Opinion
NO. 03-14-00002-CV
05-12-2016
Charles Thomas Huth, Appellant v. Susan Kay England, Appellee
FROM THE DISTRICT COURT OF HAYS COUNTY, 274TH JUDICIAL DISTRICT
NO. 11-0050, HONORABLE WILLIAM R. HENRY, JUDGE PRESIDINGMEMORANDUM OPINION
Susan Kay England and Charles Thomas Huth filed claims and counterclaims against one another for fraud, deceptive trade practices, breach of contract, and other causes of action in this dispute arising from real-estate purchases. The trial court awarded England judgment for $90,000 from Huth, secured by a purchase-money equitable lien on a piece of real property. Huth contends that the trial court erred by awarding $90,000 and establishing the lien because England did not request that damages amount or relief, because she rejected an offer to create a secured debt on that property, because nothing in the record shows a specific intent for a lien to be imposed, and because she engaged in fraud in their dealings. We will affirm the judgment.
BACKGROUND
England and Huth had a personal and business relationship for several years. Huth's son was attempting to buy some property on Hilliard Road near San Marcos. Huth testified that his son was having difficulty financing the purchase and that England provided a deposit for an extension of the contract period. Huth's son backed out of the purchase shortly before closing, and England testified that Huth asked her to loan him $90,000 to buy the property. Huth offered her collateral in exchange, but England declined the collateral arrangement and bought the property herself. She testified that Huth planned to develop the Hilliard property. (At the time of trial, Huth lived on the Hilliard property.) England also bought property from Huth on Bonnyview near Canyon Lake in order, she testified, to provide funds that would help him pay a divorce debt and finish improvements there. She paid $250,000 for the Bonnyview property—$50,000 cash and proceeds from a $200,000 mortgage loan. She testified that she told Huth she could not afford to make any payments on the mortgage loan, and that Huth agreed to make those payments. She testified that after she bought the property, he paid her $60,000—which she said refunded the Bonnyview downpayment plus $10,000.
The parties memorialized the state of their financial relationship in a document dated November 29, 2008, listing England's loans to Huth for attorney's fees, travel, construction supplies, payments to Huth's workers, and $90,000 for the Hilliard property as well as credit for payments he had made. It notes a $60,000 deposit by Huth into England's bank account. The document states that Huth will pay $1,000 per month until his debt to England is satisfied and that he "is financially responsible for the $200,000 note on Bonnyview to Americahomekey, even though the loan is in Susan's name. She bears no financial responsibility at all for that loan." Both parties signed that document. Huth's responsibility for the mortgage was never otherwise formalized or communicated to the noteholder.
By deed dated December 27, 2008, England transferred ownership of the Hilliard and Bonnyview properties to Huth. England testified that Huth persuaded her he needed the property in his name because he was putting money into developing them and feared that if something happened to her, he would lose his investment in the properties that were in her name. England said he told her that, despite the formal ownership change, she would still own the properties. She testified that Huth dictated the deeds while she typed the text. Huth denied her version of events and said that England created the deeds. The deed to Huth for the Bonnyview property stated that it was made in exchange for a promissory note from Huth to Americahomekey, but Huth never signed such a note. Huth did not file these deeds for several months—May 2009 for the Hilliard property and October 2010 for the Bonnyview property. He testified that England told him to wait to file the Bonnyview deed because she was using it as collateral on a loan that she was getting.
England testified that she grew increasingly uncomfortable with the transfers and that, in April of 2009, she began asking Huth to return the properties to her name, but he refused. Huth undisputedly stopped making payments on the Bonnyview property, and England testified that she did not make the required payments because Huth was responsible for them even though she was the only person named in the note. The foreclosure sale of the Bonnyview property left a deficiency of about $55,000. England estimated that, in all, Huth owes her $110,000 from the balances set out in the November 2008 document.
Huth testified that his agreement with England was that he would reimburse her for her purchase of the Hilliard property with the proceeds of the Bonnyview sale. He described the arrangement as a loan for him to buy the Hilliard property. Huth testified that his $60,000 payment, combined with $30,000 in services rendered to her on some of her other properties, satisfied his debt on the Hilliard property. He acknowledged, however, that the November 2008 document stated that he still owed England for the Hilliard property.
Huth denied England's testimony that he dictated the deeds for the transfer of the Bonnyview and Hilliard properties. He said that he did not give a note to purchase the Bonnyview property from England. Huth testified that England filed a deed in August 2010 transferring the Bonnyview property from herself to herself as trustee several months after she had transferred the property to him, but before he actually filed the England-to-Huth deed in October 2010.
The trial court awarded England judgment for $90,000 secured by a purchase-money equitable lien imposed against the Hilliard property. The court denied all other claims and counterclaims.
DISCUSSION
Huth contends that the trial court erred by establishing the lien and awarding $90,000 because England did not request that relief or that amount, because she declined an offer to create a debt secured by a loan on that property, because nothing in the record shows a specific intent for a lien to be imposed, and because she participated in fraud concerning the property.
Huth argues that the court erred by establishing an equitable lien on the Hilliard property for $90,000 because England did not request one in her pleadings. Whether England's broad request for equitable relief is sufficient is immaterial because the issue was tried by consent. See Tex. R. Civ. P. 67. Trial by consent exists only in exceptional cases where the record clearly shows that the parties tried the unpleaded issue. Austin Area Teachers Fed. Credit Union v. FirstCity Bank-Nw. Hills, N.A., 825 S.W.2d 795, 800 (Tex. App.—Austin 1992, writ denied). It should not be applied in doubtful cases and does not apply when the evidence on the non-pleaded matter is relevant to pleaded issues. Id. We review whether an issue was tried by consent for an abuse of discretion. RR Maloan Invs., Inc. v. New HGE, Inc., 428 S.W.3d 355, 363 (Tex. App.—Houston [14th Dist.] 2014, no pet.). A party who allows an issue to be tried by consent and who fails to raise the lack of a pleading before submission of the case cannot later raise the pleading deficiency for the first time on appeal. Id. In this case, the issue was overtly tried from the beginning of the trial. During his opening statement, England's counsel discussed equitable liens arising on purchases of real estate and how the purchase of the Hilliard property tracked the required elements. The trial court stated, "[T]hen what you're asking is the—for the Court to declare the existence of an equitable lien in the amount." England's counsel responded, "That essentially would be correct." There was no objection, even when the court discussed equitable liens with Huth's counsel during his opening statement. Evidence relevant to the issue was admitted during trial, and the parties again discussed equitable liens during both parties' closing arguments. The court asked Huth's counsel about case law "that says if you front money for property, you get an equitable lien?" Huth's counsel responded, "Provided there's not wrongdoing by the seller or the person who's trying to claim the lien." There is no indication that Huth raised the lack of pleading before submission of the case. We find no error preserved or presented on this issue.
Huth contends that there is no evidence that England requested the specific amount of $90,000 in damages. We find and are cited to no rule requiring an exact match between the amount awarded and an amount pleaded in this type of case. The judgment must conform to the pleadings and the nature of the case proved and must give England all relief to which she is entitled. See Tex. R. Civ. P. 301; see also Thate v. Texas & Pac. Ry. Co., 595 S.W.2d 591, 601 (Tex. Civ. App.—Dallas 1980, writ dism'd) (judgment cannot exceed what plaintiff requested). England requested judgment for "actual and punitive damages," but did not state a specific amount. She attached as an exhibit a portion of the November 2008 statement later admitted into evidence showing a $90,000 debt from Huth to England for the Hilliard Road property. That conformed with testimony that England paid $90,000 for the property and that she did so in order to convey the property to Huth, which she eventually did. Huth argues that the evidence shows, in addition to his satisfaction of that debt, that the Hilliard transaction was part of a larger business arrangement between the parties and was not intended to be singled out. That is a question of credibility and the sufficiency of the evidence rather than the sufficiency of the pleadings to support the court's award of $90,000. The court as factfinder was required to weigh the evidence and could disregard evidence of other debts and arrangements or conclude that only this debt was proven and remained unsatisfied. We find no pleading limiting England's recovery or error in the court's choice to award $90,000 in damages.
When reviewing legal sufficiency of the evidence, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We must credit evidence favorable to the trial court's decision if a reasonable factfinder could and disregard all contrary evidence that a reasonable factfinder could ignore. Id. at 827.
Huth argues that the court erred by imposing the lien because England declined Huth's offer to create a lien in connection with the purchase of the property. See Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140, 143 (Tex. App.—Amarillo 1995, writ denied). But Huth argues in his brief that he offered the collateral to encourage England to finance the sale of the property to his son:
Huth offered to give England collateral other than a lien on the Hilliard Road property if she would finance the purchase of the property by his son. Also he told her his son, Brian, would execute a lien note and Deed of Trust to secure a loan to Brian if she would finance the purchase of the property for Brian Huth.The trial court, however, created the lien on the property related to Huth's ownership of the property. The Hoarel case and its antecedents did not hold that a party's rejection of security for a proposed purchase of property by one person prevents a court from imposing an equitable lien regarding a purchase by another person. See id. We find no error in the court's judgment.
Huth contends that the court erred in establishing a lien because neither the pleadings, the evidence, nor the testimony shows a specific intent to impose a lien on the property. He asserts that he made the Hilliard property his homestead after selling Bonnyview to England and that any evidence England introduced is too vague or uncertain to establish a lien, citing Chorman v. McCormick, 172 S.W.3d 22, 24 (Tex. App.—Amarillo 2005, no pet.) ("An equitable lien arises when the surrounding circumstances indicate the parties to the transaction intended that certain property would secure the payment of a debt.") The fundamental element necessary to create an equitable lien is the existence of an express or implied contract. Id. The Texas Supreme Court has held that "[e]stablished Texas law holds that when no express lien is reserved in a deed and the purchase money is not paid, a lien nevertheless arises by implication in favor of the vendor to secure payment of the purchase money." McGoodwin v. McGoodwin, 671 S.W.2d 880, 882 (Tex. 1984). England testified that she bought the Hilliard property with her own cash but on Huth's behalf and that she later transferred title to Huth who assured her she "still retained ownership of the property, so [she] was protected." Although Huth testified that he obtained title to and ownership of the property through his payment of $60,000 to England along with $30,000 in services provided, England testified that the $60,000 payment was a partial reimbursement of her downpayment and mortgage for purchasing Bonnyview on his behalf. Her 2008 statement of Huth's debts and payments lists the $90,000 debt for the Hilliard property and lists the $60,000 payment as a credit, but does not describe the payment as relating to the Hilliard property. The trial court, as factfinder, is the sole judge of the credibility of witnesses and the weight to give to their testimony. JP Morgan Chase Bank, NA v. Texas Contract Carpet, Inc., 302 S.W.3d 515, 524 (Tex. App.—Austin 2009, no pet.) (citing McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986)). Evidence showed a series of transactions aimed at purchasing the property for Huth. The evidence that Huth assured England that she was "protected" and still owned the Hilliard property despite the transfer to him, that Huth acknowledged in the November 2008 compilation that he owed England for the purchase price of the Hilliard property, and that he had not repaid that debt combine to show that the trial court did not err in imposing a purchase-money equitable lien despite whatever homestead interest Huth might claim in the Hilliard property. See Tex. Const. art. XVI, § 50 (homestead interests are protected from forced sale for the payment of debts except for the money used to buy the property); see also McGoodwin, 671 S.W.2d at 882 (factfinder makes credibility choices).
Huth further asserts the following:
The trial court erred in granting judgment in favor of England and denying Huth's counterclaim for fraud, common law and statutory, because England participated in the drafting and signed documents containing false information, when she knew the
information was false, using them to induce Huth to concede to her claims that he owed her over $100,000.00 in addition to reimbursing her and paying the mortgage on the Bonnyview property even though the actual title remained in her name and she was the only one liable on the mortgage.Huth's argument is flawed. The record includes deeds from England to Huth and to herself as trustee of some unnamed entity or person's estate—i.e., evidence that the Bonnyview property did not stay in her name even before the lender foreclosed. There is dispute over who prepared the England-to-Huth deed and what that person's intent was. The court was free to conclude that Huth did not prove a misstatement by England intended to induce reliance and resulting action that harmed him. The trial court was entitled to conclude that Huth did not show a connection between any fraud by England and the default on the Bonnyview mortgage, much less the transfer of the Hilliard property on which the judgment was based. The record contains evidence that the court could have found credible showing that the harms of which Huth complains have causes—such as his failure to make mortgage payments—other than any misstatements by England in the deeds. As discussed above, there is also evidence supporting the trial court's award of damages to England. We overrule all of Huth's issues and find no error in the judgment.
A common-law fraud claim requires "'a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury.'" Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998) (quoting Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994)). Fraudulent inducement is a distinct category of common-law fraud that shares the same elements but involves a promise of future performance made with no intention of performing at the time it was made. Id. at 48. --------
CONCLUSION
We affirm the judgment.
/s/_________
Jeff Rose, Chief Justice Before Chief Justice Rose, Justices Goodwin and Bourland Affirmed Filed: May 12, 2016