Summary
noting that contract language stating that liquidated-damages provision was not a penalty reflected the parties' intent that the provision was not a penalty
Summary of this case from Bunker v. StrandhagenOpinion
No. 14-06-00936-CV
Memorandum Opinion filed July 31, 2008.
On Appeal from the 151st District Court Harris County, Texas, Trial Court Cause No. 2005-73439.
MEMORANDUM OPINION
In this case, the buyers of a residential high-rise condominium signed a purchase contract with the seller and deposited their earnest money with a title company. However, the buyers did not close on the property as provided in the purchase contract, and, at the seller's instruction, the title company transferred the buyers' earnest money to the seller. The buyers, Chiu Moon Chan and Ella Y. Chan, later sued the seller, Montebello Development Company, L.P. ("Montebello") and the title company, Stewart Title Company ("Stewart Title"), for the return of their earnest money. The trial court granted summary judgment in favor of Montebello and Stewart Title, and declared that the purchase contract was terminated and Montebello was entitled to keep the earnest money as liquidated damages under the purchase contract.
In eight issues on appeal, the Chans contend that the trial court erred by: (1) granting summary judgment on the appellees' declaratory judgment action; (2) determining that the amount of the earnest money, $92,000, was an accurate estimate of actual damages; (3) granting summary judgment when the purchase contract was void for lack of mutuality of obligation; (4) granting summary judgment in favor of Montebello on all of the Chans' claims for affirmative relief; (5) granting summary judgment in favor of Stewart Title on all of the Chans' claims for affirmative relief; (6) awarding attorneys fees of $20,000 because the award is inequitable and unjust; (7) failing to exclude the affidavit of George Gibson as evidence in support of the attorney's fee award; and (8) failing to exclude the affidavit of Jeanette Harris as summary judgment evidence.
For the reasons stated below, we affirm.
Factual and Procedural Background
Montebello is the owner and developer of the Montebello Condominium, a thirty-story residential condominium building located in Uptown Park in Houston, Texas. In February 2002, Montebello and the Chans entered into a Purchase Contract (the "Contract") for the sale and purchase of a condominium unit on the twenty-third floor of the building for a total purchase price of $920,000. As provided in the Contract, the Chans deposited earnest money, defined in the purchase contract as the "Initial Payment,"of $92,000 with Stewart Title. The Chans had negotiated the Initial Payment down from twenty percent to ten percent of the total purchase price. Ultimately, however, the Chans failed to close on the unit, and Stewart Title delivered the Initial Payment to Montebello.
In November 2005, the Chans sued Montebello and Stewart Title to recover the Initial Payment, asserting claims of unjust enrichment, breach of contract, and tortious interference with contract against Montebello. The Chans alleged conversion and negligence against both Montebello and Stewart Title, and as to Stewart Title only, the Chans alleged promissory estoppel, fraud, negligent misrepresentation, and breach of fiduciary duty. The Chans sought actual and punitive damages, and attorney's fees. Montebello and Stewart Title answered, and Montebello also filed a counterclaim asserting breach of contract and requesting a declaratory judgment that it was entitled to the Initial Payment as liquidated damages under the Contract. Montebello requested attorney's fees as provided in the Contract and under the Declaratory Judgments Act. See TEX. CIV. PRAC. REM. CODE § 37.009. The Chans answered and alleged as affirmative defenses fraud, misrepresentation, waiver, mistake, failure to mitigate, non-occurrence of conditions precedent, and denial of pre-judgment interest.
The Chans also asserted that they were entitled to arbitration under the Contract, but arbitration is not an issue in this appeal.
Montebello and Stewart Title moved for summary judgment against all of the Chans' claims and sought a declaration that, as a matter of law, the Contract was terminated and Montebello was entitled to the Initial Payment as liquidated damages. Among other things, Montebello asserted that it substantially completed the construction of the unit, but the Chans did not comply with the Contract's obligations, including scheduling a final walk-through inspection and timely closing on the property. Appellees also asserted that Stewart Title properly delivered the Initial Payment to Montebello in accordance with the Contract. The Chans responded and objected to Montebello and Stewart Title's summary judgment proof, but they did not deny that they failed to comply with their obligations under the Contract to purchase the unit. Instead, they asserted that, after entering into the Contract, they encountered financial difficulties and requested a refund of the Initial Payment, and they also offered to reimburse Montebello for an "agreed amount of reasonable actual damages." However, Montebello refused to refund any amount of the Initial Payment. The Chans further asserted that the contractual provision permitting Montebello to retain the Initial Payment in the event of the purchaser's default was unreasonable and an unenforceable penalty.
The record does not reflect that the trial court ruled on the Chans' objections to the summary judgment proof. Additionally, although it appears the trial court held a hearing on the motion for summary judgment, no reporter's record of the hearing is included in the record.
After the parties submitted additional briefing, the trial court entered a judgment in favor of Montebello and Stewart Title. In the judgment, dated September 27, 2006, the trial court declared that the Contract was terminated and Montebello was entitled to keep the Initial Payment as liquidated damages under the Contract, and awarded attorney's fees of $20,000 to Montebello and additional attorney's fees of $7,500 if an appeal is filed in the court of appeals and $7,500 if a petition for review is filed in the Texas Supreme Court. The trial court included in the judgment language demonstrating that it expressly intended to dispose of all parties and claims and that the judgment was final. This appeal followed.
The language indicating finality was as follows:
It is further
ORDERED that Defendants are granted judgment in their favor as to all claims and cause of actions by Chiu Moon Chan and Ella Y. Chan, and Chiu Moon Chan and Ella Y. Chan shall take nothing by their claims and cause of actions in this case. It is further
ORDERED that Defendants shall be entitled to all writs and processes necessary to enforce this judgment. It is further
ORDERED that all other relief not specifically granted herein is denied and that this is a final appealable judgment.
Analysis of the Chans' Issues I. Is the Liquidated Damages Provision an Unenforceable Penalty?
In their first two issues, the Chans contend that the trial court erred in granting summary judgment on Montebello's claim for declaratory judgment and awarding it the $92,000 Initial Payment as liquidated damages under the Contract, because the amount is excessive and constitutes an illegal penalty. We disagree.
As an initial matter, appellees assert that, because penalty is an affirmative defense and the Chans failed to plead it, the issue is waived. However, the Chans raised the issue of penalty in its response to appellees' motion for summary judgment and in supplemental responses in opposition to the motion. We therefore conclude the issue is preserved for appeal. See Keck, Mahin Cate v. Nat'l Union Fire Ins. Co., 20 S.W.3d 692, 699 (Tex. 2000) (raising affirmative defense in response to motion for summary judgment preserved issue for appeal). Moreover, the record does not reflect that appellees objected to the lack of formal pleading in their responses or otherwise. Unpleaded claims or defenses that are tried by express or implied consent of the parties are treated as if they had been raised by the pleadings. Roark v. Stallworth Oil Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991) (applying rules of error preservation and trial by consent to issues raised in summary judgment).
A. The Contract Provision at Issue
The Contract provided for liquidated damages in the event of default by the purchaser in the following provision:
In the event of any default by Purchaser under this Contract, Seller may (i) terminate this Contract, in which event the Initial Payment shall be delivered to Seller as liquidated damages and not as a penalty because of the uncertainty and difficulty of ascertaining and measuring Seller's actual damages, and neither Purchaser nor Seller shall have any further rights or obligations under this Contract, (ii) enforce specific performance of this Contract, or (iii) seek damages or any other available remedies.B. The Applicable Law
The test for determining whether a provision is valid and enforceable as liquidated damages is (1) if the damages for the prospective breach of the contract are difficult to measure; and (2) the stipulated damages are a reasonable estimate of actual damages. Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991) (citing Rio Grand Valley Sugar Growers, Inc. v. Campesi, 592 S.W.2d 240, 342 n. 2 (Tex. 1979)); Baker v. Int'l Record Syndicate, Inc., 812 S.W.2d 53, 55 (Tex.App.-Dallas 1991, no writ); Naylor v. Siegler, 613 S.W.2d 546, 547 (Tex.Civ.App.-Fort Worth 1981, no writ). Generally, the question of whether a contractual provision is an enforceable liquidated damages provision or an unenforceable penalty is a question of law for the court and is to be determined as of the time when the contract was executed. See Phillips, 820 S.W.2d at 788; Zucht v. Stewart Title Guar. Co., 207 S.W.2d 414, 418 (Tex.Civ.App.-San Antonio 1947, writ dism'd); Bourland v. Huffhines, 244 S.W. 847, 849 (Tex.Civ.App.-Amarillo 1922, writ dism'd w.o.j.).
In determining whether a provision is for a penalty or for liquidated damages, the intention of the parties should govern. Zucht, 207 S.W.2d at 418. Merely designating a provision as one for "liquidated damages" will not prevent the court from holding that the provision is in fact a penalty; however, when it clearly appears from the terms of the contract that it was the intention of the parties that the sum stated should be treated as providing for liquidated damages, this intention will be enforced. Elliott v. Henck, 223 S.W.2d 292, 295 (Tex.Civ.App.-Galveston 1949, writ ref'd n.r.e.).
The burden is on the party asserting the defense of penalty to demonstrate that the contractual provision is an unenforceable penalty rather than an enforceable liquidated damages provision. See Fluid Concepts, Inc. v. DA Dallas Apartments Ltd. P'ship, 159 S.W.3d 226, 231 (Tex.App.-Dallas 2005, no pet.); Johnson Eng'rs, Inc. v. Tri-County Water Supply Corp., 582 S.W.2d 555, 557 (Tex.Civ.App.-Texarkana 1979, no writ); Tri-Cities Constr., Inc. v. Am. Nat'l Ins. Co., 523 S.W.2d 426, 428 (Tex.Civ.App.-Houston [1st Dist.] 1975, no writ). In order to meet this burden, the party asserting the defense is required to prove the amount of the other parties' actual damages, if any, to show that the liquidated damages are not an approximation of the stipulated sum. Johnson Eng'rs, Inc., 582 S.W.2d at 557. If the liquidated damages are shown to be disproportionate to the actual damages, then the liquidated damages must be declared a penalty and recovery limited to the actual damages proven. Id.
Texas courts have consistently held that damages for breach of a contract to buy or sell real estate are "`uncertain and not easily estimated with accuracy.'" Thanksgiving Tower Partners v. Anros Thanksgiving Partners, 64 F.3d 227, 232 (5th Cir. 1995) (citing Enclave, Inc. v. Resolution Trust Corp., 986 F.2d 131, 134(5th Cir. 1993) (quoting Zucht, 207 S.W.2d at 419)). For example, in Zucht, the court explained: "It has been held, time and again, that a provision for liquidated damages in a contract for the sale and purchase of real estate is proper as being a transaction in which the damages for the breach thereof are uncertain and not easily estimated with accuracy." Zucht, 207 S.W.2d at 419 (collecting cases). Texas courts have recognized that often "[i]t is impossible to forecast the damages which might flow to the seller of real property in the event of breach of the contract by the purchasers," because "[r]eal property has a fluctuating value" and "[t]here is no way to ascertain at any given time what the value of a particular tract of real property might be in the future." Naylor, 613 S.W.2d at 547.
C. The Liquidated Damages Provision is Not an Unenforceable Penalty
In support of their contention that the Contract's liquidated damages provision is an unenforceable penalty, the Chans stress the following language from Phillips:
The right of competent parties to make their own bargains is not unlimited. The universal rule for measuring damages for the breach of a contract is just compensation for the loss or damage actually sustained. By the operation of that rule a party generally should be awarded neither less nor more than his actual damages. A party has no right to have a court enforce a stipulation which violates the principle underlying that rule.
Phillips, 820 S.W.2d at 788. Consequently, the Chans argue the trial court erred because it "never inquired into the evidence of actual injuries to attempt to do justice between the parties," and as a result, Montebello received a windfall. See id. (noting that, although the question whether a contractual provision is enforceable is a question of law, sometimes factual issues must be resolved before the legal question can be decided).
The Chans, relying on a 2006 property tax record from the Harris County Appraisal District, assert that information concerning Montebello's actual damages was readily available. However, evidence that a property sold at a later date for the same price, or even at a profit, is no evidence that a provision is an unreasonable stipulation as to contemplated damages. Zucht, 207 S.W.2d at 419; Thanksgiving Tower Partners, 64 F.3d at 232-33; see also Baker, 812 S.W.2d at 55 ("Evidence related to the difficulty of estimation and the reasonable forecast must be viewed as of the time the contract was executed."). The Chans also speculate that Montebello must possess other information that would show actual damages, such as "financial information with respect to the construction and occupancy of the property" and "marketing allowances for each Unit." However, they submitted no evidence of any such information in response to the motion for summary judgment. The Chans further speculate as to the type of actual damages that would be incurred by Montebello, such as "remarketing expenses" and "depreciation expense," and conclude that the amount of $92,000 is "such a bad estimate of damages, that Montebello reaped a windfall profit off of the misfortune" of the Chans, but cite no evidence or authorities in support of this conclusion.
In their response, the Chans incorporated by reference a motion to compel and motions to continue the hearing on appellees' motion for summary judgment, and argued that Montebello's failure to respond to their discovery requests denied them the opportunity to fully present summary judgment evidence to support their claims and defenses. However, the referenced motions do not appear in the record, and the Chans do not argue on appeal that the trial court erred by failing to compel any discovery or failing to grant a continuance.
Moreover, the primary authorities the Chans do cite are distinguishable. First, in Phillips, the Texas Supreme Court considered a contractual provision in which one party agreed to pay the other party as liquidated damages ten times the actual damages. See Phillips, 820 S.W.2d at 787, 789. The Court determined that such a provision involved no fact issues, as it could not meet either part of the test for an enforceable liquidated damages provision. Id. at 789. The Chans also cite Flores v. Millennium Interests, Ltd., 185 S.W.3d 427, 431 (Tex. 2005), to support their contention that the trial court erred because the amount of liquidated damages, $92,000, was excessive. In that case, the Court was asked, on certified questions from the Fifth Circuit, to construe certain statutes applying to contracts for deed. Id. at 428. The Court noted that, while an amount stipulated in advance as an acceptable measure of damages may be either an enforceable liquidated damages provision or an unenforceable penalty under the common law, the same "does not always hold true for statutes." Id. at 431. Consequently, the Court determined that a statutory "liquidated damages" provision for noncompliance, when invoked, was penal in nature. Id. at 433. Here, in contrast, the contractual provision at issue is in no way comparable to the provision at issue in Phillips or the statutes considered in Flores, and so neither case supports the Chans' claim.
The Chans also complain that Montebello has offered no legal authority or extrinsic evidence to support its assertion that damages would be impossible to ascertain or that the liquidated damages amount was a reasonable estimate of actual damages. However, as the party asserting the affirmative defense of penalty, the burden was on the Chans, not Montebello, to demonstrate that the Contract's liquidated damages provision was an unenforceable penalty. See, e.g., Fluid Concepts, Inc., 159 S.W.3d at 231; Johnson Eng'rs, Inc., 582 S.W.2d at 557; Tri-Cities Constr., Inc., 523 S.W.2d at 428.
The Chans, as the party with the burden to prove their affirmative defense of penalty, cite no authorities to contradict the longstanding recognition that damages for the breach of a contract to buy or sell real estate are uncertain and not easily estimated. See, e.g., Thanksgiving Tower Partners, 64 F.3d at 232; Zucht, 207 S.W.2d at 419; Naylor, 613 S.W.2d at 547. Further, the Chans agreed to the liquidated damages provision, which clearly provides that, in the event of the Chans' default, the Initial Payment shall be delivered to Montebello "as liquidated damages and not as a penalty" because of "the uncertainty and difficulty of ascertaining and measuring" Montebello's actual damages. The provision plainly reflects the intent of the parties to provide for liquidated damages in the amount of the Initial Payment. See Elliott, 223 S.W.2d at 295 (holding that terms of agreement to purchase beach-front property plainly expressed the parties' intention that the earnest money constituted liquidated damages and stating that "[h]ere the amount of the damages that would be sustained by the seller by a breach was uncertain in the same sense that the amount of the damages for a breach of a contract for the sale of real estate is generally uncertain.").
Moreover, the Chans negotiated the amount of the Initial Payment down from twenty percent of the purchase price of the unit to ten percent, further limiting their liability under the provision. The negotiated amount of earnest money, $92,000, or ten percent of the total purchase price of $920,000, is a reasonable amount of liquidated damages in a real estate transaction such as this one. See Ashton v. Bennett, 503 S.W.2d 392, 394-95 (Tex.Civ.App.-Waco 1974, writ ref'd n.r.e.) (upholding liquidated damages provision entitling seller to approximately sixteen percent of purchase price); Thanksgiving Tower Partners, 64 F.3d at 232 (holding that $5 million was a reasonable liquidated damage amount despite an internal memorandum stating that the anticipated damages were only $1.4 million); see also Aguiar v. Segal, 167 S.W.3d 443, 455-56 (Tex.App.-Houston [14th Dist.] 2005, pet. denied) (holding that buyers' failure to close within agreed time constituted a breach of earnest money contracts and sellers were entitled to terminate contracts and recover earnest money as liquidated damages). Consequently, given the information before it, there was no need for the trial court to resolve additional factual issues before rendering its decision.
Therefore, we agree with the trial court's conclusion that, as a matter of law, the Contract's provision was an enforceable liquidated damages provision rather than an unenforceable penalty. We overrule the Chans' first two issues.
II. Is the Contract Void for Lack of Mutuality of Obligation?
In their third issue, the Chans contend that the trial court erred in granting summary judgment because the Contract is void for lack of mutuality of obligation. According to the Chans, under the Contract, Montebello was under no obligation to actually provide a unit to them because the Contract specifically states that Montebello would not "warranty the completion of the Unit on any given date."
Again, we disagree.
A. The Contract Provision at Issue
The provision the Chans rely on is the following:
7. Construction Schedule/Effects of Building Activities. the Unit is or will be constructed in accordance with plans and specifications for the Unit to be prepared by Ziegler Cooper Architects (the " Plans and Specifications") based on the preliminary plans and specifications prepared by Ziegler Cooper Architects dated January 9, 2001, more particularly described on Exhibit "D" attached hereto (the " Preliminary Plans"), subject to normal and acceptable tolerances and pursuant to standard building practices found in residential construction in Houston, Harris County, Texas. The Preliminary Plans are located in Seller's offices. Purchaser acknowledge that all drawings and plans constituting the Preliminary Plans are not the final construction drawings for construction of the Property or the Unit and that refinements may be made thereto. Furthermore, the construction of the Unit is also subject to any changes in the Preliminary Plans and the Plans and Specifications, materials, fixtures or methods that may be required by federal, state or local governmental authority, and other refinements, amendments and adjustments to the Plans and Specifications by Seller that do not affect the fair market value of the Property or the Unit. Seller reserves the right to substitute materials, fixtures or equipment of equal or better quality. In constructing the Unit, Seller shall employ its normal construction schedule, and does not therefore warrant the completion of the Unit on any given date. Accordingly, Seller shall not be liable to Purchaser for any damages resulting from Seller's inability or failure to complete the Unit except for those provided for in Paragraph 17 of the Contract. Purchaser recognizes that the construction of the Condominium imposes an inherent risk to the health of trees presently located on the Property and hereby acknowledges that Seller cannot guarantee the viability of those trees.
(emphasis added). Paragraph 17 provides in relevant part that:
In the event that Seller is unable to obtain suitable construction financing, or should any dispute arise between Seller and Purchase prior to Closing concerning construction of the Unit or any other matter relating to the interpretation of this Contract, the Seller shall have the right, upon written notice to the Purchaser, to terminate this Contract. In the event of such termination by Seller, Seller shall cause the Title Company to return the Initial Payment to Purchaser in full satisfaction of Purchaser's relief hereunder; no claims or causes of action shall accrue on behalf of Purchaser; and neither Purchaser nor Seller shall have any further rights or obligations under this Contract.
(emphasis in bold added). Thus, the Chans contend that, under the Contract, Montebello had no duty to provide anything whatsoever to them, and, therefore, the Contract is illusory as a matter of law. B. The Applicable Law
Appellees contend that the Chans failed to preserve this issue for appeal because they did not raise this issue in their response to appellees' motion for summary judgment. However, the Chans did raise the issue in a supplemental response filed before the trial court ruled on the motion, and appellees did not object to it. Therefore, under the facts of this case, we conclude the Chans preserved the issue for appeal. See TEX. R. CIV. P. 166a(c).
Contracts are valid if there is consideration on each side. See Air Am. Jet Charter Inc. v. Lawhon, 93 S.W.3d 441, 444 (Tex.App.-Houston [14th Dist.] 2002, pet. denied) (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 409 (Tex. 1997) (stating contract "must be based upon a valid consideration, in other words, mutuality of obligation")). Consideration consists of a benefit to the promisor or a detriment to the promisee. N. Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998). There is no requirement that the consideration on each side be the same. Air Am. Jet Charter Inc., 93 S.W.3d at 444 (citing N. Natural Gas Co., 986 S.W.2d at 607-08). Texas courts generally construe contracts in favor of mutuality of obligation. Tex. Gas Utils. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970); Young v. Neatherlin, 102 S.W.3d 415, 420 (Tex.App.-Houston [14th Dist.] 2003, no pet.). A contract that lacks consideration lacks mutuality of obligation and is unenforceable. See Tex. Gas Utils. Co., 460 S.W.2d at 412.
C. The Contract is Not Void For Lack of Mutuality of Obligation
We do not construe the language of the provision to reflect a lack of mutuality of obligation as the Chans contend. The provision the Chans rely on is included in a section concerning the construction schedule for the Montebello condominium, which was not completed at the time the Contract was executed. This provision is intended to recognize the myriad of factors that can affect the construction process and to provide flexibility to Montebello rather than to obligate it to complete the construction on a specific date or risk breaching the contract. It does not mean that Montebello has no obligation to perform at all. Montebello agreed to sell a specific condominium unit and the Chans agreed to purchase the unit. As a result, Montebello removed the unit from the market and was thereafter precluded from entertaining other offers for it. Montebello also was required to sell the unit to the Chans at the specified sales price, which the Chans agreed to pay. Therefore, we conclude that the Contract is not void for lack of mutuality. We overrule the Chans' third issue.
III. Did the Trial Court Err in Granting Summary Judgment in Favor of Montebello on All of the Chans' Claims for Affirmative Relief?
In their fourth issue, the Chans contend that the trial court erred in granting summary judgment in favor of Montebello on all of their claims for affirmative relief. Specifically, the Chans assert that Montebello did not demonstrate it was entitled to summary judgment as a matter of law because there are fact issues regarding their affirmative claims of unjust enrichment, breach of contract, conversion, negligence, and intentional interference with contract, which the Chans pleaded in their petition.
To prevail on a traditional motion for summary judgment, the movant must show that there is no genuine issue as to any material fact and that it entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). A defendant moving for summary judgment must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc., v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Once the movant establishes a right to judgment as a matter of law, the burden shifts to the non-movant to produce evidence raising a genuine issue of material fact. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex. 1979). Declaratory judgments decided by summary judgment are reviewed under the same standards of review that govern summary judgments generally. Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d 725, 730 (Tex.App.-Houston [14th Dist.] 2003, no pet.).
Here, the Chans do not dispute that they failed to purchase the condominium unit as they were obligated to do under the Contract with Montebello, and do not dispute that Montebello was entitled to some measure of damages as a result. The only dispute between the Chans and Montebello was whether the Contract's liquidated damages provision was enforceable. We have already held that the liquidated damages provision was enforceable, and that Montebello was therefore entitled to keep the Initial Payment. All of the Chans' claims against Montebello were premised upon Montebello's allegedly wrongful retention of the Initial Payment. Therefore, Montebello demonstrated that, as a matter of law, it was entitled to summary judgment, and the burden then shifted to the Chans to raise a genuine issue of material fact sufficient to defeat summary judgment. However, although the Chans pleaded the affirmative claims they identify in their petition, they did not assert any of them in response to appellees' motion for summary judgment, and they point to no summary judgment evidence raising a fact issue on the claims.
We therefore overrule the Chans' fourth issue.
IV. Did the Trial Court Err in Granting Summary Judgment in Favor of Stewart Title on All of the Chans' Claims for Affirmative Relief?
In their fifth issue, the Chans contend that, although Stewart Title was a party to the motion for summary judgment, the motion did not address the Chans' claims against Stewart Title, which were different than the claims against Montebello. Specifically, the Chans assert that their claims against Stewart Title were based upon an "Earnest Money Receipt" provided to the Chans, which stated that the Chans' earnest money would not be dispersed unless all parties agreed. Despite this representation, the Chans contend, Stewart Title paid the earnest money (the Initial Payment) to Montebello. The Chans asserted claims against Stewart Title for conversion, negligence, promissory estoppel, fraud, negligent misrepresentation, and breach of fiduciary duty based on these alleged facts.
The relevant portion of the document entitled "Earnest Money Receipt" provides as follows: "Notwithstanding any terms of the Contract, Stewart Title does not agree to pay any portion of the Earnest Money to anyone unless uniform written authority to do so is given by all parties to the Contract." It is signed only by a representative of Stewart Title.
In this issue, the Chans also contend that they sued Stewart Title for breach of contract, but the breach of contract claim in the Chans' original petition — the only petition of theirs in the record — is directed only to Montebello.
The Chans' argument in this issue is the same as that made in the previous issue against Montebello. The Chans assert that fact issues were raised on each of their claims against Stewart Title precluding summary judgment in its favor. However, the Chans did not raise these claims in response to appellees' summary judgment motion or present any evidence to demonstrate that a genuine issue of material fact existed. Moreover, in appellees' motion for summary judgment, appellees showed that, in response to Montebello's instruction, Stewart Title delivered the Initial Payment to Montebello in accordance with paragraph 2(d) of the Contract, which provided that "the Title Company shall cause the Initial Payment to be delivered promptly to whichever party shall become entitled thereto pursuant to the terms of this Contract and without further approval from either party."
As we have previously discussed, the trial court correctly found that Montebello was entitled to keep the Initial Payment as liquidated damages under the Contract. Further, appellees demonstrated that, under the Contract, the Chans agreed that Stewart Title was to deliver the Initial Payment to Montebello "without further approval from either party." Thus, the trial court could have correctly concluded that Stewart Title properly delivered the Initial Payment to Montebello. At that point, the burden shifted to the Chans to raise a genuine issue of material fact on their claims against Stewart Title, all of which were based on the allegedly wrongful delivery of the Initial Payment to Montebello without the Chans' consent. In the Chans' response to appellees' motion for summary judgment, they attached a copy of the Earnest Money Receipt and discussed it in their recitation of the facts, but they did not make any legal argument concerning the document or argue that paragraph 2(d) of the Contract did not apply. Moreover, the Chans did not assert any of their claims in response to appellees' motion for summary judgment, and, other than the "Earnest Money Receipt," they point to no summary judgment evidence raising a fact issue on the claims.
We therefore overrule the Chans' fifth issue.
V. Did the Trial Court Abuse Its Discretion in Awarding Attorney's Fees and Considering Attorney's Affidavit Concerning Fees?
In their sixth issue, the Chans contend that the award of attorney's fees is inequitable and unjust under the Declaratory Judgments Act. See TEX. CIV. PRAC. REM. CODE § 37.009 ("In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just."). In their seventh issue, they contend that the trial court erred in failing to sustain their objections to the affidavit of George Gibson in support of the attorney's fees. The Chans brief these issues together, and so we will consider them together.
First, the Chans argue that it is fundamentally inequitable and unjust that Montebello, "who hasn't sustained any actual damages, and has already been awarded $92,000, should be awarded an additional $20,000 attorneys fees." The Chans complain that, "for whatever reason [the Chans] did not close, they attempted to negotiate the release of the contract," but Montebello took advantage of them and pushed forward with the scheduling of the walk through and closing with the specific intent of obtaining the earnest money. The crux of the Chans' argument appears to be that, even though Montebello prevailed on its claim that it was entitled to keep the liquidated damages as provided in the Contract (and agreed to by the Chans), Montebello is not entitled to attorney's fees to compensate it for being required to litigate the issue, because it allegedly did not incur actual damages. The Chans cite no evidence or authorities to support this argument; therefore, we do not consider it. See TEX. R. APP. P. 38.1(h); Sunnyside Feedyard, L.C. v. Metro. Life Ins. Co., 106 S.W.3d 169, 173 (Tex.App.-Amarillo 2003, no pet.) ("Failure to either cite authority or advance substantive analysis waives the issue on appeal."). Moreover, Montebello also sought reasonable attorney's fees as provided under the Contract, and the Chans do not challenge this alternative basis for the award.
The Contract provided as follows: "If either party employs an attorney or attorneys to enforce the terms of this Contract, either by arbitration, litigation or negotiation, the losing party agrees to reimburse the prevailing party for reasonable attorneys' fees, arbitration fees, court costs and expenses incurred." Montebello pleaded for attorney's fees under the Contract and the Declaratory Judgments Act, and sought attorney's fees in the motion for summary judgment under the Contract and Texas Civil Practice and Remedies Code sections 38.001 and 37.009.
Next, the Chans contend that the trial court should have sustained the Chans' objections to the affidavit of George Gibson, one of appellees' attorneys, in support of the attorney's fees, and not considered it in determining the amount of attorney's fees to award. The Chans argue that the affidavit is conclusory because the amounts requested are unreasonable, the affidavit does not reflect how much time was spent on the case, and statements concerning anticipated fees for appeal and post-judgment motions and other actions are speculative and "not readily controvertible." See TEX. R. CIV. P. 166a(c) ("A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness as to subject matter concerning which the trier of fact must be guided solely by the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted."); Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997) (same). We review a trial court's decision to admit or exclude evidence for abuse of discretion. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). We likewise review the allowance of attorney's fees for abuse of discretion. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990).
The record does not reflect that the trial court ruled on the Chans' objections. We do not presume that objections to summary judgment evidence were overruled when a trial court grants a summary judgment. Seidner v. Citibank (S.D.) N.A., 201 S.W.3d 332, 335 n. 2 (Tex.App.-Houston [14th Dist.] 2006, pet. denied). But an objection to the substance of a summary judgment affidavit, rather than a defect in the form, is not waived by failure to obtain a ruling from the trial court on the objection. See, e.g., Wadewitz v. Montgomery, 951 S.W.2d 464, 466 (Tex. 1997) ("Conclusory statements by an expert are insufficient to support or defeat summary judgment.").
As the Texas Supreme Court explained in Montiel, the mere fact that an affidavit is self-serving does not necessarily make the evidence an improper basis for summary judgment. See Montiel, 949 S.W.2d at 310. Further, whether the evidence contained in an affidavit "could have been readily controverted" does not mean that the summary judgment evidence could have been easily and conveniently rebutted, but rather indicates that the testimony could have been effectively countered by opposing evidence. Id. The trial court, as fact finder, may award attorney's fees as a matter of law based on the uncontradicted testimony of an interested witness, "especially when the opposing party has the means and opportunity of disproving the testimony or evidence and fails to do so." Ragsdale, 801 S.W.2d at 882.
As one of appellees' attorneys, Gibson averred that he was licensed to practice in Texas and had previously represented clients in connection with commercial litigation in Harris County, he was familiar with the fees customarily charged by attorneys in Harris county for handling similar suits, and was familiar with the attorneys' services normally required for the proper prosecution of lawsuits like the present one. Gibson identified and listed the specific legal services performed in connection with the prosecution of the lawsuit, and opined that additional hours of his time would be necessary for post-judgment motions and to enforce the judgment. He further opined that, taking into consideration the complexity of the case, the legal questions involved, and the time involved, a reasonable attorney's fee for the legal services rendered to Montebello would be $20,000. Finally, he opined that a reasonable additional attorney's fee for an appeal to the court of appeals would be $10,000, and if "an application for writ of error" is filed in the Texas Supreme Court, a reasonable additional attorney's fee would be $10,000.
We note that the trial court awarded the lesser amounts of $7,500 for additional attorney's fees in its judgment.
The averments in Gibson's affidavit were sufficiently clear and could have been readily controverted. In response, the Chans asserted their objections, but offered no opposing affidavits or other contradicting evidence to challenge Gibson's opinions concerning the attorney's fees incurred or to be incurred, and whether or not they were reasonable or necessary. Therefore, we cannot say the trial court abused its discretion to the extent it considered Gibson's affidavit in awarding attorney's fees to Montebello. We overrule the Chans' sixth and seventh issues.
VI. Did the Trial Court Err in Granting Summary Judgment by Failing to Exclude the Affidavit of Jeanette Harris?
Lastly, in their eighth issue, the Chans contend that the trial court erred in granting summary judgment by failing to exclude the affidavit of Jeanette Harris, an employee of The Interfin Companies LP, a partner of Montebello. Appellees submitted Harris's affidavit to support the merits of their motion for summary judgment. In her affidavit, Harris made statements concerning Montebello's substantial completion of the unit and its performance of all work and obligations under the contract, the Chans' failure to respond to Montebello's attempt to contact the Chans, the Chans' failure to contact Montebello to schedule a specific time for or attend the closing, and the parties' rights and obligations under the Contract. The Chans contend that these statements are merely factual and/or legal conclusions, no extrinsic evidence was offered to support them, and they cannot be readily controverted.
The Chans also argue that Harris does not explain how she has personal knowledge to make several of the statements in her affidavit. However, the Chans did not obtain a ruling on their objections to Harris's affidavit. An objection that an affidavit is not based on personal knowledge is one of form. See Hou-Tex., Inc. v. Landmark Graphics, 26 S.W.3d 103, 112 n. 9 (Tex.App.-Houston [14th Dist.] 2000, no pet.) ("Whether an affiant has personal knowledge and is competent are objections to form."). Thus, the Chans have waived any complaint of lack of personal knowledge on appeal. See id.
Harris averred that she was an employee of The Interfin Companies LP, a partner of Montebello, and that the facts stated in her affidavit were within her personal knowledge and were true and correct. Her factual statements were supported by documents and correspondence attached to appellees' motion for summary judgment, which she referenced in her affidavit, and which reflected that Harris either sent the document, was the recipient of the document, or was copied on the document. Moreover, although the Chans submitted the affidavit of Mrs. Chan in response to the motion for summary judgment, Mrs. Chan did not contradict any of the factual statements Harris made concerning Montebello's substantial completion of the unit, the Chans' failure to communicate with Montebello concerning scheduling, or the Chans' failure to attend the closing. Thus, we cannot say that the trial court erred to the extent that it may have considered the factual statements that could have been controverted by the Chans, but were not.
Although some of Harris's statements concerning the legal effect of the Contract, such as her assertion that Montebello was entitled to recover its reasonable attorney's fees and court costs in accordance with the Contract, constituted legal conclusions, nothing in the record demonstrates that the trial court considered any conclusory statements or based its decision on them. Moreover, even if we assume the trial court considered any conclusory statements, because the Chans did not deny that they failed to close on the unit as they were obligated to do under the Contract, many, if not all, of those statements are unnecessary to the trial court's decision. We will not reverse a trial court's judgment because of an erroneous evidentiary ruling unless the ruling probably caused the rendition of an improper judgment. See Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 906 (Tex. 2000); Owens-Corning Fiberglas Corp., 972 S.W.2d at 43; TEX. R. APP. P. 44.1(a). The complaining party must usually show that the whole case turned on the evidence at issue. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753-54 (Tex. 1995). The Chans have not demonstrated how the complained-of statements in the affidavit, if considered by the trial court, probably caused the rendition of an improper judgment. Therefore, we overrule the Chans' eighth issue.
Conclusion
We overrule the Chans' issue and affirm the trial court's judgment.