The Court issued one opinion with today’s order list.
That case is DiGiuseppe d/b/a Southbrook Development Co. v. Lawler, No. 04-0641.
In this 5-4 decision, the tiebreaking vote was cast by Justice Alan Waldrop of the Austin Court of Appeals, sitting by designation. His majority opinion was joined by Justices Hecht, Wainwright, Brister, and Willett. A dissenting opinion by Justice Green was joined by Chief Justice Jefferson, Justice O’Neill, and Justice Johnson. (Justice Medina did not sit on this case.)
The underlying dispute is about a real estate deal that broke down. DiGiuseppe (the buyer) sued for specific performance, and the jury was asked two questions — did he breach the contract and did the seller breach? The jury said “No” and “Yes,” awarding damages.
The Court held that DiGiuseppe failed to get a jury finding on an essential element of the specific performance remedy under Texas common law — that he was ready, willing, and able to carry out his own side of the deal. (( DiGiuseppe also argued that a contract provision stating that he had the option to “seek to enforce” specific performance made that remedy automatic and thus altered the background law. The Court disagreed. )) The four dissenting Justices would have held that the pleadings satisfied this burden without the need for a separate factual finding.
Take-away holding for trial lawyers: If you want specific performance, you should get a factual finding about your readiness, willingness, and ability to perform your own side of the deal at the time required by contract. The Court is very focused on the timing of those facts, suggesting it is not enough to show that you later could have come up with the funds. If timing is critical to the contract, timing is critical to this finding.
More complex point for appellate lawyers: The case also had an appellate procedure holding. The court of appeals held that DiGiuseppe had waived on appeal his right to seek the earnest money he had paid because he did not file a cross-appeal.
On this point, the Texas Supreme Court reversed. The Court explained that DiGiuseppe, who had sought this relief in the alternative in the trial court, did not need to file a cross-appeal. The Court reasoned that DiGiuseppe had obtained favorable relief in the trial court and, thus, he was not required to file his own notice of appeal to ask the appellate courts to award him the alternative relief of his earnest money.
DiGiuseppe argues that if the judgment in his favor for specific performance is reversed, he should be allowed to seek recovery on his alternative remedy under the purchase contract of termination and recovery of earnest money he paid. We agree. The court of appeals held that DiGiuseppe waived this option by failing to file a notice of appeal on the issue. However, this Court has held that a litigant who has obtained a favorable judgment and has no reason to complain in the trial court is not required to raise an issue regarding an alternate ground of recovery until an appellate court reverses the judgment. Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 747 S.W.2d 785, 787 (Tex. 1988). Consequently, DiGiuseppe was not required to raise his alternate theory of recovery until the judgment in his favor about which he had no complaint was reversed. Id. As soon as he was aware of the reversal of the judgment by the court of appeals, DiGiuseppe raised the issue of his alternative ground for recovery both in the court of appeals and in this Court. The issue is not waived.
I puzzled over this for a few minutes in light of the general rule that a litigant who has obtained more favorable relief below need not file a notice of appeal to preserve his right to seek less favorable relief on appeal.
At first I thought the Court was saying that specific performance was always more favorable relief than rescission or damages. (( It isn’t. In a case like this one, it may depend on the vagaries of the real estate market — and that answer might change dramatically during an appeal. What if the value of the land falls by 25%? The buyer may no longer want specific performance at the old price and might prefer the earnest money back. ))
Having now re-read the Boyce Iron Works case cited by the Court, the holding today appears to be narrower. The Court seems to be holding that a party who has been forced in the trial court to choose between two inconsistent judgments — such as a judgment of specific performance and a judgment of damages — can make a bad choice in the trial court, lose on appeal, and then get a remand to try the other door.
How do defendants in a case like this get closure in their first appeal? How do you attack a judgment that hasn’t been entered? The answer appears to be winning on some ground that would make remand futile — some ground that undermines both theories. Otherwise, your first appeal may become just a first step.