Court Opinion

ID: 2765633
Source: CourtListenerOpinion
Date Created: 2014-12-31 05:09:14.485143+00
Date Added: 2024-06-11T12:17:50.929922
License: Public Domain

Opinion issued December 30, 2014

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                           ————————————
                             NO. 01-13-00020-CV
                          ———————————
 PRIME INCOME ASSET MANAGEMENT, INC. AND PRIME INCOME
            ASSET MANAGEMENT, LLC, Appellants
                                      V.
MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF
                 TEXAS, INC., Appellee

               On Appeal from the County Court at Law No. 3
                         Galveston County, Texas
                     Trial Court Case No. CV0065437

                      MEMORANDUM OPINION

      Appellants, Prime Income Asset Management, Inc. (“Prime, Inc.”) and

Prime Income Asset Management, LLC (“Prime, LLC”) (collectively “the Prime

Companies”), challenge the trial court’s amended final judgment, entered after a
jury trial, in favor of appellee, Marcus & Millichap Real Estate Investment

Services of Texas, Inc. (“Marcus & Millichap”), in its suit against the Prime

Companies for breach of a broker’s fee contract in connection with the sale of real

property in Galveston County (the “Fee Agreement”). In five issues, the Prime

Companies challenge the legal sufficiency of the evidence supporting the jury’s

verdict, and the trial court’s award of attorney’s fees to Marcus & Millichap, denial

of attorney’s fees to Prime, LLC, and denial of the Prime Companies’ motion to

transfer venue. We affirm.

                                   Background

      Shortly after Hurricane Ike made landfall along the upper Texas Gulf Coast,

Jeffrey Fript, a licensed real estate agent with the brokerage firm of Marcus &

Millichap, received a telephone call from John Petricca, who Fript understood was

representing a company called “Odyssey Residential.” Petricca told Fript that he

was looking for apartments that had been damaged during the hurricane and

needed repair. After calling property owners he knew and searching industry

databases, Fript found three properties located in Galveston County that he thought

met the criteria, including the property at issue in this case, Marina Landing

Resort. Using these specialized databases, Fript identified “Prime Income Asset

Management” as the seller and Mark Nardizzi as the contact person for all three

properties.

                                         2
      Fript called Nardizzi, who confirmed that “Prime Income Asset

Management” owned all three properties. Fript told Nardizzi that he had another

party, who was represented by another broker and interested in possibly buying the

properties, if Nardizzi was interested in selling them. After Nardizzi confirmed that

the properties were damaged and for sale, Fript passed the relevant information

along to Petricca.

      Fript also talked to Nardizzi about a fee for facilitating the deal. Nardizzi

offered a fee of one-half percent of the sales price, and although it was “extremely

low” compared to the commissions Fript normally received, he agreed to

Nardizzi’s offer because he understood that he would not have to do much more

than what he had already done—find the properties and put together the deal for

Nardizzi. Fript then drafted the Fee Agreement on Marcus & Millichap letterhead

and sent it to Nardizzi for his signature.

      The Fee Agreement identified Marcus & Millichap as the “Buyer’s Broker”

and “Prime Income Asset Management” as the “Listing Broker.”              Under the

express terms of the agreement, “Prime Income Asset Management” agreed that if

“Odyssey Residential and/or Assigns represented by John Petricca—Dallas, TX”

purchased the Marina Landing Resort, “Prime Income Asset Management” would

pay Marcus & Millichap a commission at closing equal to “.50% (One-Half

                                             3
Percent) of Sales Price.” Nardizzi signed the Fee Agreement on behalf of “Listing

Broker: Prime Income Asset Management.”

      At the time the Fee Agreement was executed, there were two separate legal

entities with “Prime Income Asset Management” as part of their name: Prime, Inc.

and Prime, LLC. Prime, LLC is a wholly-owned subsidiary of Prime, Inc. Fript

testified that when he searched for “Prime Income Asset Management” on the

Texas Real Estate Commission’s website, he learned that “Prime Income Asset

Management” was licensed as a “corporation broker.” During the trial, Steven

Shelley, a vice president of Prime, Inc. and Prime, LLC, confirmed that Prime, Inc.

was a licensed real estate broker and Prime, LLC was not.

      The original purchase and sale contract for Marina Landing Resort, which

was admitted into evidence, identifies Marina Landing, LP, as the seller, and

“ORH Acquisitions II, LLC” as the purchaser, and references Fript and Marcus &

Millichap’s one-half percent commission. This agreement, however, was amended

numerous times before the sale closed a year and a half later. The final purchase

and sale agreement omitted any reference to Fript and Marcus & Millichap’s one-

half percent commission, and indicated that “ORH Acquisitions II, LLC” had

assigned the contract to “Chicory Court I, LP.” When asked if the reference to

“Odyssey Residential” in the Fee Agreement referred to “Odyssey Residential

Holdings, LP,” Fript testified that he did not remember but believed that it did

                                        4
because he understood that there was only one “Odyssey Residential.” James

Fisher, formerly the Vice President of Development for Odyssey Residential

Holdings, LP, testified that “ORH Acquisitions II, LLC” is an affiliate that

Odyssey Residential Holdings, LP uses routinely to contract for and acquire

properties.

      When the sale of the Marina Landing Resort closed and Marcus & Millichap

was not paid a commission, Marcus & Millichap filed suit against Prime, Inc. and

Prime, LLC in Galveston County for breach of the Fee Agreement. In addition to a

general denial, the Prime Companies asserted affirmative defenses, including the

statute of frauds in the Real Estate License Act (“RELA”). See TEX. OCC. CODE

§1101.806(c) (West 2012).1

      After finding that Prime, Inc. (1) entered into the Fee Agreement with

Marcus & Millichap, and (2) “fail[ed] to comply with the Fee Agreement,” the jury

awarded damages to Marcus & Millichap in the amount of the commission due

under the Fee Agreement: $68,500. The jury also found that Prime, LLC was not a

party to the Fee Agreement. In accord with the jury’s verdict, the trial court signed

an amended final judgment for Marcus & Millichap against Prime, Inc. for $68,500

1
      Marcus & Millichap moved for summary judgment, arguing that none of the
      affirmative defenses had any basis in law or in fact. The trial court granted Marcus
      & Millichap’s motion for summary judgment on the Prime Companies’
      affirmative defense based on the statute of frauds and denied the Prime
      Companies’ motion to reconsider.
                                           5
in damages, $17,060 in attorneys’ fees, plus appellate attorneys’ fees, post-

judgment interest and costs. The trial court also entered a take-nothing judgment in

favor of Prime, LLC, but denied it costs against Marcus & Millichap on the

grounds that Prime, LLC had unreasonably increased the costs of litigation in the

case.

        Both Prime, Inc. and Prime, LLC appeal the trial court’s amended final

judgment. Specifically, Prime, Inc. argues that (1) Marcus & Millichap failed to

present legally sufficient evidence establishing that the Fee Agreement met the

statute of frauds requirements of RELA, (2) even if the Fee Agreement complied

with the statute of frauds, Marcus & Millichap failed to present legally sufficient

evidence establishing that the Fee Agreement’s conditions precedent had been

satisfied, and (3) because the award of attorney’s fees to Marcus & Millichap was

based solely on its breach of contract claim, that award should also be reversed.

Prime, LLC argues that the record does not support the trial court’s denial of costs

to Prime, LLC on the grounds that it unreasonably increased the costs of litigation

in this case. Finally, Prime, Inc. and Prime, LLC argue that the trial court erred in

denying their motion to transfer venue.

                                  Statute of Frauds

        Prime, Inc.’s first issue contends that the evidence is legally insufficient to

establish that the Fee Agreement meets RELA’s statute of frauds requirement as

                                           6
set forth in section 11.01806(c). TEX. OCC. CODE ANN. § 1101.806(c).

      Section 1101.806(c) prohibits a person from maintaining an action in Texas

to recover a commission for the sale or purchase of real estate “unless the promise

or agreement upon which the action is based, or a memorandum, is in writing and

signed by the party against whom the action is brought or by a person authorized

by that party to sign the document.” Id. Strict compliance with this provision is

required if a real estate broker or salesperson seeks a judicial recovery of fees.

Henry S. Miller Co. v. Treo Enters., 585 S.W.2d 674, 676 (Tex. 1979). The

purpose of the provision is to eliminate or reduce fraud that might be occasioned

on the public by unlicensed, unscrupulous, or unqualified persons. Id. at 675–76. A

broker must plead and prove that his or her claim for a commission for the sale of a

particular property is based on an instrument in writing within contemplation of

section 1101.806(c) even if the defendant does not specifically plead the statute of

frauds as an affirmative defense. See Bayer v. McDade, 610 S.W.2d 171, 172 (Tex.

Civ. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.) (stating “a broker seeking to

recover a commission under [RELA] must prove a valid written agreement

describing the land, even though the owner does not specifically plead the statute

of frauds as an affirmative defense”); see also TEX. OCC. CODE ANN.

§ 1101.806(c).

                                         7
      Whether a contract is barred by the statute of frauds is a question of law for

the court to decide. Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 555 (Tex.

App.—Eastland 2010, pet. denied); see, e.g., Pickett v. Bishop, 148 Tex. 207, 223
S.W.2d 222, 223 (Tex. 1949) (stating courts interpreting RELA’s statute of frauds

may looks to cases interpreting general statute of frauds for guidance). Courts

applying section 1101.806(c) have interpreted the requirements as follows:

      To comply with [section 1101.806(c)], an agreement or memorandum
      must: (1) be in writing and must be signed by the person to be charged
      with the commission; (2) promise that a definite commission will be
      paid, or must refer to a written commission schedule; (3) state the
      name of the broker to whom the commission is to be paid; and (4)
      either itself or by reference to some other existing writing, identify
      with reasonable certainty the land to be conveyed.

Litton Loan Servicing, LP v. Manning, 366 S.W.3d 837 (Tex. App.—Dallas 2012,

pet. denied); Neary v. Mikob Prop., Inc., 340 S.W.3d 578, 584 (Tex. App.—Dallas

2011, no pet.). The essential elements of a commission agreement, including the

identity of the broker or salesperson attempting to recover the commission, cannot

be supplied by parol evidence. See Boyert v. Tauber, 834 S.W.2d 60, 61–62 (Tex.

1992) (holding that because broker’s name is essential element of real estate

commission agreement, parol evidence may not be admitted “to identify the broker

to whom a commission is owed in an action to recover a real estate commission”).

      Relying on Boyert, Prime, Inc. contends that Marcus & Millichap cannot use

parol evidence to substitute Prime, Inc.’s name as the “listing broker” in the Fee

                                         8
Agreement, because naming a “broker” is an essential element of a real estate sales

contract. See id. at 62–63. Boyert, however, is distinguishable. In that case, the

defendant-purchaser sent a letter to the seller confirming an offer to purchase

certain real estate and acknowledging that the defendant-purchaser was responsible

for paying a real estate commission to “outside brokers.” Id. at 63. The Texas

Supreme Court held that the term “outside brokers” did not “narrow the universe of

potential brokers” who were owed a commission under the agreement, and thus did

not identify the broker with reasonable certainty because the name of a particular

broker had to be supplied entirely by parol evidence. See id.

      First, although Boyert states that naming a “broker” is an essential element

of a real estate sales contract, the “broker” in that case was the party attempting to

recover the commission, not the party responsible for paying the commission. The

parties have not directed us to—and we have not found—any cases extending that

principle to the party charged with paying the commission, even if that party is also

identified as a “broker.”

      Second, even if Boyert requires a real estate agreement to “furnish within

itself the means or data by which [the party charged with paying the commission]

may be identified with reasonable certainty” as Prime, Inc. contends, the Fee

Agreement satisfies this requirement.     In contrast to the written agreement in

Boyert that merely acknowledged that a real estate commission was to be paid to

                                          9
“outside brokers,” the Fee Agreement’s identification of the party to be charged

with the commission as the “listing broker,” “Prime Income Asset Management,”

narrowed the universe of potential parties to Prime, Inc., because it was the only

entity named “Prime Income Asset Management” that was licensed as a

“corporation broker,” according to the Texas Real Estate Commission’s website.

See, e.g., TEX. OCC. CODE ANN. § 1101.351(a-1) (West 2012) (stating business

entity may not act as broker unless licensed as broker under RELA). As such, the

Fee Agreement furnished within itself “the means and data” to identify Prime, Inc.

as the “listing broker” with reasonable certainty. Assuming without deciding that3

Boyert requires such specificity with regard to the identification of the party

charged with paying the commission, we hold that the trial court did not err in

concluding that the Fee Agreement satisfied RELA’s statute of frauds.

      We overrule Prime, Inc.’s first issue.

                               Breach of Contract

      In its second issue Prime, Inc.’s argues that Marcus & Millichap failed to

present legally sufficient evidence establishing that the Fee Agreement’s

conditions precedent had been satisfied because there is no probative evidence in

the record that “Odyssey Residential and/or Assigns” purchased the Marina

Landing Resort and no probative evidence that the purchaser was “represented by

John Petricca – Dallas, TX,” as required in the Fee Agreement. We construe this as

                                         10
a challenge to the legal sufficiency of the evidence supporting the jury’s implied

finding that the Fee Agreement’s conditions precedent were satisfied, and

therefore, Marcus & Millichap was entitled to be paid a commission when the

Marina Landing Resort sale finally closed.

      When an appellant attacks the legal sufficiency of an adverse finding on an

issue for which it did not have the burden of proof, it must demonstrate that there is

no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d
55, 58 (Tex. 1983). Our review for legal sufficiency credits favorable evidence if a

reasonable juror could do so and disregards contrary evidence unless a reasonable

juror could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We

consider the evidence in the light most favorable to the finding under review and

indulge every reasonable inference that would support the finding. Id. at 822. We

sustain a no-evidence contention only if: (1) the record reveals 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 conclusively establishes the opposite of the vital fact. Id. at 810.

      When reviewing the evidence for legal sufficiency, we are mindful that the

jury is the sole judge of a witnesses’ credibility and may choose to believe one

witness over another, and a reviewing court may not impose its own opinion to the

                                          11
contrary. Id. We are likewise required to view the evidence in the light favorable to

the jury’s findings, drawing reasonable inferences in their favor, and presuming

that the jury resolved any evidentiary conflicts in a manner supporting its findings.

See id. at 820.

      When asked if the reference to “Odyssey Residential” in the Fee Agreement

referred to “Odyssey Residential Holdings, LP,” Fript testified that he did not

remember but believed that it did because he understood that there was only one

“Odyssey Residential.” The final purchase and sale agreement states that “ORH

Acquisitions II, LLC” had assigned the contract to “Chicory Court I, LP,” the

ultimate purchaser. Odyssey Residential Holdings, LP’s former vice president

testified that the company regularly uses one of its affiliates, ORH Acquisitions II,

LLC, to contract and acquire properties. Although he later recanted, Prime, Inc.’s

corporate representative admitted that “Odyssey Residential and/or Assigns

purchased the Marina Landing resort.” Fript also testified that “John Petricca” was

the buyer’s broker.

      Contrary to Prime, Inc.’s position, there is some probative evidence that

“Odyssey Residential and/or Assigns” purchased the Marina Landing Resort and

that the purchaser was “represented by John Petricca – Dallas, TX,” as required in

the Fee Agreement. Although the evidence and testimony is conflicting and

inconsistent regarding “Odyssey Residential and/or Assigns” role with regard to

                                         12
the ultimate sale of the Marina Landing Resort, it was within the province of the

jury to judge of the witnesses’ credibility, believe one witness over another, and

draw reasonable inferences from the evidence presented. Although Prime, Inc.

challenges Fript’s credibility with regard to his testimony that Petricca represented

the purchaser by arguing that Fript was not in a position to know this information,

it was ultimately within the jury’s province to evaluate his credibility and believe

this portion of his testimony.

      The record reflects more than a scintilla of evidence, that “Odyssey

Residential and/or Assigns” purchased the Marina Landing Resort and that the

buyer was “represented by John Petricca – Dallas, TX.” As such, we conclude that

the evidence is legally sufficient to support the jury’s implicit finding that the Fee

Agreement’s conditions precedent were satisfied and, therefore, Marcus &

Millichap was entitled to its one-half percent commission upon the closing of the

Marina Landing Resort sale.

      We overrule Prime, Inc.’s second issue.

                Award of Attorney’s Fee to Marcus & Millichap

      In its third issue, Prime, Inc. argues that Marcus & Millichap was awarded

attorney’s fees based solely on the fact that they prevailed at trial on their breach of

contract claim, and because there is legally insufficient evidence to support this

portion of the trial court’s judgment, the award of attorney’s fees should also be

                                          13
reversed. Having overruled Prime, Inc.’s first and second issues challenging the

sufficiency of the evidence with regard to Marcus & Millichap’s breach of contract

claim against Prime, Inc., we also overrule Prime, Inc.’s third issue.

                           Denial of Costs to Prime, LLC

      Prime, LLC argues that the trial court’s denial of costs on the grounds that

Prime, LLC unreasonably increased the costs of litigation in this case is not

supported by the record.

      The Texas Rules of Civil Procedure provide that “[t]he successful party to a

suit shall recover of his adversary all costs incurred therein, except where

otherwise provided.” TEX. R. CIV. P. 131. Texas Rule of Civil Procedure 141,

however, permits a trial court, for good cause stated on the record, to “adjudge the

costs otherwise than as provided by law or [the Rules of Civil Procedure].” TEX. R.

CIV. P. 141. The allocation of court costs under Rule 141 is a matter for the trial

court’s discretion and will not be overturned on appeal unless the trial court abused

its discretion. See Furr’s Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 376 (Tex.

2001); Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex. 1985). Good

cause is determined on a case-by-case basis. Bethune, 53 S.W.3d at 376; Rogers,

686 S.W.2d 599, 601. When the prevailing party unnecessarily prolongs the

proceedings, unreasonably increases costs, or does something that should be

penalized, good cause may exist to “adjudge the costs otherwise” under rule 141.

                                          14
See Bethune, 53 S.W.3d at 377. In reviewing rulings under rule 141, we evaluate

the record to determine whether it supports the trial court’s decision. Rogers, 686
S.W.2d at 601 (“The determination of a trial judge that a particular trial strategy

caused an unnecessary increase in costs should not be disturbed on appeal absent

an abuse of discretion.”).

      In the present case, the amended final judgment states: “Good cause exists

such that Defendant Prime Income Asset Management, LLC shall not recover its

costs of court against Marcus & Millichap. Good cause exists because Defendant

Prime Income Asset Management, LLC unreasonably increased costs in this

litigation.” Although the amended final judgment does not reflect precisely how

Prime, LLC “unreasonably increased costs in this litigation,” the record reflects

that, among other things, Prime, LLC failed to produce any documents in response

to Marcus & Millichap’s requests for production, which in turn required Marcus &

Millichap to spend additional time and money securing documents and testimony

from third parties to obtain and authenticate many of the documents ultimately

introduced at trial. In light of the record before us, we cannot conclude that the

trial court’s decision to deny Prime, LLC its costs amounted to an abuse of

discretion.

      We overrule Prime, LLC’s issue challenging the trial court’s denial of costs.

                                        15
                                      Venue

      By their fifth issue, the Prime Companies contend that the trial court erred in

denying their motion to transfer venue because there was no evidence that

Galveston County was a proper venue to try Marcus & Millichap’s cause of action

for breach of contract and the case should have been transferred to Dallas County

where the Prime Companies have their principal offices.

      When a trial court’s venue ruling is challenged on appeal after a trial on the

merits, an appellate court conducts an independent review of the entire record to

determine whether there is any probative evidence to support the trial court’s

venue ruling. TEX. CIV. PRAC. & REM. CODE §15.064(b); Wilson v. Texas Parks &

Wildlife Dep’t, 886 S.W.2d 259, 261 (Tex. 1994) (stating trial court’s denial of

motion to transfer venue is subject to de novo review).

      Venue is proper “in the county in which all or a substantial part of the events

or omissions giving rise to the claim occurred.” TEX. CIV. PRAC. & REM. CODE

ANN. § 15.002(a)(1) (West 2013). To determine whether a “substantial part” of the

events or omissions giving rise to the claim occurred in Galveston County, we

examine the essential elements of Marcus & Millichap’s cause of action for breach

of contract. See Chiriboga v. State Farm Mut. Auto. Ins. Co., 96 S.W.3d 673, 681

(Tex. App.—Austin 2003, no pet.). The satisfaction of a contractual condition

precedent “logically forms a substantial part of the events giving rise to” a breach

                                         16
of contract claim. See Southern Cnt’y Mut. Ins. Co. v. Ochoa, 19 S.W.3d 452, 460

(Tex. App.—Corpus Christi 2000, no pet.).

      If there is any probative evidence in the record demonstrating that venue was

proper in the county where judgment was rendered, the appellate court must

uphold the trial court’s determination. Ruiz v. Conoco, Inc., 868 S.W.2d 752, 758

(Tex. 1993); Chiriboga, 96 S.W.3d at 681; see also Bonham State Bank v. Beadle,

907 S.W.2d 465, 471 (Tex. 1995) (stating that appellate court must uphold trial

court’s venue determination if record contains any probative evidence that venue

was proper, even if preponderance of evidence is to the contrary). Although we

view the record in the light most favorable to the trial court’s ruling, we do not

defer to the trial court’s application of the law. Ruiz, 868 S.W.2d at 758;

Chiriboga, 96 S.W.3d 677–78.

      Marcus & Millichap contends that venue is proper in Galveston County

because it alleged that Prime, Inc. breached a contract for commission on the sale

of three Galveston County properties and that Fript visited the properties as part of

his performance of Marcus & Millichap’s obligations under the Fee Agreement.

The Prime Companies, on the other hand argue that venue is not proper in

Galveston because the lawsuit was not a suit regarding land, instead, it was a

breach of contract claim for payment of commissions, and contract claims

generally accrue in any county where the contract was formed, where it was to be

                                         17
performed, or where it was breached. See Killeen v. Lighthouse Elec. Contractors,

LP, 248 S.W.3d 343, 348 (Tex. App.—San Antonio 2007, pet. denied). The Prime

Companies further contend that Fript’s visits to the apartment sites were not

material to the claim or done in support or advancement of the Fee Agreement (i.e.,

unrelated to Marcus & Millichap’s performance of the Fee Agreement).

      Here, the obligation under the Fee Agreement to pay Marcus & Millichap

the contractual commission arose only when the Galveston County real estate was

sold. Although this is not a suit regarding land, the sale of property located in

Galveston County forms “a substantial part of the events giving rise to” this breach

of contract claim because the sale of the property was a condition precedent to the

obligation to pay a commission to Marcus & Millichap. See Ochoa, 19 S.W.3d at

460 (stating that satisfaction of contractual condition precedent “logically forms a

substantial part of the events giving rise to” breach of contract claim). Fript also

testified that he visited all three properties on a “couple” of occasions as part of his

role in the “sale of the three apartment complexes” in Galveston County. As such,

the record reflects that the real property at issue is located in Galveston County,

and that Fript visited the properties in Galveston County as part of his role as

facilitator of the property’s purchase and sale. In light of this evidence, we cannot

say that there is no probative evidence that venue was proper in Galveston County.

See Beadle, 907 S.W.2d at 471 (stating appellate court must uphold trial court’s

                                          18
venue determination if record contains any probative evidence that venue was

proper).

      We overrule the Prime Companies’ fifth issue.

                                   Conclusion

      We affirm the trial court’s judgment.

                                              Jim Sharp
                                              Justice

Panel consists of Justices Keyes, Sharp, and Huddle.

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