Meritage Homes of Texas, LLC v. Walther Family Limited Partnership; Clarendor Capital Ltd.; Sparrow Fields Properties, Ltd.; And BigSky Capital, Ltd.
CourtTexas Court of Appeals, 3rd District (Austin)
Date FiledAugust 27, 2026
Docket03-24-00201-CV
StatusPublished
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Full Opinion
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-24-00201-CV
Meritage Homes of Texas, LLC, Appellant
v.
Walther Family Limited Partnership; Clarendor Capital Ltd.; Sparrow Fields
Properties, Ltd.; and BigSky Capital, Ltd., Appellees
FROM THE 425TH JUDICIAL DISTRICT COURT OF WILLIAMSON COUNTY
NO. 22-0032-C245, THE HONORABLE BETSY F. LAMBETH, JUDGE PRESIDING
OPINION
In this contract case involving claims and counterclaims of breach, the briefing and
arguments before us have proceeded from a mistaken assumption about the jury’s answer to a
question about appellant Meritage Homes of Texas, LLC. In the charge, the jury was asked, “Did
Meritage fail to comply with the Contract?”1 The jury answered, “No.” Meritage has presented
this appeal under the assumption that this “No” amounts to an affirmative finding that it performed
its obligations under the Contract. The assumption is wrong because in Texas practice, a jury’s
“no” answer to a question about a claimant’s alleged failure to perform its obligations under a
contract does not amount to an affirmative finding that the claimant performed but is simply a
1 The “Contract” is the March 29, 2021 Purchase and Sale Agreement and Joint Escrow
Instructions between Meritage and appellee Walther Family Limited Partnership. The latter’s
rights and obligations under the Contract were, with Meritage’s approval, assigned to appellees
Clarendor Capital Ltd.; Sparrow Fields Properties, Ltd.; and BigSky Capital, Ltd.
failure to find a failure to comply. See Boerschig v. Rio Grande Elec. Coop., __ S.W.3d __, 2026
WL 1468464, at *7–8 & nn.14, 16 (Tex. May 22, 2026) (explaining underlying principle and col-
lecting cases); In re Commitment of Jones, 602 S.W.3d 908, 912 n.5 (Tex. 2020) (per curiam)
(“[A] negative answer to a charge question means only that the party bearing the burden of proof
has failed to carry that burden and is not a positive finding of the converse of the question.”);
Grenwelge v. Shamrock Reconstructors, Inc., 705 S.W.2d 693, 694 (Tex. 1986) (per curiam) (“The
jury’s failure to find that Shamrock breached the contract merely means that the Grenwelges failed
to carry their burden of proving the fact. It does not mean the reverse, that Shamrock substantially
performed the contract.”); Arbor Windsor Ct., Ltd. v. Weekley Homes, LP, 463 S.W.3d 131, 141
(Tex. App.—Houston [14th Dist.] 2015, pet. denied) (“The jury did not, however, find that Arbor
complied with the Agreement. The jury found that Arbor did not fail to comply with the Agree-
ment. In Texas law, this is a distinction with a difference. A negative answer to a jury question
on ‘failed to comply with a contract’ is not a positive finding that such party ‘complied with a
contract.’” (citing Grenwelge, 705 S.W.2d at 694)).
This principle regarding jury “no” answers colors much of the analysis required of
us to answer the questions that the parties have presented in this appeal. Those questions are
grouped most easily by the underlying relief that each side sought in the trial court. First is the
remedy of specific performance of the Contract, which Meritage sought and for which Meritage
seeks a reversal of the portion of the trial court’s judgment ruling that Meritage take nothing by its
request for specific performance on its contract claim. (Meritage did not seek contract damages.)
Second is a release of the earnest money that has been on deposit with the Contract’s escrow
agent—Meritage asks that the portion of the court’s judgment ordering the earnest money released
2
to Walther2 be reversed. Third is attorneys’ fees and expenses. The judgment awards Walther
attorneys’ fees, but Meritage says that the award should be reversed and judgment rendered award-
ing Meritage attorneys’ fees and expenses because only it is the true prevailing party in this suit.
We affirm the judgment in all respects. As to specific performance, Meritage nei-
ther obtained a necessary finding on nor conclusively proved at least one element of its request for
specific performance on its contract claim. As to the earnest money, the judgment properly ordered
it released to Walther because it was included in the damages that Walther requested for its contract
counterclaim and all elements of Walther’s counterclaim were proved—two were undisputed, and
the other two, we conclude, Walther proved as a matter of law. And as to attorneys’ fees and
expenses, Meritage’s failure in this appeal and Walther’s success on an appellate cross-point mean
that Walther is the proper prevailing party and thus is entitled to the award that it received.
I
A
Under the Contract, Meritage was to buy a tract from Walther (the Property). Meri-
tage intended to develop the Property as a residential subdivision. Meritage paid Walther the ear-
nest money required by the Contract and in spring 2021 shared with Walther a draft Concept Plan,
a document designed to give a general sense of the residential units that Meritage would build.
The Contract contemplated a pre-closing period for Meritage to secure approvals
from governments, special-purpose districts, utility providers, and the like. The Property, which
is what Meritage was to buy from Walther, was the middle portion of an overall tract owned by
Walther that had long been used by its owners’ family for farming. The rest of the Walther tract,
2 We use “Walther” to refer collectively to all the appellees.
3
which Meritage would not be buying, is referred to in the Contract as the “Seller Retained Land.”
The following graphic shows the Property—the middle portion of the Walther tract, in yellow—
and the northerly and southerly Seller Retained Land, in pink:
The roadway running through the northerly Seller Retained Land is for the Williamson County
Southeast Loop. The road running through the southerly Seller Retained Land from left to right
in the graphic is FM-1660. Both the Property and the Seller Retained Land lie within the extraterri-
4
torial jurisdiction of the City of Hutto. As Meritage would develop the Property for residential
use, Walther contemplated that its Seller Retained Land could be developed with commercial uses,
and the Contract required Meritage to undertake efforts to include potential development of the
Seller Retained Land in various applications that Meritage was to make to the relevant govern-
mental authorities. Yet for the Property and Seller Retained Land to be developed for the purposes
that the parties were contemplating, they needed new utility infrastructure.
The contemplated development requires, the parties generally agree, a series of ap-
provals in a particular sequence. Development would require wastewater-utility connections pro-
vided by the City and water-utility connections depending on their location in relation to FM-1660.
The Property and the Seller Retained land north of FM-1660 would require water service by Jonah
Special Utility District, and the Seller Retained Land south of FM-1660 would require water ser-
vice by the City. To obtain these approvals, Meritage would have to submit particular applications
to each entity. The entity would at some point give the requested approval and the conditions
under which it would provide service, like the size and location of infrastructure that Meritage
would construct but that the entity would later own and operate.
Aside from water and wastewater approvals, because Meritage intended to finance
the construction of utility infrastructure by creating a Municipal Utility District (MUD), it needed
the City’s consent, which would be obtained by entering into a Development Agreement with the
City, to which Walther also would be a party. Next in the approval sequence behind the water and
wastewater approvals and the concluding of a Development Agreement, was a Preliminary Plan.
A Preliminary Plan, according to the testimony of Meritage’s point person on this
development project, “is the step that you take before you create subdivision construction plans.”
It is a document agreed to by both the developer (here, Meritage) and any relevant regulating
5
entities to approve the developer’s engineering plans for how it will create the later, even-more-
detailed Improvement Plans, which guide construction efforts in the development. The Prelimi-
nary Plan, again in the words of Meritage’s point person, maps “out where the lots are going, where
the drainage [goes], [and] where the roads are,” to include “details on road width, utility sizes,
[and] things like that.” He added that the City would not even view a draft Preliminary Plan until
the City had approved the prior application for wastewater service.
Because of the types of drawings and plans that go into a Preliminary Plan, regula-
tory design requirements apply to what a developer may put into its Plan. But here, the relevant
design requirements imposed by the City conflicted in many respects with the relevant design
requirements imposed by Williamson County, and the City and County disagreed about whose
requirements should apply to development on the Property.
Much of the parties’ dispute at trial was over what Meritage did or did not do, when
it did or did not do it, and what Walther did or did not do in response regarding the Concept Plan,
the utilities matters, the Development Agreement, and the Preliminary Plan. Undisputed, however,
is that the Contract describes the structure and timing for the governmental approvals:
[T]hrough December 17, 2021 (the “Governmental Approvals Period”), [Meritage]
shall have the right to seek, and [Meritage] shall diligently pursue, all necessary
approvals from applicable governmental authorities, quasi-governmental authori-
ties, and/or utility providers and regulators (collectively, “Governmental Authori-
ties”) for the development of the Property as a residential subdivision (collectively,
the “Approvals”), including, without limitation, all of the following in form ac-
ceptable to [Meritage] in its sole and absolute discretion (except as expressly pro-
vided otherwise in this Section 4.4.1): . . . the “Preliminary Plan”[]; . . . approval
by all applicable Governmental Authorities of all agreements, easements and ar-
rangements necessary for the providing to the Property of all utility services neces-
sary or desirable for [Meritage]’s intended residential development of the Property
and for development of the Seller Retained Land (the “Utility Arrange-
ments”); . . . the “Improvement Plans”[;] and . . . the “Development Agreement.”
6
It also obligates Meritage to diligently pursue the Approvals at its own cost and expense and to
incorporate, at [Meritage]’s sole cost and expense, [Walther]’s intended use of the
Seller Retained Land into all of its various efforts to seek the Governmental Ap-
provals from Government[al] Authorities, including, without limitation, incorporat-
ing into [Meritage]’s application or other submittal for the Preliminary Plan and
other Governmental Approvals . . . the roads of appropriate size to support intended
uses of Seller Retained Land . . . and . . . extension and installation of utilities, in-
cluding, without limitation, water, wastewater, electricity, and any other Utility Ar-
rangements to the Seller Retained Land in the locations, sizes, and configurations
mutually agreed upon by [Meritage] and [Walther], both acting reasonably and in
good faith, but in all cases ensuring that access to all utilities is provided to Seller
Retained Land both north and south of FM 1660.
And it requires Meritage to “submit a draft preliminary plan to the applicable Governmental
Authorities” by a deadline of September 27, 2021. (Emphasis added.)
Closing was set for December 27, 2021, but could have been earlier had “all Ap-
provals . . . been obtained pursuant to Section 4.4.” They were not, and on December 27, 2021,
Meritage expressed that it intended to close the transaction. Meritage tendered the $21.5 million
for the purchase price to the escrow agent for the transaction. The same day, Walther told Meritage
that it refused to close, and both that day and three days later, it gave Meritage reasons for the
refusal, reasons whose meaning and effect the parties dispute. Also on that third day, Walther told
Meritage that it was terminating the Contract under its sections 12.2 and 12.4.
B
Meritage sued Walther for breach of the Contract, focusing on Walther’s failure to
close the transaction. It sought as relief specific performance to have the Property conveyed and
attorneys’ fees and expenses. Walther counterclaimed for breach of contract, seeking damages in
the form of the earnest money that Meritage had paid and attorneys’ fees as well. Trial proceeded
before a jury. Walther presented several theories of Meritage’s breach to the trial court and jury,
7
including that Meritage had failed to submit the draft Preliminary Plan by September 27, 2021,
and that Meritage had failed to diligently pursue the government approvals.
During the charge conference, both sides requested certain submissions and object-
ed to the charge. For Meritage’s part, it sought these jury submissions—combinations of questions
and accompanying instructions, including predicating instructions—on waiver and election3:
If you answered “Yes” to [the question about whether Meritage failed to comply
with the Contract], then answer the following question. Otherwise, do not answer
the following question.
[Proposed] Question 4 (Waiver Defense)
Was Meritage’s failure to comply excused?
Failure to comply by Meritage is excused if compliance is waived by Walther.
Waiver is an intentional surrender of a known right or intentional conduct incon-
sistent with claiming that right.
Answer “Yes” or “No.”
....
If you answered “Meritage” to [the question about which party materially breached
the Contract first], then answer the following question. Otherwise, do not answer
the following question.
[Proposed] Question 6 (Election)
When Meritage failed to comply with the [Contract], did Walther elect to (1) con-
tinue performance under the [Contract] or (2) cease performance and terminate the
[Contract]?
Answer “1” or “2.”
3 Meritage did not request jury submissions on the issue of impossibility, or impracticabil-
ity, of performance and has not argued that issue on appeal. See, e.g., Samson Expl., LLC v. T.S.
Reed Props., Inc., 521 S.W.3d 766, 775 (Tex. 2017); FP Stores, Inc. v. Tramontina US, Inc.,
513 S.W.3d 684, 693 (Tex. App.—Houston [1st Dist.] 2016, pet. denied).
8
The court refused the waiver and election submissions and instead submitted the case to the jury
on four questions. The first two involved failures to comply with the Contract. The charge in-
structed the jury that any failure to comply with the Contract must have been material. The
charge’s four questions, accompanying instructions, and the jury’s answers are:
This section contains four questions. Depending on your answers, you may not be
required to answer each question.
QUESTION 1
Did Walther . . . fail to comply with the Contract?
Answer “Yes” or “No.”
Answer: Yes
QUESTION 2
Did Meritage fail to comply with the Contract?
Answer “Yes” or “No.”
Answer: No
If you answered “Yes” to both Question 1 and Question 2, answer Question 3. Oth-
erwise, do not answer Question 3 and move to Question 4.
QUESTION 3
Who failed to comply with the Contract first?
Answer “Meritage” or “Walther . . . .”
Answer: _____
If you answered “Yes” to Question 1 and “No” to Question 2, or if you answered
“Walther . . . ” to Question 3, then answer Question 4.
QUESTION 4
Was Meritage ready, willing, and able to perform its obligations under the Contract
on December 27, 2021?
Answer “Yes” or “No.”
Answer: No
The parties then conducted post-verdict motion practice.
9
Meritage moved the trial court to disregard the answer to Question 4, arguing that
the “No” to Question 2 constituted an affirmative finding that Meritage complied with the Con-
tract, a finding that necessarily meant that Meritage was ready, willing, and able to perform on the
closing date because it was undisputed that Meritage had tendered the purchase price. Walther
argued, among other things, that if any jury answers should be disregarded, it should be those to
Questions 1 and 2. Walther expressly sought the relief that the trial court disregard those answers.
Ultimately, the trial court denied each side’s motions to disregard. It then rendered
its final judgment, ruling that Meritage take nothing on its request for specific performance, that
the earnest money be released to Walther, and that Walther be awarded attorneys’ fees and Meri-
tage awarded none. Meritage now appeals, and Walther raises its cross-point.
II
Meritage raises six issues on appeal:
1. Was the evidence conclusive that [Meritage] was ready, willing, and able to
perform on the closing date when undisputed evidence showed that [Meritage]
actually performed on that date?
2. Should the trial court have granted [Meritage]’s motion to disregard the jury’s
negative finding on “ready, willing, and able” and rendered judgment granting
[Meritage] specific performance?
3. Alternatively, was the jury’s finding on “ready, willing, and able” against the
great weight of the evidence, necessitating a new trial?
4. Should the trial court have awarded damages to [Walther] when [it] lost on lia-
bility and did not fulfill the contractual prerequisites for damages?
5. Was the trial court’s award of attorney’s fees to [Walther] as the prevailing
party erroneous as a matter of law because:
a. the jury found against [Walther] on both liability questions, making [it] both
a non-prevailing plaintiff and a non-prevailing defendant;
10
b. the jury found that [Meritage] did not breach the contract, making [Meri-
tage] a prevailing defendant on [Walther]’s counterclaim; and
c. if judgment is rendered granting specific performance, [Meritage] will be
the sole prevailing party on all claims?
6. Did the trial court err by rejecting [Meritage]’s proffered jury questions regard-
ing waiver and election? (relevant only if the Court credits [Walther]’s potential
cross point challenging the legal sufficiency of the breach findings)
(Emphasis removed.) Walther’s appellate cross-point seeks an affirmance of the trial court’s judg-
ment on these grounds:
With undisputed evidence that Meritage had not performed material contract obli-
gations on or before the closing date, was there factually or legally sufficient evi-
dence to support a finding that Walther . . . breached the contract by declining to
close? . . . The evidence was factually and legally insufficient to support the jury’s
answers to Questions 1 and 2 on breach, and those findings should be disregarded.
We begin with the parties’ competing positions about specific performance.
A
Meritage’s first, second, third, and sixth issues implicate its request for specific
performance, which is an equitable remedy that may be awarded for breach of contract. Pathfinder
Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 888 (Tex. 2019). When plaintiffs seek
specific performance for a claim for breach of contract, these are the relevant elements:
Breach of contract requires pleading and proof that (1) a valid contract exists;
(2) the plaintiff performed or tendered performance as contractually required;
(3) the defendant breached the contract by failing to perform or tender performance
as contractually required; and (4) the plaintiff sustained damages due to the breach.
A party seeking the equitable remedy of specific performance in lieu of money
damages may, in some circumstances, be excused from pleading and proving the
second element, but must additionally plead and prove that, at all relevant times, it
was ready, willing, and able to perform under the contract.
11
Id. at 890 (emphases added); accord DiGiuseppe v. Lawler, 269 S.W.3d 588, 594 (Tex. 2008) (“It
is also a general rule of equity jurisprudence in Texas that a party must show that he has complied
with his obligations under the contract to be entitled to specific performance.”).
For plaintiffs to be awarded final relief, whether legal or equitable, they must pre-
vail on at least one of their affirmative claims for relief. See Etan Indus., Inc. v. Lehmann,
359 S.W.3d 620, 624–25 & n.2 (Tex. 2011) (per curiam); Valenzuela v. Aquino, 853 S.W.2d 512,
514 n.2 (Tex. 1993). And for plaintiffs to prevail on an affirmative claim for relief, they must for
each element of the claim either conclusively prove the element or obtain an express or implied
finding in their favor on the element. See Tex. R. Civ. P. 279; Energy Transfer Partners, L.P. v.
Enterprise Prods. Partners, L.P., 593 S.W.3d 732, 741 & n.36 (Tex. 2020); Hanson
Aggregates W., Inc. v. Ford, 338 S.W.3d 39, 42–43, 46–48 (Tex. App.—Austin 2011, pet. denied);
see also Horton v. Kansas City S. Ry. Co., 692 S.W.3d 112, 139 n.26 (Tex. 2024) (“[A]n erroneous
failure to instruct the jury that it must find specific elements will not be harmful if undisputed
evidence conclusively establishes those elements.”).
As relevant here then, for Meritage to have prevailed on its contract claim for spe-
cific performance, it must have achieved at least one of the following outcomes in the trial court
(if not more—which is to say, one from the first group and one from the second): (1)(a) Meritage
obtained either an express or an implied finding that it performed, or tendered performance of, its
obligations under the Contract; (1)(b) Meritage conclusively proved that it performed, or tendered
performance of, its obligations under the Contract; (2)(a) Meritage obtained either an express or
an implied finding that it was at all relevant times ready, willing, and able to perform its obligations
under the Contract; and (2)(b) Meritage conclusively proved that it was at all relevant times ready,
willing, and able to perform its obligations under the Contract. It achieved none of these.
12
B
1
Meritage has presented its appeal as if it obtained an express finding from the jury
that Meritage performed its obligations under the Contract. But as we have said, the jury’s “No”
answer to Question 2 is not the legal equivalent of an affirmative finding in Meritage’s favor that
it performed its obligations under the Contract. See Boerschig, 2026 WL 1468464, at *7–8 &
nn.14, 16; Commitment of Jones, 602 S.W.3d at 912 n.5; Grenwelge, 705 S.W.2d at 694; Arbor
Windsor Ct., 463 S.W.3d at 141; see also Texas Genco, LP v. Valence Operating Co., 187 S.W.3d
118, 123 & n.4 (Tex. App.—Waco 2006, pet. denied) (legal effect of jury’s answers is question of
law, reviewed de novo). Nothing else in the jury’s verdict amounts to an affirmative finding that
Meritage performed, or tendered performance of, its obligations under the Contract either.
Nor did Meritage obtain an implied finding in its favor on the matter. When implied
findings arise, they arise only ever in support of the relevant portions of the trial court’s judgment.
See Tex. R. Civ. P. 279; Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 564 (Tex. 2002). Because
the trial court in its judgment ruled that Meritage take nothing on its request for specific perform-
ance for its contract claim and awarded Meritage no relief based on the Contract, if any implied
finding arose on Meritage’s performance of the Contract, the implied finding must run in favor of
the portion of the judgment ruling that Meritage take nothing on its request for specific perform-
ance for its contract claim. Meritage thus did not obtain either an express or implied finding about
its own contractual performance.
2
Meritage also did not conclusively prove that it had performed, or tendered per-
formance of, its obligations under the Contract. After setting forth the applicable rules in this area,
13
we review one of Walther’s theories of Meritage’s breach of the Contract, including the Contract
provisions relevant to the theory, and the evidence relating to the theory that showed that Meritage
had breached. See Greene v. Farmers Ins. Exch., 446 S.W.3d 761, 765 (Tex. 2014) (“‘Breach’ of
a contract occurs when a party fails to perform an act that it has contractually promised to per-
form.”). We also address Meritage’s counterargument that the theory at issue concerned a Contract
obligation that was not material.
To conclusively establish a vital fact, the evidence must be such that reasonable
people could not disagree that the fact exists. Hanson Aggregates W., 338 S.W.3d at 47. By
contrast, when the evidence allows for reasonable people to disagree about whether a given fact
has been proved, then there is at least some evidence against the fact, and it thus has not been
conclusively proved. See City of Keller v. Wilson, 168 S.W.3d 802, 815–16 (Tex. 2005); Merrell
Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). Conclusive proof of a fact is in
other words proof “as a matter of law” of that fact. See Airway Ins. Co. v. Hank’s Flite Ctr., Inc.,
534 S.W.2d 878, 879 n.2 (Tex. 1976); Valdez v. Moerbe, No. 03-14-00731-CV, 2016 WL
1407800, at *5 (Tex. App.—Austin Apr. 6, 2016, pet. denied) (mem. op.); Bisland v. Financial
Indem. Co., No. 03-11-00228-CV, 2013 WL 3186192, at *3 (Tex. App.—Austin June 21, 2013,
pet. denied) (mem. op.).4
4 The evidence to support a finding that Meritage failed to perform its obligations under
the Contract is a subject of Walther’s cross-point and of Meritage’s sixth issue, which responds to
the cross-point. The cross-point, however, is postured as a legal-sufficiency attack on the jury’s
“No” answer to Question 2, with Walther arguing that the evidence conclusively proved that Meri-
tage had failed to perform. At this stage in our analysis, we need not review whether the evidence
conclusively proved that Meritage had failed to perform; instead, we are reviewing only for wheth-
er there was some evidence that Meritage had failed to perform. If there was, then Meritage did
not conclusively prove its performance or tender of performance.
14
Among Walther’s theories of Meritage’s breach was the latter’s Contract obligation
to timely submit a draft of the Preliminary Plan to the government. There was at least some evi-
dence that Meritage did not submit that draft timely and thus at least some evidence that Meritage
had not performed its obligations under the Contract. We first set forth the provisions of the Con-
tract relevant to this topic, provisions that concern (a) the Preliminary Plan itself and similar ef-
forts, (b) timeliness under the Contract, and (c) Meritage’s rights.
The Contract identifies the Preliminary Plan as one of the necessary Approvals to
be submitted to the Governmental Authorities before development of the property as a residential
subdivision could start. Under the Contract, Meritage was obligated to “diligently pursue the Ap-
provals and conduct all negotiations with the Governmental Authorities.” It was also to “be solely
responsible to pay all fees and costs incurred by [it] to prepare, process, and obtain the Approvals.”
The Approvals included not only the Preliminary Plan but also the water and wastewater arrange-
ments, the Development Agreement, and the Improvement Plans.
But more particular to the Preliminary Plan from among all the Approvals was a
deadline for a draft of it to be submitted. Under the Contract, Meritage had to “submit a draft
preliminary plan to the applicable Governmental Authorities within ninety . . . days following the
Due Diligence Termination Date,” a 90-day deadline that the parties agree fell on September 27,
2021. The Preliminary Plan was important in that it was to govern development of the Property:
“[D]evelopment of the Property will materially comply with . . . the approved Preliminary Plan.”
The Contract sets forth many other time constraints. It subjects “all matters” to
timely performance: “Time shall be of the essence with respect to all matters contemplated by this”
Contract. It prohibits certain escrow instructions from changing the time limits otherwise set up
by the Contract: “[N]o provision in any printed form instructions shall excuse any performance by
15
either party at the times provided in this [Contract or] provide either party hereto with any grace
period not provided in this” Contract. And it requires Walther to “promptly furnish” certain items,
like environmental reports, surveys, and tax data about the Property.
The Contract provides for still other performance by each party to occur in struc-
tured, timed phases. In rough chronological order, the Contract establishes an Agreement Date,
Document Delivery Date, Escrow Date, Due Diligence Termination Date,5 Governmental Approv-
als Period, and Closing. Tied to the defined times were specific, counted-in-days deadlines for
Meritage and Walther to communicate with each other about Meritage’s objections to any title
documents and for the parties to communicate about any continued farming and harvesting that
Walther would conduct on the Property. Further, the escrow agent was to “promptly” notify the
parties of the contractual Escrow Date. Then Meritage had 60 days and 150 days from the Escrow
Date to obtain surveys of, respectively, the Property and the Seller Retained Land. Both parties
were—within 60 days of the Escrow Date—to cooperate to prepare the Concept Plan. Later, but
before the end of the due-diligence period on the Due Diligence Termination Date, Meritage was
to submit to Walther for its approval marketing names for the development and for any streets and
parks in it. The still-later Governmental Approvals Period was to end on December 17, 2021,
before which Meritage had to “diligently pursue” the Approvals.
Before Closing, Meritage had the right to cure many types of default by it, limited
to a 30-day window. The Contract lays out detailed and time-bound cure-or-default procedures in
its sections 12.1 through 12.4, applicable to Closing Defaults or to other kinds of defaults. By
Closing, “[a]ll . . . permits and agreements required from any third party . . . to provide . . . all wa-
5 This date was 90 days after the Escrow Date.
16
ter, sewer and other utility services that are required in connection with the Approvals . . . must
have been obtained in form and content satisfactory to [Meritage] and [Walther] in each’s reasona-
ble discretion.” At Closing, Meritage was to provide Walther with “items, documents, and instru-
ments as may be reasonably required by [Walther] . . . in order to effectuate the provisions of this
[Contract] and the Closing.” And if Meritage ended up committing a type of Closing Default, then
it had just three business days to cure.
Finally among the Contract’s deadlines was the Closing. “Closing” was defined to
“mean the settlement of the purchase and sale of the Property at which [Walther] conveys title to
the Property to [Meritage] by delivery of a Deed and [Meritage] delivers the Purchase Price.” The
Closing was to take place, the parties agree, on December 27, 2021.
As for some of Meritage’s rights under the Contract, Meritage was given an option
either to proceed with buying the Property or to terminate the Contract. The Contract provides for
“rights and options extended to [Meritage] under this [Contract], including, without limitation, the
right and option to terminate the [Contract] as provided therein,” and one such termination right
expired by the end of the Due Diligence Termination Date, before which Meritage could “termi-
nate this [Contract] . . . if [Meritage] determines in its sole and absolute discretion that the Property
is not acceptable to [Meritage] for any reason.”
Bearing the Contract’s relevant terms in mind, we proceed to decide whether there
was any evidence that Meritage had not performed, or tendered performance of, its Contract obli-
gations. Undisputedly in the evidence, Meritage submitted no draft Preliminary Plan to any of the
Governmental Authorities by September 27, 2021, or indeed ever. Testimony and exhibits both
showed that Meritage has never submitted a draft Preliminary Plan to the government.
17
Meritage responds that its failure to submit the Preliminary Plan by the deadline is
not a material breach.6 The materiality of a breach can be established as a matter of law. For
example, the Supreme Court of Texas in Mustang Pipeline, as it explained later in Bartush–
Schnitzius Foods, “held that a contractor’s failure to meet a deadline in contravention of an express
time-is-of-the-essence clause was a material breach as a matter of law.” Bartush–Schnitzius Foods
Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 437 (Tex. 2017) (per curiam) (citing Mustang
Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 199–200 (Tex. 2004)); see also id. at 436–
37 (noting that materiality may be decided as a matter of law and contrasting Mustang Pipeline’s
dispute with that in Bartush–Schnitzius Foods by describing Mustang Pipeline’s as one involving
“conclusive evidence of materiality”).
Mustang Pipeline is no anomaly. Texas courts in many other cases have concluded
that a breach’s materiality was established as a matter of law. See, e.g., EM Bldg. Contractors
Servs., LLC v. Byrd Bldg. Servs., LLC, No. 05-19-00153-CV, 2020 WL 4592791, at *1, *10, *17
(Tex. App.—Dallas Aug. 11, 2020, no pet.) (mem. op.); GDL Masonry Supply, Inc. v. Lopez,
No. 05-15-01200-CV, 2016 WL 6835719, at *2–3 (Tex. App.—Dallas Nov. 2, 2016, no pet.)
(mem. op.); Duncan v. Woodlawn Mfg., Ltd., 479 S.W.3d 886, 901 (Tex. App.—El Paso 2015, no
pet.); TrueStar Petrol. Corp. v. Eagle Oil & Gas Co., 323 S.W.3d 316, 319–20 (Tex. App.—Dallas
2010, no pet.); Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842, 846 (Tex. App.—Dallas 2008,
no pet.); Casarez v. Alltec Constr. Co., No. 14-07-00068-CV, 2007 WL 3287933, at *6 (Tex.
App.—Houston [14th Dist.] Nov. 6, 2007, no pet.) (mem. op.); see also Dallas City Limits Prop.
6 Meritage’s materiality arguments concern the timeliness of submission of the draft Pre-
liminary Plan; Meritage at oral argument conceded that the eventual obtaining of an approved
Preliminary Plan was material to future development of the Property.
18
Co. v. Austin Jockey Club, Ltd., 376 S.W.3d 792, 800–01 (Tex. App.—Dallas 2012, pet. denied)
(concluding that party’s breach “was unquestionably material” and saying that Mustang Pipeline
teaches that “a breach of timeliness would be material” when, as there, “[t]he contract . . . provided
a deadline for performance” and “also provided that time was of the essence”).
Courts properly reach such a conclusion by reference to the plain language of the
parties’ contract. See GDL Masonry Supply, 2016 WL 6835719, at *2–3; Dallas City Limits Prop.,
376 S.W.3d at 800–01; TrueStar Petrol., 323 S.W.3d at 319–20; Deep Nines, 246 S.W.3d at 846;
see also Chowning v. Boyer, No. 03-20-00387-CV, 2021 WL 3233859, at *7 n.12 (Tex. App.—
Austin July 30, 2021, no pet.) (mem. op.) (citing Deep Nines, 246 S.W.3d at 846, with approval
and recognizing importance of contract language that expresses that “time is of the essence”);
Kennedy Ship & Repair, L.P. v. Pham, 210 S.W.3d 11, 19 (Tex. App.—Houston [14th Dist.] 2006,
no pet.) (“[A] date stated for performance does not mean time is of the essence. Instead, the con-
tract must expressly make time of the essence or there must be something in the nature or purpose
of the contract and the circumstances surrounding it making it apparent that the parties intended
that time be of the essence. Unless the contract expressly makes time of the essence, the issue is a
fact question for the jury.” (emphases added) (citations omitted)).
So much of this area of the law, and of Walther’s and Meritage’s arguments, con-
cerns the effect of a contract’s “time is of the essence” provision. But lumping all such provisions
together can be misleading. Each such provision’s particular language matters, for the express
language of all of a contract’s provisions regarding timeliness, including the express language of
any “time is of the essence” provision, can turn the issue of a breach’s materiality. Thus, the
Mustang Pipeline contractor’s “failure to meet a deadline in contravention of an express time-is-
of-the-essence clause was a material breach as a matter of law,” see Bartush–Schnitzius Foods,
19
518 S.W.3d at 437 (explaining Mustang Pipeline, 134 S.W.3d at 199–200), because the contract’s
language provided that “all time limits stated in the Contract are of the essence to the Contract”;
called for “100 percent completion of the pipeline system no later than” a certain date; and “re-
quired that ‘sufficient forces and equipment . . . be