law-statutes-of-frauds

law-statutes-of-fraud | statute of frauds and real-estate transactions | statute of frauds in money lending loan
transactions | statute of frauds sales of goods UCC | statute of repose |

POLICY RATIONALE FOR STATUTES OF FRAUDS

The statute of frauds exists to prevent fraud and perjury in certain kinds of transactions by requiring
agreements to be set out in a writing signed by the parties. Haase v. Glazner, 62 S.W.3d 795, 799
(Tex. 2001).

STATUTE OF FRAUDS - AFFIRMATIVE DEFENSE

The statute of frauds requires that certain types of promises or agreements, such as a promise by
one person to pay the debt of another, be in writing and signed by the party to be charged. Tex. Bus.
& Com. Code Ann. § 26.01(a), (b)(2) (Vernon 2009).

Generally, whether a contract falls within the statute of frauds is a question of law. Bratcher v. Dozier,
162 Tex. 319, 346 S.W.2d 795, 796 (1961); Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149
(Tex. App.-Houston [1st] Dist. 2005, pet. denied). We review questions of law de novo. El Paso
Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999); Rittmer v. Garza, 65 S.W.
3d 718, 722 (Tex. App.-Houston [14th Dist.] 2001, no pet.). Whether a particular case falls within an
exception to the statute of frauds, however, is generally a question of fact. Gulf Liquid Fertilizer Co.
v. Titus, 163 Tex. 260, 354 S.W.2d 378, 384 (1962) (question of promisor's intent to be either
primarily or secondarily responsible for another's debt is one for the fact finder if the words used are
not clear and are susceptible to more than one meaning); Otto Vehle & Reserve Law Officers Ass'n
v. Brenner, 590 S.W.2d 147, 152 (Tex. Civ. App.-San Antonio 1979, no writ) (plaintiff must establish
facts which take oral contract outside statute of frauds).

Statute of frauds is an affirmative defense which is waived if not pleaded. See Tex. R. Civ. P. 94; Phillips v.
Phillips, 820 S.W.2d 785, 791 (Tex. 1991). In addition, the party pleading the statute of frauds bears an initial
burden to establish its applicability. Brenner, 590 S.W.2d at 152.

Once the applicability of the statute of frauds is established, the burden of proof then shifts to the plaintiff to
establish facts which would take the oral contract out of the statute, thus allowing the oral promise to be
enforceable. Brenner, 590 S.W.2d at 152. "Whether the circumstances of a particular case fall within an
exception to the statute of frauds is generally a question of fact." Adams v. Petrade Int'l, Inc., 754 S.W.2d
696, 705 (Tex. App.—Houston [1st Dist.] 1988, writ denied). The party seeking to benefit from an exception
to the statute of frauds bears the burden of pleading and proving an exception. Mann v. NCNB Tex. Nat'l
Bank, 854 S.W.2d 664, 668 (Tex. App.-Dallas 1992, no writ) (party must plead and prove exception to the
statute of frauds). In addition, unless the evidence conclusively establishes an exception, a party must
secure a favorable jury finding on the exception. Tex. R. Civ. P. 279; Barbouti v. Munden, 866 S.W.2d 288,
295 (Tex. App.-Houston [14th Dist.] 1993, writ denied) (party claiming an exception to the statute of frauds
must secure a finding to that effect), overruled on other grounds by Formosa Plastics Corp. USA v. Presidio
Engineers and Contractors, Inc., 960 S.W.2d 41 (Tex. 1998).

The Texas Supreme Court has held that the statute of frauds bars a fraud claim when the only damages
sought are benefit-of-the-bargain damages arising out of a contract that is unenforceable under the statute
of frauds. See Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007); Haase v. Glazner, 62 S.W.3d
795, 798-99 (Tex. 2001); see also Villanueva v. Gonzalez, 123 S.W.3d 461, 468 (Tex. App.-San Antonio
2003, no pet.). The court reasoned in Haase that it would be circumventing the statute of frauds if it
determined that a contract was unenforceable because of the statute, yet allowed a party to assert a fraud
claim so as to recover the benefit of the unenforceable bargain. Haase, 62 S.W.3d at 799; see McMillan v.
Hillman Int'l Brands, Ltd., No. 14-03-01392-CV, 2004 WL 1660760, at *3 n.2 (Tex. App.-Houston [14th Dist.]
July 27, 2004, pet. denied) (mem. op.).

Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982) (recognizing courts will enforce oral promise to sign
instrument complying with statute of frauds if (1) promisor should have expected his promise would lead
promisee to some definite and substantial injury, (2) such injury occurred, and (3) court must enforce
promise to avoid injustice).

STATUTE OF FRAUDS DEFENSE - HOUSTON CASES

Alattar v. Ganim (Tex.App.- Houston [14th Dist.] Feb. 18, 2010)(Hedges)
(real estate transaction, statute of frauds applie s and was not satisfied, judgment reversed and take-nothing
judgment entered)
REVERSED AND RENDERED: Opinion by Chief Justice Hedges
Before Chief Justice Hedges, Justices Anderson and Boyce
14-08-00756-CV Farouck (Frank) Alattar v. John Ganim
Appeal from 400th District Court of Fort Bend County
Trial Court Judge: Clifford J. Vacek

Lee-Way Prince Enterprises, LLC v. Qai Assurance, Inc. (Tex.App.- Houston [1st Dist.] Oct. 29, 2009)(Bland)
(award of attorney’s fees on contract breach attorney's fees for promissory estoppel claim, breach of
contract, breach of settlement agreement, common-law fraud)
In its appellate briefing, Prince also challenged the enforceability of the cash flow statement under the statute
of frauds, but conceded this issue at oral argument. We note that Prince did not raise the statute of frauds
as an affirmative defense in the trial court, nor was the issue tried by consent. See Tex. R. Civ. P. 67, 92,
94; Double Ace, Inc. v. Pope, 190 S.W.3d 18, 28 (Tex. App.—Amarillo 2005, no pet.); Karbalai v. Solhjou, No.
01-01-00371-CV, 2003 WL 1848448, at *4 (Tex. App.—Houston [1st Dist.] 2003, no pet.).
AFFIRM TC JUDGMENT: Opinion by Justice Bland
Before Chief Justice Radack, Justices Bland and Massengale
01-07-01004-CV Lee-Way Prince Enterprises, LLC v. Qai Assurance, Inc. and Arthur Kwok
Appeal from 269th District Court of Harris County
Trial Court Judge: Hon. John T. Wooldridge

Harford Fire Ins. Co. v. C. Springs (Tex.App.- Houston [1st Dist.] Apr. 16, 2009)(Radack)
(construction law, bondability, statute of fraud, suretyship, sufficiency of the pleadings)
REVERSE TRIAL COURT JUDGMENT AND RENDER JUDGMENT: Opinion by Chief Justice Radack
Before Chief Justice Radack, Justices Alcala and Bland
01-06-00065-CV
Hartford Fire Insurance Company v. C. Springs 300, Ltd.
Appeal from 270th District Court of Harris County
Trial Court Judge: Hon. Brent Gamble
A contract that creates a suretyship must also comply with the statute of frauds. See TEX. BUS. & COM.
CODE ANN. § 26.01(a), (b)(2) (Vernon 2002 & Supp. 2008). To satisfy the statute of frauds, there must be a
written memorandum which is complete with itself in every material detail and that contains all of the essential
elements of the agreement, so that the contract can be ascertained from the writing without resorting to oral
testimony. Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex.1978); Frost Nat'l Bank v. Burge, 29 S.W.3d 580,
594 (Tex.App.-Houston [14th Dist.] 2000, no pet.).
"A promise to sign a written contract as surety for the performance of a duty owed to the promisee ... is within
the Statute of Frauds." RESTATEMENT (SECOND) OF CONTRACTS § 117 (1981). Similarly, an agreement
to make a future contract is enforceable only if it is specific as to all essential terms. Fort Worth Indep. Sch.
Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex.2000). A contract to enter a contract covered by the
statute of frauds must also meet the statute of frauds. See Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635
(Tex. 2007) (holding that statute of frauds bars breach of contract claim based on oral promise to enter
contract not performable in one year).

Baylor Univ. v. Sonnichsen, No. 04-0851 (Tex. Apr. 20, 2007)(per curiam) (employment dispute)
(fraud damages barred where same damages sought in unenforceable oral contract)
Because these benefit-of-the-bargain damages are the same damages Sonnichsen sought to recover under
an unenforceable contract, his fraud claim fails. See Nagle v. Nagle, 633 S.W.2d 796, 801 (Tex. 1982); see
also Formosa Plastics, 960 S.W.2d at 46-47 (noting that except fraudulent inducement, contract duties and
damages may not be pursued in common law tort). The trial court correctly granted summary judgment in
favor of Baylor on Sonnichsen’s fraud claims. . . .
We hold that the trial court did not abuse its discretion by sustaining Baylor’s special exception on
Sonnichsen’s breach of contract claims and the trial court correctly granted summary judgment in favor of
Baylor on Sonnichsen’s fraud claim. Therefore, without granting oral argument, we grant the petition for
review, reverse the judgment of the court of appeals, and render judgment that Sonnichsen take nothing.

BACM-2001 San Felipe Road LP v. Trafalgar Holdings I Ltd 218 S.W.3d 137 (Tex.App.- Houston [14th Dist.]
Jan. 11, 2007)(Opinion by Justice Guzman) (commercial loan, breach of contract, statute of fraud s)
REVERSED AND RENDERED: Opinion by Justice Guzman
(Before Justices Anderson, Hudson and Guzman)
14-05-00476-CV     BACM-2001 San Felipe Road Limited Partnership Et Al v. Trafalgar Holdings I Ltd Et Al--
Appeal from 133rd District Court of Harris County (Judge Lama r McCorkle)

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