Bakke Development Corp. v. Eddie L. Albin and Kim A. Albin

Citation: Not availableDocket: 04-15-00008-CV

Court: Court of Appeals of Texas; April 8, 2015; Texas; State Appellate Court

Original Court Document: View Document

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Bakke Development Corporation is the appellant in an appeal before the Fourth Court of Appeals in San Antonio, Texas, against Eddie L. Albin and Kim L. Albin, the appellees. The appeal originates from the 216th District Court in Kendall County, Texas, under Cause No. 13-192. The appellant's legal representation is Mark A. Randolph from Hornberger Fuller. Garza, Inc. The brief includes a request for oral argument, asserting that it would aid the court in its deliberations.

Key issues presented in the appeal are whether a fully-formed partnership, which can be terminated at will, can violate the statute of frauds requiring contracts to be performable within one year, and whether a partnership formed for the purpose of jointly developing real property is subject to the statute of frauds. 

The statement of facts highlights that Bakke Development Corporation, which specializes in real estate development, was in discussions with the Albins, who claimed to own a 65-acre tract known as Theis Property in Boerne, Texas. The parties intended to develop this property into an apartment complex/mixed-use development, leading to the formation of a general partnership for this purpose. 

The document outlines the structure of the brief, including sections on the standard of review, arguments regarding the applicability of the statute of frauds, equity considerations due to partial performance by Bakke, and relevant case law and statutes.

The Partnership agreement stipulated that Mr. and Mrs. Albin would contribute the Theis Property, while Bakke would contribute the Menger-Shumard Retail Center in Kendall County, Texas, and handle the associated debts and development of the Project. Profits and losses from the Project would be shared equally between Bakke and the Albins. After the Partnership's formation, Bakke initiated development activities, including securing plans and financing. However, the Albins refused to allow the use of the Theis Property and disclaimed their obligations, breaching the Partnership agreement and fiduciary duties, which halted Project development and prompted Bakke to file a lawsuit. Bakke's claims include breach of contract, breach of fiduciary duties, constructive trust, promissory estoppel, and fraud. 

The Albins filed three summary judgment motions, initially arguing the partnership agreement was an unenforceable oral contract under the statute of frauds. Judge Stephen B. Ables denied this motion on April 22, 2014. Subsequently, the Albins sought partial summary judgment, asserting the statute of frauds applied due to the nature of the agreement involving real estate and lack of a signed writing. Judge Bill Palmer granted this motion on September 29, 2014, leading to the dismissal of Bakke's claims on December 8, 2014, following a request for traditional and no-evidence summary judgment from the Albins.

Bakke argues that the trial court improperly subjected the oral partnership agreement to the statute of frauds, asserting that the agreement did not necessitate real property conveyance. Bakke contends that the initial denial of the Albins' motion was correct, and the later ruling contradicts Texas law, which favors the validity of oral partnerships aimed at joint property development. The application of the statute of frauds in this instance contradicts established case law and threatens the enforceability of similar oral agreements, making the trial court's ruling erroneous.

The Court conducts a de novo review of summary judgments, determining whether a defendant has conclusively disproven an element of the plaintiff's claim or proven all elements of an affirmative defense. While reviewing, the Court must accept evidence favorable to the nonmovant as true, resolving doubts in their favor. In a no-evidence summary judgment, the focus is on whether the nonmovant has presented sufficient evidence to create a genuine issue of fact; if they provide more than a scintilla of evidence, the summary judgment should be reversed.

The statute of frauds, which mandates a signed writing for agreements not performable within one year, does not apply here for three reasons. First, the formation of a partnership constitutes its performance, meaning the statute is inapplicable. Second, the partnership was indefinite and could be terminated at any time, which also exempts it from the statute of frauds. Third, the expectation that the apartment complex development might exceed one year is irrelevant; the key factor is whether the contract could potentially be performed within a year, which it could, given that the partnership agreement allowed for various development opportunities.

Additionally, the statute of frauds does not apply as the partnership agreement does not involve the conveyance of real estate. The Albins' argument asserting its applicability was rejected by Judge Ables in a prior ruling, and despite their attempts to reassert this claim, they did not seek reconsideration of the earlier order. Consequently, Judge Palmer's later grant of summary judgment was based on different grounds than those initially presented by the Albins.

The partnership agreement in question is not subject to the statute of frauds, which mandates a signed writing for real estate sales. The agreement was established to jointly develop real property without necessitating the conveyance of that property. Texas law clarifies that a partnership agreement focused on real estate development does not inherently classify as a transaction for the sale of real estate. The case of Sewing v. Bowman supports this view, where the court ruled that a partnership agreement does not automatically invoke the statute of frauds, even if it involves real estate. The Albins' reliance on Pappas v. Gounaris is misplaced, as that case addressed a specific foreclosure issue and does not pertain to the circumstances here.

Bakke seeks damages for breach of the partnership agreement, asserting that the trial court incorrectly applied the statute of frauds, since the agreement did not involve the sale of real property. Additionally, Bakke argues that partial performance constitutes an equitable exception to the statute of frauds; it would be unjust for the Albins to benefit from their alleged wrongful conduct. Texas courts recognize that if a party has partially performed under an agreement, equity may intervene, overruling the statute of frauds to prevent fraud. Bakke contends that he fulfilled his obligations prior to the Albins’ repudiation and that allowing the Albins to benefit from this situation would be inequitable. Therefore, Bakke insists that his claims should be presented to a jury, and the trial court's dismissal of his claims should be reversed.

The trial court incorrectly applied the statute of frauds, leading to the summary dismissal of all claims made by Bakke. Bakke requests the Court to: 1) determine that the statute of frauds does not apply to the partnership agreement, reverse the trial court’s ruling, or establish that a factual issue exists regarding the agreement’s purpose, necessitating a remand; 2) reverse the dismissal of Bakke's claims; 3) remand the case for a trial; and 4) award any additional relief deemed just. The document is dated April 8, 2015, and is submitted by Mark A. Randolph, attorney for the appellant, Bakke Development Corporation. It includes a Certificate of Compliance stating the brief contains 2,794 words and a Certificate of Service confirming that a copy was served to the appellees' counsel. The appeal is lodged with the Fourth District Court of Appeals of Texas, concerning a prior ruling from the 216th District Court in Kendall County. The appendix references various legal documents and statutes relevant to the case, including factors for determining the creation of a partnership under the Texas Business Organizations Code.

Co-ownership of property can take various forms, including joint tenancy, tenancy in common, tenancy by the entirety, joint property, community property, or part ownership, and may involve the sharing of profits. The right to share gross returns or revenues is recognized, even if there is no common interest in the underlying property. Ownership of mineral property under a joint operating agreement is also included. Importantly, an agreement among business owners to share losses is not required to establish a partnership.

Additionally, certain promises or agreements must be in writing to be enforceable, as stated in the Texas Business and Commerce Code, Section 26.01. These include promises by executors to cover debts from an estate, promises to answer for another's debt, agreements related to marriage considerations, contracts for real estate sales or leases over one year, agreements not to be performed within one year, promises for commissions on oil and gas leases or royalties, and contracts related to medical care made by healthcare providers. The provisions of this section, effective September 1, 2005, do not apply to pharmacists.