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SP Terrace, L.P. v. Meritage Homes of Tex., LLC - 334 S.W.3d 275 (Tex. App. 2010)

Rule:

Even if the oral modification extending performance would not ordinarily materially alter the underlying written contract, when a party relies on the modification to assert that the other party is in material breach to excuse further performance, the modification then becomes material and unenforceable unless in writing.

Facts:

Appellee builder entered into an earnest money contract with appellant developer to develop a subdivision. Appellant failed to timely file a subdivision plat under the contract deadline. Appellee terminated the contract and demanded the return of its earnest money deposit. The trial court summarily rejected appellant's counterclaims for breach of contract. The appellate court reversed the summary judgment and remanded the case for trial.

Issue:

Was the contract to develop a subdivision extended by the alleged oral modification of appellee builder?

Answer:

Yes.

Conclusion:

The trial court correctly granted summary judgment on appellant developer's affirmative defense of modification. The alleged oral modification of the substantial completion deadline did satisfy the statute of frauds, Tex. Bus. & Com. Code Ann. § 26.01(b)(4) (2009). Because appellant did raise fact issues as to whether appellee builder waived performance of the substantial completion deadline and whether appellee caused the delay that extended the time for performance, summary judgment was inappropriate. Appellant's counterclaim for breach of contract stated a claim for affirmative relief, but it failed to prove that the earnest money provision of the contract was unenforceable as a penalty. The contract did not require notice of default and an opportunity to cure before appellee could recover its earnest money under the liquidated damages provision.

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