Lopez v. Rivas,
No. 01-14-00592-CV (Tex. App. - Houston [1st Dist] Apr. 30, 2015)
In an opinion issued April 30, 2015, a panel of the First Court holds that the parol evidence rule did not bar testimony regarding an oral promise by one sibling and his spouse to pay the other two siblings $20,000 each for their respective shares of a house valued at $60,000 that they had jointly inherited from their parents.
The general warranty deed recited that the conveyance was done for $10 dollars and other good and valuable consideration.
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| General Warranty Deed: Recitation of Consideration |
As for the acknowledgment of receipt and sufficiency thereof recited in the deed, the court concludes that it pertained to the promise to pay the $20,000 each, rather than the actual payment thereof. Therefore, the trial court did not err in entering judgment against the sibling who took the house and did not compensate the others for their respective shares.
The liability of the sibling's spouse is not discussed separately. Huddle adds in a footnote that the statute of frauds had not been invoked as an affirmative defense to enforcement of the oral agreement regarding the two $20,000 payments for the two siblings' shares of the property.
Opinion issued April 30, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00592-CV
———————————
HUMBERTO LOPEZ, JR. AND OLGA LOPEZ, Appellants
V.
MAYRA RIVAS AND LINDA LOPEZ, Appellees
On Appeal from the 190th District Court
Harris County, Texas
Trial Court Case No. 2011-32028
MEMORANDUM OPINION
Appellees Mayra Rivas and Linda Lopez conveyed, by a general warranty
deed, their respective one-third interests in their deceased parents’ property to their
brother and sister-in-law, Appellants Humberto Lopez, Jr. and Olga Lopez. Two
years later, Mayra and Linda sued Humberto and Olga, asserting that Humberto
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and Olga orally promised to pay them each $20,000, plus interest, for their
interests in the property in addition to the consideration of $10 recited in the deed.
After a bench trial, the trial court entered a final judgment awarding Mayra and
Linda damages in the amount of $20,000 each, plus interest. In their sole issue on
appeal, Humberto and Olga contend that the judgment must be reversed because
the parol evidence rule bars the trial court from considering Mayra and Linda’s
testimony concerning Humberto and Olga’s oral promise that contradicts the
express terms of the deed. We affirm.
Background
Humberto Lopez, Sr. and Delia Lopez were married and owned a home at
7833 Dayton Street in Houston, Texas. After their death, the Dayton Street
property devolved to their three surviving children—Mayra, Linda, and Humberto.
Each of the three siblings executed an “Affidavit of Distributees” in which they
stated that they each received a one-third interest in the property, which they
valued at $60,000.
Mayra and Linda conveyed their interests in the Dayton Street property to
Humberto and Olga by general warranty deed in April 2009. The deed recites that
Mayra and Linda granted, sold, and conveyed the Dayton Street property to
Humberto and Olga “for and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration to the Grantor in
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hand paid by Humberto Lopez and Olga Lopez . . . the receipt and sufficiency of
which is hereby acknowledged.”
Two years later, in May 2011, Mayra and Linda sued Humberto and Olga,
asserting breach of agreement, fraud in a real estate transaction, restitution, and
seeking attorney’s fees.1
According to Mayra and Linda, Humberto and Olga
orally agreed but failed to pay Mayra and Linda each $20,000 within one year, plus
3.5 percent interest for their respective interests in the property. Mayra and Linda
alternatively requested that in the event the trial court could not enforce their oral
agreement, the trial court restore the ownership interests they held before executing
the deed.2
The trial court conducted a bench trial at which Mayra and Linda were the
sole witnesses. They each testified that before signing the deed, Humberto and
Olga had agreed to pay Mayra and Linda each $20,000 within one year, plus 3.5
percent interest, and that they signed the deed in reliance on this promise to pay.
1 Mayra and Linda also asserted a vendors lien under their “foreclosure” claim and
requested that the trial court (1) order Appellants to provide an inventory of all
inherited personal property and (2) “account for such personal property” that they
“took possession of after their mother’s death [and was] no longer in Defendants’
possession . . . .”
2 Mayra and Linda also requested that (1) the trial court order Humberto and Olga to
2 Mayra and Linda also requested that (1) the trial court order Humberto and Olga to
provide Mayra and Linda with an “accounting of all rental income and expenses
from the Property since June 22, 2008, and to award [Mayra and Linda] two-thirds
of the net rental income from the property” and (2) the trial court enter a
temporary injunction enjoining Humberto and Olga “from spending or using for
their own, personal benefit any of net rental income derived from the rental or
lease of the Property.”
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Mayra and Linda also both testified that Humberto and Olga admitted that they
were attempting to secure financing to make good on their oral promise.
Specifically, Mayra and Linda testified that they received the following letter in
which Humberto and Olga’s attorney stated:
Dear Mayra and Linda: March 2, 2011
It is my understanding that it will take several more weeks to
complete and fund the loan, as the broker is still shopping for the best
deal for them. Humberto wants to thank you for your patience and
understanding . . . . As soon as they obtain the loan, all of you will sit
down together to discuss how to amicably resolve any unresolved
issues with your mother’s estate.
The trial court admitted the letter.
On April 15, 2014, the trial court entered a final judgment in favor of Mayra
and Linda. The judgment states: “as a result of [Humberto and Olga’s] breach of
contract and fraud in a real estate transaction, [Mayra and Linda] have sustained
damages and that [Mayra and Linda] should recover damages and costs from
[Humberto and Olga] jointly and severally.” The trial court awarded Mayra and
Linda attorney’s fees and ordered Humberto and Olga, jointly and severally, to pay
Mayra and Linda $20,000 each with prejudgment interest at 3.5 percent interest
and post-judgment interest at 5 percent. Humberto and Olga filed a motion for
new trial, which was overruled by operation of law. See TEX. R. CIV. P. 329b(c).
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Discussion
In their sole issue on appeal, Humberto and Olga contend that the trial court
erred in admitting parol evidence of an oral promise to contradict or vary the terms
of the general warranty deed. They argue that this error requires reversal because
it “was the only evidence offered in support of the trial court’s judgment.”
A. Standard of Review and Applicable Law
When parties reduce an agreement to writing, the law of parol evidence
presumes, in the absence of fraud, accident, or mistake, that any prior or
contemporaneous oral or written agreements merged into the final written
agreement. See DeClaire v. G & B Mcintosh Family Ltd. P’ship, 260 S.W.3d 34,
45 (Tex. App.—Houston [1st Dist.] 2008, no pet.). Any provisions not set out in
the writing are presumed to have been abandoned before execution of the
agreement or, alternatively, they are presumed to have never been made. Id.
Likewise, the parol evidence rule provides that the terms of a written contract
cannot be contradicted by evidence of an earlier, inconsistent agreement. Baroid
Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.—Houston [1st
Dist.] 2005, pet. denied).
The parol evidence rule is not a rule of evidence, but a rule of substantive
contract law. Jarvis v. K & E Re One, LLC, 390 S.W.3d 631, 638 (Tex. App.—
Dallas 2012, no pet.). Its applicability is a question of law that we review de novo.
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Audubon Indem. Co. v. Custom Site–Prep, Inc., 358 S.W.3d 309, 316 (Tex. App.—
Houston [1st Dist.] 2011, pet. denied).
B. Analysis
Humberto and Olga contend that the deed expressly states that the agreedupon
consideration was $10. Therefore, they argue, the parol evidence rule bars
consideration of evidence to contradict or vary that term. They contend that the
statement in the deed that the consideration’s “sufficiency . . . is hereby
acknowledged” supports their claim that the trial court could not consider evidence
of the oral promise.3
In contrast, Mayra and Linda contend that the trial court
properly admitted parol evidence to show the amount of consideration referenced
in the deed by the words “other good and valuable consideration.” We agree with
Mayra and Linda.
The parol evidence rule does not bar evidence of a consistent collateral
agreement. Ledig v. Duke Energy Corp., 193 S.W.3d 167, 179 n.10 (Tex. App.—
Houston [1st Dist.] 2006, no pet.). Thus, parol evidence may be used to clarify or
explain the agreement. Tex. Builders v. Keller, 928 S.W.2d 479, 481 (Tex. 1996).
In addition, we may consider parol evidence “‘to show want or failure of
consideration, and to establish the real consideration given for an instrument.’”
Audubon, 358 S.W.3d at 316 (quoting DeLuca v. Munzel, 673 S.W.2d 373, 376
3 We note that Humberto and Olga did not raise the statute of frauds as a defense in
the trial court or on appeal.
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(Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.)); see McLernon v.
Dynergy, Inc., 347 S.W.3d 315, 335 (Tex. App.—Houston [14th Dist.] 2011, no
pet.) (“[P]arol evidence is admissible to show want or failure of consideration and
establish the actual consideration given for the instrument.”). Thus, we may
consider parol evidence “to determine if consideration exists even though the
parties have reduced their agreement to a writing which appears to be a completely
integrated agreement.” Audubon, 358 S.W.3d at 316 (internal quotations and
citations omitted).
Here, we conclude that Mayra and Linda’s testimony concerning the oral
promise was admissible to show the actual consideration given for the deed
because it did not contradict or vary the deed’s terms. The deed states that, in
addition to $10, “other good and valuable consideration” was given for the deed.
Deeds ordinarily embody such recitals of nominal consideration and “other good
and valuable consideration.” See, e.g., Averyt v. Grande, Inc., 717 S.W.2d 891,
898 (Tex. 1986); Tatum v. Tatum, No. 14-11-00622-CV, 2012 WL 1795112, at
*2–3 (Tex. App.—Houston [14th Dist.] May 17, 2012, no pet.); Troxel v. Bishop,
201 S.W.3d 290, 294 (Tex. App.—Dallas 2006, no pet.). Therefore, evidence that
establishes what the “other” consideration was is admissible to establish the true
consideration given in the consistent collateral agreement and does not contradict
or vary the terms of the deed. See ERI Consulting Eng’rs, Inc. v. Swinnea, 318
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S.W.3d 867, 875–76 (Tex. 2010) (testimony of consideration was proper under
exception to parol evidence rule because “if the parties agreed that the lease
obligation was to be additional consideration for the buyout, then such an
agreement was a consistent collateral agreement. Nothing in such an agreement
would contradict the written contracts.”); Deluca, 673 S.W.2d at 376 (parol
evidence admissible to explain provision of release concerning consideration);
Tarrant v. Schulz, 441 S.W.2d 868, 869–70 (Tex. Civ. App.—Houston [14th Dist.]
1969, writ ref’d n.r.e.) (where deed recited consideration of “$10 and other good
and valuable consideration . . . parol evidence was admissible to show the true
consideration or that there was no consideration given”).
Humberto and Olga rely on Johnson v. Driver, 198 S.W.3d 359 (Tex.
App.—Tyler 2006, no pet.), to support their contention that evidence of the oral
promise was inadmissible. In Johnson, the defendant argued that the deed, which
stated that the property was “granted, sold, and conveyed” “in consideration of ten
dollars and other valuable consideration,” evidenced a gift. Id. at 361. The court
of appeals held that the appellant could not introduce parol evidence to show that
the conveyance was a gift, rather than a sale, where appellant did not argue
ambiguity. Id. at 363–64. But, here, Mayra and Linda did not offer parol evidence
to prove that the conveyance was a gift; rather, they offered evidence to show that
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the phrase “other consideration” in the deed referred to a consistent collateral
agreement. See id. Accordingly, Johnson does not support reversal here.
Humberto and Olga also contend that evidence of the oral promise was
inadmissible because the words “the receipt and sufficiency of which is hereby
acknowledged” “memorialize[d] the grantor’s admission that the consideration,
while not disclosed, was nevertheless satisfactory.” According to Humberto and
Olga, these words also mean that Mayra and Linda acknowledged receipt of all the
consideration they were provided and, therefore, no consideration can be
outstanding. But, as Mayra and Linda point out, the consideration that was
deemed sufficient and of which receipt was acknowledged was the promise to pay
Mayra and Linda each $20,000 plus interest for their respective interests in the
property. Therefore, we conclude that the phrase “the receipt and sufficiency of
which is hereby acknowledged” does not render evidence of the oral promise
inadmissible. We hold that the trial court did not err in admitting Mayra and
Linda’s evidence of Humberto and Olga’s oral promise.
We overrule Appellants’ sole issue.
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Conclusion
We affirm the judgment of the trial court.
Rebeca Huddle
Justice
Panel consists of Justices Jennings, Higley, and Huddle.
THE STATUTE OF FRAUDS WAS NOT RAISED IN THE ANSWER
CASE STYLE ON APPEAL: Humberto Lopez, Jr. and Olga Lopez v. Mayra Rivas and Linda Lopez., No. 01-14-00592-CV (Tex. App. - Houston [1st Dist] Apr. 30, 2015) (Memorandum Opinion by Justice Rebeca Huddle)
TRIAL COURT CASE INFO: Mayra Rivas and Linda Lopez vs. Humberto Lopez, Jr. and Olga Lopez; Harris County District Clerk Cause No 2011-32028; Judgment for Plaintiffs signed by Judge Patricia J. Kerrigan, presiding judge of the 190th District Court,
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