## COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH NO. 02 - 15 - 00339 - CV

K. HOVNANIAN HOMES

– DFW, LLC APPELLANT
V. THE POWDERMAKER FIRS T FAMILY LIMITED PARTN ERSHIP APPELLEE

---------- FROM THE 211TH DISTR ICT COURT OF DENTON COUNTY

TRIAL COURT NO. 14

- 00737

- 211

---------- 

### MEMORANDUM OPINION 1

---------- Appellant K. Hovnanian Homes

– DFW, LLC (Hovnan ian) appeals from the trial court’s judgment, entered after a bench trial, in favor of appellee The Powdermaker First Family Limited Partnership (Powdermaker) on Powdermaker’s breach

- of

- contract claim. Because we conclude that the trial

1 See Tex. R. App. P. 47.4.2

court improperly i nterpreted the contract , we reverse the trial court’ s judgment and remand for further proceedings

. I. BACKGROUND
A. C ONTRACT OF S ALE AND A MENDMENT On July 15, 2013, Powdermaker and Hovnanian signed a contract of sale (the contract) under which Powdermak er agreed to sell 100 acres of real property to Hovnanian. Hovnanian placed $100,000 in escrow with the title company as
an earnest

- money deposit, which would be applied as a credit against the eventual purchase price of $7 million. Hovnanian was contrac tually obligated to deposit $400,000 in additional earnest money once Hovnanian received “zoning and development approvals.” In section 5.4 of the contract, which was entitled “Approval of Inspections,” Hovnanian could unilaterally terminate the contract by a certain date if it had not previously given Powdermaker written notice of its intent to continue the contract : If [Hovnanian] determines at any time prior to the expiration of the Inspection Period [ 2 ] that the Property is not satisfactory to [Hovnania n] for any reason or no reason, in [Hovnanian’s] sole discretion, or [Hovnanian] has not obtained the Zoning and Development Approvals then [Hovnanian] may terminate this Contract by delivering written notice of termination to [Powdermaker] prior to the en d of the Inspection Period. Additionally, if [Hovnanian] shall fail to give [Powdermaker] written notice on or prior to the end

2 The inspection period was contractually defined as “a period of time commencing on the Effective Date and ending at 6:00 p.m. Dallas, Texas, time on the ninetieth (90th) day after the Effective Date.” The effective date was the date the title company received “a fully executed counterpart” of the contract

. The record shows that the title company received the contract on July 15, 2013.3

of the Inspection Period that [Hovnanian] wishes to continue this Contract then this Contract shall automatically terminate at the end of the Inspection Period. If [Hovnanian] properly terminates this Contract or if this Contract automatically terminates pursuant to this Section 5.4 , then this Contract shall be terminated, the Title Company shall return the Earnest Money Deposit to [Hovnanian], and neither party shall have any further rights, duties or obligations.

. . . If [Hovnanian] timely delivers to [Powdermaker] written notice of [Hovnanian’s] intention to continue this Contract, the conditions of this Section 5.4 shall be deemed satisfied, and [Hovnanian] may not thereafter terminate this Contract pursuant to this section 5.4. Hovnanian cou ld extend the contractual inspection period upon notice to Powdermaker: [I]n the event [Hovnanian] has not obtained the Zoning and De velopment Approvals prior to the t h en current expiration date of the Inspection Period, [Hovnanian] shall have the right to extend the Inspection Period for up to three (3) period s of thirty (30) days each by . . . sending written notice to [Powdermaker] o f such election to extend the Inspection Period before the then scheduled expiration date of the Inspection Period, and . . . sending written notice to the Title Company to release [$25,000] of the Earnest Money Deposit then on deposit with the Title Compa ny to [Pow dermaker] in connection with the first thirty (30) day extension, [$10,000] with respect to the second thirty (30) day extension and [$20,000] with respect to the third thirty (30) day extension. Section 5.4 further provided for liquidated dam ages for Powdermaker if Hovnanian terminated the contract after notifying Powdermaker of its intent to continue the contract: However, should [Hovnanian] cause this Contract to terminate . . ., [Hovnanian] shall pay [Powdermaker] the sum of $250,000.00 wit hin five (5) days of termination . . . . [Hovnanian’s] obligation to pay $250,000.00 . . . shall in no way limit, replace, or reduce [Powdermaker’s] right to additional funds from the Earnest Money Deposit.4

The general requirements for any provided not ices were governed by s ection 14.5 of t he contract : Any notic e provided or permitted to be given under this Contract must be in writing and may be served by depositing the same in the United States Mail, postage prepaid, certified or registered mail with r eturn receipt requested, or by delivering the same in person to the party to be notified via a delivery service, Federal Express or any other nationally recognized overnight courier service that provides a return receipt . . ., or by facsimile copy transmi ssion with proof of receipt. Finally and p articularly relevant to the appeal before us, s ection 14.16 provided that the contract could be amended and that any amendment or modification “must be made in writing and signed or acknowledged in writing by bo th parties.” On October 10, 2013, Hovnanian and Powdermaker signed a n

a mendment to the contract , entitled “SECOND AMENDMENT TO CONTRACT OF SALE” (the amendment). 3 The amendment “modified and amended” the contract to provide that any reference to “Inspe ction Period” in the contract would mean “a period of time commencing on the Effective Date and ending at 6:00 p.m. Dallas, Texas, time on November 13, 2013.” The amendment further provided that “each and every of the terms and provisions of the Contract [not modified by the amendm ent] are unchanged and continue[] in full force and effect.” In November 2013, Hovnanian and Powdermaker by email discussed

3 This amendment was a “second” amendment, and Powdermaker alleged that the first amen dment was a similar amendment to the inspection period. The first amendment is not a part of the record on appeal and, indeed, is not at issue.5

amending the contract to again extend the inspection period, but this amendment

w as never agreed to or s igned. No further action was taken on the contract as amended and Hovnanian believed that the contract had automatically terminated without penalty under section 5.4 at the end of the amended inspection period on November 13, 2013. As a result, Hovnani an did not pay Powdermaker the $250,000 in liquidated damages or the remaining $98,500 in earnest money as provided in section 5.4.
B. U NDERLYING L ITIGATION Powdermaker filed suit against Hovnanian, raising a claim for breach of contract. Powdermaker alleged that by amending the contract to extend the inspection period, Hovnanian necessarily notified Powdermaker under section
5.4 of its intent to continue the contract, which triggered Hovnanian’s contractual obligation to pay Powdermaker under section 5.4 because the contract was terminated after the notice of intent to continue

. In short, Powdermaker believed that the amendment was Hovnanian’s written notice under section 5.4 that it intended to continue the contract. Hovnanian answered and raised se veral affirmative defenses, including payment, release, failure to mitigate, and waiver. Hovnanian also raised a counterclaim for its attorney’s fees, which it alleged were provi ded for in the contract: “Should either party be required to retain an
attorn ey to enforce its obligations hereunder, the prevailing party shall be entitled to recover from the non

- prevailing party its reasonable attorneys’ fees incurred in such enforcement.” Based on a jury

- trial waiver in the contract , the trial court6

conducted a bench trial on February 17 and April 13, 2015. After Powdermaker rested its case, Hovnan ian moved for judgment in its favor , which was denied. See Tex. R. Civ. P. 268. After both Powdermaker and Hovnanian closed, Hovnanian ag ain moved for judgment , wh ich the trial court denied. C. P OST - T RIAL On July 31 , 2015, the trial court signed a final judgment in favor of Powdermaker, awarding it $348,500 in damages and $67,765.50 in attorney’s fees, and rendered a take

- nothing judgment on Hovnanian’s counterc laim. Hovnanian filed a request for findings of fact and conclusions of law. See Tex. R. Civ. P. 296. The trial court entered findi ngs and conclusions, concluding that the contract was unambiguous, finding that Hovnanian “gave written notice o f its inte ntion to continue the Contract in full force and effect , ” and finding that it thereafter “terminated the Contract pursuant to Section 5.4.” The trial court concluded that this notice and subsequent t ermination triggered Hovnanian’s duty to pay Powdermaker the liquidated damages provided in section 5.4

. Hovnanian appeals and argues that (1) the trial court’s interpretati on of the amendment as a notice to continue “is unsupported by the plain language [of the contract], fails to give meaning to each provi sion, fails to harmonize the provisions, and leads to absurd results” and (2) the evidence was legally, or alternatively factually, insufficient to support the trial court’s implicit finding that the amendment was a written notice to continue. Powdermaker responds that the amendment was a notice of intent to continue that complied with the7

contractual notice requirements in section 14.5 , rendering the trial court’s interpretation of the contract legally correct, and that the evidence showed Hovnanian breac hed the contract by failing to pay the section 5.4 damages upon termination. II. STANDARD S OF REVIEW
A. C ONTRACT I NTERPRETATION In attacking the trial court’s judgment , Hovnanian recites the standards of review applicable to findings and conclusions along with the standards used to determine whether sufficient evidence support ed the challenged findings and conclusions. But this is a case involving the interpretation of a contract. The trial court concluded, and no part y disputes on appeal, that the contract was unambiguous. See Friendswood Dev. Co. v. McDade & Co. , 926 S.W.2d 280, 283 (Tex. 1996) (holding whether a contract is unambiguous is a question of law). Accordingly, extrinsic evidence of the parties ’ intent or the meaning of the
contract ’s terms may not be considered

. See Kachina Pipeline Co. v. Lillis , 471 S.W.3d 445, 450 (Tex. 2015) (op. on reh’g) (holding extrinsic evidence admissible only to interpret ambiguous contract ). Thus, the traditional sufficiency

- of

- the

- evidence s tandards are a poor fit for Hovnanian’s initial, straightforward question of contract interpretation, which is an issue of law that we determine de novo

. See, e.g. , Unit Petroleum Co. v. David Pond Well Serv., Inc. , 439 S.W.3d 389, 395

– 96 (Tex. App.

— Amarillo 2014, pe t. denied) ( reviewing, after bench trial involving interpretation of oil

- and

- gas lease, trial8

court’s interpretation of lease under standards of contract construction as a matter of law). Hovnanian recognizes this by arguing in its reply that this court

m ay not address the evidence regarding any breach by Hovnanian without first determining the appropriate interpretation of the contract as a matter of law.
B ecause Hovnania n’s first issue attacks the legal correctness of the trial court’s interpretation of the contract, w e will apply the traditional rul es of contract interpretation to determine, as a matter of law , whether the trial co urt erred in its construction of the contract

. See Kachina , 471 S.W.3d at 449 (“At issue here is the trial court’s construc tion of the Agreement’s . . . provision[s]. The construction of an unambiguous contract is a question of law, also reviewed de novo.”). In construing an unambiguous cont r act, we consider the entire writing and attempt to harmonize and give effect to all of the contract’s provisions such that none are rendered meaningless

. See id. at 450; Frost Nat’l Bank v. L & F Distribs., Ltd. , 165 S.W.3d 310, 3 12 (Tex. 2005). “No single provision taken alone will be given controlling effect; rather, all the provisio ns must be considered with reference to the whole instrument.” Coker v. Coker , 650 S.W.2d 391, 393 (Tex. 1983). We are to give contractual terms their “plain and ordinary meaning” unless the contract itself shows that a different meaning was intended. S ee Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp. , 294 S.W.3d 164, 168 (Tex. 2009). We presume that the parties intended for every clause to have some effect. See Heritage Res., Inc. v. NationsBank , 939 S.W.2d 118, 121 (Tex.9

1996). The intent of t he parties must be taken from the agreement and the unambiguous contract must be enforced as written. See id. All writings that relate to the same transaction must be interpreted together even if not executed at the same time. DeWitt C ty . Elec. Coop. , I nc. v. Parks , 1 S.W.3d 96, 102 (Tex. 1999) ; Fort Worth Transp. Auth. v. Thomas , 303 S.W.3d 850, 858 (Tex. App.

— Fort Worth 2009, pet. denied)

. B. F INDINGS AND C ONCLUSIONS Hovnanian also challenges the sufficiency of the evidence to support the trial court ’s conclusion that Hovnanian breached t he contract by failing to pay the damages provided in section 5.4 based on the trial court’s finding that Hovnanian gave written notice of its intent to continue under that same section . We review conclusions of law de novo, affording them no deference. See Quick v. City of Austin , 7 S.W.3d 109, 116 (Tex. 1998); State v. Heal , 917 S.W.2d 6, 9 (Tex. 1996) (op. on reh’g)

. A trial court’s findings of fact have the same force and dignity as a jury’s answers to jury ques tions and are reviewable for legal and factual sufficiency of the evidence to support them by the same standards. Catalina v. Blasdel , 881 S.W.2d 295, 297 (Tex. 1994)

. III. APPLICATION Hovnanian specifically attacks the trial court’s conclusions that Hovnanian gave written notice of its intent to continue the contract before the inspection period expired, thereby triggering its duty to pay Powdermaker liquidated damages and a larger portion of its earnest

- money deposit after the contract10

subsequently t erminated. In short, Hov nanian argues that the amendment may not be interpreted to equate to a notice of intent to continue the contract under section 5.4 . If the amendment was a notice of intent to continue , Hovnanian was required to pay the damages und er section 5.4 when the contract terminated ; if it

was not, Hovnanian could terminate the contract with no penalty under section
5.4

. At trial, Alan Powdermaker, the “general partner” of Powdermaker, testified through designated deposition excerpts that h e considered the amendment to be Hovnanian’s written notice that it intended to continue the contract. Daniel Stasky, the land acquisition manager for H ovnanian, testified that Hovnanian never provided written notice to continue the contract under section s 5.4 and 14.5, mainly because he believed Hovnanian had not complied with the contractual requirements to give such notice; therefore, the contract automatically terminated with no penalty . But as we previously stated, this extrinsic evidence regarding t he contract’s meaning or the parties’ intent is not admissible to inform the contract’s interpretation. Therefore, we turn to the language of the unambiguous contract. Considering the unambiguous language of the contract, to gether with the amendment , the re were separate and distinct provisions that furnished Hovnanian with options to (1) unilaterally continue the contrac t, (2) unilaterally extend the inspection p eriod , or (3) ame nd the contract by agreement. In se ction 5.4, the contract provided for “wr itten notice of [Hovnanian’s] intention to11

continue” the contract. This pr o vision does not require any approval, acknowledgment , or signature by Powdermaker. Such written notice, if delivered before the inspection period ended, would entitle Powdermaker to liquidated damages upon subsequent termination of the contract. But if no written notice was given, the contract would automatically terminate at the end of the inspection period. Secti on 5.4 also provided that Hovnanian could extend the inspection
pe riod by sending written notice to Powdermaker and the title company. Once again, this action by Hovnanian required no approval by or signature of Powdermaker but did provide that to avail itself of this option, Hovnanian would have to pay for each extensi on by the release of a specified amount of the earnest money on deposit. 4 Finally, section 14.16 of the contract clearly allowed for an amendment to the contract with the explicit requirement that an amendment or modification be “signed or acknowledged in writing by both parties.” We cannot agree with the trial court’s interpretation o f the provisions at issue. At the time the contract was executed, amendment of the contract was specifically contemplated in section 14.16 , which clearly stated how an

ame ndment was to be properly performed. The amendment strictly adhered to the requirements of only one of the options set o ut above

— an amendment or

4 The record does not r eflect that the amendment was sent to the title company to initiate th e required release of funds on dep osit nor does either party contend that this occurred.12

modificatio n of the contract. The amendment was so entitled, specifically stated it was an “amendment and mod ification,” and was executed by both Powdermaker and Hovnanian. The amendment’s language could n ot be clearer that it does nothing more than amend the contract to modify the definition of the term “Insp ection Period.” We conclude as a matter of law that the unambiguous
contra ct’s plain language contradicts the trial court’s in terpretation , equating the amendment to a notice of intent to continue the contract under section 5.4

. Therefore, we sustain Hovnanian’s first issue. Hovnanian’s second issue, whic h is dependent on the contract’s correct interpretation, now is easily decided. Because the amendment was not a notice of intent to continue the contract under the unambiguous contract’s plain language, there was no notice of intent to continue such that Hovnanian breached the contract by failing to pay Powdermaker the section 5.4 damages once the contract terminated at the end of the amended inspection period. We sustain issue two. IV. CONCLUSION Because the trial court erred by interpreting the contr act contrary to its unambiguous language, its conclusion that Hovnanian breach ed the contract is unsupported by any evidence in the record. We sustain Hovnanian’s issues, reverse the trial court’s judgment, and remand to that court for further proceedings on Hovnanian’s counterclaim for attorney’s fees

. See Tex. R. App. P. 43.2(d), 43.3(a). Further, our judgment and mandate shall reflect that13

Hovnanian’s surety is discharged from its liability on the supersedeas bond filed in the trial court on September 1, 2015. See Amwest Sur. Ins. Co. v. Graham , 949 S.W.2d 724, 729 (Tex. App.

— San Antonio 1997, writ denied); Edlund v. Bounds , 842 S.W.2d 719, 732 (Tex. App.

— Dallas 1992, writ denied).

/s/ Lee Gabriel LEE GABRIEL JUSTICE PANEL: GARDNER, GABRIEL, and SUDDERTH, JJ.
DELIVERED: June 9, 2016