Opinion
No. 04-17-00214-CV
03-07-2018
Amin Q. ALI and Salma Ali, Appellants v. Nizarshah MOHAMMAD, Appellee
MEMORANDUM OPINION
From the 37th Judicial District Court, Bexar County, Texas
Trial Court No. 2013CI10486
Honorable Laura Salinas, Judge Presiding Opinion by: Sandee Bryan Marion, Chief Justice Sitting: Sandee Bryan Marion, Chief Justice Karen Angelini, Justice Rebeca C. Martinez, Justice AFFIRMED
Nizarshah Mohammad sued Amin and Salma Ali for breach of contract. The Alis appeal a judgment entered in favor of Mohammad following a bench trial, contending: (1) Mohammad failed to prove the terms of the alleged oral contract were sufficiently definite to be enforceable; (2) the alleged oral contract violated the statute of frauds; and (3) the evidence is legally and factually insufficient to support the award of attorney's fees to Mohammad. We affirm the trial court's judgment.
BACKGROUND
Mohammad and the Alis had been friends for many years. In June of 2013, Mohammad sued the Alis for breach of contract alleging they failed to repay a loan he made to them to purchase a restaurant, pay a car loan, and pay for various expenses relating to the remodeling and operation of the restaurant. The Alis disputed owing Mohammad any money.
A four-day bench trial was held on Mohammad's breach of contract claim. Mohammad, the Alis, and Salim Merchant, the individual who sold the restaurant to the Alis, were the only witnesses to testify at trial. After hearing all the evidence, the trial court entered judgment in favor of Mohammad, awarding him $65,889.23 as the principal amount due on the loan, $33,056.49 in interest, and $21,962.86 in attorney's fees. The judgment also awarded Mohammad conditional post-judgment and appellate attorney's fees. The Alis appeal.
WERE THE TERMS OF THE LOAN AGREEMENT SUFFICIENTLY DEFINITE?
In their first issue, the Alis contend the terms of the alleged oral loan agreement were not sufficiently definite to be enforceable based on "Mohammad's own testimony." By relying exclusively on "Mohammad's own testimony" in making their argument, the Alis are not contesting Mohammad's testimony that a loan agreement existed. Therefore, the parties' intention to enter into a loan agreement and the existence of such an agreement are not challenged on appeal. Instead, the first issue presented by the Alis on appeal is whether the terms of the loan agreement, as described in Mohammad's testimony, were sufficiently definite to enable a court to understand the parties' obligations and to provide an appropriate remedy if the terms were breached. See Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237 (Tex. 2016) (noting when parties' intention to be contractually bound is established, "the agreement's terms must also be sufficiently definite to enable a court to understand the parties' obligations, and to give an appropriate remedy if they are breached") (internal quotations omitted); America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 623 (Tex. App.—San Antonio 1996, writ denied) ("Where the evidence shows that the parties intended to enter into an agreement, the courts should find the contract to be definite enough to grant a remedy provided that there is a certain basis for determining the remedy."). Although the Alis couch their issue in terms of an evidentiary review, whether an agreement contains all essential terms is a question of law which we review de novo. McCoy v. Alden Indus., Inc., 469 S.W.3d 716, 725 (Tex. App.—Fort Worth 2015, no pet.); Bandera Cty. v. Hollingsworth, 419 S.W.3d 639, 645 (Tex. App.—San Antonio 2013, no pet.); G.D. Holdings, Inc. v. H.D.H. Land & Timber, L.P., 407 S.W.3d 856, 861 (Tex. App.—Tyler 2013, no pet.); Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 74 (Tex. App.—Houston [14th Dist.] 2010, pet. denied).
This issue was hotly contested at trial.
"To be enforceable, a contract must address all of its essential and material terms with a reasonable degree of certainty and definiteness." Fischer, 479 S.W.3d at 237. "In a contract to loan money, the material terms will generally be: the amount to be loaned, maturity date of the loan, the interest rate, and the repayment terms." T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). However, each contract must be considered separately, and what terms are material and essential to a contract must be determined on a case-by-case basis. Fischer, 479 S.W.3d at 237; T.O. Stanley Boot Co., 847 S.W.2d at 221.
The terms of a contract are to be construed to avoid forfeiture. Fischer, 479 S.W.3d at 239. And, "when construing an agreement to avoid forfeiture, we may imply terms that can reasonably be implied." Id. Finally, the law favors finding agreements sufficiently definite for enforcement when one of the parties has fully performed his part of the contract. Fischer, 479 S.W.3d at 240; Samaras, 929 S.W.2d at 623.
Based on Mohammad's testimony, he loaned the Alis $66,889.23, and the interest rate was nine percent. Of the total amount loaned, Mohammad borrowed $50,000 of that amount from a bank, which was evidenced by two cashier's checks, and a spreadsheet was admitted as evidence documenting the manner in which Mohammad loaned the other $16,889.23 to pay various bills and expenses. Mohammad was the remitter on both of the cashier's checks. The first check in the amount of $30,000 was dated June 30, 2008, and was payable to Salma Ali. Mohammed testified the Alis used $20,000 of that amount to pay Salim Merchant, the person who sold the restaurant to the Alis, and used the balance to pay a car loan and other bills. The second check in the amount of $20,000 was dated August 26, 2008, and was payable to Merchant. Mohammad testified this check was to pay the purchase price the Alis owed for the restaurant. Mohammad testified the parties initially agreed the Alis would repay the $50,000 by making the payments to the bank in accordance with the terms of the bank's loans. Because the Alis' restaurant was not generating a sufficient profit to make the loan payments when they became due under the bank's terms, the parties renegotiated, and Mohammad agreed the Alis would not have to repay the loan until after two years when the restaurant should be generating enough profit to repay the loan. In 2011 or 2012, when Mohammad was informed by a friend that the restaurant was doing well, he demanded repayment of the loan. When the Alis did not respond to this demand, Mohammad hired an attorney and made a written demand for full repayment on April 17, 2013.
Mohammad testified the Alis repaid $1,000 of the loan, and the trial court awarded $65,889.23 as the principal amount due on the loan.
Mohammad believed Merchant agreed to sell the restaurant to the Alis for $20,000, if they paid him by September 1, 2018, and the first $20,000 was to repay money the Alis had borrowed from Merchant. Merchant testified the purchase price for the restaurant was $40,000. Merchant also testified the August 26, 2008 check was in payment of the balance of the purchase price the Alis owed for the restaurant.
The Alis contend Mohammad's testimony does not establish a maturity date or loan repayment terms. However, as previously noted, the law favors finding agreements sufficiently definite for enforcement when one of the parties has fully performed his part of the contract, and we may imply reasonable terms to avoid forfeiture. Fischer, 479 S.W.3d at 239-40; Samaras, 929 S.W.2d at 623. Although Mohammad did not testify to a specific maturity date and specific loan repayment terms, his testimony was sufficiently definite to enable the trial court to understand the Alis' obligation to repay the loan after two years when their restaurant was doing well. Because Mohammad's testimony also established the Alis' restaurant was doing well enough in 2011 or 2012 to repay the loan, Mohammad's testimony provided a reasonably certain basis for awarding him damages based on the Alis' failure to repay the loan. See Fischer, 479 S.W.3d at 239 (noting "if the parties clearly intended to agree and a 'reasonably certain basis for granting a remedy exists,' [a court] will find the contract terms definite enough to provide that remedy ... 'even though one or more terms are missing'") (quoting RESTATEMENT (SECOND) OF CONTRACTS § 33 cmt. a-b); General Metal Fabricating Corp. v. Stergiou, 438 S.W.3d 737, 751 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ("The Restatement states that contract terms are reasonably certain 'if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.'") (quoting RESTATEMENT (SECOND) OF CONTRACTS § 33(2)); Vela v. Vela, No. 14-12-00822-CV, 2013 WL 6700270, at *5-6 (Tex. App.—Houston [14th Dist.] Sept. 24, 2013, no pet.) (mem. op.) (holding loan agreement sufficiently definite where testimony showed plaintiff "made 'many attempts' to collect the money owed," "was 'rudely' rebuffed," and "hire[d] an attorney" to collect the loan balance, thereby establishing the loan was due on demand and demand was made at a reasonable time); Lilani v. Noorali, No. H-09-2617, 2011 WL 13667, at *6 (S.D. Tex. Jan. 3, 2011) (holding specific repayment schedule not a required term of a loan "to help a family member's struggling business, lent with the expectation that the money would be repaid within approximately one year"); Jackson v. Carlson, No. 03-08-00429-CV, 2009 WL 638848, at *2 (Tex. App.—Austin Mar. 12, 2009, no pet.) (mem. op.) (holding if no due date is specified, loan is due on demand and demand may be made within a reasonable time). Based on Mohammad's testimony, we hold the terms of the loan agreement were sufficiently definite to constitute an enforceable contract. The Alis' first issue is overruled.
STATUTE OF FRAUDS
In their second issue, the Alis contend the loan agreement was not enforceable because Mohammad's own version of the facts showed the agreement violated the statute of frauds. The Alis also argue the evidence was insufficient to support the full performance exception to the statute of frauds.
Whichever party pleads the statute of frauds as an affirmative defense has the initial burden to establish the alleged promise falls within the statute. Dynegy, Inc. v. Yates, 422 S.W.3d 638, 642 (Tex. 2013); Stripe-A-Zone, Inc. v. M.J. Scotch Family Ltd. P'ship, No. 02-16-00130-CV, 2017 WL 1352099, at *6 (Tex. App.—Fort Worth Apr. 13, 2017, no pet.) (mem. op.); TEX. R. CIV. P. 94 (statute of frauds is an affirmative defense). "Whether a contract is within the statute of frauds is a question of law, which we review de novo." Dynegy, Inc., 422 S.W.3d 642. "Once a party establishes that the statute of frauds applies, the burden shifts to the other party to establish an exception." Stripe-A-Zone, Inc., 2017 WL 1352099, at *6. "[W]hether the circumstances of a particular case falls within an exception to the statute of frauds ... is generally a question of fact." Bakke Dev. Corp. v. Albin, No. 04-15-00008-CV, 2016 WL 6088980, at *2 (Tex. App.—San Antonio Oct. 19, 2016, no pet.) (mem. op.).
Section 26.01(a) of the Texas Business and Commerce Code provides the following promises or agreements must be in writing to be enforceable: (1) a promise by one person to answer for the debt of another; and (2) an agreement which is not to be performed within one year of the making of the agreement. TEX. BUS. & COM. CODE ANN. § 26.01(a) (West 2015). However, "full performance by one party to an oral contract removes the contract from the prohibitions of the Statute [of Frauds]." Estate of Kaiser v. Gifford, 692 S.W.2d 525, 527 (Tex. App.—Houston [1st Dist.] 1985, writ ref'd n.r.e.); see also Tex. Co. v. Burkett, 296 S.W. 273, 279 (Tex. 1927) ("The general rule is that, where one party to an oral contract has in reliance thereon so far performed his part of the agreement that it would be perpetrating a fraud on him to allow the other party to repudiate the contract and set up the statute of frauds in justification thereof, equity will regard the case as being removed from the operation of the statute, and will enforce the contract."); McElwee v. Estate of Joham, 15 S.W.3d 557, 559 (Tex. App.—Waco 2000, no pet.) ("[C]ourts have crafted various exceptions to the application of the statute when enforcement would allow the very fraud that was sought to be prevented. One exception to the application is when one party has fully performed under the contract and the only thing remaining is performance by the other party.").
Assuming, without deciding, that the Alis met their burden to show the parties' agreement falls within the Statute of Frauds, the burden shifted to Mohammad to establish an exception. Mohammad testified the three amounts were fully advanced and argues the "full performance" exception applies. In their brief, the Alis admit Mohammad testified the three amounts were fully advanced to the Alis as loans. However, the Alis rely on their own testimony to assert the three amounts were paid as part of the purchase price Mohammad owed them for their sale to him of a convenience store. Therefore, the Alis assert, "the evidence Mohammad presented in support of his complete performance argument results on [sic] nothing more than a 'he said, she said' dispute."
Because the applicability of an exception is a question of fact which the trial court was required to resolve as the factfinder in a bench trial, we defer to the trial court's credibility findings. Matthews v. Matthews, No. 04-16-00609-CV, 2017 WL 4518295, at *2 (Tex. App.—San Antonio Oct. 11, 2017, no pet.) (mem. op.). "'We may not pass upon the credibility of the witnesses or substitute our judgment for that of the trier of fact, even if a different answer could be reached upon review of the evidence.'" Id. (quoting Rich v. Olah, 274 S.W.3d 878, 884 (Tex. App.—Dallas 2008, no pet.)). In this case, the trial court chose to believe Mohmmad's testimony which supports its implied finding that Mohammad fully performed.
The Alis also assert the evidence did not establish that they "knowingly accepted the benefits of Mohammad's purported performance because they consistently testified that they believe[d] he made these three payments to pay for the [convenience store]." In support of this assertion, the Alis cite this court's decision in Tex. Nom Ltd. P'ships v. Akuna Matata Invs., Ltd., which states the statute of frauds is unavailable when one party fully performs and the other party knowingly accepts the benefits. No. 04-04-00447-CV, 2005 WL 159459, at *5 (Tex. App.—San Antonio Jan. 26, 2005, pet. denied) (mem. op.). Once again, however, we must defer to the trial court's assessment of the credibility of the witnesses. Matthews, 2017 WL 4518295, at *2. Mohammad testified Salma asked him to loan her the money; therefore, the trial court could infer that Salma knowingly accepted the money as a loan in order to pay Merchant for the purchase of the restaurant, remodel the restaurant, and pay expenses. Accordingly, we hold Mohammad's testimony is sufficient to support the trial court's finding that Mohammad established the full performance exception to the statute of frauds, and the Alis' second issue is overruled,
ATTORNEY'S FEES
In their final issue, the Alis challenge the sufficiency of the evidence to support the trial court's award of attorney's fees. In their brief, the Alis acknowledge Mohammad presented evidence that his attorney was retained under a one-third contingency fee contract. However, the Alis assert Mohammad was required to prove the contingent fee was reasonable under the eight factors listed by the Texas Supreme Court in Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997). The Alis further acknowledge Mohammad's attorney testified the one-third contingency fee was "reasonable and customary;" however, the Alis contend Mohammad was also required to present evidence to show the attorney's fees were necessary for the prosecution of the case.
In Arthur Andersen & Co., the Texas Supreme Court held, "a contingent fee award based solely on evidence of a percentage fee agreement between a lawyer and a client may be determined without regard to many of the factors that should be considered when determining reasonableness." 945 S.W.2d at 818. The court also noted the "contingent fee agreement should be considered by the factfinder." Id. The court cautioned, however, that the "agreement cannot alone support an award of attorney's fees." Id.
In this case, the trial court's award of attorney's fees is not supported solely by evidence of the one-third contingency fee agreement. In addition to evidence of the existence of the contingency fee agreement, Mohammad's attorney testified he has been practicing law since 1994, and the terms of the contingency fee were reasonable and customary in Bexar County in an action to collect a debt. An attorney's testimony about his experience, the total amount of fees, and the reasonableness of the fees charged is sufficient to support an award of attorney's fees. Ferrant v. Graham Assocs., Inc., No. 02-12-00190-CV, 2014 WL 1875825, at *9 (Tex. App.—Fort Worth May 8, 2014, no pet.) (mem. op.); Metroplex Mailing Servs., LLC v. RR Donnelley & Sons Co., 410 S.W.3d 889, 900 (Tex. App.—Dallas 2013, no pet.). Furthermore, Mohammad's claim was for breach of contract. "It is presumed that the usual and customary attorney's fees for a [breach of contract] claim are reasonable," and "[t]he court may take judicial notice of the usual and customary attorney's fees and of the contents of the case file ... in a proceeding before the court." TEX. CIV. PRAC. & REM. CODE ANN. § 38.003-38.004 (West 2015); see also Gill Sav. Ass'n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) (noting trial court's ability to take judicial notice of usual and customary attorney's fees in affirming award); McMahon v. Zimmerman, 433 S.W.3d 680, 692 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ("Appellate courts may presume that the trial court did take such judicial notice."). Therefore, given the applicable statutory presumptions, and the trial court's ability to take judicial notice of the usual and customary attorney's fees. we hold the evidence of the contingency fee agreement coupled with the testimony of Mohammad's attorney was sufficient to support the attorney's fees award.
The Alis also challenge the award of conditional appellate attorney's fees, asserting the testimony by Mohammad's attorney was too conclusory to support the award. Once again, however, the trial court was allowed to take judicial notice of the usual and customary attorney's fees, and it is presumed that the usual and customary fees are reasonable. TEX. CIV. PRAC. & REM. CODE ANN. § 38.003-38.004; Gill Sav. Ass'n, 797 S.W.2d at 32; McMahon, 433 S.W.3d at 692. In addition, Mohammad's attorney stated he has experience in appellate work and is familiar with the usual and customary fee for appellate work, including the fees he has paid other attorneys to handle appeals. Mohammad's attorney testified $20,000 is a usual and customary fee for handling an appeal to this court, noting his hourly rate is $300 an hour and an appeal would involve approximately 60 to 70 hours of work. Mohammad's attorney further testified regarding the fees he has paid appellate lawyers to handle petitions filed in the Texas Supreme Court. We hold the foregoing is sufficient evidence to support the trial court's award of conditional appellate fees. The Alis' third issue is overruled.
CONCLUSION
The trial court's judgment is affirmed.
Sandee Bryan Marion, Chief Justice