denied). No single provision will control; rather, all =
provisions=20
must be considered with reference to the whole instrument. =20
Forbau, 876 S.W.2d at 134; Old TJC, 177 S.W.3d at=20
430.
Our primary concern =
in=20
construing a written contract is to ascertain the true intent of =
the=20
parties as expressed in the instrument. Forbau, 876 =
S.W.2d at=20
133; Lone Star Heat Treating Co., Ltd v. Liberty Mut. Fire Ins. =
Co., 233 S.W.3d 524, 527 (Tex. App.CHouston [14th Dist.] =
2007, no=20
pet.). If a contract is worded in such a way that it can be =
given a=20
definite or certain legal meaning, then the contract is not=20
ambiguous. CBI Indus., 907 S.W.2d at 520. A =
contract=20
will become ambiguous only if its meaning is uncertain or if it is =
subject=20
to two or more reasonable interpretations. Id. =
An=20
ambiguity does not arise simply because the parties advance =
conflicting=20
interpretations of the contract. Forbau, 876 S.W.2d =
at=20
134.
FedGess argues that =
the PSA=20
amendment and the Escrow Agreement are ambiguous because the =
parties offer=20
two interpretations, one that the post-closing legal fees and =
expenses=20
incurred by anyone other than Montague are to be paid by MNC and =
the other=20
that all post-closing legal fees and expenses are to be paid by =
FedGess,=20
regardless of who is hired to prosecute the condemnation =
proceeding. =20
However, an ambiguity does not arise simply because the parties =
advance=20
conflicting interpretations of the contract. =
Id. Our=20
primary concern is to ascertain the true intent of the parties as=20
expressed in the instrument; we examine and consider the entire =
writing in=20
an effort to harmonize and to give effect to all the provisions of =
the=20
contract. Forbau, 876 S.W.2d at 133-34. The =
relevant=20
portions of the PSA amendment reads:
because of the pending finality of the =
Existing=20
Gessner Condemnation and because it is anticipated the total =
amount of the=20
award will exceed $4,000,000.00, Purchaser hereby agrees to escrow =
at=20
closing an additional sum of One Million Eight Hundred Thousand =
Dollars=20
(1,800,000.00) (the AEscrow Deposit@) with the Seller=3Ds Title Company pursuant to the terms of =
an Escrow=20
Agreement agreed to by Seller and Purchaser and Seller=3Ds Title Company as conditional purchase =
proceeds=20
pending determination and receipt of the final award (the =
AAward@) paid by TXDOT for taking the TXDOT =
Tract. =20
In addition . . .
Seller shall, at Seller=3Ds expense, pay all legal fees, costs and =
expenses,=20
appraiser fees and other costs and expenses associated with the =
Existing=20
Gessner Condemnation incurred prior to the date of Closing =
including but=20
not limited to legal fees of Stephen Adler. Purchaser shall =
hire=20
Dixon Montague of Vinson & Elkins to represent Purchaser in =
the=20
Existing Gessner Condemnation. Dixon Montague=3Ds fees shall be 30% of the amount of the =
Condemnation Award on the existing condemnation in excess of =
$2,000,000.00=20
and such fees and all expenses related to the Existing Gessner=20
Condemnation shall be paid out of the Escrow Deposit before any =
amount is=20
paid to Seller.
The relevant portion =
of the=20
Escrow Agreement reads:
In the event that the condemnation award =
(the=20
AAward@) in the Existing Gessner Condemnation =
is=20
$2,200,000 or less, the entire amount of the Escrow Deposit shall =
be paid=20
to Buyer. In the event that the award is greater than $2,200,000 =
and not=20
more than $4,000,000, the amount of the Award (less $2,200,000 =
less all=20
expenses incurred in connection with the Existing Gessner =
Condemnation not=20
previously paid by Seller including but not limited to fees due to =
Stephen=20
Adler) shall be paid to Seller, and the remainder of the Escrow =
Deposit=20
shall be paid to Buyer. In the event the amount of the Award =
is=20
greater than $4,000,000 then the entire Escrow Deposit (less all =
other=20
expenses incurred in connection with the Existing Gessner =
Condemnation not=20
previously paid by Seller including but not limited to fees due to =
Stephen=20
Adler) shall be paid to Seller and the remainder of the Escrow =
Deposit=20
shall be paid to Buyer.
It is undisputed that =
of the=20
three scenarios regarding disposition of the escrow funds and =
legal fees,=20
the third scenario is controlling in this case. Importantly, =
the=20
Escrow Agreement provided that FedGess would pay all legal fees =
and=20
expenses in the second scenario (an award between $2.2 million and =
$4=20
million) and in the third scenario (an award over $4 =
million). Both=20
agreements clearly reflect that the parties intended to negotiate =
an award=20
exceeding $4 million and that FedGess would pay the legal fees =
associated=20
with a $4 million award. The agreements do not become =
ambiguous=20
simply because MNC was suppose to hire Montague and the parties =
did not=20
indicate who would be responsible for attorney=3Ds fees if Montague =
was not=20
hired. See Forbau, 876 S.W.2d at 134 (stating that no =
single=20
provision will control; rather, all provisions must be considered =
with=20
reference to the whole instrument). The agreements here are =
worded=20
in such a way that the provisions regarding the party responsible =
for=20
legal fees and expenses in the case of a $4 million award can be =
given a=20
definite or certain legal meaning. See CBI Indus., =
907 S.W.2d=20
at 520.
Moreover, a contract =
is=20
ambiguous only if its meaning is uncertain or if it is subject to =
two or=20
more reasonable interpretations. Id. =20
FedGess=3Ds interpretation, =
that it was=20
responsible for attorney=3Ds fees if only =
Montague was=20
hired, is unreasonable and not supported by the four corners of =
the=20
contract. There is nothing in the agreements that reflects =
any=20
intent to shift the responsibilities for payment of legal expenses =
associated with the condemnation away from FedGess and over to=20
MNC. Accordingly, FedGess has not provided two or more =
reasonable interpretations of the agreements sufficient to render =
them=20
ambiguous. We therefore hold that the agreements are =
not=20
ambiguous. We overrule FedGess=3Ds second =
issue.
We affirm=20
the trial court=3Ds=20
judgment.
/s/ =20
Adele Hedges
Chief =
Justice
Judgment=20
rendered and Memorandum Opinion filed December 18, =
2007.
Panel=20
consists of Chief Justice Hedges and Justices Anderson and=20
Seymore. |