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The facts underlying the Austin Court of Appeals decision in\u00a0Marek v. Lehrer<\/em> are an agricultural real estate deal gone terribly wrong.\u00a0 This case is a great example of why it is so important to have every agreement\u00a0 put into writing and timely signed by the parties.<\/p>\n Photo via TAMU AgriLife<\/em><\/p><\/div>\n Factual Background<\/strong><\/p>\n R.L. Lehrer, a cattle rancher in San Saba County decided to sell 257 acres of his property and to lease the property back to continue grazing his cattle.\u00a0 He planned to use the proceeds from the property sale and from selling calves each year from the cows he ran on the property to cover his living expenses and to allow him to travel.<\/p>\n Tom Marek, who lives in Austin, expressed an interest in the property.\u00a0 Marek visited the land and he and Lehrer verbally agreed that Lehrer would sell the land for $200,000 down and carry an $800,000 note for five years at 3% interest with no principal payment required for the first five years, while Marek would lease the land back to Lehrer for grazing and hunting.\u00a0 Subsequently, prior to closing, Lehrer received another offer for $100,000 more than asking price and 4% interest.\u00a0 Lehrer refused the offer because he had already made a deal with Marek.<\/p>\n On June 9, 2014, Marek and Lehrer signed a Farm and Ranch Contract that included a provision stating that “Seller and Buyer agree that at closing, Seller shall lease the Property from Buyer for grazing purposes for the sum of $2,500 per year for a period of five years.\u00a0 The lease will be payable annually in advance, with the first payment of $2,500 being due at closing and the payments for each succeeding year of the lease term being due on the anniversary date of closing.”<\/p>\n Prior to the August 21, 2014 closing date, Lehrer proposed a one-paragraph lease that mirrored the term in the Farm and Ranch Contract.\u00a0 Marek refused to sign it.\u00a0 Instead, he had his ex-wife, Mary, who was an attorney, prepare a draft lease.\u00a0 The initial draft by Mary provided a 5-year term, but allowed Marek to terminate with 180-day notice.\u00a0 Marek did not like that lease, saying it was too long and complicated, and told her to draft another version. Mary then drafted a shorter lease with a one-year term, the possibility of renewal for another year, and a 90-day termination right for both Marek and Lehrer.\u00a0 This lease was given to Lehrer at closing, but his attorney was not present due to a family emergency, so Lehrer refused to sign the lease until his attorney could review.\u00a0 Because there was no agreed upon lease at closing, the parties signed a document that said the provisions in the Farm and Ranch Contract related to the lease would survive closing.\u00a0 \u00a0The land deal closed, and Lehrer provided Marek with the deed to the land and continued to graze his cattle on the property.<\/p>\n A few months later, Mary wrote another draft lease that had only a one-year term and allowed only\u00a0 Marek to terminate the lease on 30 days notice.\u00a0 Marek did not remember if he ever gave the lease to Lehrer, but it was not signed regardless.\u00a0 In December, Marek presented Lehrer with another lease with one year term and the right for Marek only to terminate upon 7 days notice along with his payment for the following year.\u00a0 Lehrer told Marek he would read the lease when he got the chance, but did not sign it.\u00a0 Marek asked Lehrer to sign a receipt that listed the payment made by Marek that day, which Lehrer did.<\/p>\n When Marek presented what he said was a copy of that receipt to the jury, it contained two paragraphs about the grazing and hunting rights saying that if the parties did not enter into a lease, Lehrer would remove his cattle upon 5 days notice from Marek.\u00a0 Lehrer testified that language was not on the receipt he signed.\u00a0 Five days later, Marek called Lehrer’s attorney and said if the lease was not signed by 5:00 that day, he would remove all of Lehrer’s cattle the next day.\u00a0 The attorney said that Lehrer would be happy to meet with Marek sometime in January to discuss the issue and was interested in cutting ties with Marek.\u00a0 The attorney also explained that there was already\u00a0 a written lease in place from what the parties signed at closing and that Marek had even accepted the lease money. Marek’s position was that there was no current lease in place until Lehrer signed an additional document.<\/p>\n A couple of weeks later, Marek locked Lehrer’s cattle up in a 4 acre turnip patch and, in the process of doing so, separated some baby calves from the cows and the calves died.\u00a0 For several days, Lehrer had to climb over the fence in order to care for his cattle.\u00a0 Lehrer removed the cattle from the property and took them to his ranch, which was already fully stocked with cattle, so he was forced to sell several cows.<\/p>\n Litigation Background<\/strong><\/p>\n Lehrer sued Marek for breach of contract and for violating the Deceptive Trace Practices Act (DTPA) by committing deceptive and unconscionable acts.\u00a0 Marek counterclaimed for breach of contract based on the alleged agreement from the receipt that Lehrer signed.\u00a0 A jury trial was held, and the jury found in favor of Lehrer, awarding $2,695.41 in expenses, $45,982.85 in lost profits, and $50,000 in additional damages under the DTPA.\u00a0 Marek appealed only the jury’s DTPA verdict and the award of lost profits.\u00a0 He did not challenge the breach of contract verdict.<\/p>\n Appellate Court Opinion<\/strong><\/p>\n The appellate court affirmed the trial court’s verdict.\u00a0 [Read opinion here<\/a>.]<\/p>\n The DPTA provides consumers with a cause of action for a false, misleading, or deceptive act relied upon by the consumer or for an unconscionable act.\u00a0 A mere breach of contract, without more, does not constitute a DTPA violation.<\/p>\n False, misleading, or deceptive act<\/em><\/p>\n In order for Lehrer to recover under the DTPA’s false, misleading, or deceptive act standard in this case, he had to show that Marek “did not intend to perform the contract at the time the contract was made.”\u00a0 The court found sufficient evidence to uphold the jury verdict that Marek did not intend to perform the agreement at closing to allow Lehrer to lease the property for five years.<\/p>\n In particular, the court relied upon the fact that Marek had never presented Lehrer a lease to sign containing a five year term, and that Marek had refused to sign the five year lease drafted by Lehrer, despite it being identical to the terms in the Farm and Ranch Contract.\u00a0 Further, Marek testified that he did not think any lease had been entered into despite the signing of the document at closing, evidencing that he did not intend to comply with the contractual obligations that document did create.\u00a0 Additionally, the court found intent not to comply by Marek because with each successive draft of lease he presented, he shortened the time frame on his right to cancel the lease.\u00a0 The court reasoned that had Marek really wanted to get a lease signed, he would not have made the terms more onerous with each subsequent draft.<\/p>\n Unconscionable act<\/em><\/p>\n The court also found that Marek committed an unconscionable act under the DTPA.\u00a0 An unconscionable act is “an act or practice which, to a consumer’s detriment, takes advantage of the lack of knowledge, ability, experience or capacity of the consumer to an unfair degree.”\u00a0 Lehrer argued, referring to the receipt, it was unconscionable for Marek to criminally alter a legal document and use it for grounds of eviction.\u00a0 The court found sufficient evidence to uphold a jury verdict on this issue as well.<\/p>\n Lost Profits<\/em><\/p>\n Lastly, the court held that there was sufficient evidence to support the jury’s lost profit award of $45,982.85.\u00a0 The jury calculated lost profits by relying on expert testimony that determined the value of calves Lehrer could have sold each year less expenses like lease and commission, times the five year lease term.\u00a0 The court found there was sufficient evidence to support this verdict.<\/p>\n No appeal was filed.<\/p>\n Key Takeaways<\/strong><\/p>\n Every agricultural lease agreement should be reduced to writing before the lease begins.\u00a0 This is something we preach in our Ranchers Leasing Workshop events, and this case is a perfect example of why this is so important.\u00a0 Had the parties waited to close until they had agreed upon a lease and signed it, this whole fiasco might have been avoided.\u00a0 Additionally, this case is interesting because of the application of the DTPA to a grazing lease–something that rarely (if ever) happens in Texas law.\u00a0 This is a good reminder that there could be potential legal claims beyond just breach of contract that may allow for significantly larger damage awards in a lease dispute.<\/p>\n For more information on our Ranchers Leasing Workshops, click here<\/a>.\u00a0 For a copy of our Ranchers Agricultural Leasing Handbook, click here<\/a>.<\/p>\n Ranchers Leasing Workshop is now available on demand to be taken anytime at your own pace. To register click here<\/em><\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/agrilife.org\/texasaglaw\/files\/2019\/06\/3513878824_64ff29cfe5_z.jpg\")