File: 060130F - From documents
transmitted: 09/19/2007
AFFIRM in
part, REVERSE and REMAND in part, REVERSE and RENDER in part; Opinion issued September 19,
2007
In The
Court of Appeals
Fifth
District of Texas at Dallas
............................
No. 05-06-00130-CV
............................
SOLAR SOCCER CLUB, Appellant and
Cross-Appellee
V.
PRINCE OF PEACE LUTHERAN CHURCH
OF CARROLLTON, TEXAS, Appellee and Cross-Appellant
.............................................................
On Appeal from the 296th Judicial District
Court
Collin County,
Texas
Trial Court Cause No.
296-961-04
.............................................................
OPINION
Before Justices
Whittington, Francis, and Lang
Opinion By
Justice Whittington
In this intractable
dispute, Prince of Peace Lutheran Church of Carrollton, Texas, seeks to terminate a contractual relationship with Solar Soccer
Club. Solar, on the other hand, seeks to continue the relationship for the full
contractual term. After several summary judgments and a jury trial, the parties
continue to pursue their opposing goals in this appeal and cross-appeal. The
trial judge entered judgment on the jury's verdict, terminating the contract but
awarding damages to Solar. We affirm the trial court's judgment in part and
reverse in part. We conclude summary judgment for Prince of Peace on its claim
for breach of the field maintenance provision of the lease was improper. We
render judgment that Solar cannot recover on its claim in quantum meruit. We
remand for further proceedings the issues of whether Solar breached the field
maintenance provision of the lease and the amount of Prince of Peace's
attorney's fees. In all other respects, we affirm the trial court's
judgment.
Background
In 1999, Solar and Prince
of Peace entered into a lease agreement. Solar agreed to build soccer fields on Prince of Peace's undeveloped property.
The parties agreed Solar would use the fields primarily on evenings and
weekends, while Prince of Peace would use the fields during the school day for
the students in its school. Because the construction of the fields was at
Solar's expense, and the fields, thereafter, would belong to Prince of Peace,
there were no periodic rental payments in the lease. The initial term of the
lease was for ten years, after which Solar had the option to extend the lease
for three five-year periods.
Before the fields were
completed, neighbors of the church expressed concern about the lights to be installed for the fields. These concerns
culminated in a lawsuit, the Hodgson case, brought against Prince of
Peace and Solar. The Hodgson suit was settled out of court, and the final
judgment dismissing it provided, “all claims, counterclaims, cross-claims and
third-party claims which have been or could have been asserted in the
above-entitled and numbered . . . litigation by the parties against one another
are dismissed with prejudice to refiling . . . .” Prince of Peace then filed
this lawsuit seeking to terminate the lease. Solar moved for summary judgment,
alleging the agreed order of dismissal precluded all of Prince of Peace's
claims. The trial judge granted this motion in part, holding the Hodgson
order of dismissal “is not ambiguous and that all claims and any matters
dismissed with prejudice by such Order of Dismissal with Prejudice dated May 20,
2003 are barred from this suit as a matter of law.”
In this lawsuit, Prince of Peace
alleged breaches of four contractual provisions: the insurance provision, the
field maintenance provision, the utilities clause, and the use clause. The trial
judge granted partial summary judgment in favor of Prince of Peace, ruling Solar
breached the insurance provision and the field maintenance provision of the
lease as a matter of law. The jury found Solar breached the utilities clause and
the use clause. The jury also found, however, that Prince of Peace suffered no
damages as a result of Solar's breaches of the insurance and the use clauses.
The jury awarded Prince of Peace $25,000 for the breach of the field maintenance
provision and $31,000 for the breach of the utilities clause. The jury also
awarded attorney's fees to Prince of Peace in the amount of $130,000 for trial,
$20,000 for appeal to the court of appeals, and $15,000 for appeal to the
supreme court.
Over objection by Prince
of Peace, the jury charge included questions relating to Solar's claim for recovery of damages in quantum meruit for its
construction of the fields. The jury found Solar performed compensable work with
a value of $342,568.33. The trial judge offset the damages awarded to each party
by the jury and entered judgment that Solar recover $154,934.33 from Prince of
Peace. The judgment also terminated the lease. After post-judgment hearings, the
trial judge set the amount of supersedeas bonds to be posted by each party in
prosecuting their appeals of the judgment. As a result of these post-judgment
hearings and orders, Solar continues to use the lighted fields.
Each party
appeals. Solar asserts seven multi-part issues. It complains Prince of Peace's claims were barred by res judicata. Solar also
contends the trial judge erred in granting summary judgment for Prince of Peace
on its breach of contract claims and on Solar's affirmative defenses, granting
judgment terminating the ground lease, and awarding Prince of Peace damages and
attorney's fees. Solar further complains of the sufficiency of the evidence to
support certain of the jury's findings. In six issues, Prince of Peace complains
of Solar's recovery of damages in quantum meruit and the trial judge's rulings
regarding enforcement of the judgment pending appeal.
Standards of Review
Solar challenges the
legal and factual sufficiency of the evidence to support the jury's findings. In reviewing the legal sufficiency of the
evidence, we consider all the evidence in the light most favorable to the
prevailing party, indulging every reasonable inference in that party's favor.
See Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 296
(Tex. 1998). We must credit the favorable evidence if reasonable jurors could
and disregard the contrary evidence unless reasonable jurors could not. City
of Keller v. Wilson, 168 S.W.3d 802, 807, 827 (Tex. 2005). When reviewing a
finding for factual sufficiency, we consider all of the evidence and will set
aside the finding only if it is so contrary to the overwhelming weight of the
evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175,
176 (Tex.1986) (per curiam).
Solar also challenges
certain of the trial judge's summary judgment rulings. We review a summary judgment de novo to determine whether a
party has established its right to summary judgment as a matter of law. See
Dallas Cent. Appraisal Dist. v. Cunningham, 161 S.W.3d 293, 295 (Tex.
App.-Dallas 2005, no pet.). In reviewing a summary judgment, we must examine the
entire record in the light most favorable to the nonmovant. See City of
Keller, 168 S.W.3d at 824-25.
Prince of Peace sought a
declaratory judgment defining its rights under the lease, specifically seeking a declaration terminating the lease and
permitting Prince of Peace to resume exclusive possession of the leased
property. We review declaratory judgments under the same standards as other
judgments and decrees. Tex. Civ. Prac. & Rem. Code Ann. § 37.010 (Vernon
1997 ). We look to the procedure used to resolve the issue at trial to
determine the standard of review on appeal. Hawkins v. El Paso First Health
Plans, Inc., 214 S.W.3d 709, 719 (Tex. App.-Austin 2007, pet. filed). Here
the trial judge determined the declaratory judgment issue after summary judgment
rulings and a jury trial. Therefore we apply the standards set forth above for
review of summary judgments and jury findings and review the trial judge's
conclusions of law de novo. See Hawkins, 214 S.W.3d at 719; Montfort
v. Trek Resources, Inc., 198 S.W.3d 344, 354 (Tex. App.-Eastland 2006, no
pet.).
We review the trial
judge's rulings regarding enforcement of the judgment pending appeal for abuse of discretion. A trial judge abuses her
discretion if she acts in an arbitrary or unreasonable manner without reference
to any guiding rules or principles. See Walker v. Gutierrez, 111 S.W.3d
56, 62 (Tex. 2003).
Solar's
Appeal
Res Judicata
Before we review Solar's
primary complaint that the lease should not have been terminated, we address Solar's arguments that Prince of Peace's
lawsuit against it could not be brought at all. In its first issue, Solar argues
the trial judge erred in permitting Prince of Peace to proceed to trial on
claims that were barred. Solar contends the order of dismissal in the
Hodgson suit precludes Prince of Peace from asserting any claims in this
lawsuit. The essence of Solar's complaint is that res judicata applies to bar
all of Prince of Peace's claims. In its second issue, Solar complains the trial
judge erred in granting Prince of Peace summary judgment on Solar's affirmative
defenses of res judicata, estoppel, and waiver. We address these issues
together.
Solar concedes res
judicata would not normally apply where, as here, Solar and Prince of Peace were co-defendants in an earlier lawsuit and neither
asserted any cross-claims against the other. See State & County Mut. Fire
Ins. Co. v. Miller, 52 S.W.3d 693, 696 (Tex. 2001) (per curiam) (where
co-defendants in first suit could have filed cross-actions against each other
but did not, res judicata did not bar claims by one of co-defendants against
other in second suit); see also Tex. R. Civ. P. 97(e) (pleading “may”
state cross-claim by one party against co-party). But Solar argues the language
of the Hodgson order of dismissal, “that all claims, counterclaims,
cross-claims, and third- party claims which have been or could have been
asserted in the above-entitled and numbered and [sic] litigation by the parties
against one another are dismissed with prejudice to refiling,” bars Prince of
Peace's claims nonetheless. Solar argues all of Prince of Peace's claims “could
have been asserted” in the Hodgson suit.
Rule 97(e) of the Texas
Rules of Civil Procedure provides “[a] pleading may state as a cross- claim any claim by one party against a co-party arising
out of the transaction or occurrence that is the subject matter either of the
original action or of a counterclaim therein.” Tex. R. Civ. P. 97(e). Solar
contends even though the cross-claim rule is permissive, the language of the
dismissal order required Prince of Peace to assert all cross-claims arising out
of the transaction or occurrence that was the subject matter of the
Hodgson litigation. Texas does apply the transactional approach to res
judicata. See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630 (Tex.
1992). “A determination of what constitutes the subject matter of a suit
necessarily requires an examination of the factual basis of the claim or claims
in the prior litigation.” Barr, 837 S.W.2d at 630.
We first note
that there is no copy of either the Hodgson petition or the complete settlement agreement in the record, so it is not
clear what claims were actually asserted or what relief was requested. The
caption of the order of dismissal reflects Prince of Peace and Solar may have
brought claims against a third party, Air Park Homeowners' Association, Inc.,
but the record does not reflect the substance of those claims. Without copies of
the basic pleadings for comparison with the claims asserted in this lawsuit, it
is difficult to determine whether Prince of Peace's claims here arise out of the
same transaction as the Hodgson plaintiffs' claims.
From references in our record,
it appears the Hodgson plaintiffs asserted a claim for common law
nuisance arising from the brightness of the lights. A “nuisance” is a condition
that substantially interferes with the use and enjoyment of land by causing
unreasonable discomfort or annoyance to persons of ordinary sensibilities.
Schneider Nat'l Carriers, Inc. v. Bates, 147 S.W.3d 264, 269 (Tex. 2004).
The factual basis for this claim would have included proof of the effect of the
field lighting on the Hodgson plaintiffs' use and enjoyment of their
homes and property. Solar contends all of Prince of Peace's claims arise out of
the same occurrence as the Hodgson plaintiffs' claims, that is, the
alleged nuisance caused by the field lights.
We do not agree all of
Prince of Peace's claims could have been asserted in the Hodgson suit. Prince of Peace's claims are for
breaches of the contract between it and Solar, including claims Solar violated
the provisions of the lease relating to insurance, field maintenance, payment of
utilities, and use of the premises in violation of law. The Hodgson
plaintiffs' claims did not arise out of the lease between Prince of Peace and
Solar, and apparently did not contain allegations relating to insurance,
utilities, or maintenance of the fields. It appears the only issue with facts
common to both the Hodgson case and this action would have been the claim
the lights were too bright, and even for that claim, the focus of the facts
developed would have been different. The Hodgson plaintiffs' proof would
center around the effect of the lights on the neighborhood near the fields,
while Prince of Peace's proof would center around whether use of the lights was
“in violation of any valid and applicable law, regulation, or ordinance of the
United States, the State of Texas, or Dallas County or the City of Dallas, or
other lawful authority having jurisdiction over the Leased Premises,” under
section 15.05 of the lease.
In determining whether
the facts constitute a single transaction, we consider “their relatedness in time, space, origin, or motivation, and whether,
taken together, they form a convenient unit for trial purposes.” Getty Oil
Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 798-99 (Tex. 1992) (quoting
Restatement (Second) of Judgments § 24 cmt. b (1980)). The suits in
Getty arose from the same accident, concerned the same section of the
same contract, and sought the same relief. See Getty, 845 S.W.2d at 799.
Although there is likely some overlap between the Hodgson plaintiffs'
claims and Prince of Peace's claims against Solar with respect to the field
lights, we do not read the Hodgson dismissal order so broadly as to hold
that Prince of Peace is completely barred from asserting any claim against Solar
in this lawsuit, particularly where the Texas Rules of Civil Procedure did not
require Prince of Peace to assert any cross-claims during the course of the
Hodgson litigation and the lease between Solar and Prince of Peace was
not at issue in the Hodgson case. We overrule Solar's first and second
issues.
Termination of the Lease
In its fourth issue,
Solar argues the trial judge erred in terminating the lease and awarding Prince of Peace immediate possession of the
premises. Prince of Peace sought to terminate the lease pursuant to an express
clause authorizing termination in the event of a default by Solar. The lease
provides:
Should Lessee default in the performance of any other covenant,
condition, or agreement in this Lease, and such
default is not cured within thirty (30) days after receipt of written notice
from lessor to Lessee, Lessor may declare this Lease in its sole and absolute
discretion, and all rights, titles, and interests created by it, to be
terminated. Upon Lessor so electing to terminate, this Lease shall cease and
come to an end as if that were the date originally fixed herein for the
expiration of the Lease Term.
This clause is unambiguous; the
parties agreed termination of the lease was a remedy available to Prince of Peace for a breach by Solar. Therefore, if the
evidence supports findings of uncured defaults by Solar, the trial judge
correctly granted Prince of Peace's request to terminate the lease. We review
each alleged default in turn, addressing each of Solar's issues relating to each
default. Use clause. In issue
4.a, Solar challenges the legal and factual sufficiency of the evidence to
support the jury's finding Solar breached the use clause of the lease. In issue
3, Solar contends the trial judge erred by granting Prince of Peace's no
evidence summary judgment motion on Solar's affirmative defense of limitations
relating to this alleged breach. Section 15.05 of the lease
provides:
15.05 Use clause. Lessee
agrees not to use the Leased Premises or any improvement situated upon the Leased Premises, or any part thereof, for
any use or purpose in violation of any valid and applicable law, regulation, or
ordinance of the United States, the State of Texas, or Dallas County or the City
of Dallas, or other lawful authority having jurisdiction over the Leased
Premises.
The jury heard testimony
from Prince of Peace's expert witness Nancy Clanton that the lighting from the fields exceeded the City of Carrollton's
standards for light trespass and glare, by as much as six to twelve times the
maximum in some locations. Clanton, who undertook testing of the lighting,
testified and was cross-examined about her methodology and results. While some
of Solar's objections to Clanton's testimony were sustained, she nevertheless
testified as to her conclusions, and her report was admitted into the record.
The jury also heard testimony from Prince of Peace's expert Lewis Harvey that
the lights created “disability glare” and caused other dangers for drivers in
the area. Solar did not offer its own expert testimony about the lighting. Solar
points to a letter it received from the City of Carrollton stating the City
would not be taking any enforcement action as to the lights, but the evidence
also showed this letter was in reference to complaints by the Hodgson
plaintiffs who lived outside the city limits of Carrollton. We conclude there
was evidence from which the jury could have concluded Solar breached the use
clause of the contract, and the jury's finding is not so contrary to the
overwhelming weight of the evidence as to be clearly wrong and unjust. See
Cain, 709 S.W.2d at 176. We overrule Solar's issue number
4.a.
We also conclude the
trial judge did not err in granting summary judgment for Prince of Peace on Solar's affirmative defense that the claim
for breach of the use clause was barred by limitations. In its third issue,
Solar contends Prince of Peace's “nuisance-based contract claim” accrued more
than four years prior to April 12, 2004, the date Prince of Peace filed this
action. Solar notes the field lights were installed and in use by January 2000,
and complaints from the neighboring landowners began even before the lights were
completed. In its summary judgment materials, Prince of Peace contended it was
only seeking damages from Solar's use of the lights within the limitations
period; Solar's breaches of the use provision were continuing, citing Dvorken
v. Lone Star Industries, Inc., 740 S.W.2d 565, 567 (Tex. App.-Fort Worth
1987, no writ); and the lease's “no waiver” clause permitted suit on these later
breaches even if Prince of Peace did not sue on the earlier breaches (“No waiver
by Lessor of a breach of any of the agreements, covenants, conditions, or
restrictions of this Lease shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other agreement, covenant,
condition, or restriction herein contained.”). Summary judgment for Prince of
Peace was proper on the issue whether limitations barred its claim for breach of
the use clause. See Dvorken, 740 S.W.2d at 567 (if continuing breach
occurred, then appellants entitled to damages from four years prior to filing of
their original petition). We overrule Solar's issues relating to the use clause
of the lease.
Insurance clause. In
issue 4.b, Solar contends the trial judge erred in granting Prince of Peace summary judgment on its claim that Solar
breached the lease's insurance provisions. Under section 11.02 of the lease,
Solar was to provide “bodily injury and property damage insurance, covering
Lessor as well as Lessee” in specified amounts to protect against liability
arising out of the use of the leased premises.
Solar appears to concede
it breached at least one requirement of section 11.02, requiring Solar to “furnish a copy of the certificate of insurance
reflecting Lessor as a coinsured prior to Lessee's occupancy of the Leased
Premises.” Solar pleaded the affirmative defense of impossibility, and in its
summary judgment materials, offered the affidavit of a licensed insurance agent
who explained under the rules and regulations of the Texas Insurance Board, a
commercial tenant could only cause its landlord to be shown as an additional
insured, not a co-insured. If the party opposing a motion for summary judgment
relies on an affirmative defense, it must come forward with summary judgment
evidence sufficient to raise an issue of fact on each element of the defense.
See Am. Home Shield Corp. v. Lahorgue, 201 S.W.3d 181, 184 (Tex.
App.-Dallas 2006, pet. denied). Solar does not detail the elements of the
impossibility defense, and Prince of Peace argues it does not apply where the
inability to make Prince of Peace a co-insured was or could have been
anticipated at the time the contract was made, citing Huffines v. Swor Sand
& Gravel Co., 750 S.W.2d 38, 40 (Tex. App.-Fort Worth 1988, no
writ).
Solar counters the
Huffines rule only applies to an impossibility arising after the
contract is made, that is, a supervening event,
citing Janak v. FDIC, 586 S.W.2d 902, 906-07 (Tex. App.-Houston [1st
Dist.] 1979, no writ). The Texas Supreme Court has looked to the Restatement
(Second) of Contracts to set out the proper elements of the defense. See
Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992) (relying on
Restatement (Second) of Contracts §§ 261 and 264). Those sections address
supervening impossibility. See Restatement (Second) of Contracts
§ 261.
An impracticability that
existed at the time the contract was made is addressed in a different section of the Restatement. See Restatement
(Second) of Contracts § 266 (1981) (Existing Impracticability or
Frustration); see also Castaneda v. State, 138 S.W.3d 304, 319-20 and
n.25 (Tex. Crim. App. 2003) (noting section 266 addresses situation in which
impossibility existed at time of contracting). Section 266 provides that no duty
to perform arises if “it is impracticable without his fault because of a fact of
which he has no reason to know and the non-existence of which is a basic
assumption on which the contract is made.” This would most likely be the
applicable section to Solar's pleading of the defense, as Solar does not
contend, and its evidence does not indicate, that the impossibility of making
Prince of Peace a co-insured was the result of a supervening event. Solar does
not offer evidence regarding whether it had reason to know of the problem or
whether it involved a basic assumption of the parties, and thus did not
establish a genuine issue of material fact existed on each element of its
affirmative defense. We overrule Solar's issue 4.b relating to the insurance
clause of the lease.
Field maintenance
provision. Under article 9.01 of the lease, Solar was obligated to keep and maintain the improvements it erected in a good
state of appearance and repair. The parties refer to this as the field
maintenance provision. Solar challenges the trial judge's summary judgment
rulings on limitations and on liability as well as the jury's finding of damages
for breach of the field maintenance provision.
In its third issue, Solar
contends the trial judge erred in granting Prince of Peace summary judgment on Solar's affirmative defense of the
statute of limitations regarding the field maintenance claim because the work
leading to the drainage problems was complete by December 1, 1999. We disagree.
While Solar alleged all improvements affecting grade and drainage were completed
by December 1, 1999, Solar offered no further summary judgment evidence of facts
relevant to when this claim arose. Solar relies on Hubble v. Lone Star
Contracting Corp., 883 S.W.2d 379, 382 (Tex. App.-Fort Worth 1994, writ
denied), for the proposition that for contracts with continuing obligations,
limitations begins to run when the work under the contract is complete. We do
not agree that the rule described in Hubble applies to Prince of Peace's
claim Solar breached the field maintenance provision. In Hubble, the
alleged breach was failure to make periodic payments as work under a
construction contract proceeded. See Hubble, 883 S.W.2d at 380. Here, the
alleged breach is failure to keep and maintain the improvements on Prince of
Peace's property in good appearance and repair after completion, as required by
section 9.01 of the lease. The breach would occur, as we have recently noted,
when the wrongful act occurred:
The limitations period for a breach
of contract claim is four years. The issue of when a cause of action accrues is a question of law for the court. By moving for
summary judgment on the affirmative defense of limitations, it is the
defendant's burden to establish as a matter of law the date a cause of action
accrues. A breach of contract claim accrues when the contract is breached. The
contract is not breached until a wrongful act occurs. A cause of action
generally accrues, and the statute of limitations begins to run, when facts come
into existence that authorize a claimant to seek a judicial
remedy.
Jones v.
Blume, 196 S.W.3d 440, 445-46 (Tex. App.-Dallas 2006, pet. denied)
(citations omitted). Here, the wrongful act
alleged by Prince of Peace was the failure to maintain the fields, allowing
standing pools of water and soggy turf to occur. Solar's contractual obligations
did not end with completion of the fields. Without evidence of when the breach
occurred, the trial judge did not err in granting Prince of Peace's motion for
summary judgment on Solar's affirmative defense of limitations as to the field
maintenance claim. We overrule Solar's third issue.
In issues 4.c and 5.a,
Solar contends the trial judge erred in granting Prince of Peace summary judgment on its claim that Solar breached the
field maintenance provision. The trial judge granted Prince of Peace's summary
judgment motion on this provision, and the jury found damages in the amount of
$25,000 for Solar's breach of this provision, exactly half of Prince of Peace's
requested damages of $50,000 to regrade the fields. In issue 5.b, Solar
challenges the jury's finding of damages.
In its summary judgment
motion, Prince of Peace contended, “The fields surrounding Solar's soccer fields are lower than the soccer fields. Solar
has place[d] so much sod on the soccer fields that they now rise well above
surrounding fields. These surrounding fields, consequently, experience
substantial drainage problems; water from the soccer fields drains downwards
onto the surrounding fields and creates standing pools of water and/or soggy
turf.” The motion cites to the affidavit of Gary Weik, the then-Executive
Director for Prince of Peace, and Weik recites the same facts in his affidavit
that are alleged in the motion.
In response, Solar cited
to the affidavit of David Ringer. Ringer testifies Weik's statements about the sod affecting drainage are
“nonsensical.” He avers the grading plans were approved by Prince of Peace's
architect; water from the fields is directed to a swale and then a drain pipe;
only minor sod work has been done since installation; there is no condition of
the sod on the soccer fields which causes any increased drainage onto the
baseball field; Prince of Peace failed to provide specifications for the
baseball field from which Solar's grading contractor could work; Prince of Peace
does not properly care for the baseball field; changes in the natural conditions
of the property have occurred and will occur; there were no changes to the sod
affecting drainage; and the water on the baseball fields is caused by drainage
from a neighboring parking lot, not from any condition on the soccer
fields.
Weik's testimony does not
establish Solar violated the field maintenance provision as a matter of law. It is not clear to what “surrounding
fields” Weik refers, or whether it was Solar's obligation to maintain these
“surrounding fields,” as Solar's contractual obligation was to keep and maintain
the “improvements.” Ringer's affidavit challenges Weik's factual assertions, and
the jury should have been permitted to decide whether Solar had failed to
maintain the fields in compliance with its contractual obligation. We conclude
summary judgment should not have been granted on this issue. We sustain Solar's
issues 4.c and 5.a.
In issue 5.b, Solar
complains the evidence is insufficient to support the jury's finding of damages for Solar's alleged breach of the field
maintenance provision. Because we have held summary judgment was not proper on
the question whether Solar breached the field maintenance provision, we must
remand that issue, and the issue of resulting damages, to the trial court for
further proceedings. See Dallas, Garland & Ne. R.R. v. Hunt County,
195 S.W.3d 818, 820 (Tex. App.-Dallas 2006, no pet.) (if movant does not show
its entitlement to summary judgment as matter of law, this court must remand
case to trial court)(citing Gibbs v. Gen. Motors Corp., 450 S.W.2d 827,
829 (Tex. 1970)).
Utilities provisions. In
issues 4.d, 4.e, 5.c, and 5.d, Solar complains the evidence is legally and factually insufficient to support the jury's
finding that Solar breached the utilities clauses of the lease, and contends the
jury's finding its breach was not excused is against the great weight and
preponderance of the evidence. In issue 5.e, Solar challenges the legal and
factual sufficiency of the evidence to support the jury's finding of damages
arising from Solar's breach of the utilities clauses. We overrule these
issues.
The jury heard evidence
of the parties' agreements regarding payment of utilities. The lease itself set forth these agreements in several
different provisions. Prince of Peace offered testimony that Solar did not pay
certain utility expenses and offered further testimony of the amounts of these
unpaid expenses. Steven Ailey, the director of accounting and controller for
Prince of Peace, testified that, in June 2004, a different company began
providing electric services for Prince of Peace. After that date, the charges
for the lights illuminating the soccer fields began appearing on Prince of
Peace's bills instead of Solar's, and Prince of Peace paid $18,500 for those
charges. Ailey also testified he reviewed the water bills received by Prince of
Peace; Prince of Peace tracked the bills for water to the soccer fields; Prince
of Peace has paid $27,000 in water bills since July of 2001; Solar's portion of
these bills would be $12,500; and Solar had not paid any water utility bills
since July 2001. In sections 3.01, 3.02, and Article 5 of the lease, the parties
agreed to share the cost of electric and water utilities. Article 5, for
example, provides in part, “[u]tilities for water and electricity shall be paid
and allocated by and among Lessor and Lessee on a ratable basis according to the
terms and provisions set forth in this Lease.” After reviewing the record, we
conclude there is legally and factually sufficient evidence to support the
jury's findings Solar breached the utilities provisions of the lease and that
$31,000 would fairly and reasonably compensate Prince of Peace for this
breach.
Solar does not contend it
did not agree to pay certain utility expenses but argues it was excused from its obligation because Prince of Peace did not
present Solar with any invoices showing the amounts due. In Question No. 4 of
the jury charge (conditioned on a finding that Solar failed to comply with the
utilities provisions of the lease), the jury was asked whether Solar was excused
from its failure to comply and was instructed that Solar's failure to comply is
excused if compliance is waived by Prince of Peace. The instruction also defined
waiver as “an intentional surrender of a known right or intentional conduct
inconsistent with claiming the right.” Solar challenges the sufficiency of the
evidence to support the jury's answer of “no” to this question. While Solar
argues Prince of Peace did not present the bills to Solar nor did Prince of
Peace demand payment, Solar does not point to any evidence that Prince of Peace
intentionally surrendered the right to be reimbursed pursuant to the utilities
provisions of the lease. Prince of Peace cites to correspondence, including
demand letters in this litigation, in which it complained of Solar's failure to
pay its share of utility expenses. These letters were introduced into the
record, and the jury was entitled to consider them. While there is no written
demand for a specific amount of utilities expenses to be paid, Prince of Peace
offered evidence it continued to assert its right to recover utilities expenses
under the lease rather than waiving its claim. We conclude there was evidence to
support the jury's finding Prince of Peace did not waive its claim for the
utilities expenses and that Solar was not excused from its failure to comply
with the utilities provisions of the lease. Therefore, the jury's finding on
Question 4 was not against the great weight and preponderance of the evidence.
We overrule Solar's issues 4.d, 4.e, 5.c, 5.d, and 5.e.
We now
consider Solar's complaint that the lease should not have been terminated. We have reviewed and upheld the judge's and
jury's findings that Solar breached three provisions of the lease. In light of
these defaults, section 13.01 of the lease allowed Prince of Peace to “declare
this Lease in its sole and absolute discretion, and all rights, titles, and
interests created by it, to be terminated.” Solar asks to be relieved of its
express bargain, however, because the result of enforcing the lease provisions
would be inequitable and result in a forfeiture.
Solar cites Caranas v.
Jones, 437 S.W.2d 905, 912 (Tex. Civ. App.-Dallas 1969, writ ref'd n.r.e.), in which we stated, “[c]ourts of equity do not
favor forfeiture and in the absence of willful and culpable neglect on the part
of the lessee a forfeiture will not be decreed for failure to comply with the
covenants of the lease, especially where adequate compensation can be made for
the breach.” In Caranas, as here, the lease included an express clause
permitting forfeiture of the lease upon uncured default. Caranas, 437
S.W.2d at 912. Despite the express clause, the trial judge in Caranas
found it would be inequitable to forfeit the lessee's interest in the lease
without affording the lessee the opportunity to pay the ad valorem taxes
determined to be due. Caranas, 437 S.W.2d at 912. We affirmed the trial
judge's ruling, noting the facts developed in the record “reveal a situation
where the remedy of forfeiture would be manifestly unjust.” Caranas, 437
S.W.2d at 912. In the original petition in the case, the lessor had sought
termination of the lease not because of the nonpayment of ad valorem taxes, but
on other grounds subsequently abandoned. Caranas, 437 S.W.2d at 910. When
the lessor amended its petition to allege failure to pay the ad valorem taxes as
grounds for termination of the lease, the lessee responded by stating he was
ready, willing, and able to pay the correct amount, as determined by the court.
Caranas, 437 S.W.2d at 912. When the judge determined the amount due, the
lessee paid it with interest in the amount of time allotted by the trial judge.
Caranas, 437 S.W.2d at 912. We noted the lessor had therefore not
sustained any monetary damage by virtue of the lessee's alleged breach of the
covenant to pay the taxes. Caranas, 437 S.W.2d at 912. Under those
circumstances, we held there was ample evidence in the record to sustain the
trial judge's conclusion of law that it would be inequitable to forfeit the
lease. Caranas, 437 S.W.2d at 912-13.
Here, in contrast to
Caranas, the trial judge or the jury found Solar was in default of at least three different provisions of the lease,
and Solar did not demonstrate it was ready, willing, and able to cure the
defaults either during the notice period provided in the lease or thereafter.
See Caranas, 437 S.W.2d at 912. Parties may contract to provide for
forfeiture upon default, although equities may be shown to justify a
continuation of the contract rather that forfeiture of it. See W.W.
Laubach Trust/The Georgetown Corp. v. The Georgetown Corp./W.W. Laubach
Trust, 80 S.W.3d 149, 157 (Tex. App.-Austin 2002, pet. denied) (quoting
T-Anchor Corp. v. Travarillo Assoc., 529 S.W.2d 622, 627 (Tex. Civ.
App.-Amarillo 1975, no writ)). Here, the contract is clear and was the result of
negotiation between the parties.
See Footnote 1
The parties provided for Prince of Peace to be able to terminate the contract
upon default by Solar with or without cause. For termination without cause, the
parties included a procedure for valuing Solar's investment and specified a
period of time before which Prince of Peace could not terminate the lease. The
termination upon default provisions do not include these safeguards. The trial
judge declared the rights of the parties consistent with the agreements they
made in the lease. We do not disagree that the results are harsh, especially in
light of the jury's findings that two of the breaches caused no damage to Prince
of Peace and the value of Solar's compensable work on the soccer fields was
$342,568.33. We nevertheless conclude, in accordance with the parties' express
agreement, that the trial judge did not err in entering a judgment declaring
that the lease was terminated and granting Prince of Peace immediate and
exclusive possession of the leased premises. We overrule Solar's fourth
issue.
Solar's Counterclaims
In its sixth issue, Solar
complains the trial judge erred in granting summary judgment for Prince of Peace on Solar's counterclaims for breach of the
lease. Solar contends the affidavits it offered in response to Prince of Peace's
no-evidence motion for summary judgment “at least raised a genuine issue of
material fact on Solar's counterclaims that Prince of Peace was in breach of its
obligations under the Ground Lease in a number of ways.” Solar does not specify
what testimony supports these causes of action or what evidence raises a fact
issue regarding whether Prince of Peace breached these two provisions. Without
such specifics, we decline to address Solar's issue. See Tex. R. App. P.
38.1(h) (brief must contain clear and concise argument to contentions made with
appropriate citations to authorities and record). We overrule Solar's sixth
issue.
Attorney's Fees
In its seventh issue,
Solar complains of reversible error in the award of attorney's fees to Prince of Peace. While we do not agree with any of the
assertions Solar makes under this issue,
See Footnote 2
we are mindful of the supreme court's recent pronouncements on the necessity of
remand to determine attorney's fees when the jury considered an erroneous amount
of damages in making its attorney's fees finding. See Young v. Qualls,
223 S.W.3d 312 (Tex. 2007) (unless appellate court reasonably certain jury was
not significantly influenced by erroneous amount of damages it considered, issue
on attorney's fees should be retried if damages awarded are reduced on appeal;
appellate court cannot substitute its judgment for jury's consideration of
results obtained); Barker v. Eckman, 213 S.W.3d 306, 313-14 (Tex. 2006).
We therefore reverse the portion of the judgment awarding Prince of Peace its
attorney's fees and remand that issue to the trial court for further
proceedings.
Prince of Peace's
Appeal
Quantum Meruit Recovery
In a cross-issue, Prince
of Peace complains Solar cannot recover in quantum meruit for its investment in the improvements to the property because the
lease expressly covers the subject matter of the quantum meruit claim. In
support of its claim, Prince of Peace relies on Truly v. Austin, 744
S.W.2d 934 (Tex. 1988). In Truly, the court noted “[a]s a general rule, a
plaintiff who seeks to recover the reasonable value of services rendered or
materials supplied will be permitted to recover in quantum meruit only when
there is no express contract covering those services or materials.”
Truly, 744 S.W.2d at 936 (citations omitted). Here, the parties' lease
addresses the services Solar will perform, including the construction of the
improvements, and expressly provides the capital improvements made by Solar and
the sharing of expenses will constitute full rent for the term of the lease. The
lease also fully addresses remedies available in the event of default. Upon
default by Solar, after thirty days' notice without cure, Prince of Peace may
declare the lease to be terminated. The lease between the parties expressly
details their rights, obligations, and remedies.
In Truly, the
court held recovery in quantum meruit was not available to Truly because he limited his quantum meruit claim to the services
he agreed to render under a written joint venture agreement. Truly, 744
S.W.2d at 936. Prince of Peace argues Solar seeks to recover in quantum meruit
for the services it agreed to render under the lease and that Truly
applies to preclude this claim.
Solar counters that an
exception recognized by the Truly court, for building and construction contracts, applies to allow Solar quantum
meruit recovery. The Truly court noted “the only Texas cases that have
permitted a breaching [party] . . . to recover in quantum
meruit have involved building or construction contracts.” Truly, 744
S.W.2d at 937 (emphasis in original). Contractors have been permitted to recover
the reasonable value of their services less any damages suffered by the owner,
as long as the owner has accepted and retained the benefits arising as a direct
result of the contractor's partial performance. See Truly, 744 S.W.2d at
937. This exception did not apply in the Truly case, and we likewise
conclude it is inapplicable here. See Truly, 744 S.W.2d at 937-38.
In Truly, because the
plaintiff undertook his obligations on behalf of a joint venture in which he
held a 40% interest, he acted to further his own financial interests as well as
those of the defendants, his co-joint venturers. Truly, 744 S.W.2d at
937. Under those circumstances, where the written joint venture agreement
covered the subject matter of the claim, quantum meruit did not apply.
Truly, 744 S.W.2d at 937. Here, Solar undertook the obligations of the
lease in order to provide a facility for its own use and benefit, as well as for
the use and benefit of Prince of Peace, and has been able to use the facility
since its completion in 2000.
Prince of Peace does retain some
of the benefits of Solar's investment, unlike the defendants in Truly.
Because Truly refused to assume personal liability for the joint venture debt,
the venture failed. Truly, 744 S.W.2d at 937-38. Austin and Clark “were
left with no tangible benefit.” Truly, 744 S.W.2d at 937. In contrast,
Solar argues Prince of Peace uses the fields for its school. But Solar also used
the fields and shared in the operating expenses so that Solar as lessee could
use the leased premises, and it has done so since the lease was signed and the
fields were completed.
The lease provides for
remedies in the event of a default by Solar and, if Prince of Peace had decided to terminate the lease without cause,
the lease provided a formula under which Solar could recover the reasonable
value of the improvements. The lease specifically addresses the services that
are the basis for Solar's quantum meruit claim. Under Truly, quantum
meruit does not apply. Accordingly, we sustain Prince of Peace's fourth
cross-issue. We reverse the trial court's judgment on Solar's quantum meruit
recovery and render the judgment which should have been rendered, that Solar
take nothing on its quantum meruit claim. See Tex. R. App. P. 43.3 (when
reversing trial court's judgment, court of appeals must render judgment trial
court should have rendered unless remand necessary). In light of our disposition
of Prince of Peace's fourth cross-issue, we need not address its fifth and sixth
cross-issues challenging the quantum meruit recovery on different grounds.
See Tex. R. App. P. 47.1.
Supersedeas Bond
In its first three
cross-issues, Prince of Peace argues the trial judge abused her discretion in entering the order setting the amount of
Solar's supersedeas bond because the bond provides security for only a part of
the judgment. The judgment provides, “The court orders that the Ground Lease is
terminated and that Prince of Peace shall have immediate and exclusive
possession of the leased premises.” Prince of Peace argues the judgment both
terminated a contractual relationship and returned an interest in real property,
but the bond only secures the part of the judgment returning an interest in
property. Prince of Peace maintains there is no security for suspending the
termination of the lease, specifically permitting Solar to continue operation of
the field lights.
A trial judge is given
broad discretion in determining the amount and type of security required. Miller v. Kennedy & Minshew, P.C., 80
S.W.3d 161, 164 (Tex. App.-Fort Worth 2002, no pet.). After a series of motions
and hearings, the trial judge set the bond to be posted by Solar at the amount
of $30,000, “which includes lost rental income and court costs.” Prince of Peace
concedes there is security for “immediate and exclusive possession of the leased
premises” as a return of interest in real property, because the trial judge set
a bond to cover lost rental income. See Tex. R. App. P. 24.2(a)(2).
Rule 24.2(a)(2) provides that when a judgment is for the recovery of an interest
in real property, the amount of security the judgment debtor must post must be
at least “the value of the property interest's rent or revenue, if the property
interest is real . . . .” Tex. R. App. P. 24.2(a)(2).
Prince of
Peace also contends, however, that the termination of the lease is a
separate award for which separate security is
required under subsection (a)(3) of rule 24.2. See Tex. R. App. P.
24.2(a)(3) (regarding security for judgments “for something other than money or
an interest in property”). Prince of Peace cites Klein Independent School
District v. Fourteenth Court of Appeals, 720 S.W.2d 87 (Tex. 1986), to
support its argument that termination of the lease actually falls under this
rule regarding “other judgments.” In Klein, the supreme court held there
was no abuse of discretion when the trial judge refused to permit a party to
supersede the injunctive portion of a judgment. See Klein, 720 S.W.2d at
87. In Klein, however, the recovery of real property rule did not apply
as it does here, and the rule regarding superseding a judgment for the recovery
of money did apply, but does not here. See Klein, 720 S.W.2d at 87; Tex.
R. App. P. 24.2(a)(1). Therefore, we conclude the trial judge properly applied
rule 24.2(a); Klein does not compel us to hold otherwise.
Prince of
Peace argues additional security should be offered for operation of the field lights, arguing under rule 24.1(e) the trial judge
must order adequate protection “against loss or damage that the appeal might
cause.” See Tex. R. App. P. 24.1(e). However, rule 24.1(e) is not
mandatory; rather, it provides the trial judge “may” make any order necessary.
Tex. R. App. P. 24.1(e). Further, rule 24.1 requires a supersedeas bond to be
“in the amount required by [rule] 24.2.” See Tex. R. App. P.
24.1(b)(1)(A).
At the post-judgment
hearings to determine the amount of the supersedeas bond, the trial judge heard conflicting evidence and argument regarding
alleged loss Prince of Peace might suffer pending appeal if it was sued by a
third party as a result of Solar's use of the field lights. Prince of Peace
cites to the testimony of its lighting experts at trial, as well as to its offer
of proof of the testimony of an insurance specialist, which was excluded on
Solar's motion.
Solar, on the other hand,
cites to the City of Carrollton's letter stating the City would not take any action concerning the lights. Solar also
notes there is insurance in place to protect Prince of Peace and further notes
that, even though the trial judge instructed the jury Solar had breached the
insurance provision of the lease, the jury found Prince of Peace did not suffer
any damages from this breach. Similarly, although the jury found against Solar
on the liability question relating to the lights, it also found Prince of Peace
did not suffer any resulting damages. Solar also contends the testimony of
Prince of Peace's insurance specialist was properly stricken because the
methodology was unreliable, but further argued even if the exclusion was error,
the expert admitted the risk of lawsuits against Prince of Peace was low. For
all of these reasons, Solar argues the trial judge did not abuse her discretion
in refusing to set any additional security for the operation of the field
lights. We conclude the trial judge acted with reference to guiding rules and
principles in setting the amount of the supersedeas bond. See Walker, 111
S.W.3d at 62. We overrule Prince of Peace's first three cross-issues.
Conclusion
We
overrule Solar's issues regarding (i) res judicata and limitations, (ii) summary judgment on the insurance clause of the lease,
(iii) the sufficiency of the evidence to support the jury's findings regarding
breach of the utilities and use clauses of the lease, (iv) termination of the
lease, and (v) its counterclaims. We sustain Solar's issue contending summary
judgment should not have been granted for Prince of Peace on Solar's alleged
breach of the field maintenance provision of the lease. We sustain Prince of
Peace's cross-issue regarding the quantum meruit award to Solar. We overrule
Prince of Peace's cross-issues regarding the trial judge's rulings on Solar's
supersedeas bonds. We remand the issues of breach of the field maintenance
provision and Prince of Peace's attorney's fees to the trial court for further
proceedings.
MARK
WHITTINGTON
JUSTICE
060130F.P05
Footnote
1
The Second Affidavit of David
Ringer in Support of Defendant's Second Motion
for Summary Judgment provides, “I negotiated on behalf of Solar with the Church
representatives and its attorneys regarding an agreement to develop and use
fields on the Church's land. The Ground Lease was drafted, negotiated, revised
more than once, and then executed. The Ground Lease was signed by both Solar and
the Church.”
Footnote
2
Solar asserts Prince of Peace failed to make presentment of its claim, failed to
segregate its fees, and presented only “thin and
conclusory” evidence of the factors required under Arthur Andersen & Co.
v. Perry Equipment Corp., 945 S.W.2d 812 (Tex. 1997). The record contained
numerous written demands by Prince of Peace, including demand for payment of
utilities, and it is not clear presentment would be required in any event as
Prince of Peace sought its attorney's fees pursuant to the lease, not by
statute. See McMann v. McMann, 942 S.W.2d 94, 97, 98 (Tex. App.-Houston
[1st Dist.] 1997, no writ) (section 38.002 did not apply where party sought
attorney's fees pursuant to contract). Further, Solar makes no explanation as to
why Prince of Peace should be required to segregate the fees expended in
pursuing its various claims for breach of contract, other than the alleged lack
of presentment on the utilities claim. Segregation based on separate theories of
the same cause of action is not required. Flagship Hotel, Ltd. v. City of
Galveston, 117 S.W.3d 552, 565 and n.6 (Tex. App.-Texarkana 2003, pet.
denied) (“Courts examine segregation based on whether different causes of action
have similar elements and arise out of the same set of circumstances. They do
not examine whether the different theories of the same cause of action need to
be segregated.”). Finally, Prince of Peace offered expert testimony by Craig
Albert on many of the factors set forth in Arthur Andersen & Co.,
including the time and labor required, the novelty and difficulty of the
questions involved, the fee customarily charged, the amount involved and results
obtained, the experience, reputation, and ability of the lawyer, whether the
representation precluded other employment, and whether the fee was fixed or
contingent. See Arthur Andersen & Co., 945 S.W.2d at 818. Albert
testified based on his own experience as well as his review of the pleadings,
motions, letters, and fee statements in the case. Albert's testimony was legally
and factually sufficient to support the jury's findings.
File Date[09/19/2007]
File Name[060130F]
File
Locator[09/19/2007-060130F]