Walter Umphrey, Trustee v. Waffle House, Inc., et al.--Appeal from 172nd District Court of Jefferson County

NUMBER 13-01-085-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI

_______________________________________________________________________

WALTER UMPHREY, TRUSTEE, Appellant,

v.

WAFFLE HOUSE, INC., ET AL., Appellees.

_______________________________________________________________________

On appeal from the 172nd District Court of Jefferson County, Texas.

_______________________________________________________________________

O P I N I O N

Before Justices Dorsey, Ya ez, and Wittig[1]

  Opinion by Justice Wittig

Lease and deed restrictions on commercial property are at issue. In this, the second appeal from summary judgment, we examine whether appellant is barred from bringing his claim based upon the equitable doctrine of changed circumstances. In the first appeal, the Beaumont Court of Appeals reversed a summary judgment rendered in favor of appellant, Walter Umphrey, Trustee. The Beaumont court held the restrictions in question did not violate the state=s antitrust laws. Waffle House, Inc. et al v. Walter Umphrey, Trustee, No. 09-99-272 CV, 2000 WL 1273421 (Tex. App.CBeaumont, September 7, 2000) (not designated for publication). Upon remand, appellees Waffle House and Forbus Food, Inc. immediately filed their own motion for summary judgment under Texas Rule of Civil Procedure 615a(c). After a brief postponement, the trial court again granted summary judgment, this time in favor of Waffle House and Forbus Food, Inc.

Appellant essentially complains the trial court erred in granting the summary judgment because he had an alternative ground for relief not addressed in the earlier appeal. Appellant states the asserted four year statute of limitations does not apply, that he had standing to sue, that his damages are continuous and unnecessarily restricting his property, that he has not waived any claims, nor is he estopped from asserting such claims. Finally, appellant argues two constitutional issues regarding due process issues. Because of our disposition, we need not address these last two issues (which are likely waived because appellant voluntarily entered into a Rule 11 agreement re-setting the summary judgment motion; appellant agreed to the hearing date and should not now be heard to complain)[2]. We, like the Beaumont Court of Appeals, will reverse and remand.

Background

When appellant went to sell his 2.41 acre property located on Interstate 10 in Beaumont, he found that appellees would not release the restrictive covenants dating back to a collateral lease in 1977. Umphrey claimed he only recently became aware of the restrictive covenants before filing suit in 1997. He also claimed that since he purchased the land in 1986, the adjacent interstate property emerged as a virtual restaurant row. New developments, including restaurants, changed the landscape and thus the circumstances of the restrictions. (The restrictions not only disallow restaurant competition but also forbade even serving or giving away any food or drink. After his first appellate rebuff, the gravamen of Umphrey=s claim shifted from statutory anti-trust to equity. While the equitable, changed circumstances claim, is pled with more articulation in his third amendment petitionBfiled after remandBhis original petition also complained in less detail about this equitable remedy. Appellant sought a declaratory judgment to quiet title and remove or reform the restrictive covenants.

Standard of Review

We review the trial court's granting of the motion for summary judgment de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Texas Commerce Bank Rio Grande Valley v. Correa, 28 S.W.3d 723, 726 (Tex. App.BCorpus Christi 2000, pet. denied). Appellees were required to establish that no genuine issue of material fact existed and that judgment should be granted as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). We presume all evidence favorable to appellant to be true, and indulge all reasonable inferences and resolve any doubts in his favor. Id. 548 49

Analysis

Appellees' motion for summary judgment was based almost entirely upon documents without other supporting proof. The issues in the summary judgment motion generally correspond to appellant=s issues. Therefore, we will address the questions in the order found in the underlying motion for summary judgment.

Appellees first argument to the trial court was that the restrictions were valid and enforceable and ran with the land. Appellees expand this argument on appeal to include resjudicata.[3] We will not consider this second argument because it was not made in the motion to the trial court. McConnell v. Southside ISD, 858 S.W.2d 337, 342 (Tex. 1993).

Appellees cite City Products Corp v. Berman, 610 S.W.2d 446 (Tex. 1980) and other cases for the general proposition land use restrictions are valid as found in a lease. This legal principle does not seem to be greatly disputed, although the pleadings show there was a lease subsequent to Umphrey=s deed that would have had the effect of extending if not enlarging the scope of the underlying lease restrictions. Remarkably, nowhere in this first issue presented to the trial court do appellees address appellant's equitable "change of circumstance" argument. Because appellees did not address this issue before the trial court, it cannot be a grounds for sustaining the order granting summary judgment. McConnell, 858 S.W.2d at 342. Merely because restrictions may have general validity, does not per se imply the inapplicability of equitable principles. Similarly, although the Beaumont Court of Appeals found the restrictions "valid" in that they are not violative of anti trust statutes, that court=s remand leaves open appellant's alternative theories. Because appellees did not even address the validity of the restrictions when there are changed circumstances, we cannot affirm the summary judgment on that ground. Id.; See also City of Midland v. O=Bryant, 18 S.W.3d 209, 218 (Tex. 2000). We sustain appellant's first issue.

Appellees next raised a statute of limitation argument corresponding to appellant=s second issue. First appellees claimed the matter was barred by the Aapplicable statute of limitation.@[4] In the next paragraph, appellees cite the four year limitation statute under Texas Business and Commerce Code Section 15.25 (Vernon=s 1997). This is the anti-trust statute, already ruled upon by the Beaumont Court of Appeals. This argument obviously does not apply because appellant=s anti-trust claim has already been decided adversely to him[5]. Next, appellees cited Henderson v. Henderson, 694 S.W.2d 31, 36 (Tex. App.BCorpus Christi 1985, writ ref=d n.r.e.).[6] Appellees= reliance onHenderson is quizzical because of its holding. While it is true Henderson states the four year residual statute of limitations can apply, it refused to apply the statute to a deed recorded some ten years before. Henderson, 694 S.W.2d at 36. (limitations does not begin to run until the cause of action was discovered or, by reasonable diligence, should have been discovered) (question of when a mistake should have been discovered is one of fact). Courts have recognized a blanket exception to the statute in suits for reformation based on mutual mistake in deeds, as long as no rights of bona fide purchasers have intervened. Id.

Henderson relies in turn upon Brown v. Havard, 593 S.W.2d 939 (Tex. 1980). There the Supreme Court of Texas, just as in Henderson, relied upon equitable principles in holding the four-year limitation statute would not apply. Brown quotes from Sullivan v. Barnett, 471 S.W.2d 39 (Tex. 1971): AThe weight of authority is that once the presumption of immediate knowledge is rebutted, the statute of limitation will commence to run when the mutual mistake was, or in the exercise of reasonable diligence should have been, discovered.@

Brown further relies upon McClung v. Lawrence, 430 S.W.2d 179 (Tex. 1968), where the supreme court reversed and remanded for trial a summary judgment granted the defendant on his plea of the four year statute of limitations in McClung's suit to reform a 1947 deed upon allegations of mutual mistake. A[E]quity will grant relief against such a mistake of law.@ Brown, 593 S.W.2d at 944. In such a situation the statute of limitations will commence to run when the mistake was, or in the exercise of reasonable diligence should have been, discovered. Id. Brown next discusses Miles v. Martin, 321 S.W.2d 62 (Tex. 1959), where the supreme court reversed a judgment based on limitations and remanded the case for a trial of grantor's right to equitable relief of reformation because of an alleged mutual mistake as to the effect of the royalty reservation. Id. The deed sought to be reformed had been executed almost six years prior to filing of the suit. Id.

Appellant counters appellees= limitation argument claiming that the law has long recognized no limitation to this type of equitable action. He directs us to Watson v. Rochmill, 155 S.W.2d 783, 785 (Tex. 1941) (lessor action for removal of cloud of title to mineral interest in land was continuous and consequently not barred by limitation). Our court has also held that an equitable remedy exists to remove restrictions when change has been so radical it renders continuation of the covenants without substantial benefit to the dominant estate. Simon v. Henrichson, 394 S.W.2d 249, 254 (Tex. App.BCorpus Christi 1965, writ ref=d, n.r.e.). We further held that the rules of equity govern when restrictions become unenforceable. Id. And finally we have read that limitations statutes do not absolutely bind courts of equity. Oldham v Medearus, 39 S.W. 919, 920 (Tex. 1897).

We need not either read nor extend equitable principles into perpetuity. It is well settled law that limitations begin to run Awhen a right of action accrues@. Stella Products v. Scott, 875 S.W.2d 462, 464 (Tex. App.BAustin 1994). Query: When did Umphrey=s cause of action for changed circumstances accrue? While ordinarily this is stated in plaintiff=s pleadings, neither the pleadings nor appellee=s proof furnish this essential fact necessary for a summary judgment on limitations. Because of the failure to demonstrate that Umphrey=s equitable claim accrued[7] within the Aapplicable@ limitation period, we sustain this issue.

Next we turn to the third and fourth grounds for summary judgment. In their third grounds for relief appellees asserted to the trial court and to us that Umphrey has no standing Ato assert the antitrust cause of action.@ In their forth ground, appellees again assert the Trust (Umphrey) does not have a cause of action under Texas antitrust law because it has no antitrust injury. Appellees simply do not address the extant claims arising under equity. For reasons that do not appear in either the motion for summary judgment or the briefs, appellees once again focus upon matters already disposed of by the Beaumont Court of Appeals decision. Because appellees address only moot points, these issues cannot be a grounds upon which to sustain the summary judgment. Tex. R. Civ. P. 166a(c) (the motion shall state the specific grounds therefor); McConnell, 858 S.W.2d at 342; Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997) (because it did not raise this ground in its motion, Science Spectrum is not entitled to a summary judgment on this claim).

In their fifth issue, appellees and appellant address the affirmative defense of waiver. Appellees assert that because appellant purchased the property in 1986 with an encumbrance, and waited eleven years to assert any claim, he waived any complaint. All parties cite Tenneco, Inc. v. Enterprise Prod. 925 S.W.2d 640 (Tex. 1996), and Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210 (Tex. Civ. App.BAmarillo 1981, writ ref=d n.r.e.). Tenneco, Inc. was a summary judgment case involving a right of first refusal to acquire an interest plus a requirement for any new party to make a minimum raw make delivery.[8] Unlike appellees, the Tenneco defendants included in their summary judgment proof, deposition excerpts from the plant owners' designated representatives demonstrating the following: (1) various owners knew that Tenneco Oil had transferred its ownership interest to Tenneco Natural Gas Liquids; (2) Tenneco Natural Gas Liquids had not executed an agreement in satisfaction of Section 12.2 (the right of refusal/raw make requirement provision); and (3) Tenneco Natural Gas Liquids was delivering substantially less than 31,000 barrels per day (and thus was not meeting its minimum raw make delivery). Tenneco Inc, 925 S.W.2d at 643. Here appellees provide no such proof of waiver. Nor do appellees provide any proof of when the changed circumstances occurred or were ascertainable. Tenneco, Inc further holds: AWaiver is ordinarily a question of fact.@ Id. (citing Caldwell v. Callender Lake Property Owners Improvement Ass'n, 888 S.W.2d 903, 910 (Tex. App.BTexarkana 1994, writ denied)). Only when the facts and circumstances are admitted or clearly established does the question become one of law. Id. (emphasis added.)

In Alford, a jury found waiver. The issue arose when a partner sought to withdraw from a firm but expressly sought a waiver of contractual financial penalties before he withdrew. Negotiations lasted over several months and culminated in the partner=s departure after he received no response from the partnership. After leaving he started his own practice and was then sued by the former partnership. In upholding the jury verdict, Alford held, broadly stated, waiver occurs Awhere one dispenses with the performance of something which he has a right to exact, and occurs where one in possession of any right, whether conferred by law or by contract, with full knowledge of the material facts, does or forbears to do something, the doing of which or the failure or forebearance (sic) to do which is inconsistent with the right or his intention to rely upon it.@ Alford, 619 S.W.2d 213, 214. (Citing 92 C.J.S. Waiver p. 1061). AWaiver, of course, is a matter or question of intention.@ Id. (Citing Ford v. Culberson, 308 S.W.2d at 865); According to Alford, AThe elements of waiver, then, are established by evidence that the party possessing the right (1) is aware of the right and (2)(a) expressly relinquishes it or (2)(b) acts in a manner inconsistent with, or fails to act in a manner consistent with, an intent to claim the right.@ Id. at 213. Appellees implicitly argue that Umphrey was aware of changed circumstances when he bought the property, relinquished his right to his equitable claim or acted inconsistently or failed to act consistent with his claim. There is simply no summary judgment proof to support this argument. The record does not demonstrate Umphrey=s intent, when the conditions changed, express relinquishment, or inconsistent action or inaction. Appellant=s fifth issue is sustained.

The sixth issue involves claimed estoppel. Appellees again do not point to any summary judgment proof, but seem to simply reiterate the facts under their waiver argument. Appellees direct our attention to Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, (Tex. 1991). Schroeder was an employment dispute and Schroeder invoked the doctrine of equitable estoppel to support his contention that his employment at will status was modified. Id. at 489. The supreme court held: ATo establish an equitable estoppel, Schroeder must prove (1) a false representation or concealment of material facts, (2) made with knowledge, actual or constructive, of those facts, (3) with the intention that it should be acted on, (4) to a party without knowledge, or the means of knowledge of those facts, (5) who detrimentally relied upon the misrepresentation.@ Id. (Citing Gulbenkianv. Penn, 252 S.W.2d 929, 932 (1952)). Remarkably, once again, appellees furnished neither the trial court nor us any proof of a false representation or concealment, made with knowledge, with the requisite intent, to a party without knowledge. Patently, appellees had equal or superior knowledge concerning both the deed restrictions as well as any conditions that may or may not have changed on the Interstate 10 property. Like the Schroeder court, we too hold appellees failed to provide summary judgment proof to establish this affirmative defense. Appellant=s sixth issue is sustained.

In conclusion, we hold appellees failed to conclusively establish that no genuine issues of material fact exist and that they were therefore entitled to judgment as a matter of law. See Michael v. Dyke, 41 S.W. 3rd 746, 750 (Tex. App.BCorpus Christi 2001, no pet.). A summary judgment must stand on its own merits and the movant must establish its entitlement to a summary judgment on the issues expressly presented to the trial court, conclusively proving all essential elements of their defense. Id. Because appellees failed to establish their entitlement to summary judgment on issues expressly presented, we reverse the judgment of the trial court and remand the case.

________________________

Don Wittig

Retired Justice

Do not publish. Tex. R. App. P. 47.3.

Opinion delivered and filed this the

25th day of April, 2002.

[1]Retired Justice Don Wittig assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to Tex. Gov=t Code Ann. '74.003 (Vernon 1998).

[2] See Tex.R.App. P. 33.1(a)(1)(A)

[3]Although res judicata is applicable to the anti-trust claim, it is clearly inapplicable to matters not considered by the earlier appeal.

[4] One could logically conclude that appellee thinks and argues the Aapplicable@limitation statute is in the anti-trust statute.

[5] See our first paragraph for a brief discussion of this unpublished opinion.

[6] Only because appellees cite Henderson, which in turn addresses the four year residual statute of limitations, Tex. Bus. & Com. Code Ann. '16.051 (Vernon 1987), do we even address this argument. Actually, appellees failed to state specifically this ground for summary judgment. Tex. R. Civ. P. 166a(c).

[7] A'In equity, as at law, the general rule is that the cause of action arises whenever the party is entitled to bring suit, or as soon as he has a right to apply to a court of equity for relief. 2 Story, Eq. Jur. '1521a.@, Oldham, 39 S.W. at 920.

[8]The parties also included Enron Corp. and several of its subsidiaries, including one of its now famous Apartnerships.@