NO. 07-03-0051-CV IN THE COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TE XAS

AT AMARILLO PANEL A MARCH 24, 2005

______________________________ J. H. (BUSTER) REEDY AND DEBBIE L. REEDY, APPELLANT V. GENE SCOTT, APPELLEE

_________________________________ FROM THE 31ST DISTRICT COURT OF WHEE LER COUNTY; NO. 9875; HONORAB LE H. BR YAN POFF , JUDGE

_______________________________ Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.
MEMORAND UM OPINION Appellants, J .H. (Buster) Reedy and his wife Debbie Reedy, bring this appeal challenging a summary judgment in favor of Gene Scott on Scott’s claim for breach of an earnestmoney contract for the sale of property by the R eedy s. We overrule appellants’ three poi nts of erro r and affi rm the judg ment of th e trial court.1 Powell also uses thename Day na Dawn’ yel and both name s appear in docum ents

in the record. There is no question both names refer to the same person. -2- The events giving rise to this litig at ion began in May 1991 when the Reedys executed a written l ease toDiane Powell 1 for a house on a seventeen-acre tract in Wheeler County. The lease term began June 1, 1991, and was to run for thirty-six months. Atthe
same time the Reedys executed a hand-w ritten ag reement to sell the property to Powell “upon said lease dated May 23, 1991.” The agreement provided the Reedys would not sell the property to anyone else unless Powell breache d the lease agreement. Disputes arose between the Reed ys and Po well con cerning the prope rty, resul ting in l itigatio n.
The Reedys offered thepropert y for sa le and Scott made an offer of $55,000 in January 1993. Scott would later allege the Reedys told him of Powell’s lease and that she
was occupyi ng the pr

operty , but told him Powell was in default for failure to pay rent and would be remove d. The R eedys ac cepted S cott’s off er, leadi ng to execution of an earnest moneycontract dated January 26, 1993. That contract required the Reedys to provide title insurance subject o nly to ei ght liste d exclu sions an d a warra nty deed subject to the same exclusions. Powell’s lease and cont ract werenot listed in the exclusions. On F ebruary 26, 1993 the Reedys executed and delivered adeed conveying the prop erty to Scott in exchange for cash and Scott’s assumption of the ou tstanding mortgage.
On March 16, 1993, Powell filed her May 199 1 lease and the hand-written agreementfor record in the Wh eeler County property records. Scott filed his deed for record on April 2, 1993. A new commitment for title insurance dated t he same day listed the le ase and agreement recorded by Powell as add itional exceptions to title insurance2 The lease termina ted by its o wn terms in June 1994. The earlier, separate suit

between the Reedys and Powell was dismissed in January 1995. -3- coverage. Scott filed suit against the Reedys on September 15, 1993, for breach of the earnestmone y contract and breach of warranty. He sought specific performance and damages. His suit also as se rted clai ms again st Powel l for tres pass to tr y title a nd to
remove the cloud on his title . Powel l filed countercl aims aga inst Sco tt. See Powell v. Scott , No. 07-97-0241-CV (Tex.App.–Amarillo July 14, 19 98, no pet ) (unpublished opinion)

. The record indicates the claims between Scott and Po well were settled in J une 1999, resultin g in Powell’s re lease of her clai ms under t he May 19 91 agree ment. 2
Scott sold the property for $35, 000 in April 2000. In May 2001 he moved for summary

judgment on the basis his summa ryjudgment evidence conclusively established the Reedys’ breach of the earnest money contract. The motion a lleged he was “precluded from selling the property because of the encumbrances created b y” the lease and agreementfiled by Powell. Scott’s motion also sought recovery of liquidated damages, including attorney’s fees.
The Reedys filed a respons e May 22, 2001, in which they objected to Scott’s summary

judgment affidavito n the basis it was conclusory, and asserted that a factual disputeexisted concerni ng Scott’ s actual noti ce of Pow ell’s claim to the property and his “failureto timely

record th e deed [f

rom the Re edys].” T he Reedys offered the affidavit of J.H. Reedy i n support , which a sserted S cott “was aware of litigation between [Reedy] and [Powell] regarding this real estate in the justice and county courts of Wheeler County,-4-

Texas when [he] purchased said property[.]” The trial co urtheard the summary judgment motion th e same da y but took no immed iate acti on on it.
The Reedys t hen file d a third amended answer, adding their allegat ions tha t Scott
was aware of the litigation over the property at the time of h is purc hase. Scott subseque ntl yobjected to J.H. Reedy’s affidavit asserting it sought to establi sh an affirmative defense which was ne ver plea d. In a b rief file d in sup port of hi s motion Scott conceded actual k nowledg e of Powe ll’s in terest wo uld bar h is claim , but reit erated his position that the absence of a plead ing to su pport

the defense prevented consideration of the evidence. He also argued the court shoul d not permit the filing of the Reedys’ amended
answer because they failed to obtain leave of court to file the amendment less than seven days befo re the he aring on his moti on. See Tex. R. Civ. P. 63; Goswami v. Metropolitan Sav. & Loan Ass'n , 751 S.W. 2d 487, 4 90 (Tex. 1988) (a pplying Rule 63to amend ments before su mmary judg ment hear ing).
The trial court later held a second hearing at which it denied the Reedys’ motion for leave to file their third amended an swer bu t sustained a challenge to a portion of Sco tt’s at tor ney’s fees. It granted Scott’s motion and rendered a final summary judgment i n his favor, awardin g damage s of $51,9 64.0 2, prejudgment interest of $28,607.19, and attorney’s fees of

$8,880.17. The Reedys requested findings of fact and conclusions of law and timel y perfecte d appeal

. The Reedys present three poi nt s of error on appea l. They contend t he trial court erred in (1) failing to file properly requested findin gs of fact and conclusions of law; (2)-5-

granting the m otion for summary judgment because the pleadings and eviden ce raise a genuine question on Scott’s actual knowledge “of that which [Scott] claims as a cloud on his title”; and (3) granting the motion for summary judgment becau s e the pleadings and evidence raised an issue on Scott’s constructive no tice of the cloud on the title.
The Reedys c ite Rule of Civil P rocedure 296, Tenery v. Tenery

, 932 S.W.2d 29 (Tex. 1996), and Cherne Industries, Inc. v. Magallanes , 763 S.W.2d 768 (Tex. 1989), for the proposition that a trial court’s failure to file findingsof fact on a proper request is presumed harmful. Their

reliance on those authorities is misplaced. The Texas Supreme C ourt has consistentlyhel d reques ts for findings of fact and conclusions of law “have no place in a summary

judgment proceedi ng.” IKB Indus tries Ltd . v. Pro-L ine Corp ., 938 S.W.2d 440, 441 (Tex. 19 97); Linwood v. NCNB Texas , 885 S.W.2d 102, 103 (Tex. 1994). This is so because for

summary judgment to be rendered, there cannot be a genuine issue as to any material fact, Tex. R. Civ. P. 166a(c), and the legal grounds are limited to those stated in the motio n and res ponse. 93 8 S.W.2d a t 441. We overrule t he Reedys’ first p oint.
In their two remaining points the Reedys argue the ple adi ngs and s ummary judgmentevidence raised a fact issue on Scott’s actual or constructive no tice of Powell’s cl aim to the property and such notice, if proven, would defeat Scott’s claim. On appeal , Scott continues to characterize the Reedys ’ conten ti on that his notice of Powell’s claim defeatshis breach of contract action as an affirmati ve defens e, and as serts thei r failureto plead the defense prevents their reliance on it. The Reedys’ brief does not directly address the tr ial cour

t ’s ruling denying leave to file their third amended petition, by which they attempted to plead Scott’s knowled ge of Powell’s cl aims. At ora l argument , the Reedys-6-

advanced the conte ntion th ei r response to the motion for summary judgment may be considered a pleading for this purpose. By supple mental b rief, Scot t contests that contention, arguing Roar k v. Stallworth Oil & Gas , 813 S.W. 2d 492, 4 94 (Tex. 1991), supportsthe conclusion the Reedys could not raise the affirmative defense of Scott’s notice for the first timein their

summary

judgment response in the face of his objection in the trial court to their failure to plead the affirmative defense. For resolution of the narrow issues presented on appeal, we do not find it necessary to address the sufficiency of the Reedys’ pleadings or whether the issues they raised in oppositio n to Sco tt’s moti on for sum mary judgment are properly characterized as affirmative defenses.
The Reedys second and third points of error are based on the premise that Scott’s entitlementto recove ry on his brea ch of contract claim is dependent on his status as a bona fide purchaser. This court has said a bona fide purchaser is one who acquires apparentlegal title to property in good faith for a valuable consideration and without actual
or constructive notice of

an outsta nding eq uity

or an ad verse interest or ti tle. Newman v. C oker , 310 S.W.2 d 354 (Tex.Civ.A pp.–Amari llo 1958 , no writ)

. See generally 4 Leopol d and Lange, Texas Pr actice: Texa s Land Titles & T itle Exa mination §§ 881-8 85, 883 n .3 (1992). A bona fide purchaser takes title to the property unburdened by such interests as those based on unrecord ed instru ments. See, e.g. , Ma dison v. Gordon , 39 S.W.3d 604, 606 (Tex . 2001) (p er curiam ). See also Tex. Pro p. Code A nn. §13.0 01 (Verno n 2003). Contending in support of their second issue that Scott’s actual knowledge of Powell’ s claim to the property “prevented [Scott] from being a bona fide purchaser without notice of such claim and prevented [Scott] from prevailing against [the Reedys] on his c l aim3 In accordance with t he standard of review of a summary judgment, we take the

statements

in J. H. Ree dy’s affi davit favorable to his posi tion as t rue, and indulgeevery rea sonable inference in the Reedys’ favor. Nixon v. Mr. Property Management Co. , 6 9 0 S.W.2d 54 6, 548 (T ex.1985 ). -7- therefore ,” the Reedys cite Lefevere v. Sears , 629 S.W.2d 768 (Tex .Civ.App .--El Paso 1981, no writ), Cornish v. Yarbrough , 558 S.W. 2d 28 (Tex.Civ.A pp.–Waco1977, no writ), and Foster v. Buchele , 213 S.W. 2d 738 (T ex.Civ.A pp.–Fort Worth 1948, wr it ref’d n .r.e.). Contending constructive notice similarly prevented Scott from attaining the status of a bona fide purchase r, theyalso cite Langley v. Norris , 173 S.W.2d 454 (Tex. 1943). The cases cited state the rule that actual or constructive notice of a clai med interest in real property preven ts a buyer from avoi ding theinterest as a bon a fide pu rchaser. 3 Scott denies that his breach of contract claim against the Reedys required hi m to prove he was a bona fide purchase r.
To be entitled to summary judgment a plaintiff must conclusively esta blish all the essential elements o f his cau se of acti on as a ma tter of law. MMP, Ltd. v. Jones , 710 S.W.2d 59, 60 (T ex. 1986 ) (per curi am); City o f Housto n v. Clea r Creek B asin Aut hority , 589 S.W.2d 671, 678 (Tex . 1979). See Rhone-Poulenc, Inc. v. Steel , 997 S.W.2d 217, 223 (Tex. 1999). In his motion for summary judgment, Scott set out the elements of his cause of action f or breach of contra ct as requ iring pro of there was a bin ding ear n est mone y contract between him and the Reedys containing obligations to be performed by both sides; thathe perfo rmed his obligati ons as spe cified i n the con tract; that the Reed ys faile d to perform all the obligations required of them by the contract; and that he incurred damages4 The essential elements of an action for breach of contract are: (1) the existence of

a valid contract; (2) that the plaintiff performed or tende r ed performance; (3) that the defendantbreached the contract; and (4) that the plaintiff was damaged as a result of the breach. Hussong v. Sc hwan’s Sales E nterprises, Inc ., 896 S.W.2d 320, 326 (Tex.App.–Houston [1 stDist.] 1995, no writ). This appeal doesnot present a general issue challenging the gran t of summar y judgmen t, see, e.g., Friedman v. Atlantic Funding Corp. , 936 S.W.2d 38 , 40 n.1 (Tex.App .–San Antonio 1996, no writ), or a contention that the grounds alleged in Scott ’s motion were ins ufficien t to suppo rt summary judgment, se e McConnell

v. South side Ind

ep. Sch. Dist. , 858 S.W.2 d 337, 34 3 (Tex. 1 993); Clear Creek Basin Au thority

, 589 S.W.2d at 678. -8- as a result of their breach. 4 Neither his motion nor his summary judgment evidence

refers to proof he lacked kno wled ge of Powell’s claims or that he was entitled to bona fide purchaser

status wi th respectto his purchase of the property from the Reedys. We see n o basis for a contention that Scott’s status as a bona fide purchaser was an el ementof the breach of contractcause of action on which summary judgment was granted. The cases the Reedys cite do not support such a contention. Nor do we see any reason why Scott’s knowledge of P o well’s purported interest necessarily would constitute a defense to the breach of contract claim. We must conclude the evidence of Scott’s knowledge of Powell’s claims was not material to the claim on which he sought summary judgment. A dispute on
a fact which is not material does not prevent disposition by summary ju dgment. See Howell
v. Murray Mortgage Co. , 890 S.W. 2d 78, 84(Tex.Ap p.–Amaril lo 1994, writ den ied); BorgWarner Acceptance Corp. v. C.I.T. Corp. , 679

S.W.2d 140, 144 (Tex.App.–Amarillo 1984, writ ref’d n.r.e.). Accordingly, we over rul e appella nts’ seco nd and th ird poin ts and aff irm the tri al court’ s judgmen t.-9- James T. Campbell Justice

Johnson, C.J., not

particip ating.