1 

## NO. 12

- 21

- 00103

- CV

IN THE COUR T OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS

SHARON WORTHY AND DENNIS WORTHY , APPELLANT S

V.
DAWN FRENCH, MICHAEL FRENCH, PAU L TIBBETS, CARLA BYRD AND SIGNATURE PROPERTIES, LLC , APPELLEE S §

§

§ APPEAL FROM THE 354TH

JUDICIA L DISTRICT COURT

RA INS COUNTY, TEXAS

MEMORANDUM OPINION Sharon Worthy and Dennis Worthy appeal the summary judgments rendered against
the m in favor of Dawn French and Michael French (the Frenches) , and Paul Tibbets, Carla Byrd, and Signature Properti es, LLC ( the Realtors ) . They present three issues on appeal . We reverse and remand

.

B ACKGROUND In July 2020, the Worthys offered to purch as e the Frenches’ house in Emory, Texas. As part of the offer, the Worthys included a loan pre

- approval letter f rom their lender. The letter stated that the Worthys qualified for a loan based on a sales price of $450,000, with a maximum
loan

- to

- value rat io of 80%. It also specified that the property would have to appraise for no less than the purchase price. The Frenches accepted the Worthys’ offe r, and the parties executed a real estate contract for a total purchase price of $490,000, payable by $98,00 0 in cash at closing
and the remainder via third

- party financing. The contract contained a Third

- Party Financing Addendum, which included the following paragraph:2 B. PROPERTY APPROVAL: If Buyer’s lender determines that the Property does not satisfy lend er ’s underwriting requirements for the loan (including but not limited to appraisal, insurability, and lender req uired repairs) Buyer, not later than 3 days before the Closing Date, may terminate this contract by giving Seller : (i) notice of termination; a nd (ii) a copy of a written statement from the lender setting forth the reason(s) for lender’s determination . If Buyer terminates under this paragraph, the earnest mon ey will be refunded to Buyer. If Buyer does not terminate under this paragraph, Propert y Approval is deemed to have been obtained.

The Worthys delivered $4,000 in earnest money to the title company t o be held in escrow. The appraisal was completed on Aug ust 14, 2020 . It valued the property at $440,000,
which is $50,000 less than the purch as e price. As a result, the lender denied financing to the Worthys. According to the Worthys, Sharon sent a cop y of the appraisal to the Frenches on August 17. Sh aron also claims she sent the Frenches a notice of termination and the lender’s
denial lett er

. The notice of termination was prepared by the Worthys’ real estate agent, Byrd. 1 When preparing the term ination notice, Byrd checked the box indicating that th e contract was being terminated pursuant to the appraisal addendum. The contract did no t contain an appraisal addendum. Byrd should have checked the box indicating that the contract was being termina ted pursuant to the financing addendum. The Worthys demanded the earnest money be released by the title company and returned
to them. The Fr en ches refused to return, or have the title company release, the earnest money , claiming the contract was not pro perly terminated under the financing addendum and that they never received an explanation letter from the lender.
After the Frenches refused t o release or return the earnest money , the Worthys filed suit against the Fre nches and the Realtors in Septembe r 2020

. The Worthys asserted a claim for breach of contract against the Frenches. They asserted a claim against the Realtors for professional n egligence for failure to prepare an accurate termination notice and failure t o protect the Worthys’ interests. Both the Realtors and Frenches filed answers. The Frenches further
counterclaimed for breach of contract. In February 2021, the Frenches fil ed a traditional motion for summary judgment and a no
- evidence motion for summary ju dgment

. The traditional moti on argued that the Worthys breached the contract , which entitled the Frenches to the earnest money.

1 The Worthys were represented in the real estate transaction by Signature Properties, LLC and one of its

a gents, Byrd. The Frenches were also represented by Signature Proper t ies; however, they had a different agen t, Li nda Burns. Tibbets was Byrd’s and Burns’s supervisor.3 The no

- evidence motion urged that the Wort hy s had no evidence that they performed under the

contract , the Frenches breached the contra ct, or the Worthys su ffered damages. The Worthys moved to compel the depositions of the Frenches and to continue any hearing on the Frenches’ motions until the e nd of discovery and mediation. On March 8, the trial

cour t denied the continuance , and the Worthys withdrew thei r motion to compel. During the hearing, the trial court advised the parties that it would hear all summary judgment motions by
submission on A pr il 1

. On March 24 , the Realtors filed no

- evidence and traditional motion s for summary jud gme nt and a motion fo r sanctions

. The Worthys objected to the Realtors ’ motion s , arguing that they were not allotted the necessary twenty

- one days ’ notice

. The tr ia l court granted both the Frenches’ and the Realtors’ summary judgment motions without specifying the grounds.
It fur ther ordered the Worthys pay $6,500 in attorney’s fees as sanctions to the Realtors . This appeal followed.

M OTIONS FOR S UMMARY J UDGMENT In their first and second issues, the Worthys argue the trial court erred in g ranting the
Frenches’ motions for summa ry judgment and the Realtors’ motions for summary judgment.
Standard of Review Because the grant of a summary judgment is a question of la w, we review the trial court ’ s
summary judgment decision de novo. See Ft. Worth Transp. Auth. v. Rodriguez , 547 S.W.3 d 830, 837 (Tex. 2018). In this case, the Frenches and the Realtors each moved for a no

- evidence summary judgment. See T EX

. R. C IV

. P. 16 6a(i). The motion must state the elements as to which there is no evidence, but the movant need not produce an y proo f in support of its no

- evidence claim. DeGrate v. Exec. Imprints, Inc. , 261 S.W.3d 403, 407 (Tex. App.

— Tyler 2008, no pet.). A no

evidenc e summary judgment motion is properly granted if the nonmovant fails to bring forth
more than a scintilla of evid ence t o raise a genuine fact issue as to an essential element of the

nonmovant ’ s claim on which the nonmovant would have the burden of proof at t rial. Id .; see Merrell Dow Pharm., Inc. v. Havner , 953 S.W.2d 706, 711 (Tex. 1997).
The Frenches and the Realt ors ea ch also moved for traditional summary judgment. To be
entitled to a traditional summary judgment, a defendant must conclusively negate at l east one essential element of each of the plaintiff ’ s causes of action or co nclusively establish each4 element o f an a ffirmative defense. Priddy v. Rawson , 282 S.W.3d 588, 592 (Tex. App.

— Houston [14th Dist.] 2009, pet. denied). When reviewing a summary ju dg ment, we “must examine the entire record in the light most favorable to the nonmovant, indulging every
reasonab le inf erence and resolving any doubts against the motion.” City of Keller v. Wilson , 168 S.W.3d 802, 824 (Tex. 2005). When a trial court ’ s orde r granting summary judgment does not specify the ground or grounds relied on f or the ruling, summary judgment wil l be a ffirmed on appeal if any of the theories advanced are meritorious. State Farm Fire & Cas. Co. v. S.S. , 858 S.W.2d 374, 380 (Tex. 1993).
Wh en a party moves for both traditional and no

- evidence summary judgment, and the
determination of the no

- evidenc e summ ary judgment could make the grounds asserted in the traditional motion moot, we first review the trial court ’ s ruling under the no

- eviden ce standard of
review. See Merriman v. XTD Energy, Inc. , 407 S.W .3d 244, 248 (Tex. 2013); Ford Motor Co. v. Ridgw ay , 13 5 S.W.3d 598, 600 (Tex. 2004). If the trial court properly granted the no

- evidence motion, we do not consider the complaints raised rega rd ing the traditional summary judgment
motion. Ridgway , 135 S.W.3 d at 600.
The Frenches’ Motion s The Worthys urge that summary judgment was improperly granted on the Frenches’
breach of contract claim

. The elements a of breach of contract claim are: “( 1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and ( 4) the plaintiff was damaged as a result of the breach.” Richter v. Wagner Oil Co. , 90 S.W.3d 890, 898 (Tex. App.

— San Antonio 2002, no p et .). In their motion s for summary judgment, the Frenches
contend there is no evidence of the last three elements of th e Worthys’ claim.
The Frenches assert that the Worthys had not performed under the contract because they wrongfully terminated the cont ra ct

. Specifically, th ey maintain that the termination notice wrongfully referenced a non

- existent appraisal adde ndum

. The Frenches further urge the Worthys failed to comply with the financing addendum’s requirements by fail ing to provide the
Frenches wi th “a written statement from [their] lender setting forth the reason(s) for the lender’s determination” that the p ropert y did not meet the underwriting requirements. The Worthys claim they did provide such a letter.5 Along with their response to the Frenc he s’ motion, the Worthy s included an affidavit
from Sharon. In that affidavit, Sharon testified to the following:

Duri ng preparations to close earlier, Plaintiffs’ lender notified Dennis and I that the Property did not appraise for the sales price, and c on sistent with the Pre

- A pproval Letter, our lender denied the financing to purchase the Property at the sales pric e. In accordance with the Contract and Section 2.B. of the Financing Addendum, on August 17, 2020, I timely provided Defendants notice of Pro pe rty’s failure to appra ise for the sales price and sent Defendants the Property’s appraisal and lender denial let ter as well as notice of termination.

Copies of the appraisal letter and the lender’s denial letter were attached to Sharon’s
affidavit. Th e appraisal was performed on August 14 by Glenda L. Duncan of Treehouse Appraisals for First Financial Bank, NA of Waxah achie. Duncan’s appraisal is dated August 15, 2020, and values the property at $440,000. The Worthys’ denial letter is dated August 13 a nd was issued by Fairwa y Independent Mortgage Corporation , the same company that provided the loan pre

- approval letter . The denial letter indicates that the appraisal of $440,000 is insufficient and the lender is denying financing.
To defeat the no

- e vi dence summary judgment, the Worthys had to produce more than a scintilla of evidence that they tendered performa nce or attempted to perform under the contract.
See DeGrate. , 261 S.W.3d at 407

. I f the Worthys properly terminated the contract, it necessa ri ly follows that the Frenches breached the contract and damaged the Worthys by failing to release
the earnest mon ey. S haron’s affidavit unequivocally states that she provided the notice of
termination and the lender’s denial letter to the Frenc hes three da ys prior to closing. And she attached copies of both the notice and the denial letter to the summary judgment r espons e. Even though the denial letter predates the appraisal and may be from a different lender, Sharon’s affidavit testimony is m ore than a s cintilla of evidence to support the Worthys’ claim that they properly terminated the contract. 2 S ee Havner , 953 S.W.2d at 711 ; see also DeGrate , 261
S.W.3d at 407 ; T EX

. R. C IV

. P. 166a(i)

. Therefore, the trial court erred in granting the no

evidence su m m ary judgment. The Frenches also moved for traditional summary judgment arguing that they conclusively establish ed the ir counterclaim for breach of contract. In their motion, the Frenches argued the Worthys breached the contract by attemptin g to termin a t e the contract “pursuant to an

2 The record is silent as to the relationship, if any, between First Financial Bank, NA, and Fairway Independent Mo rtgage Corporation. Nevertheless, the Wo rthys provided evidence that they were denied finan cing.6 appraisal addendum the contract did not contain.” They further claim the Worthys “made no attempt to comply with any of the requirements of the financing addendum termination provisions.” In support of their mo tion, the F r e nches attached copies of the documents they
received and Dawn’s affidavit

. In her affi davi t , Dawn contradicts Sh aron’s affidavit attached to the summary judgment response. Specifically, Dawn testified that the termination did not
include a c opy of the l e nder’s denial letter. She further testified, “The Worthys have never provided us with the written statement from their lender explaining why the property did not satisfy the lender’s underwriting requirements.” The Frenches urge that because the denial l etter predates the appraisal and is from a different financing company than the company listed on the appraisal m akes t he documents amount to “no evidence” that the Worthys sent a denial letter. The Worthys respond that this creates a fact is sue. When d e ciding whether a material fact issue exists precluding summary judgment, we
must take evidence favorable to the n on
- mov ant as true and indulge every reasonable inference and resolve any doubts in favor of the non

- movant. Sysco Food Servs. Inc . v. Trapne l l , 890 S.W.2d 796, 800 (Tex. 1994). Therefore, we must accept Sharon’s affidavit and the fact s stated
within it a s true and indulge every reasonable inference in its favor

. The discrepancies in the
affidavit ’s exhibits lend themselves to plausible expla n a tions, such as the denial letter is incorrectly dated, which should be explored via discovery or trial testimony. Furt hermore , it is the jury’s role to judge the credibility of witnesses, assign the weight aff orded to their testimony,
and resolve incons i s tencies within or conflicts between witnesses ’ testimonies. See Golden Eagle Archery , Inc. v. Jackson , 116 S.W.3 d 757, 761 (Tex. 2003). If the credibility of the affiant is likely to be a dispositive factor i n the resolution of the case, then summary j u d gment is inappropriate. Casso v. Brand , 776 S.W.2d 551, 558 (Tex. 1989)

. Therefore, the trial court erred in gr anting the Frenches’ traditional motion for summary judgment. Because the trial court erred in g ranting the Frenches’ no
- evidence and tradit i o nal
motion s for summary judgment, we sustain the Worthys’ first issue.
The Realtors’ Motion
In their second issu e, the Worthys contend the trial court erred in failing to adhere to the
21

- day notice requiremen t contained in Texas Rule of Civil Procedure 1 66a.
A motion for summary judgment must be filed and served at least twenty

- one days before the time specified for t he hearing. T EX

. R. C IV

. P. 166a(c). The nonmovant ’ s response must be7 filed not later than seven days prior to the date of the hearing

. Id

. By requiring the nonmovant to file its response seven days before the hearing, Rule 166a presupposes that the nonmo vant has had at least fourteen days to obtain and file summary judgment evidence to reb ut the movant ’ s evidence. City of Dallas v. Cont ’ l Airlines, Inc.
, 735 S.W.2d 496, 500 (Tex. App.

— Dallas 1987, writ denied). The reason for the notice provision is to gi ve the nonmovant a full opportunity to respond on the merits. See Stephens v. Turtle Cr eek Apartments, L td

. , 875 S.W.2d 25, 26 (Tex. Ap p

. — Houston [14th Dist.] 1994, no writ). Nonetheless, Rule 166a provides that the trial court may allow filings even thoug h they are not within the time requirements. City of Dallas
, 735 S.W.2d at 500. If a pa rty receives notice that is untimely, but suffic i e nt to enable the party to
attend the summary judgment hearing, the party must file a motion for continuance and/o r rais e the complaint of late notice in writing and raise the issue before the trial court during the

summary judgment hearing. May v. Nacogd o c hes Mem ’ l Hosp.
, 61 S.W.3d 623, 626 (Tex. App.

— Tyler 2001, no pet.). Further, the appellant must show harm from t he lac k of sufficient
notice in a summary judgment proceeding. Cunningham v. Zurich A m. Ins. Co.
, 352 S.W.3d 519, 531 (Tex. App.

— Fort Worth 2 0 1 1, pet. denied ). In response to the Frenches’ motions for summary judgment, the Worthys filed a motion
for conti nuance . At the hearing on that motion on March 9, 2021, the trial court stated:

All right. I will review this case by submission for Motio n s for Summary Judgment on April the 1 st at 9 o’clock. Have all of your documents submitted before then that you w ant me to review . I don’t need to hear oral arguments on it.

At that time, the Realtors had not filed a motion for summary judgment. Subseq u e ntly, the Realtors filed both traditional and no

- evidence motions for summary judgment on March 24 , which was onl y eigh t days prior to the submission date set by the trial

cou rt. On March 30, t he Worthys filed objections to the summary judgment motions a n d argued
that the motions were untimely under the notice requirements of Rule 166a , their due process rights were viola ted by the late filing , and they lacked adequate time to meaningfully review and respond to the motions. As a result, the Worthys did n o t file a response to either the no

- evidence
motion or the traditional motion. The Worthys were not given suffi cient notice of t he Realtors’ motion s for summary judgment as required by Rule 166a(c). The trial court ’s summary judgment submission date wa s8 scheduled for a mere eight days after the Realtors filed their summary judgment motion s and the Worthys had only one da y to timely respond under Rule 166a(c)

. The Worthys comp lained of the
shor t time frame via objections

. See Clarent Energy Servs. Inc. v . Icon Bank of Tex., N.A. , No.
01

- 18

- 00854

- CV, 2019 WL 5792190, at *3 (Tex. App.

— Houston [1 st Dist.] Nov. 7, 2019, no
pe t.) (mem. op.) (objections need not be verified or accompanied by affidavit). Because summary judgment is such a harsh remedy, the noti c e provisions of Rule 166a(c) must be strictly
construed. Williams v. City of Angleton
, 724 S.W.2d 414, 417 (Tex. A pp.

— Ho uston [1st Dis t.] 1987, writ ref ’ d n.r.e. )

. Therefore, we sustain the Worthys’ second issue.

S ANCTIONS A WARD In their third issue, the Worthys u r ge the trial court erred in awarding sanctions to the Realtors. However, because we reverse the trial court’s gra nt of the summary jud gment motions, this necessarily includes the sanctions award. See In re Holman , No. 12

- 21

- 00145

- CV, 2021
WL 52 37 9 45, at *10 (Tex. App.

— Tyler Nov. 10, 2021, orig. proceeding) (mem. op.) ; T EX

. R.
C IV

. P. 13 (sanctions appl y to groundless claims)

. There fore, we sustai n the Worthys’ third
issue.

D ISPOSITION Having sustained the Worthys’ first , second , and third iss ues , we reverse the t rial court’s judgment and sanctions award and remand the case for further proceedings consistent with this opinion

.

B RI AN H OYL E Justice
Opinion delivered January 26, 2022. Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.9 

## COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

JUDGMENT

JANUARY 26 , 2022

NO. 12

- 21

- 00103

- CV

SHARON WORTHY AND DENNIS WORTHY , Appella nt s V. DAWN FRENCH, MICHAEL FRENCH, PAUL TIBBETS, CARLA BYRD AND SIGNATURE PROPERTIES, LLC , Appellee s

Appeal from the 3 5 4th District Court
of Rains County, Texas (Tr.Ct.No. 10956 )

THIS CAUSE came to be heard on the appellate record and briefs filed herein, and t he same being considered, because it is the opinion of this Court that there was error in ju dgment of the court b elow, it is ORDERED, ADJUDGED and DECREED by this Court that the judgment be reversed and the cause remanded to the trial court for furth er pro ceedings in accordance with the opinion of this Court; all cost s of this appeal are hereby a djudged against the
A ppell ee s, DAWN FRENCH, MICHAEL FRENCH, PAUL TIBBETS, CARLA BYRD AND SIGNATURE PROPERTIES, LLC , and that this decision be certified to the court below
for observance. Brian Hoyle , Justice

. Panel consisted of Worthen, C.J., Hoyle, J., an d Neeley, J.