HOUSTON – The First District Court of Appeals reversed a trial court ruling Aug. 23 in favor of a couple who said the owner of a property they contracted to buy breached their contract when he encountered title problems.
Judge Michael Massengale wrote the court order with judges Sherry Radack and Harvey Brown on the panel.
"Because the contract terminated by its unambiguous terms without a written extension, and because [Terry and Donna Ortego] were not excused from proving their tender of performance, we reverse. We render judgment that the Ortegos’ earnest money be returned to them and that they otherwise take nothing by their claims," the court ruled.
According to the opinion, the Ortegos rented a commercial property in Harris County that Karl Lyons took ownership of in 2013. The parties signed a new lease with an option to purchase, and the Ortegos paid $1,500 in earnest money. Part of the contract stated that if the sale was not finalized by Oct. 15, 2013, the Ortegos could end the contract and either receive their earnest money or sue for specific performance.
Lyons allegedly encountered issues with the property’s title, and the contract deadline passed. Lyons sent the Ortegos a letter in April 2014, advising them that the contract had ended, and the Ortegos sued for specific performance and damages.
The jury in the 281st District Court of Harris County found Lyons breached the contract, stating that the parties had extended the contract because of Lyons’ conduct although there was no written extension and found that the Ortegos were ready and willing to complete the purchase at any time. The jury awarded the Ortegos specific performance of the contract along with attorney fees and court costs.
Lyons appealed the ruling, alleging that because the contract ended on its own, it “cannot support an award of specific performance,” the ruling states.
Massengale found that because the Ortegos did not provide any writing that extended the contract’s termination date, “any post-termination conduct by the parties cannot support an award of specific performance of the terminated contract.”
Lyons also argued the Ortegos did not provide evidence of their tender of performance, so specific performance was not enforceable. The Ortegos argued that they did not have to prove tender of performance because Lyons refused to close, “and because the contract did not require them to pay the purchase price until the closing date, which never occurred.”
Massengale stated that the finding that the Ortegos were ready and willing to perform by August 2014 does not show that they were ready and willing to provide the services by the original contract date in October 2013, and that the Ortegos were obligated to provide proof of tender to sue for specific performance.
Massengale agreed that the Ortegos should not have been awarded court costs since the jury did not award the Ortegas any money that would make them the prevailing party and entitled to attorney’s fees and court costs.
“We reverse and render judgment that the Ortegos take nothing by their claims, and that the earnest money be returned to them,” the ruling states.
Court of Appeals for the First District of Texas case number 01-17-00092-CV