Affirmed and Memorandum Opinion filed =
January 22,=20
2008.
In The
Fourteenth Court=20
of Appeals
____________
NO. 14-06-00483-CV
____________
GEORGE K.=20
SHEFFIELD AND CREED CORPORATION, =
Appellants
V.
JOHN=20
GIBSON, =
Appellee
On Appeal from the =
190th District Court
Harris County, =
Texas
Trial Court Cause =
No. 2002-26522
M E M O R=20
A N D U M O P I N I O N
Appellant=20
George Sheffield, officer and owner of Creed Corporation =
(ACreed@), =20
and appellee, John Gibson, negotiated the purchase of a home in =
Beach City=20
from Creed. After Gibson bought the home, he filed this suit =
against=20
Sheffield, Creed, and others, alleging, among other things, =
common-law=20
fraud, statutory real estate fraud, and DTPA violations based on =
alleged=20
misrepresentations regarding the home=3Ds=20
foundation. After a bench trial, the trial court found in =
favor of=20
Gibson and awarded him damages. Sheffield and Creed brought =
this=20
appeal.
Factual=20
and Procedural Background
Gibson is=20
a CPA who has lived in the Houston area since 1965. In April =
of=20
2000, Gibson informed one of his clients, Linda Miller, who was a =
real=20
estate broker, that he was looking to purchase a house in Beach=20
City. Miller knew that Sheffield had a house in Beach City =
that he=20
wanted to sell, so she contacted Sheffield for Gibson, and =
Sheffield made=20
the key to the home available so Gibson could go look at the=20
property.
Gibson=20
decided to purchase the home, and on May 26, 2000, the earnest =
money=20
contract was signed. The earnest money contractCa standard=20
ATexas Real=20
Estate Commission One To Four Family Residential =
Contract@Ccontained=20
a provision dealing with acceptance of the property =
condition. The=20
contract provided that in exchange for $100, Gibson would have ten =
days=20
after the effective date of the contract to give notice of =
termination of=20
the contract. If Gibson did not give notice in the time =
allowed, he=20
would be deemed to have accepted the property in its Acurrent=20
condition.@
After=20
signing the earnest money contract, but before closing, Gibson =
discovered=20
a crack in the foundation of the home, and informed Sheffield that =
he=20
would not close with the foundation of the home in such a =
condition. =20
Sheffield informed Gibson that he had already consulted a =
foundation=20
repair company to look at the problem, and that he was considering =
having=20
the foundation repaired. Rather than terminate the contract, =
as=20
Gibson had a right to do under the property acceptance provision =
of the=20
earnest money contract, Sheffield and Gibson orally agreed that, =
instead,=20
Sheffield would pay to have the foundation fully repaired by =
Continental=20
Foundation Repair (AContinental@) after=20
closing. Relying on this modification, Gibson closed on the =
house on=20
June 22, 2000.
Sheffield=20
testified at trial that he paid Continental $4,150 for the =
necessary=20
foundation repairs in the form of forgiveness of debt owed to=20
Sheffield. However, the repair work was never performed, and =
as a=20
result, Gibson sued Sheffield, Creed, Continental, Ogden, and =
Tesha Ann=20
McClanahan, apparent wife and co-owner of Continental. =20
His pleadings claimed breach of contract, fraud,=20
conspiracy, and Deceptive Trade Practices-Consumer Protection Act=20
(ADTPA@)=20
violations. Sheffield and Creed filed a cross-claim against =
James=20
Ogden, individually, and d/b/a Continental Foundation Repair, =
seeking (1)=20
in-kind contribution for any liability Sheffield and Creed might =
owe to=20
Gibson; (2) the determination of proportionate responsibility as =
to the=20
various defendants, and particularly amongst themselves, Ogden and =
Continental; and (3) actual damages for breach of contract. =
With=20
respect to their breach of contract claim, Sheffield and Creed =
alleged=20
that they had contracted with Ogden and Continental to perform =
foundation=20
repairs on Gibson=3Ds=20
residence, and that Ogden and Continental failed to perform after=20
receiving Aadequate=20
remuneration.@ =20
Sheffield and Creed therefore sought to recover the greater of =
$4,150 or=20
the contribution amount, plus attorney=3Ds fees,=20
from Ogden and Continental.
Ogden and=20
Continental failed to appear at trial, and Gibson, Sheffield and =
Creed=20
tried the case to the bench. In support of their defense and =
their=20
cross-claim, Sheffield and Creed presented, among other things, a =
letter=20
from Ogden, on behalf of Continental, to Gibson, informing him =
that=20
Sheffield had Apaid the=20
amount of $4150.00 to complete the work@ =
at=20
Gibson=3Ds=20
home. Sheffield testified that this payment was in the form =
of=20
forgiveness of debt owed to him by Ogden and Continental. =
The trial=20
court found in favor of Gibson, and awarded him actual damages, =
exemplary=20
damages, attorney=3Ds fees,=20
pre- and post-judgment interest, and costs from all defendants, =
jointly=20
and severally. The trial court further found in favor of =
Sheffield=20
and Creed on their cross-claim, and awarded them actual damages,=20
attorney=3Ds fees,=20
and pre- and post-judgment interest from Ogden and Continental, =
jointly=20
and severally. The trial court did not file any findings of =
fact and=20
conclusions of law. This appeal followed.
Analysis=20
of Sheffield=3Ds and=20
Creed=3Ds=20
Issues
On appeal,=20
Sheffield and Creed raise four issues: 1) whether the agreement to =
pay for=20
the foundation repair was barred by the statute of frauds or the =
parol=20
evidence rule; 2) whether the court erred in holding Sheffield=20
individually liable; 3) whether the court erred in awarding =
exemplary=20
damages; and 4) whether reversal is required because the trial =
court=20
waited eleven months to issue a final judgment.
I. =20
Consideration of agreement not barred by the statute of frauds or =
the=20
parol evidence rule.
Whether=20
the statute of frauds applies is a question of law, which we =
review de=20
novo. See Bratcher v. Dozier, 162 Tex. 319, =
346 S.W.2d=20
795, 796 (1961). Since the parol evidence rule is a rule of=20
substantive law, its application also is reviewed de novo. =
Baroid=20
Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex.=20
App.CHouston=20
[1st Dist.] 2005, pet. denied).
A.=20
Assuming the statute of frauds applies, =
an=20
exception allowed the trial court to consider the=20
agreement.
The=20
statute of frauds requires that certain types of promises or =
agreements,=20
or memorandums of those promises or agreements, be in =
writing and=20
signed by the party to be charged. See Tex. Bus. & Com. Code=20
' =
26.01. However, this is not to say that subsequent oral=20
modifications of contracts required by the statute of frauds to be =
in=20
writing must themselves be in writing. See Garcia v. =
Karam,=20
276 S.W.2d 255, 257 (Tex. 1955). If neither the portion of =
the=20
written contract affected by the subsequent modification nor the =
matter=20
encompassed by the modification itself is required by the statute =
of=20
frauds to be in writing, then courts will allow oral modification =
of a=20
contract required by the statute of frauds to be in writing. =
See=20
id.
The=20
parties correctly state that the statute of frauds applies to =
contracts=20
for the sale of real estate. See Tex. Bus. & Com. =
Code=20
' =
26.01(b)(4). Sheffield and Creed contend that subsequent =
oral=20
modifications to a contract for the sale of real estate are barred =
by the=20
statute of frauds when that contract covers the entire agreement =
between=20
the parties. However, we find that our resolution of the =
present=20
appeal does not require us to address this issue. Even =
assuming the=20
statute of frauds would apply to bar evidence of the oral=20
modification of the sales agreement, an exception precludes its =
operation=20
in this case. When one party fully performs a contract, the =
statute=20
of frauds may be unavailable to the second party if he knowingly =
accepts=20
the benefits and partly performs. Callahan v. Walsh, 49 =
S.W.2d 945,=20
948 (Tex. Civ. App.CSan=20
Antonio 1932, writ ref'd) (citing Texas Co. v. Burkett, 117 =
Tex.=20
16, 296 S.W. 273, 278 (1927); Matthewson v. Fluhman, 41 =
S.W.2d 204,=20
206 (Tex. Comm=3Dn App.=20
1931)); see also Estate of Kaiser v. Gifford, 692 S.W.2d =
525, 526=20
(Tex. App.CHouston=20
[1st Dist.] 1985, writ ref=3Dd n.r.e.);=20
Carmack v. Beltway Development Co., 701 S.W.2d 37 (Tex.=20
App.CDallas=20
1985, no writ); Le Sage v. Dunaway, 195 S.W.2d 729, 731 =
(Tex. Civ.=20
App.CWaco 1946,=20
no writ). The second party=3Ds=20
effectual repudiation of the contract and refusal to complete =
performance=20
thereunder would amount to a fraud, which the courts will not=20
sanction. Callahan, 49 S.W. at 948.
There is=20
sufficient evidence from which the trial court could have found =
that=20
Gibson fully performed his end of the agreement by closing before =
any of=20
the repair work had been completed, and that Sheffield and Creed =
accepted=20
that benefit and partially performed by tendering the forgiveness =
of debt=20
in the amount of $4,150 in order to have foundation work =
performed. =20
However, it is undisputed that Sheffield and Creed never fully =
performed=20
their end of the bargain, i.e., paid to have the foundation fully =
repaired=20
by Continental. Therefore, it would be a fraud to allow =
Sheffield=20
and Creed to raise the statute of frauds as a defense=20
now.
=20
B. The parol evidence rule does =
not bar=20
evidence of modification.
Sheffield=20
and Creed also argue that the parol evidence rule bars evidence of =
the=20
oral modification. However, A[t]he=20
parol evidence rule excludes only prior and contemporaneous=20
negotiations. It does not apply to subsequent agreements =
entered=20
into by the parties.@ =
Garcia, 276 S.W.2d at 258; see also Mortgage Co. of Am. =
v.=20
McCord, 466 S.W.2d 868, 871 (Tex. Civ. App.CHouston=20
[14th Dist.] 1971, writ ref=3Dd n.r.e.)=20
(AExtrinsic=20
evidence may always be offered to show a new agreement or that an =
existing=20
written contract has been changed, waived, or abrogated in whole =
or in=20
part.@). =20
The=20
agreement to repair the foundation was made after the original =
earnest=20
money contract was signed, during the period before closing. =
The=20
modification was therefore subsequent to the written agreement, =
and is not=20
barred by the parol evidence rule.
Thus, we=20
hold that the court did not err under either the statute of frauds =
or the=20
parol evidence rule in considering the oral modification. We =
therefore overrule Sheffield=3Ds and=20
Creed=3Ds first=20
issue.
II.=20
No error in holding Sheffield =
individually=20
liable.
In their=20
second issue, Sheffield and Creed argue that the trial court erred =
in=20
holding Sheffield individually liable, because there was no =
evidence to=20
support a finding of Aactual=20
fraud@ =
necessary=20
to pierce the corporate veil. They argue that because the =
trial=20
court Afound@ =
that=20
Sheffield and Creed should be reimbursed for the money paid to =
Continental=20
for the foundation repair, a finding that payment was actually =
made is=20
implied, and there can be no finding of fraud on the part of=20
Sheffield. We disagree.
Although=20
Sheffield and Creed argue repeatedly that the trial court found =
that they=20
were entitled to reimbursement for the $4,150 forgiveness of debt =
that was=20
made to Ogden and Continental, the trial court made no findings of =
fact or=20
conclusions of law. However, the trial court did award =
Sheffield and=20
Creed actual damages in the amount of $4,150, attorney=3Ds fees,=20
and pre- and post-judgment interest against Ogden and =
Continental. =20
Our examination of the record leads us to conclude that there is=20
sufficient evidence to support an implied finding by the trial =
court that=20
Sheffield and Creed tendered forgiveness of the $4,150 debt owed =
to them=20
as payment for the foundation repair work to be done by =
Continental. =20
With this in mind, we now turn to our analysis of this =
issue.
Contrary=20
to Sheffield=3Ds and=20
Creed=3Ds=20
arguments, piercing the corporate veil is not the only theory =
under which=20
Sheffield could be held individually liable. In Texas, =
agents are=20
personally liable for their own torts. Miller v. Keyser, 90 =
S.W.3d=20
712, 718 (Tex. 2002); see also Holberg v. Teal Constr. Co., =
879=20
S.W.2d 358, 360 (Tex. App.CHouston=20
[14th Dist.] 1994, no writ) (AIt has=20
long been the rule in Texas that corporate agents are individually =
liable=20
for fraudulent or tortious acts committed while in the service of =
their=20
corporation.@). =20
Therefore, Sheffield can be held liable in his individual capacity =
without=20
corporate veil piercing if he is personally liable for any =
fraudulent or=20
tortious actsCeven those=20
committed while acting for Creed. See Holberg, 879 S.W.2d =
at=20
359B60.
Gibson=3Ds=20
pleadings support causes of action for common-law and statutory =
real=20
estate fraud against Sheffield in his individual capacity. A =
cause=20
of action for common-law fraud requires (1) a material =
misrepresentation;=20
(2) which was false; and (3) which was either known to be false =
when made=20
or was asserted without knowledge of its truth; (4) which was =
intended to=20
be acted upon; (5) which was relied upon; and (6) which caused=20
injury. Formosa Plastics Corp. USA v. Presidio=20
Eng=3Drs &=20
Contractors, Inc., 960=20
S.W.2d 41, 47 (Tex. 1998). Similarly, under the Business and =
Commerce Code, a cause of action for statutory real estate fraud =
requires=20
a false promise to do an act, when the false promise is (1) =
material; (2)=20
made with the intention of not fulfilling it; (3) made to a person =
for the=20
purpose of inducing that person to enter into a contract; and (4) =
relied=20
on by that person in entering into the contract. Tex. Bus. & Com. Code=20
_ =
27.01(a)(2).
Here,=20
every element of Gibson=3Ds fraud=20
causes of action is met. First, there was evidence that =
Sheffield=20
represented that he would pay to have the foundation fully=20
repaired, when, in fact, he only intended to pay for the =
cheaper,=20
inadequate $4,150 repair. Ogden=3Ds=20
deposition testimony indicates that before Sheffield entered into =
the=20
modification agreement, Ogden had completed two proposals for =
foundation=20
repairs on the Beach City homeCone=20
involving 25 exterior piers and 12 interior piers to support the=20
home=3Ds=20
foundation, and the second, involving only 20 exterior =
piers. =20
Ogden=3Ds=20
deposition testimony further indicates that Sheffield opted for =
the=20
second, less-expensive proposal, as he was interested in doing the =
job=20
Aas cheaply=20
as possible.@
Second,=20
evidence in the record shows that before he entered into the =
modification=20
agreement, Sheffield knew this second proposal would not =
fully=20
repair the foundation of the home. Ogden=3Ds=20
deposition testimony reveals that first proposal constituted the=20
appropriate way to repair the problems with the foundation of the =
home,=20
that he recommended only the first proposal to Sheffield, that he =
did not=20
recommend the second proposal. In fact, Ogden testified that =
attempting foundation repairs on the home without the inclusion of =
interior piers would actually result in the foundation problems =
worsening=20
over time. Ogden=3Ds=20
deposition testimony further suggests that Sheffield knew about =
both=20
proposals before the agreement was modified, and that he chose the =
second=20
approach simply because it was the cheaper one.
Finally,=20
the record demonstrates that Gibson relied on =
Sheffield=3Ds=20
representation when he purchased the home, and this representation =
damaged=20
Gibson by causing him to purchase a home with foundation problems =
that=20
will cost, by one estimate, $13,813 to repair. At trial, =
Gibson=20
testified that he relied upon Sheffield to pay to have the =
foundation=20
fully repaired by Continental, and that he would not have =
purchased the=20
home had Sheffield not made this representation. Therefore, =
Gibson=20
sufficiently alleged and proved causes of action for common-law =
and=20
statutory real estate fraud against Sheffield in his individual=20
capacity. See Formosa, 960 S.W.2d at 47; Tex. Bus. & Com. Code=20
_ =
27.01(a)(2). Thus, the trial court did not err in holding =
Sheffield=20
individually liable.
Moreover,=20
Gibson also asserted claims for DTPA violations for which =
Sheffield could=20
be held individually liable. See Miller, 90 S.W.3d at=20
715B16. =20
While it is true that Sheffield could be held individually =
liable=20
under the DTPA even if he did not know that his representations =
were false=20
or if he did not intend to deceive Gibson, to support the award of =
exemplary damages under the DTPA, Gibson was required to prove =
that=20
Sheffield Aknowingly@ =
violated=20
the statute. See id.; Tex.=20
Bus. & Com. Code _ =
17.50(b)(1). The same evidence in support of =
Gibson=3Ds fraud=20
claims also supports the award of exemplary damages under the=20
DTPA.
We=20
therefore overrule Sheffield=3Ds and=20
Creed=3Ds second=20
issue.
III. =20
No error in awarding exemplary damages.
In their=20
third issue, Sheffield and Creed argue that the trial court =
Afound@ =
that=20
Creed and Sheffield paid Continental $4,150 to repair the =
foundation, and=20
therefore there can be no finding against them of intentional =
fraud or a=20
knowing DTPA violation justifying the award of exemplary damages =
because=20
there could have been no intentional act or knowing violation =
given that=20
the court also awarded damages to Sheffield and Creed from =
Continental,=20
and that this case is merely a breach of contract action. =
Stated=20
another way, Sheffield and Creed argue that the award of damages =
to them=20
against Continental shows that the court decided the case as a =
breach of=20
contract, rather than a tort case, and therefore exemplary damages =
are=20
unavailable. This argument is similar to the one made in the =
second=20
issue, and similarly lacks merit.
The award=20
of damages to Sheffield and Creed from Continental does not =
preclude a=20
finding of fraud. See Tex. Civ. Prac. & Rem. =
Code=20
' =
41.003(a). Sheffield=3Ds and=20
Creed=3Ds argument=20
presupposes that the only viable fraud claim would be one claiming =
that it=20
was fraudulent for Sheffield and Creed to fail to have the =
foundation=20
fully repaired. However, this is not true. As =
discussed above,=20
the trial court did not find that Sheffield or Creed paid $4,150 =
to=20
Continental to repair the foundation. Rather, there is =
sufficient=20
evidence to support an implied finding by the trial court that =
Sheffield=20
and Creed tendered forgiveness of debt owed to Sheffield in the =
amount of=20
$4,150 as payment for the foundation repair, and that Sheffield =
still=20
committed fraud by representing that he would pay to have the =
foundation=20
fully repaired, when he intended all along to pay only for an =
inadequate=20
repair. In no way does the award of the $4,150 suggest that =
the=20
trial court did not find that fraud was committed. When =
there are no=20
findings of fact and conclusions of law filed by the trial court, =
we imply=20
all findings supported by the evidence that support the trial=20
court=3Ds=20
judgment, and we do not imply findings contrary to the trial=20
court=3Ds=20
judgment. See Holt Atherton Indus., Inc. v. Heine, 835 =
S.W.2d 80,=20
83 (Tex. 1992).
Sheffield=20
and Creed cite two cases to support their position. They =
cite=20
Dubow v. Dragon, 746 S.W.2d 857 (Tex. App.CDallas=20
1988, no writ), for the proposition that when a buyer discovers a =
property=20
condition before closing, and accepts the property Aas=20
is,@ =
he cannot=20
claim reliance upon the seller=3Ds=20
misrepresentations regarding the condition of the property in =
support of a=20
DTPA cause of action. However, because we find that the trial =
court could=20
have based its award of exemplary damages on either common-law or=20
statutory real estate fraud, we need not consider whether this =
case would=20
avail Sheffield and Creed if the court relied on violations of the =
DTPA=20
for its decision.
Sheffield=20
and Creed also cite Formosa for the proposition that tort =
damages=20
and DTPA claims based on the failure to perform the stated terms =
of a=20
contract are not valid in Texas. While it is true that a =
pure breach=20
of contract cannot be pleaded as a fraud just to obtain more =
favorable=20
treatment under the law, Formosa makes clear that =
fraudulent=20
inducement claims allow the recovery of tort damages, irrespective =
of=20
whether the fraudulent representations are later subsumed in a =
contract or=20
whether the plaintiff only suffers an economic loss related to the =
subject=20
matter of the contract. Formosa, 960 S.W.2d at 47. =
Therefore,=20
Formosa, contrary to Sheffield and Creed=3Ds=20
purposes, actually makes clear that a fraud in the inducement =
claim is=20
valid under the facts in this case. See id.
Because=20
the return of money to Sheffield and Creed did not preclude a =
finding of=20
fraud, we hold that a cause of action existed on which the trial =
court=20
could predicate the award of exemplary damages. We therefore =
overrule Sheffield and Creed=3Ds third=20
issue.
IV. =20
No error in waiting eleven months to issue final =
judgment.
In their=20
final issue, Sheffield and Creed complain that the trial court =
reversibly=20
erred in waiting eleven months to issue its final judgment. =
They=20
complain that the Amended Judgment contained multiple errors, =
although=20
they do not identify these alleged errors. Without citing =
any=20
authority, Sheffield and Creed argue that public policy should =
dictate=20
that eleven months is too long to wait between a bench trial and a =
final=20
judgment. In addition, they have not shown that they =
preserved=20
error, what errors were committed, or how they were harmed by the=20
delay. See Tex. R.=20
App. P. 38.1(h) (requiring appropriate citations to =
authority to=20
accompany argument). We therefore overrule =
Sheffield=3Ds and=20
Creed=3Ds final=20
issue.
Conclusion
Having=20
overruled each of Sheffield=3Ds and=20
Creed=3Ds issues,=20
we affirm the judgment of the trial court.
/s/ =20
Wanda McKee Fowler
Justice
Judgment=20
rendered and Memorandum Opinion filed January 22, =
2008.
Panel=20
consists of Justices Anderson, Fowler, and Frost.
Service was never accomplished on =
McClanahan, and Ogden indicated that she was in prison at =
the time=20
of trial. At any rate, the claims against her were nonsuited =
at the=20
beginning of trial. Because Ogden and Continental did not =
appear at=20
trial, Gibson and Sheffield and Creed moved for default judgment =
against=20
them. Only defendants Sheffield and Creed appeal from the =
judgment=20
of the trial court.
In his original and first amended =
petitions, Gibson alleged a cause of action for Afraud@ against all defendants. However, =
in his=20
brief, Gibson characterizes his fraud claim as one for statutory =
real=20
estate fraud under section 27.01 of the Texas Business and =
Commerce=20
Code. Although this issue is not contested on appeal, we =
note that=20
Gibson=3Ds pleadings support causes of action for =
common-law fraud and statutory real estate fraud under Texas =
Business and=20
Commerce Code _=20
27.01. |