Court Opinion

ID: 3076980
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:23:13.796496+00
Date Added: 2024-06-11T11:42:00.886964
License: Public Domain

COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                             NO. 02-13-00316-CV

JUST FOR FUN GRAPEVINE, INC.,                                   APPELLANTS
JOHN LEMLEY, AND LAURA
LEMLEY

                                      V.

TEJAS FUN, L.P. AND PETER J.                                       APPELLEE
CLARK

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          FROM THE 16TH DISTRICT COURT OF DENTON COUNTY
                    TRIAL COURT NO. 2011-11020-16

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                       MEMORANDUM OPINION 1

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      Appellants Just For Fun Grapevine, Inc., John Lemley, and Laura Lemley

appeal the trial court’s judgment awarding appellee Tejas Fun, L.P. damages and

      1
      See Tex. R. App. P. 47.4.
the title to two dinner boats. We modify the judgment and affirm the judgment as

modified.

                                Background Facts

      In 2003, Peter J. Clark and John Lemley incorporated Just For Fun. Clark

was a 67% shareholder, and John and his wife Laura owned 33% of the

corporation. Pertinent to the case at hand, Just For Fun built two dinner boats,

and they were titled in the corporation’s name.

      In 2004, Clark formed Tejas with Marshall Funk. Clark contributed to Tejas

the two boats belonging to Just For Fun. Clark maintained that he took the boats

as payment for money owed to him by Just For Fun. John initially believed that

Clark was contributing the boats to Tejas on behalf of Just For Fun and that in

return, Just For Fun would own an interest in Tejas. The boats’ titles, however,

were never transferred to Tejas.

      Tejas and Just For Fun then entered into a lease agreement in which

Tejas rented the two boats back to Just For Fun. The lease was signed by Clark

on behalf of Just For Fun. It stated that it had “an initial term of one (1) year and

eight (8) months beginning May 1, 2004[,] and . . . shall be automatically

renewed for successive additional terms of one (1) year each thereafter.”

      In February 2008, the Lemleys purchased Clark’s interest in Just For Fun.

In April 2008, Just For Fun entered into another lease agreement with Tejas for

the boats. John signed on behalf of Just For Fun, and he and Laura signed as

personal guarantors. The lease agreement stated that it had “an initial term of

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ONE (1) year[] beginning January 01, 2008 and . . . shall be automatically

renewed for successive additional terms of ONE year[] each thereafter.” From

2008 to 2010, John signed a series of identical lease renewal agreements

renewing the lease on the boats. The agreements stated,

             This Renewal Agreement is made and entered into between
      Tejas . . . and Just For Fun . . . for and in consideration of One Dollar
      ($1.00) and other good and valuable consideration, receipt of which
      is hereby acknowledged.

                               WITNESSETH

             1. Lessor and Lessee hereby confirm and ratify, except as
      modified below, all of the terms, conditions[,] and covenants in that
      certain written Lease Agreement dated January 1, 2008 between
      Lessor and Lessee . . . .

            ....

            3. Lessor and Lessee agree that the term of this Lease
      Agreement including all Amendment[s] and previous Renewals shall
      be extended for twelve (12) months. . . .

John signed on behalf of Just For Fun. Neither he nor Laura signed the renewals

as personal guarantors.

      In 2011, the parties began disputing what Just For Fun owed under the

lease. Around this time, the Lemleys discovered that Clark’s interest in Tejas

was his personally and that Just For Fun had no interest in Tejas. In September

2011, Just For Fun owed Tejas $15,000 that it refused to pay based on its belief

that the lease was invalid. Tejas demanded that the boats be returned for failure

to pay, but Just For Fun refused. Tejas filed this suit after Just For Fun refused

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to deliver the boats’ titles to Tejas. Tejas sought “specific performance of the

terms of the written agreements in effect and the forced delivery by [Just For

Fun] of clear and clean titles to the two vessels[] to [Tejas]” and damages. 2

      After a trial to the bench, the trial court found that the boats were Tejas’s

property and ordered that Just For Fun transfer the titles to Tejas.             It also

awarded Tejas $190,500 for the cost of moving the boats, for the “wrongful

detention of and loss of use, revenue[,] and profits from the boats,” and for the

unpaid rentals. The Lemleys and Just for Fun then filed this appeal.

                                    Discussion

I. The lease renewals

      The appellants argue in their first issue that the trial court erred by finding

that John and Laura personally guaranteed the 2011 lease renewal.

      The 2008 lease between Tejas and Just For Fun for the two party boats

states that the lease term is one year beginning January 1, 2008, and “shall be

automatically renewed for successive additional terms of [one year] each

thereafter.” It was signed by Jeff Rose on behalf of Tejas, by John on behalf of

Just For Fun, and by John and Laura as personal guarantors. In December

2008, 2009, and 2010, Tejas and Just For Fun entered into a series of three

      2
        The Lemleys and Just For Fun countersued for breach of contract,
tortious interference with business relationships, conversion, unjust enrichment,
and fraud. Just For Fun sought a declaration of the rights of the parties under
the lease and the ownership of the boats and injunctive relief. The trial court
denied their counterclaims, and the appellants do not appeal that part of the
judgment.

                                         4
“Lease Renewal Agreements” that acknowledged receipt of new consideration

and “confirmed and ratified” the 2008 lease “except as modified below.” Below

that statement was an agreement that the lease term would be extended for one

year. There was no signature block for personal guarantors, and John and Laura

did not sign the agreements in their personal capacities.

      The trial court’s conclusions of law stated that the Lemleys were jointly and

severally liable for the damages awarded to Tejas for Just For Fun’s breach of

the lease agreement “by virtue of [their] personal guarantee.”       The Lemleys

argue that the successive lease renewal agreements were new contracts

between the parties. And because they were new agreements, the only contract

in effect at the time of the breach was the 2010 renewal. Because the Lemleys

did not guarantee that renewal, they cannot be held personally liable for Just For

Fun’s breach of that contract.

      Tejas notes that by the express terms of the 2008 agreement, the contract

between the parties automatically renews every year for one year. They argue

that the renewal agreements were therefore only memorializations of the

automatic renewals and made no material alterations of the original contract

terms. The renewal agreements, however, stated that the parties confirmed and

ratified the 2008 agreement “except as modified below.” Below that term were a

number of provisions, including a change in the lease term; each agreement

extended the lease for one year. These were modifications of the terms of the

2008 agreement and were supported by consideration.           See Fubar, Inc. v.

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Turner, 944 S.W.2d 64, 67 (Tex. App.—Texarkana 1997, no writ) (“The

modification of an existing contract must be based upon sufficient fresh

consideration.”) (citing Rhoads Drilling Co. v. Allred, 123 Tex. 229, 244, 70
S.W.2d 576, 583 (1934)). The modifications made by the parties in the renewals

and the acts of signing new agreements themselves signal the parties’ intent to

enter into a new agreement instead of allowing the 2008 agreement to

automatically renew as its terms provided.      See Centerpoint Apartments v.

Webb, No. 02-07-00278-CV, 2008 WL 4052929, at *4 (Tex. App.—Fort Worth,

Aug. 28, 2008, no pet.) (holding that when first lease automatically renewed,

signing of second lease was a new contract and guarantor of first lease was not

liable under second lease).

      Also below the statement in the renewal agreements that the 2008

agreement was being modified were the signature lines, and those lines did not

include the Lemleys’ personal guarantees. Therefore these new contracts

modifying the 2008 contract were not personally guaranteed by the Lemleys.

Any other interpretation would extend the guaranty “by construction or implication

beyond the precise terms of the contract,” which we may not do. Futerfas Family

Partners v. Griffin, 374 S.W.3d 473, 478 (Tex. App.—Dallas 2012, no pet.); see

also Coker v. Coker, 650 S.W.2d 391, 394 & n.1 (Tex. 1983) (stating that any

uncertainty as to the terms of the guaranty must be resolved in the guarantor’s

favor). Because the renewal agreements modified the terms of the 2008 lease

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agreement to remove the Lemleys as personal guarantors, they cannot be held

liable for Just For Fun’s breach of contract. We sustain the appellants’ first issue.

II. Title to the vessels

      In their second issue, the appellants argue that the there was no evidence

to support awarding title to the boats to Tejas.         We may sustain a legal

sufficiency challenge only when (1) the record discloses a complete absence of

evidence of a vital fact; (2) the court is barred by rules of law or of evidence from

giving weight to the only evidence offered to prove a vital fact; (3) the evidence

offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence

establishes conclusively the opposite of a vital fact. Uniroyal Goodrich Tire Co.

v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998), cert. denied, 526 U.S. 1040

(1999); Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of

Error, 38 Tex. L. Rev. 361, 362–63 (1960).        In determining whether there is

legally sufficient evidence to support the finding under review, we must consider

evidence favorable to the finding if a reasonable factfinder could and disregard

evidence contrary to the finding unless a reasonable factfinder could not. Cent.

Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller

v. Wilson, 168 S.W.3d 802, 807, 827 (Tex. 2005).

      Just For Fun argues that there is no evidence that Tejas had an ownership

interest in the boats because the boats have always been titled in Just For Fun’s

name, Clark never owned the boats and therefore could not contribute them to

Tejas, and no bill of sale was ever produced. There is, however, some evidence

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upon which the court could rely, in the form of Clark’s testimony, that Clark took

the boats as payment from Just For Fun for money that he had loaned the

company.    See Uniroyal Goodrich Tire, 977 S.W.2d at 334.          Although John

disputed Clark’s claim, neither party produced financial records to support their

contentions, and the determination of whether Clark had paid Just For Fun for

the boats was the province of the factfinder. See Bellefonte Underwriters Ins.

Co. v. Brown, 704 S.W.2d 742, 744–45 (Tex. 1986).

      That the boats’ titles were never transferred to Tejas is also not

determinative. No one disputes that the legal titles to the boats have always

been in Just For Fun’s name. However, under the parks and wildlife code, an

owner of a vessel is “the person who rightfully claims lawful possession of a

vessel by virtue of the legal title or an equitable interest.” 3 Tex. Parks & Wild.

Code Ann. § 31.003(4) (West 2002 & Supp. 2014) (emphasis added). Tejas,

Clark, Just For Fun, and the Lemleys all treated the boats as Tejas’s property for

years despite title never transferring. By John’s own testimony, he had known

that the titles had not been transferred yet had still believed that Tejas owned the

boats. That the title documents had not been transferred to Tejas’s name does

not defeat its equitable claim. See Vibbert v. PAR, Inc., 224 S.W.3d 317, 322

(Tex. App.—El Paso 2006, no pet.) (noting that under the Uniform Commercial

      3
       Equitable title is “the present right to compel legal title.” Hydroscience
Techs., Inc. v. Hydroscience, Inc., 401 S.W.3d 783, 801 (Tex. App.—Dallas
2013, pet. denied) (citing Smith v. Dass, Inc., 283 S.W.3d 537, 542 (Tex. App.—
Dallas 2009, no pet.)).

                                         8
Code, “title passes to the buyer at the time and place at which the seller

completes her performance with reference to the physical delivery of the

goods . . . even though a document of title is to be delivered at a different time or

place”) (citing Tex. Bus. & Comm. Code Ann. § 2.401(b) (West 2009)).

      Just For Fun argues that Tejas cannot show an equitable interest in the

boats because it never produced a bill of sale. Equitable title requires proof that

the interest holder “has paid the purchase price and fully performed the

obligations under the contract.” Hydroscience Techs., 401 S.W.3d at 801. The

partnership agreement between Funk and Clark contemplates that Clark would

contribute the boats “to the Partnership pursuant to that certain Bill of Sale by

and between Clark and the Partnership.” Because there was no bill of sale, Just

For Fun argues that Tejas has not fully performed under the contract. However,

“[t]he general rule . . . is that only the parties to a contract have the right to

complain about any non-compliance with the contract. If they are satisfied with

the contract’s disposition, a third party has no right to insist there has been any

non-compliance.” Cadle Co. v. Harvey, 46 S.W.3d 282, 288 (Tex. App.—Fort

Worth 2001, pet. denied) (citing Bruner v. Exxon Co., 752 S.W.2d 679, 682 (Tex.

App.—Dallas 1988, writ denied)). Just For Fun was not a party to the partnership

contract between Funk and Clark, and both Funk and Clark considered the

contract fully performed.    Just For Fun cannot therefore rely on its claim of

noncompliance to defeat Tejas’s equitable right of ownership. See id. (holding

that appellee acquired equitable title to property despite appellant’s claim that he

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had not performed a contract to which appellant was not a party). We therefore

hold that the evidence is legally sufficient to support the trial court’s award of title

to the boats to Tejas. We overrule the appellants’ second issue.

                                     Conclusion

      Having sustained the appellants’ first issue, we modify the judgment to

delete that portion holding John and Laura Lemley jointly and severally liable for

the damages awarded to Tejas for Just For Fun’s breach of the lease agreement,

including attorney’s fees, pre-judgment and post-judgment interest, and costs.

Having overruled the appellants’ second issue, we affirm the trial court’s

judgment as modified.

                                                      /s/ Lee Gabriel

                                                      LEE GABRIEL
                                                      JUSTICE

PANEL: WALKER, MCCOY, and GABRIEL, JJ.

DELIVERED: October 30, 2014

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