Opinion issued May 12, 2011

In The

Court of Appeals

For The

First District of Texas

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NO. 01-10-00141-CV

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William C. Robbins, Appellant

V.

Maxwell-GMII, Inc., Appellee

On Appeal from the 11th District Court

Harris County, Texas

MEMORANDUM OPINION

This is a dispute over who is entitled to the earnest money deposited by the potential buyer of an automobile dealership when the transaction failed to close.  The trial court granted summary judgment, concluding that the seller was entitled to retain the earnest money.  We affirm.

Background

On July 25, 2008, Plaintiff/Appellant William C. Robbins entered into an Asset Purchase Agreement (“APA”) to purchase a San Antonio automobile dealership, Freedom Chevrolet, from Defendant/Appellee Maxwell-GMII, Inc.  In accordance with the APA’s terms, Robbins deposited $250,000 in earnest money with an escrow agent.   

1.     The APA’s earnest money provisions

The APA provides for disbursement of the earnest money to either Robbins or Maxwell, depending on whether the contemplated transaction closed and, if it did not, depending on the reason.  Each scenario provides for disbursement to Maxwell, the seller, except:

If Purchaser elects not to close because of Seller’s default or the failure to satisfy any of the conditions in Sections 4.1.1, 4.1.5., or 4.1.8 below, then the Earnest Money Deposit shall be returned to Purchaser.

The parties agree that Maxwell was never in default, and that Section 4.1.1 is the only condition at issue here.  It provides:

4.1.    Conditions Precedent to Obligations of Purchaser.  The obligations of Purchaser to consummate the transactions contemplated by this Agreement at the Closing are subject to the satisfaction, or the written waiver by Purchaser, of each of the following conditions:

4.1.1. Unconditional approval by the Manufacturer of Purchaser for a new Sales and Service Agreement for Chevrolet on Chevrolet’s standard form.

Robbins received this unconditional approval from General Motors (“GM”) on October 9, 2008, seventy-six days after the APA was entered.  It is the effect of the timing of that approval upon which this dispute turns.

2.     Closing date

Section 5.1 of the APA provides that:

Unless otherwise agreed to in writing by the parties, closing of the transactions contemplated by this Agreement shall take place at the Dealership Location on the first Monday, following the satisfaction or waiver of the conditions contained in Section 4, above (“Closing Date”), or such other date as mutually agreed by Seller and Purchaser.  If the Closing has not occurred on or before the date that is sixty (60) days after the date of this Agreement (“Closing Date Deadline”), either party may terminate this Agreement by written notice to the other party, provided that rights and remedies of a party arising from or related to a breach of this Agreement shall survive the termination.

The parties entered a Letter Agreement, also on July 25, 2008, memorializing an additional agreement related to section 5.1 of the APA and the timing of the approvals serving as conditions precedent under the APA:

Section 5.1 of the [APA] states that either party may terminate the [APA] if Closing has not occurred by the Closing Date Deadline.  Section 4.1.1 of the [APA] states that it is a condition precedent to Purchaser’s obligation to consummate the transactions contemplated by the [APA] that Purchaser receive unconditional approval by [General Motors]. . . . If Closing has not occurred by the Closing Date Deadline and the only remaining conditions are Manufacturer approval as contemplated by Section 4.1.1 . . . Purchaser may extend the Closing Date Deadline two (2) times by written notice to Seller prior to the original or the extended, as the case may be, Closing Date Deadline for an additional thirty (30) days each.

On the Closing Date Deadline of September 23, 2008 (60 days following the date of execution of the APA), approval from GM had not been received.  At this point, Robbins did not, however, “terminate this Agreement by written notice” as permitted under 5.1, or “extend the Closing Date Deadline . . . by written notice to Seller prior to the . . . Closing Date Deadline” as permitted by the Letter Agreement.  Instead, he met with Mr. Callison, a representative of Maxwell’s, on September 25, 2008 and told Callison that he was only interested in moving forward under the APA if the dealership price was reduced.  According to Robbins, Callison suggested that Robbins not formally terminate the APA, and that Robbins continue seeking GM approval and propose a reduced purchase price after the approval was obtained.  After GM approval was received on October 9, 2008, Robbins offered a lower price that was rejected by Maxwell.  On October 16, 2008, Maxwell requested a closing under the APA, noting that all the conditions had been satisfied.  The following day, Robbins’s attorney sent written notice that Robbins “has terminated the [APA] . . . due to our client’s failure to obtain General Motor’s Corporation’s approval . . . by the Closing Date Deadline (as defined by the [APA]).” That letter also requested immediate return of the $250,000 earnest money deposit, plus interest.  Maxwell refused to return the earnest money.

3.     The trial court proceedings 

Robbins sued Maxwell, alleging it breached the APA and seeking return of the earnest money, interest, and attorneys’ fees.  Maxwell counterclaimed for breach of the APA, and for a declaratory judgment that Robbins was not entitled to return of the earnest money.

Maxwell moved for partial summary judgment on Robbins’s claim that Maxwell breached the APA by failing to return the earnest money.  After Maxwell’s summary judgment motion was on file, Robbins filed an answer to Maxwell’s counterclaims, pleading the affirmative defenses of estoppel, waiver and modification, and that the APA was ambiguous.  Robbins responded to Maxwell’s motion and, in response to the trial court’s questions at the summary judgment hearing, both parties filed additional supplemental briefing to address whether Robbins had a “legal excuse” for not formally terminating, and whether Robbins’s affirmative defenses to Maxwell’s counterclaims impacted whether Maxwell was entitled to summary judgment. 

On December 7, 2009, the trial court granted a partial summary judgment in Maxwell’s favor.  On January 19, 2010, Maxwell nonsuited its pending counterclaims, rendering the court’s partial summary judgment final.  Robbins appealed. 

Standard of Review    

We review the trial court’s decision to grant summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).  To prevail on a summary judgment motion, the movant must demonstrate that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c);  City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979) (movant must conclusively prove all “essential elements of his cause of action or defense as a matter of law”).  In deciding whether there is a disputed material fact issue precluding summary judgment, we must take evidence favorable to the nonmovant as true, indulge every reasonable inference in favor of the nonmovant, and resolve any doubts in the nonmovant’s favor. Dorsett, 164 S.W.3d at 661; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985).  If the movant shows that it is entitled to judgment as a matter of law, the burden shifts to the nonmovant to present evidence to raise a material fact issue that precludes summary judgment. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).  

 “[A] court interprets a contract by ascertaining the true objective intentions of the parties, based on the contract language.” SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005) (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)).  A court construes written instruments as a whole in an effort to harmonize and give effect to all the provisions of the instrument so that none will be rendered meaningless.  Dorsett, 164 S.W.3d at 662; Shell Oil Co. v. Khan, 138 S.W.3d 288, 292 (Tex. 2004).  Contract terms are given their “plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense.” Dorsett, 164 S.W.3d at 662. If a contract is capable of more than one reasonable interpretation, it is ambiguous; if, however, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and we will construe it as a matter of law. Coker, 650 S.W.2d at 393; Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 131 (Tex. App.—Houston [14th Dist.] 2000, pet. dism’d).

The Parties’ Arguments

Robbins argues that he is entitled to return of the earnest money because the APA terminated automatically on the Closing Date Deadline—sixty days after the APA was executed—because GM approval had not been received by that date, and because Robbins did not formally elect to extend the Closing Date Deadline as provided under the Letter Agreement.  Alternatively, Robbins contends, if “the APA did not terminate automatically on September 23, 2008, Maxwell waived and/or is estopped from denying Robbins’s right to receive” the earnest money.  Finally, Robbins argues that he raised a fact issue about whether the contract with Maxwell was orally modified.   

Maxwell argues that the APA provides for the earnest money to be retained by the seller if Robbins terminates after all the preconditions to the transaction have been met.  Maxwell also disputes that there is any evidence in support of Robbins’s waiver or estoppel theories, and that these affirmative defenses cannot create liability.  Maxwell further disputes that the contract could be orally modified and argues that, in any event, the facts even as Robbins alleges them would not amount to a modification of the agreement.  We agree with Maxwell and thus affirm the trial court’s summary judgment.

Analysis

Section 5.1 does not, as Robbins contends, provide for automatic termination of the APA sixty days after the date of its execution, defined in section 5.1 as the “Closing Date Deadline.”  Instead, Section 5.1 provides that after the Closing Date Deadline, “either party may terminate this [APA] by written notice to the other party.”  (emphasis added).  The Letter Agreement further provides that the buyer, Robbins, “may extend the Closing Date Deadline . . . by written notice to Seller . .  . for an additional thirty (30) days.” (emphasis added).

By its plain language, Section 5.1 obligates both parties to close upon the meeting of certain conditions.  The significance of Section 5.1’s 60-day Closing Date Deadline is that, if that date is passed without conditions precedent for closing being satisfied or waived, either party has the option of terminating the parties’ obligations after that date by providing written notice.  The Letter Agreement permits—but does not obligate—Robbins to bind both parties for two additional 30-day periods by extending the Closing Date Deadline if GM approval has not yet been received by the Closing Date Deadline.  In other words, the Letter Agreement simply provides a mechanism for Robbins to push into the future the date on which the parties are first permitted, with written notice, to terminate the APA.  These provisions are not ambiguous, and nothing in their actual language supports Robbins’s argument that termination of the APA occurs automatically after sixty days. 

Robbins would be entitled to return of the earnest money if he “elect[ed] not to close because of . . . the failure to satisfy any of the conditions in Section 4.1.1” (i.e., unconditional approval from GM).  Thus, had Robbins provided written notice of termination of the APA after the Closing Date Deadline of September 23, 2008 but before GM’s approval was received on October 9, 2008, he would have been entitled to return of the earnest money.  He elected not to terminate then, instead actively seeking GM’s approval and only terminating after that approval was received because Maxwell refused to accept a lower price.  Robbins was not in breach of the APA by providing written notice of termination after the Closing Date Deadline because either party could at that time elect to terminate the agreement.  But because GM’s approval had been received before Robbins terminated the APA, Robbins failed to satisfy the condition for return of the earnest money because he did not “elect[] not to close because” GM approval had not been received.  By that point, GM approval had been granted. 

  The three cases Robbins cites in support of his interpretation are not on point.  First, he cites Maywood Proviso State Bank v. York State Bank & Trust Company, an Illinois case, for the proposition that a contract terminates automatically upon the failure of a condition precedent because the court in that case held that a bank purchaser’s failure to timely obtain FDIC approval terminated the purchase agreement.  625 N.E.2d 83, 88 (Ill. App. 1993).  Maywood is not instructive, as (1) it involved different contract terms—a contract that tied regulatory approval to a set deadline, (2) the buyer tried to revive the contract by waiving the regulatory approval deadline after the seller had given written notice of termination of the agreement for nonperformance, and (3) the contract contained a time-is-of-the-essence clause.  Id. 

Tiger Truck, LLC v. Bruce’s Pulp & Paper, LLC, a Beaumont Court of Appeals case that Robbins cites for the proposition that a party need not cancel a contract on the first day it is permitted to for termination of a contract to be timely, is likewise distinguishable.  282 S.W.3d 176, 187–88 (Tex. App.—Beaumont 2009, no pet.).  At issue in Tiger Truck was a provision allowing the buyer to recoup its earnest money if it terminated a purchase contract pursuant to its termination terms.  Id. at 186.  The contract permitted the buyer to terminate the contract if due diligence was not completed within 60 days.  Id.  The buyer terminated the contract almost 120 days after the contract was signed, when the ongoing due diligence indicated environmental problems existed on the property that could not easily be worked around.  Id. at 184.  The court held the buyer was entitled to terminate the contract at that point and recover its earnest money.  Id. at 187.  Tiger Truck does not involve a situation in which, as here, the condition precedent in question is met before termination of a contract and the buyer’s right to recover earnest money is conditioned upon that condition not being met.

Zemnovich v. 2729 Coney Island Ave., LLC—a New York trial court opinion Robbins cites as “squarely support[ing] Robbins position that the contract automatically terminated on September 23, 2008 due to the failure to obtain GM approval and the fact that Robbins’s notice of termination was after subsequent GM approval is irrelevant”—is likewise inapposite.  See No. 7739/08, 2009 WL 1777216 (N.Y. Supp. June 22, 2009) (not designated for publication).  In Zemnovich, a buyer sought termination of a real estate purchase contract under a 45-day financing contingency.  Id. at *1.  He received financing, after the 45 days but before he sought termination the contract, in the form of approval of an assumption of the seller’s mortgage of $ 1,420,000.  Id. at *5.  The court held, however, that the “purchaser’s obligation to purchase under the contract remains conditioned upon the ‘issuance,’ specifically on or before the Commitment Date, of a ‘written commitment’ to a first mortgage of $1,575,000.”  Id.  The court held that a financing commitment of $1,575,000 was not received, and the buyer was entitled to return of his earnest money.  Id.  Not only does Zemnovich involve a contract with different terms, it is not analogous because the condition precedent at issue in Zemnovich was not satisfied before the buyer terminated the contract and sought return of his deposit. 

We likewise reject Robbins’s argument that Maxwell is “waived and/or estopped from denying Robbins’[s] right to receive the Earnest Money.”   While this assertion is made in the “Summary of the Argument” section of his appellant’s brief, his brief contains no citation to any authority related to a waiver or estoppel theory, and no argument specific to these issues.  See Tex. R. App. P. 38.1(f), (i) (brief should “state concisely all issues or points presented for review” and “a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record”).  We glean from his arguments below and factual recitation here that his waiver/estoppel theory is based on his assertion that Maxwell’s representative—when told that Robbins was not interested in closing at the agreed-upon price—“suggested that Robbins not formally terminate the APA but continue to pursue GM approval and once approval was obtained propose the lower price.”  Even taking these assertions as true, Robbins does not contend that Maxwell’s employee made any representations related to return of the earnest money.  For this same reason, we reject Robbins’s argument that he raised a fact issue as to whether the APA was orally modified.  Robbins’s assertions about Maxwell’s suggestion, taken as true, would not amount to a modification of the APA, as Robbins does not allege that Maxwell’s representative said that a lower price would necessarily be accepted or that he purported to orally alter the earnest money provisions of the APA.      

Conclusion

  We affirm the trial court’s summary judgment. 

                                                                   Sherry Radack

                                                                   Chief Justice

Panel consists of Chief Justice Radack and Justices Alcala and Bland.