Court Opinion

ID: 37156
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:49:42+00
Date Added: 2024-06-11T17:15:34.624305
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                               F I L E D
                 IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT                December 17, 2004
                         _____________________
                                                           Charles R. Fulbruge III
                              No. 04-10504                         Clerk
                         _____________________

               SG/IP LTD, a Texas Limited Partnership,

               Plaintiff - Counter Defendant - Appellee,

                                versus

                          WILLIAM L. CENTERS,

            Defendant - Counter Claimant - Appellant.
_________________________________________________________________

           Appeal from the United States District Court
                for the Northern District of Texas
              District Court Cause No. 3:99-CV-556-L
_________________________________________________________________

Before GARWOOD, JONES and PRADO, Circuit Judges.

PER CURIAM.*

     This appeal involves the interpretation of the terms of an

option agreement between the appellant, William L. Centers

(Centers), and the appellee, SG/IP Ltd (SG/IP).     In the

agreement, SG/IP gave Centers the option to acquire a 50%

interest in an apartment complex that Centers’s wholly-owned

company, Centennial Mortgage, owned.     The option agreement

conditioned purchase of the option interest on the sale of the

apartment complex to SG/SC Ltd (SG/SC) who is not a party to the

     *
      Pursuant to 5TH CIRCUIT RULE 47.5, this court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.

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litigation.

     The agreement provided that Centers’s purchase of the option

interest would occur on the date of SG/SC’s purchase and

acquisition of the apartment complex (the closing).    The

agreement further provided that SG/IP would convey the option

interest simultaneously with SG/SC’s acquisition of the property.

The agreement required Centers to tender a certified check for

the purchase price of the option interest to SG/IP at the closing

for SG/SC’s purchase of the apartments.    Neither Centennial

Mortgage nor Centers attended the closing, and the property

closed in escrow.

     After the closing, a dispute arose between SG/SC and

Centennial Mortgage about ownership of the apartment complex.

Ultimately, a Florida state court resolved the dispute by

entering a judgment holding that SG/SC became the sole owner of

the apartments on the closing date.   Centers then asked SG/IP to

send him the documents to close on the option agreement.

     SG/IP responded that Centers no longer had a right to

purchase the option interest because the option agreement had

terminated.    SG/IP then sought declaratory judgment in Texas

state court that Centers had no right to acquire an interest in

the property.    Centers removed the lawsuit to federal court and

filed counterclaims for breach of contract and specific

performance.

     After considering the parties’ cross-motions for summary

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judgment, the district court determined that SG/IP was entitled

to summary judgment on Centers’s counterclaims and declared that

Centers had no right to the option.    Centers challenges those

determinations in this appeal.

     Centers first argues that the district court erred by

determining that SG/IP did not breach the option agreement.    To

prevail on his counterclaim for breach of contract, Centers had

to prove that he performed or tendered performance under the

option agreement.1    Centers, however, cannot prove that he

performed under the option agreement because the option agreement

required him to perform at the closing.    Centers failed to attend

the closing and failed to tender a check for the purchase of the

option interest.     Although Centers maintains that his obligations

under the option agreement did not begin until SG/SC actually

acquired the property, nothing in the option agreement suggests

that Centers was not obligated to perform at the closing.

Regardless of when SG/SC obtained the deed memorializing its

title to the apartment complex, the option agreement required

Centers to perform at the closing.2    Because the summary judgment

     1
      See Sullivan v. Smith, 110 S.W.3d 545, 546 (Tex.
App.—Beaumont 2003, no pet.) (“The elements of a cause of action
for breach of contract are: 1) the existence of a valid contract;
2) that the plaintiff performed or tendered performance; 3) that
the defendant breached the contract; and 4) that the plaintiff
was damaged as a result of the breach.”).
     2
      Moreover, it is clear that Centers, through Centennial
Mortgage, his wholly-owned company of which he was CEO, without
legal justification, wrongfully caused SG/SC not to receive the

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evidence indicates that Centers did not perform under the option

agreement, the district court correctly determined that SG/IP was

entitled to summary judgment on Centers’s counterclaim for breach

of contract.

     Centers next argues that the district court erred by

determining that he was not entitled to specific performance of

the option agreement.    To be entitled to specific performance,

Centers had to prove that he complied with his obligations under

the option agreement.3   Centers, however, did not perform his

obligations because he did not attend the closing and he did not

tender a check for the purchase of the option interest.    Despite

Centers’s efforts to distinguish the opinion on which the

district court relied,4 Texas law clearly indicates that only a

party who has performed his obligations under an agreement is

deed to the property until after the closing date.
     3
      Graves v. Alders, 132 S.W.3d 12, 18 (Tex. App.—Beaumont
2004, pet. denied) (explaining that party seeking specific
performance of a real estate contract must prove that he has
diligently and timely performed all contractual obligations);
Scott v. Vandor, 671 S.W.2d 79, 84 (Tex. App.—Houston [1st Dist.]
1984, writ ref’d n.r.e.) (determining that a plaintiff is not
entitled to specific performance where the plaintiff commits a
material breach of the contract); Advance Components, Inc. v.
Goodstein, 608 S.W.2d 737, 739 (Tex. Civ. App.—Dallas 1980, writ
ref’d n.r.e.) (stating that a party seeking specific performance
must show that he has taken all proper steps towards
performance).
     4
      The district court relied upon Ferguson v. von Seggern, 434
S.W.2d 380 (Tex. Civ. App.—Dallas 1968, writ ref’d n.r.e).

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entitled to specific performance.5    The district court did not

err by entering summary judgment in favor of SG/IP on Centers’s

counterclaim for specific performance.

     Finally, Centers complains that the district court erred by

declaring that he was no longer entitled to an option interest.

To show that the district court erred, Centers had to prove that

he performed his obligations under the agreement by the date

specified in the option agreement.6    The agreement gave Centers

until November 4, 1996 to exercise his option.    Although Centers

notified SG/IP that he intended to exercise his option on October

14, 1996, he did not attend the closing and he did not tender a

check for the option interest.   By failing to perform his

obligations under the option agreement, Centers lost his right to

acquire an interest under the option agreement.    Consequently,

the district court did not err by declaring that Centers had no

right under the option agreement.

     Because the district court correctly decided the issues

raised in this appeal, this court AFFIRMS the district court’s

judgment.

AFFIRMED.

     5
      See Goodstein, 608 S.W.2d at 739.
     6
      See Ferguson, 434 S.W.2d at 386 (determining that where
parties to an option agreement specify when performance must
occur, a party loses his right under the agreement if he fails to
perform by the specified date).

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