X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Real Property No. 01-1167, 5/22/2003. Click here for the full text of this decision FACTS: In Olmos v. Pecan Grove Municipal Utility District, 857 S.W.2d 734 (Tex. App. – Houston [14th Dist.] 1993, no writ), the court of appeals held that the holder of title to utility facilities was entitled to the construction costs reimbursement for those facilities from the Municipal Utility District that agreed to buy the facilities when constructed. In that opinion, the court explained that title to the facilities had not been severed from the land otherwise conveyed, and thus, the right to reimbursement of the construction costs passed to the current property owner and did not remain with the original developer. It is this discussion into which Jerald A. Turboff and his attorney, Julius Glickman, attempt to bring their complaint that though N.P. Inc. owns title to the utility facilities, Turboff and Glickman are entitled to the construction costs reimbursement because Turboff reserved the right to that reimbursement when he lost title to the facilities. The court of appeals agreed with the trial court that Turboff and Glickman prevail on their argument. HOLDING: The court reverses in part the court of appeals’ judgment awarding the reimbursement payments to Turboff. The court renders judgment for N.P. Inc. and affirms that part of the court of appeals’ judgment holding that Turboff cannot compel N.P. Inc. to transfer the facilities. Olmosholds that the original developer was not entitled to a MUD reimbursement because the MUD was released from the contract when the developer lost the property through foreclosure. In Olmos, the original developer, Edward D. Guttman, contracted with the Pecan Grove MUD to construct utility facilities for a subdivision he was developing. Guttman assigned his right to payment under his MUD contract to Jose Zavala Olmos. But before Guttman conveyed the property to the Pecan Grove MUD, he defaulted on his loan, and his lender, American General Investment Corp., foreclosed on his property. Pecan Grove Associates bought the property from American General, and when Pecan Grove Associates conveyed the utility facilities to the Pecan Grove MUD, Olmos asserted his claim to the MUD proceeds. The 14th Court of Appeals concluded that Pecan Grove Associates owned the MUD payments, reasoning that the right Olmos asserted is “a contract right to the [MUD proceeds] by virtue of his assignment under the Guttman/MUD Sales Agreement.” And Olmos’s assigned right “depended on Guttman’s performance under the [MUD] Sales Agreement.” Because Guttman lost title through foreclosure proceedings, he could not deliver title to the Pecan Grove MUD, resulting in a breach of his MUD contract. Therefore, the Pecan Grove MUD was not obligated to pay Olmos. Turboff misunderstands this discussion in Olmos. There, the court, regarding a related point, analyzed whether title to the utility facilities passed with the underlying real estate. It is in this context that the court stated: “Generally, absent a specific reservation in a deed, buildings and other improvements used in connection with realty in such a way as to constitute appurtenances or fixtures, pass as a matter of course by the conveyance. . . . However, in the case at bar, title to the Facilities was never severed from the Property and conveyed to the MUD.” From the context, it is clear that Olmoswas not talking about severing entitlement to payment for construction of utility facilities, but rather was addressing whether the utility improvements were severed from the underlying real estate. To get where Turboff wants, the court would have to conclude that the construction costs reimbursement was some sort of interest running with the land, which interest could otherwise be reserved. It is not, and therefore, it cannot. The interest Turboff attempts to enforce against N.P. Inc. is simply an interest in a contract that Turboff cannot now honor. Turboff’s right, if any, to reimbursement from the MUD for construction of the utility facilities was a personal contract right subject to Turboff’s ability to convey title, and Turboff was unable to perform. OPINION: Enoch, J., delivered the opinion of the court.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.