Current Feed Content from 3 Jan 09 08:24
Unfinished Divorce Leaves New "Wife" in a World of Hurt
Fri, 19 Dec 2008 14:18:12 -0600Bailey-Mason v. Mason. Edward married Rae and subsequently filed for divorce, but the divorce was never finalized. After he separated from Rae, he bought a house. He later "married" Carlyn, with whom he had two children. Eventually Edward deeded the house to the children, and then he died. The probate court determined that Rae was the surviving spouse because she was never formally divorced from Edward. In a separate partition suit, the court ruled that Rae owned 1/2 of the house and each of the children owned 1/4. On appeal, Carlyn seeks reimbursement of $60, 000 expended to improve the property. The court holds that she failed to prove that Rae joined in or consented to the improvements, or that the improvements were necessary to preserve the property. Accordingly, Carlyn gets nothing.Plaintiff's Proof Insufficient to Set Aside Deed
Wed, 05 Nov 2008 13:25:45 -0600Turner v. Hendon. While Turner's elderly mother was hospitalized in 1998 for a broken hip, she signed a deed conveying her property to Hendon. Turner did not learn of the deed until 2004, at which time her mother claimed to have no recollection of signing it. Shortly thereafter, Turner's mother died and Turner sued Hendon to establish that her mother lacked sufficient mental capacity to execute the deed, and was under the undue influence of Turner at the time of the deed's execution. On appeal, the Court holds that the law presumes that the grantor of a deed had sufficient mental capacity at the time of its execution to understand his legal rights, and for that reason the burden rests on the person seeking to set aside the deed to show lack of mental capacity of the grantor at the time the deed was made. All of the evidence at trial concerned the mother's mental state after she was released from the hospital; no evidence was offered relating to her mental capacity at or near the time that she executed the deed. In order to establish undue influence, a party has the burden to show: (1) the existence and exertion of influence; (2) the effective operation of an influence so as to subvert the will or overpower the mind of the grantor at the time of the execution of the deed; and (3) the execution of a deed the maker would not have executed, but for such influence. At best, the evidence at trial supports an inference that Turner had an opportunity to exert influence over the mother, but it does not prove that Turner subverted the mother's will or overpowered her mind. Accordingly, both claims fail.A Costly Mistake: Buyer Defrauded Out of Home and Years of Payments
Tue, 28 Oct 2008 13:58:01 -0500Casstevens v. Smith. Buyers failed to obtain title insurance upon purchasing their home from Sellers, and Sellers did not disclose that the property was subject to two existing liens. Although Buyers paid Sellers over a period of six years, Sellers failed to discharge the existing liens. The second lien went into foreclosure, and Investor purchased the property subject to the first lien. After Investor was unable to come to agreement with Buyers, Investor paid off the first lien and evicted Buyers. Buyers successfully sued Sellers for fraud, and then sued Investor for various claims, including equitable subrogation, unjust enrichment, and fraud. The Court observes that equitable subrogation applies when one party involuntarily pays a debt primarily owed by another. So, Buyers could have asserted such a claim against the Sellers (who owed the debt secured by the liens) but not against Investor (who was actually a creditor and did not owe any debt paid by Buyers.) Further, Investor purchased the property in the ordinary course of a foreclosure sale, so there was no implied contract between Investor and Buyers that would obligate Investor to reimburse money to Buyers. Consequently, unjust enrichment does not apply. Finally the Court finds that any statements Investor may have made to Buyers regarding a willingness to "work together" with Buyers were too vague to constitute fraud.Buyer Snatches Defeat from Jaws of Victory; Might Still Recover Earnest Money
Tue, 21 Oct 2008 13:50:25 -0500Digiuseppe v. Lawler. Buyer and Seller entered into an agreement concerning the sale of some land, contingent upon Buyer obtaining acceptable zoning. After a dispute arose between the parties regarding whether the zoning obtained by Buyer was acceptable, Seller attempted to terminate the contract and retain the earnest money. Buyer sued and won an order for specific performance against Seller. The Texas Supreme Court holds that an essential element in obtaining specific performance is that the party seeking such relief must plead and prove he was ready, willing, and able to timely perform his obligations under the contract. In this case, Buyer made the necessary allegations but offered "equivocal and conflicting" proof, and wholly failed to obtain the necessary finding from the jury. As a result, Buyer is not entitled to specific performance. However, the case is returned to the trial court to determine whether Buyer is entitled to a refund of its $200, 000 earnest money deposit.Nobody Knows What's Going On; Case Sent Back for Trial
Tue, 14 Oct 2008 13:59:34 -0500Givens v. Ward. Givens agreed to sell land to Ward. The contract provided that "Seller reserves the following mineral, water, royalty, timber, or other interests, " and referenced a copy of an oil, gas, and mineral lease attached to the contract. However, the warranty deed signed at closing contains no reservation of mineral interests. When Givens raised the issue after closing, Ward sued for a declaration that Ward owns the disputed interest. Givens countersued for reformation of the deed due to mistake. The Court observes that generally when a deed is delivered and accepted as performance of a contract to convey, the contract is merged in the deed and thereafter the deed alone determines the rights of the parties. However, the merger doctrine applies to deeds only in the absence of fraud, accident, or mistake. After reviewing the evidence, the Court concludes that neither party has clearly proven whether the deed varies from the parties' original agreement, and if so whether the variance was due to a mistake on the part of the Givenses of which the Wards had (or acquired) knowledge. As a result, the case is returned to the trial court for further proceedings.Neighbors Inherit the Wind: Wind Farm Not a Nuisance
Tue, 23 Sep 2008 13:32:09 -0500Rankin v. FPL Energy, LLC. Neighbors sued to obtain an injunction against a wind farm operator, alleging that the wind farm was a nuisance. A nuisance is a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities. Trespass to real property occurs when a person enters another's land without consent. In this case, neither has occurred, and the wind farm is operating lawfully. The Court sympathizes with the the plaintiffs' loss of "unobstructed sunsets, panoramic landscapes, and starlit skies, " but reiterates that "the law will not declare a thing a nuisance because it is unsightly or disfigured, because it is not in a proper or suitable condition, or because it is unpleasant to the eye and a violation of the rules of propriety and good taste."No Commission for Broker with Unenforceable Agreement
Fri, 29 Aug 2008 14:09:51 -0500Duncan v. F-Star Management, LLC. Broker sued to recover unpaid commissions. The Real Estate Licensing Act requires that a commission agreement provide a description of the real estate that would satisfy the statute of frauds, meaning that it must identify the property with reasonable certainty. In this case, the properties were described as "Build-to-Suit for Thomson Consumer Electronics Facility in Socorro, Texas, " and "Operation Campus View, Socorro, Texas, " both of which the Court holds to be insufficient. Accordingly, the commission agreement was unenforceable. Further, Duncan's fraud claim fails because a real-estate broker may not allege fraud to recover a commission on an unenforceable agreement, even if he can prove the elements of fraud.Borrower Saves Lender Trouble of Foreclosing; Gets Sued Anyway
Wed, 27 Aug 2008 13:45:37 -0500Morrison v. Christie. Morrison borrowed money from Christie secured by a lien on property in Wichita Falls. Later, Morrison executed a Deed In Lieu of Foreclosure ("Deed In Lieu") conveying the property to Christie. Christie sold the property to a third party and, after crediting the sales proceeds to Morrison's note, sued Morrison for the deficiency. The Court notes that a Deed In Lieu is not a specific type of deed, such as a special warranty deed or a quitclaim deed, but rather is deed given in satisfaction of a debt. The Court finds no evidence in this case that the Deed In Lieu was intended to be a mortgage. The Court further finds that Morrison received consideration by avoiding a foreclosure on Morisson's credit record. While it is typical that a Deed In Lieu is given in full satisfaction of the debt, there is no law preventing the parties from agreeing that the conveyance is only in partial satisfaction. Finally, because the transaction does not constitute a foreclosure, Morrison is not entitled to a judicial determination of fair market value of the property.Limited Partners Really Do Have Limited Liability
Thu, 21 Aug 2008 13:51:45 -0500Asshauer v. Wells Fargo Foothill. Investors formed a series of limited partnerships to construct a commercial project. The original financing was insufficient to complete the project, so Wells Fargo agreed to provide additional financing in exchange for a limited partnership interest in the master limited partnership. Wells Fargo received some money on a subsequent sale. However, the project subsequently failed and when the other investors lost their money they sued Wells Fargo on various fraud theories. The Court holds that (1) a limited partner may not directly sue another limited partner when the alleged injuries damaged the limited partnership; and (2) the investors failed to plead and prove that Wells Fargo was either a de facto general partner or otherwise participated in the control of the partnership for liability purposes. Consequently the plaintiffs lack standing to sue.LLC Shields Owner from Liability for Contract Debts, but not Owner's Personal Wrongdoing
Mon, 11 Aug 2008 14:00:47 -0500Sanchez v. Mulvaney. Sanchez hired a limited liability company (LLC) owned by Mulvaney to construct a Sonic Drive-in restaurant. The project ran into trouble and, after paying off mechanic's liens, Sanchez sued both the LLC and Mulvaney individually. On appeal, the Court holds that Sanchez's contract was with the LLC, and Sanchez failed to produce evidence of fraud on Mulvaney's part that would entitle Sanchez to hold Mulvaney liable for a breach by the LLC of its contractual obligations. However, Sanchez also alleged certain wrongdoing by Mulvaney personally, including improper disbursements of construction payments, misrepresentation, breach of warranty, and unconscionable conduct. In an action seeking to hold an agent individually liable for his tortious or fraudulent acts, the corporate veil is not required to be pierced, so such claims could proceed to trial.Good Title Work Is Always Better Than Equity: First Lienholder Loses Lien Priority
Thu, 17 Jul 2008 14:27:57 -0500AMC Mortgage Services, Inc. v. Watts. In 1996 Gonzalez bought a home financed by a first lien to Lender 1 and a second lien to Smith, the seller. In 1999 Gonzales refinanced Lender 1's loan with Ameriquest. In 2000 she obtained a first home equity loan from Ameriquest and all prior liens held by Ameriquest were released. In 2003 she obtained a second home equity loan from Ameriquest and the 2000 home equity loan lien was released. Meanwhile, Gonzales defaulted on the 1996 Smith loan. The lender foreclosed and sold the property to Watts, who borrowed money from Argent to make the purchase. Shortly thereafter Ameriquest conducted a foreclosure of its 2003 home equity lien and tried to evict Watts from the property. Watts countersued and won at trial. On appeal, the Court holds that although equitable subrogation would ordinarily allow Ameriquest to succeed to the rights of Lender 1 upon a showing that Ameriquest had satisfied Gonzalez's obligation to Lender 1, in this case nothing in the public real estate records indicates the debt secured by the 1999 deed of trust was paid with the proceeds of the 2000 and 2003 home equity extensions of credit. As a result, Watts was entitled to conclude that the 1996 Smith loan had first priority because the home equity loans were both later in time, and foreclosure of the first lien extinguishes all junior liens. (Interestingly, the Court did not address the fact that a home equity loan cannot be in "renewal and extension" of a prior debt, and did not explain why Ameriquest had made either loan without requiring a release of the Smith lien.) Ameriquest did find one bright spot, though: the Court confirms that Watts is not entitled to recover attorney's fees in a trespass to try title suit.Poor Drafting Strikes Again
Tue, 15 Jul 2008 13:46:09 -0500Johnson v. Conner. The Johnsons agreed to sell land to the Conners. The "standard" real estate contract provided space for reservations of minerals, water, royalties, and timber, but the real estate agent noted only that "none of the above are available to be conveyed." At closing, the sellers signed a deed that provided for a reservation of "all presently recorded oil and gas leases, mineral severances, and other instruments ... that affect the property." Upon later learning that the buyers were collecting royalties under an oil and gas lease the sellers sued to reform the deed. Alternatively, they requested the court to avoid the contract on the basis of mutual mistake. The sellers lost on both counts at trial. The appellate court agreed, holding the deed is unambiguous in that it did not reserve the minerals. Further, a mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written contract does not reflect the intention because parties were acting under the same misunderstanding of the same material fact. Although the parties in this case had different understandings of the contract language, they did not have the same misunderstanding.Subcontractor's Lien Affidavit is Close Enough
Wed, 09 Jul 2008 13:25:16 -0500Mustang Tractor & Equipment Co. v. Hartford Accident and Indemnity Co. Mustang furnished heavy equipment for the site work on a new Home Depot in Austin. When Mustang's invoices were not timely paid it sent notices to the general contractor and the owner, and timely filed mechanic's lien affidavits. A lawsuit resulted and the trial court invalidated the lien affidavits because they failed to specify the date each notice of the claim was sent to the owner and the method by which the notice was sent. The appellate court disagreed, holding that Mustang substantially complied with the law because: (1) the affidavits were otherwise correct, and (2) the owner and contractor actually received the notices containing the required information, so no one was misled or otherwise prejudiced by the omission.Probate Remanded to Give the Parties Another Shot
Tue, 08 Jul 2008 13:43:22 -0500In re Estate of Wilson. Decedent's spouse filed a copy of Decedent's will for probate because she could not find the original. After the will was admitted, Decedent's son challenged the proceedings. The Court observes that when a will was last known to be in the decedent's possession and cannot be located after death, a rebuttable presumption of revocation arises. The presumption can be overcome by proof and circumstances contrary to the presumption, or evidence that the will was fraudulently destroyed by some other person. Likewise, the recognition of a will's continued validity and the testator's continued affection for the chief beneficiary thereunder, without evidence tending to show the decedent's dissatisfaction with the will or any desire to cancel or change the will, is sufficient to rebut the presumption of revocation. However, in this case the widow had produced no evidence at all as to why the will could not be located. In the interest of justice, the Court sends the case back to the trial court to allow the parties another chance to fully explore the issue of whether the original will had been revoked.Spendthrift Provision Did Not Preclude Trust Beneficiary from Devising His Interest in the Trust by Will
Tue, 08 Jul 2008 13:43:25 -0500In re Townley Bypass Unified Credit Trust. Decedent's will established a trust for the benefit of his spouse for life, with the remainder to his children, Billy and Jimmy. After Decedent's death, Billy predeceased Decedent's surviving spouse. The Court holds that because Billy was alive when his father died and no condition precedent exists other than the termination of the life estate, his interest was vested. Further, finding no controlling authority, the Court holds that an interest in a trust may be transferred by will or intestacy because a spendthrift provision is to protect the beneficiary from his or her own folly, a purpose that cannot be promoted after the beneficiary's death. As a result, Billy's interest passes to his widow by his will, not to his heirs by intestacy.Defeat Snatched from Jaws of Victory: Adverse Possession Verdit Overturned
Tue, 08 Jul 2008 13:43:27 -0500Moore v. Stone. Stone claimed to have acquired title by adverse possession. There are statutory periods of adverse possession of 3, 5, 10, and 25 years, depending on the nature of the plaintiff's claim and how the property is used. In this case, the Court holds that casual or incidental fencing of the property for occasional grazing, and the cutting and gathering of natural crops such as hay, will not amount to such adverse and hostile possession and use as will satisfy the 10-year statute. Further, the 3, 5 and 25 year statutes all require the plaintiff to claim "title or color of title, " or a deed. Because of a procedural quirk in this case, the plaintiff had neither. As a result, the jury's verdict of adverse possession is reversed.Another Reason to Read Contracts Carefully: Easements Don't Have to Be Reasonable
Tue, 08 Jul 2008 13:43:30 -0500Smith v. Huston. The plaintiffs each bought lots out of a subdivision, which included a "nonexclusive easement for aircraft for flight and taxiway purposes along, over and across" an adjacent airstrip. The easement provided for a $200 per year fee payable to the owner of the airport for use of the airport, such fee to be increased by no more than 10% annually. The plaintiffs eventually sued, alleging that airstrip owner was unlawfully interfering with their use of the easement, and asking the Court to rule that that any fees charged under the runway easements must be used for maintenance purposes only, must be reasonable and necessary for the actual maintenance of the runway, and that the owners are entitled to a detailed accounting of the fees collected and expended. The Court disagreed, holding that the easements are not ambiguous and thus mean exactly what they say. As a result, the owner of the airstrip is entitled to charge the fee set forth in the easements, and may increase the fee by ten percent each year, even though the fee might eventually exceed the value of the plaintiffs' lots. Further, the fees are not subject to a reasonableness limitation, and the owner is not obligated to account for or segregate any payments for the fees from other funds. However, nothing in the easements addresses remedies available to the owner of the airport in the event any lot owner fails to pay the easement fees, so the airport owner has no right to deny access by the lot owners while fees are unpaid.Court Gives Buyer Another Bite at the Apple
Wed, 09 Jul 2008 13:29:42 -0500Lovett v. Lovett. Louis alleges he had an oral agreement with Peter under which Louis would pay two-thirds of the monthly mortgage payments for a 26-acre tract, Peter would pay one-third, and title to the property would be divided so that Louis held title to one-half of the acreage along with a house located on the property and Peter would hold title to the other half of the acreage. Peter maintains that Texas real estate law requires an agreement for the sale of real estate to be in writing, so the oral agreement is unenforceable. However, the Court holds that "partial performance" is an exception to this rule. The Court further finds that Louis had paid over $25, 000 in mortgage payments, taxes, maintenance and repair costs, and that he has at least raised a fact issue as to whether such sums are partial performance under an oral purchase contract, or merely rent. Accordingly, the case is returned to the trial court for further proceedings.
Updated link to Court's revised opinion."AS IS" Clause Doesn't Shield Seller from Liability for Fraud
Tue, 08 Jul 2008 13:43:34 -0500San Antonio Properties, L.P. v. PSRA Investments, Inc. Agreement for sale of apartment complex stated that buyer accepted the property "as is" and that seller had made no representations or warranties not shown in the contract. However, buyer produced proof that it had relied upon operating statements provided by seller that turned out to be incomplete, as well as promises by the seller that the seller had spent large sums improving the property, and that the property was in good working order. The Court holds that even sophisticated buyers have the right to rely on the veracity of the financial information provided by the sellers, and that the evidence is supported the jury's determination that the seller had defrauded the buyer.Borrower Fired Up Over Lender's Use of Insurance Proceeds
Tue, 08 Jul 2008 13:43:38 -0500Lewis v. Wells Fargo. Two weeks after she bought it, Lewis' house burned. Her lender collected the insurance, and used the money to build a new house on the old foundation. Lewis made no payments, so the lender foreclosed. Lewis sued to challenge the foreclosure, complaining that instead of applying the insurance proceeds to the note and releasing her from liability, Wells Fargo had constructed a new house that was substantially different from the original. The Court holds that the lender was within its rights under the loan documents to rebuild rather than credit the note. However, the case is returned to the trial court to determine whether the lender breached an agreement with Lewis by failing to properly restore the home.
Breaking legal news, and summaries of interesting recent cases and statutes from the lawyers of Roberts & Roberts, LLP, a Killeen, Texas law firm focusing on real estate, business, probate and estate planning law.
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