Court Opinion

ID: 3102288
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:21:24.814027+00
Date Added: 2024-06-11T11:44:35.577374
License: Public Domain

NUMBER 13-10-207-CV
 
COURT OF APPEALS
 
THIRTEENTH DISTRICT
OF TEXAS
 
CORPUS CHRISTI - EDINBURG  
                                                                                                                     

 
RAJENDRAKUMAR GHANDI,                  
                              Appellant,
 
v.
 
NAINESH GANDHI AND
CHANDAN HOSPITALITY, LLC,     Appellees.
                                                                                                                     
  
 
On appeal from the 105th
District Court 
of Kleberg County,
Texas.
                                                                                                                     

 
MEMORANDUM OPINION
 
Before Justices Benavides,
Vela, and Perkes 
Memorandum Opinion by
Justice Vela
 
This is an appeal from a partial summary
judgment granted in favor of Nainesh Gandhi and Chandan Hospitality, LLC
(“Nainesh”), appellees, and against appellant, Rajendrakumar Gandhi
(“Rajendrakumar”) in a suit alleging a cause of action for specific performance
to purchase and sell a hotel in accordance with an executed contract. 
Rajendrakumar also pleaded a cause of action for fraud in the alternative.  The
trial court severed the summary judgment from Nainesh’s counterclaim for
entitlement to the deposited earnest money and a claim for wrongful filing of a
lis pendens, making the summary judgment final for purposes of appeal.  Rajendrakumar
raises three issues, complaining that the trial court erred in granting summary
judgment.  We reverse and remand. 
l.  Background
The petition, filed by Rajendrakumar
against Nainesh, urged a cause of action for the specific performance of a
contract to purchase and sell a hotel, or, alternatively, for fraud. 
Rajendrakumar owns a hotel in Kingsville, Texas which is immediately adjacent to
the disputed property, the Econo Lodge Hotel (“hotel”), owned by Nainesh
through his company Chandan Hospitality, LLC.  In 2008, Rajendrakumar and
Nainesh entered into negotiations to purchase and sell the hotel.  After both
parties had agreed to the sales price of $830,000, Rajendrakumar produced a
form contract entitled “Earnest Money Contract,” which Rajendrakumar’s business
partner and wife presented to Nainesh.  Upon Nainesh’s acceptance, both parties
executed the contract on May 7, 2008.  Paragraph four of the contract provides
that the contract is contingent on financing, which must be obtained within
ninety days from the date of signing.  Paragraph ten, on the other hand, states
that the closing shall take place no later than seventy-five days from the date
of signing.  We quote the following part of the contract as germane to this
opinion:
4.
 FINANCING: This Contract is contingent on the approval of a permanent loan for
Buyer by a third party.  Purchaser shall have Ninety (90) days from the date of
this contract in order to obtain financing.  
 
10. 
POSSESSION AND CLOSING:  The settlement or closing of the sale shall be on or
before seventy-five days from the date hereof in the offices of Stewart Title
Company of Corpus Christi, Texas.  
 
14.
 DEFAULT:  Upon failure of buyer to comply herewith, Seller may terminate this
Contract and retain the Earnest Money as liquidated damages.  Upon Seller’s
failure to comply herewith, Buyer can enforce specific performance or may
terminate this Contract, upon which event all Earnest Money will be returned to
Buyer.
 
The contract further specified that
$10,000 would be escrowed.  Rajendrakumar subsequently furnished Nainesh with
an earnest money check, which was later endorsed to Kleberg County Title
Company, a company different from that specified in paragraph ten of the earnest
money contract.  On August 4, 2008, the eighty-ninth day after signing,
Rajendrakumar was ready to close on the sale.  Nainesh, citing the seventy-five
day closing provision in paragraph ten of the contract, refused to sell the
property.  On September 26, 2008, Rajendrakumar subsequently filed suit seeking
specific performance for the purchase and sale of the hotel and for additional
economic and exemplary damages.  Rajendrakumar also pleaded, in the
alternative, for a finding of fraud.  Nainesh answered the lawsuit and
counterclaimed for the $10,000 deposited as earnest money and for wrongful
filing of a lis pendens.
            On June 3, 2009, Nainesh moved for partial
summary judgment.  The motion detailed the facts and mentioned the cause of
action pleaded—specific performance of the earnest money contract for the
purchase and sale of the hotel.  The motion stated that Rajendrakumar should
take nothing by his lawsuit because he breached the contract by failing to
close on the sale within seventy-five days as stated in the contract.  In
support of the assertion that the seventy-five day provision should govern,
Nainesh alleged that the contract should be interpreted by either:  (a)
construing the contract against the plaintiff since he authored the contract
and was the one with the most control over the stipulated verbiage; or
alternatively by (b) finding that the contract was not binding because it
either lacked mutual assent or because it lacked the necessary specificity; or
by (c) holding that the express language in the contract should be given
greater credence and overrule any general inferences to the contrary.  The
motion further sought recovery, as a counterclaim, of $10,000 for the earnest
money deposit and requested a cancellation of the lis pendens.  Nainesh alleged
that because the contract should be construed against the plaintiff, that the
earnest money, in accordance with paragraph fourteen of the contract, entitled
him to terminate the contract and retain the earnest money.  The motion was
supported by the affidavit of Nainesh.  
            In response, Rajendrakumar argued that the
motion was improper because the defendant failed to conclusively establish, as
a matter of law, that he had breached the contract.  Rajendrakumar also urged
that the affidavit of Nainesh was improper summary judgment evidence because it
was conclusory.  Rajendrakumar further argued that the motion for summary
judgment was improper because it was premature as material facts remained
disputed and such facts should have been resolved prior to any such
determination made on summary judgment.  
Rajendrakumar contends that the
determination regarding whether a mutual or unilateral mistake occurred is a
question of fact.  He also contends that because there was no clause in the
contract stating that time was of the essence, the summary judgment should not
stand.  Rajendrakumar argues that after the closing date lapsed, he had a
reasonable time to close on the sale and such determination of reasonableness
is a question of fact.  The trial court granted Nainesh’s motion for partial
summary judgment.  Rajendrakumar subsequently filed this appeal.  
II.  Standard of
Review
In a summary judgment case, the movant
must show that there is no genuine issue of material fact and that the movant
is entitled to judgment as a matter of law.  Tex.
R. Civ. P. 166a(c); Provident Life & Acc. Ins. Co. v. Knott,
128 S.W.3d 211, 215–216 (Tex. 2003); M.D. Anderson Hosp. & Tumor Inst.
v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000); Lear Siegler, Inc. v. Perez,
819 S.W.2d 470, 471 (Tex. 1991).  The movant has the burden of proof.  City
of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.
1979).  A defendant who conclusively negates at least one essential element of
the plaintiff’s cause of action, or who conclusively establishes all of the
elements of an affirmative defense, is entitled to summary judgment.  Cathey
v. Booth, 900 S.W.2d 339, 341 (Tex. 1995); Klentzman v. Brady, 312
S.W.3d 886, 896–897 (Tex. App.—Houston [1st Dist.] 2009, no pet.).  The burden
to raise a fact issue shifts to the non-movant only after the movant has
established that it is entitled to summary judgment as a matter of law.  Casso
v. Brand, 776 S.W.2d 551, 556 (Tex. 1989). 
We review a traditional motion for
summary judgment de novo.  Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d
618, 621 (Tex. 2007); Valence Oper. Co. v. Dorsett, 164 S.W.3d 656, 661
(Tex. 2005); Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994). 
We consider the evidence in the light most favorable to the non-movant and
resolve all doubts in the non-movant’s favor.  W. Invs., Inc. v. Urena,
162 S.W.3d 547, 550 (Tex. 2005).  Issues not expressly presented to the trial
court by written motion, answer or other response shall not be considered on
appeal as a ground for reversal.  See Tex.
R. Civ. P. 166a(c); City of Houston, 589 S.W.2d at 677.
III.  Analysis
 
In issue two, Rajendrakumar contends
that the trial court erred in granting summary judgment because a factual issue
remained disputed that precluded a determination made on summary judgment. 
Rajendrakumar alleged three arguments that potentially raised a fact issue:  (1)
whether or not the contract was entered into by mutual mistake; (2) whether or
not there was a unilateral mistake in which Nainesh knew about and remained
silent; and/or (3) whether or not Rajendrakumar performed under the contract in
a “reasonable” time, since the contract did not stipulate that time was of the
essence.
            Rajendrakumar first argues mutual mistake.  The
law presumes that a written agreement correctly embodies the parties'
intentions, and is an accurate expression of the agreement the parties reached
in prior oral negotiations.  See Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273, 275 (Tex. 1970).  A
mutual mistake of fact occurs when both parties to a transaction have a belief
that a present fact exists, that actually does not exist, and that fact is
material to the transaction.  Valero Energy Corp. v. Teco Pipeline Co.,
2 S.W.3d 576, 588–89 (Tex. App.—Houston [14th Dist.] 1999, no pet).  In order to
establish the defense of mutual mistake, the defendant must raise a fact issue
showing that the contracting parties were acting under the same
misunderstanding of the same material fact.  Johnson v. Conner, 260
S.W.3d 575, 581 (Tex. App.—Tyler 2008, no pet.) (citing N. Natural Gas v. Chisos Joint Venture
I, 142 S.W.3d 447, 456 (Tex. App.—El Paso
2004, no pet.)).  Parol evidence is admissible to show that
the writing, because of a mutual mistake, incorrectly reflects the true
agreement.  However, the affirmative defense is unavailable unless the party
claiming mistake presents "clear, exact, and satisfactory evidence." 
Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d at 275. 
The question of mutual mistake is determined not by self-serving subjective
statements of the parties’ intent, but rather solely by objective circumstances
surrounding execution of the contract.  Williams v. Blash, 789 S.W.2d
261, 265 (Tex. 1990).  The party asserting a mistake must prove what the true
agreement was, but his case is not made by proof that there was an agreement
which is at variance with the writing.  He must go further and establish the
fact that the terms or provisions of the writing, which differ from the true
agreement made, were placed in the instrument by mutual mistake.  Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d at 275; see
also
Clemmens v. Kennedy, 68 S.W.2d 32l, 324 (Tex. Civ. App.—Texarkana 1934,
writ ref'd). 
     As summary judgment evidence,
Rajendrakumar filed his own affidavit in which he averred that he and Nainesh
discussed financing for the purchase and discussed that he would have ninety
days to organize financing to purchase and close the deal.  They agreed to use
Kleberg County Title Company to escrow the earnest money funds and handle the
closing.  Rajendrakumar stated that at that time they again discussed the
closing date that would occur within ninety days.  Rajendrakumar also submitted
the affidavit of Jean Stewart, from the Kleberg County Title Company, as summary
judgment evidence.  She averred that on May 29, 2008, Kleberg County Title
Company mailed a commitment for title insurance to Nainesh for his review.  A
closing date was subsequently set by the parties for August 4, 2008 to occur at
Kleberg County Title.  Rajendrakumar averred, and it is uncontroverted, that
the parties agreed to use Kleberg County Title Company to escrow the earnest
money funds and handle the closing.  It is uncontroverted that they deposited
$10,000 with Kleberg County Title.  He also stated that on July 22, 2009, one
day past the seventy-five day deadline that Nainesh now urges, a professional
appraiser retained by ValueBank met with Rajendrakumar and Nainesh to inspect
the property.  A draft settlement was sent to the parties before the closing
date, but Nainesh did not show up for the closing and did not notify the title
company that he did not intend for the closing to occur on August 4, 2008.  
     Francis Stokes, senior vice
president for ValueBank Texas, averred in an affidavit that it was his
understanding that Rajendrakumar had ninety days to secure financing for his
purchase.  ValueBank Texas approved the financing request and was ready to fund
the transaction.  
     Rajendrakumar alleged that the
seventy-five day provision expressed in the contract resulted from either a
mutual mistake of fact or from a unilateral mistake of which Nainesh was aware
and purposefully remained silent.  Rajendrakumar claims the understanding and
intent of the parties create a fact issue which was impermissibly determined on
summary judgment.  We agree.  
     Nainesh’s summary judgment evidence
controverts Rajendrakumar’s, suggesting that he relied on the seventy-five day
provision in the contract and was ready to sell at that time.  He averred that
he subsequently decided not to sell the hotel.  There is no evidence that
Nainesh took any action to see that that the closing occurred within
seventy-five days.  
      Although Rajendrakumar was the
author of the contract, it is clear from the summary judgment evidence
submitted that both parties, as well as all individuals who prepared affidavits
and were involved in the transaction, mutually believed that the closing would
occur within ninety days, and not seventy-five days as Nainesh now argues.  It
would be totally inconsistent for the parties to agree to close at Kleberg
County Title, escrow funds there, and allow an appraiser to look at the
property after seventy-five days had passed, if, indeed, Rajendrakumar had to
close the deal within seventy-five days at a title company in Corpus Christi. 
It would also make no sense for Rajendrakumar to have ninety days to obtain
financing for the property, yet be required to close within seventy-five days.
      The summary judgment evidence is
clear that both parties acted upon a belief that closing would occur within
ninety days.  The evidence submitted by Rajendrakumar is clear and exact.  We
hold that the summary judgment evidence creates a fact issue with respect to
mutual mistake.  Since there remains a genuine issue as to a material fact, a
determination made on summary judgment was improper.  Tex. R. Civ. P. 166a(c).  We sustain issue two and hold that
the trial court improperly granted summary judgment.           
     Rajendrakumar alleges in issue
three that the notice of lis pendens was not improper and thus the trial court
erred in the cancellation of such notice.  A party is eligible to file a notice
of lis pendens when they are a party to an action involving the title of real
property and seeking affirmative relief.  Tex.
Prop. Code Ann. § 12.007(a) (West Supp. 2010).  Because the trial court
determined that Rajendrakumar take nothing by his lawsuit, the lis pendens was
cancelled.  However, because the summary judgment is reversed and Rajendrakumar
is seeking affirmative relief by his pleading for specific performance, the
notice of lis pendens was not improper.  We sustain issue three.  
IV.  Conclusion
 
We conclude that the trial court erred
by granting partial summary judgment.  Having addressed all dispositive issues,
the judgment of the trial court is reversed and remanded.
 
 
                                                                        ROSE
VELA
                                                                                    Justice
 
Delivered and filed
the 
4th day of August,
2011.