Opinion
No. 14-07-01087-CV
Opinion filed August 13, 2009.
On Appeal from the 333rd District Court Harris County, Texas, Trial Court Cause No. 2004-53200.
Panel consists of Chief Justice HEDGES and Justices ANDERSON and SEYMORE.
MEMORANDUM OPINION
In this commercial lease case, Hardam S. Azad and Manohar S. Mann (collectively, the landlords) appeal a summary judgment in favor of, and an award of attorney's fees to, Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron Rents, Inc. ("Aaron"). In three issues, the landlords contend (1) the pleadings and summary judgment proof precluded the trial court from granting summary judgment on Aaron's affirmative defenses of breach of quiet enjoyment and breach of conditions subsequent, (2) the pleadings and summary judgment proof precluded granting summary judgment on an earlier summary judgment motion (which the court, in fact, denied), and (3) the lease contract precluded the trial court from rendering a judgment on attorney's fees. Because all dispositive issues of law are settled, we issue this memorandum opinion and affirm. See Tex. R. App. P. 47.4.
I. FACTUAL AND PROCEDURAL BACKGROUND
In October 2001, the landlords leased Aaron approximately 7,500 square feet of the South Village Shopping Center. The initial term of the lease was five years, but the lease contained a provision that, if the anchor tenant, Auchan Hypermart, at any time ceased business, Aaron could terminate the lease between the thirty-sixth and the forty-eighth month of the term by giving a ninety-day notice. The lease also contained the following warranty of quiet enjoyment:
35. Quiet Enjoyment. Landlord warrants that it has good and indefeasible fee simple title to the Center, including the premises, and has the lawful authority to enter into this Lease. Landlord further warrants that Tenant, subject to the terms and conditions of this Lease, will peaceably and quietly hold and enjoy the Premises and use the Common Areas during the Term without hindrance or interruption, so long as no Default by Tenant shall occur.
Additionally, pursuant to Paragraph 37 of the lease, Aaron's performance was conditioned on its ability to obtain the necessary permits and certificates to complete its build-out of the leased premises and to operate its business. Paragraph 37 provided, in relevant part:
37. Conditions Subsequent.
a. Landlord and Tenant agree that their obligations under this Lease are expressly contingent upon the following:
(i) The ability of Tenant to secure, through the exercise of due diligence and good faith efforts, . . . a Certificate of Occupancy and such use and other permits and approvals from all appropriate zoning and other governmental and quasi-governmental authorities as are necessary to permit Tenant to . . . conduct its business . . . without any requirement that . . . Tenant alter or improve the Premises or any . . . sewer . . . or other system . . . which is contained on or about the Premises . . .;
(ii) The ability of Tenant to secure, through the exercise of due diligence and good faith efforts, all building and related permits necessary for Tenant to make its intended Initial Alterations . . .;
. . .
(iv) The ability of Tenant to secure, through the exercise of due diligence and good faith efforts, . . . all necessary permits, . . . easements and approvals pertaining to the Building, occupancy . . . and any other governmental permits which, in the sole judgment of Tenant, are necessary to permit it to construct the Alterations and operate upon the Premises. . . . Landlord agrees to execute any applications or other documents requested by Tenant in order to obtain any permits . . . and approvals. . . .
b. Landlord will provide Tenant with all reasonable assistance to aid Tenant in obtaining the aforesaid permits and approvals.
c. If any of the aforesaid conditions subsequent is not satisfied . . . upon notice to Landlord, Tenant may elect to terminate this Lease. . . .
Finally, the lease provided for attorney's fees in actions to enforce, defend, or interpret the rights under the lease:
30. Attorney's Fees. In any action, suit or proceeding to enforce, defend or interpret the rights of either Landlord or Tenant under the terms of this lease or to collect any amount due landlord or Tenant hereunder, the prevailing party, pursuant to a final order of a court having jurisdiction over said matter as to which applicable periods within which to appeal have elapsed, shall be entitled to recover all reasonable costs and expenses incurred by said prevailing party in enforcing, defending or interpreting its rights hereunder, including, without limitation, all collector [sic] and court costs, and reasonable attorney's and paralegal fees, whether incurred out of court, at trial, on appeal, or in any bankruptcy proceeding.
On January 2, 2002, Aaron opened for business in the leased premises although many of the renovations and alterations required under the lease were not complete. Aaron prepared to complete its build-out of the leased premises and applied for building permits from the City of Houston (" the City").
On January 16, 2002, the City's Utility Analysis Section, Water/Wastewater Department sent two letters, addressed to the landlords, describing defects with the landlords' property. In the first letter, the City explained there was no record of an easement connecting the landlords' property to the nearby city sanitary sewer. In the second letter, the City explained the landlords' property was built over an existing water line and an existing storm sewer easement and the City would require documentation allowing the encroachments. In the second letter, the City stated it would issue no building permit until the problems described in the letter were resolved: "Until such time that proper documentation is presented to this office allowing this encroachment or the water line/easement is abandoned and relocated through the City's Joint Referral Committee, a building permit cannot be issued." The City included an identical statement regarding the storm sewer easement. Milton Wells, the landlords' property manager, immediately went to the City, explained the City's records were in error, and asked the City to withdraw their letters. The City refused to do so.
Wells was unsure whether he spoke with Rodolfo Moreno in the Public Works Department or to someone else.
Willie Chandler, Aaron's construction manager, also met with City personnel. According to Chandler, Wells had given Chandler a "single 82 x 11 inch document plat showing the layout of the shopping center where the lease[d] premises was [sic] located." The City told Chandler the document was insufficient to solve the easement problem and the landlords would have to resolve the problem themselves.
In January and February 2002, the landlords and Aaron exchanged correspondence regarding Aaron's late or non-payment of rent and the landlords' failure to obtain a permit before beginning improvements and their failure to complete the improvements. By letter dated February 7, 2002, Aaron also asked the landlords to resolve the easement issues immediately. According to Wells, in April 2002, he gave Chandler all the surveys he had obtained in his research and Chandler said he would take care of what was needed to obtain a certificate of occupancy.
Without a building permit, Aaron could not complete its build-out of the space and could not obtain a certificate of occupancy. A certificate of occupancy is necessary for a business to operate. According to the landlords' designated expert, if the City learns a business is occupying a building without a certificate of occupancy, the City will give it thirty days to obtain one, and if it cannot do so, the City will lock the premises. The landlords and their designated expert agreed that Aaron would not be allowed to obtain the final building permit or the certificate of occupancy until the easement issues were fully resolved. The landlords also agreed the easement issues affected the landlords' ownership of the entire property, not just the portion leased by Aaron, and knew they had to resolve these issues in order to re-lease the property. The landlords did not fulfill these conditions while Aaron occupied the leased property.
In March 2003, Auchan closed. By letter dated April 29, 2003, Aaron notified the landlords it was vacating the leased premises the following day and intended to seek reimbursement and damages.
On September 24, 2004, the landlords sued Aaron, alleging claims for breach of the lease. Aaron answered, raising, among other matters, the affirmative defense of prior breach by the landlords based on their failure to (1) obtain a certificate of occupancy, (2) complete all improvements by October 31, 2001, (3) provide electrical, mechanical, plumbing, sewer, and heating and ventilation systems in good order, and (4) secure all necessary permits, licenses, variances, easements and approvals. Aaron also counterclaimed against the landlords for expenses incurred in partially building out the leased space and for its attorney's fees and expenses, pursuant to both the lease and "applicable Texas Code and Statutes."
In May 2005, Aaron filed a traditional motion for summary judgment. It argued the landlords could not enforce a contract they had breached before Aaron vacated the premises. Specifically, Aaron argued the landlords had breached the contract by failing to deliver a certificate of occupancy and to complete the improvements by October 31, 2001. The trial court orally denied the motion and noted the denial on the docket sheet.
In March 2006, Aaron again moved for traditional summary judgment on the grounds of the landlords' prior breach of the lease. In the 2006 motion, Aaron specifically relied on the landlords' obligations under Paragraphs 35 (quiet enjoyment) and 37 (conditions subsequent). After considering the pleadings, the motion, the response, and the summary judgment evidence, the trial court granted the motion. Aaron subsequently non-suited its claims for breach-of-contract damages, but maintained its claims for attorney's fees and expenses.
In an initial order granting Aaron's motion for summary judgment, the trial court stated the landlords had not filed a response. The landlords filed a motion for new trial, and the trial court granted the motion and subsequently entered a second order granting Aaron's motion.
The landlords filed a motion for a take-nothing judgment on Aaron's claim for attorney's fees. The trial court denied the motion.
Following a non-jury trial on attorney's fees, the trial court rendered final judgment, decreeing that the landlords take nothing on their claims against Aaron. The trial court found Aaron was the prevailing party, and ordered that Aaron recover the following amounts from the landlords: (1) $75,000 attorney's fees for trial, (2) $15,291.77 for costs and expenses of trial, (3) $15,000 if Aaron prevailed in the court of appeals, (4) $5,000 if either landlord filed a petition for review and the supreme court denied the petition, (5) $10,000 if Aaron prevailed in any appeal to the supreme court by any party, and (6) post-judgment interest. The court further ordered as follows: (1) if no valid appeal were filed, the trial level amounts would become due and owing on dates corresponding to the deadlines set forth in Texas Rule of Appellate Procedure 26.1; and, (2) depending on whether Aaron prevailed on appeal and in any supreme court review, the corresponding appellate level amounts would become due and owing on the dates the mandate issued from the court of appeals or the supreme court.
II. THE TAKE-NOTHING SUMMARY JUDGMENT
In issue one, the landlords contend "[t]he pleadings and summary judgment evidence precluded" the trial court from rendering summary judgment (1) on Aaron's "breach of quiet enjoyment affirmative defense" and (2) on Aaron's "conditions subsequent affirmative defense." In issue two, the landlords make the same argument regarding Aaron's affirmative defense of the landlords' prior breach for failing to (1) timely complete improvements and (2) obtain a certificate of occupancy.
Aaron asserted these latter two grounds in its May 2005 motion for summary judgment. Both parties agree the trial court denied the May 2005 summary judgment motion and that Aaron did not repeat the May 2005 grounds in its second summary judgment motion. Accordingly, we overrule issue two as moot.
A party moving for traditional summary judgment must establish that no genuine issue of material fact exists and it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Provident Life Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003). To be entitled to traditional summary judgment, a defendant must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997); Brown v. Hearthwood II Owners Ass'n, 201 S.W.3d 153, 159 (Tex. App.-Houston [14th Dist.] 2006, pet. denied). A party conclusively establishes a matter if reasonable people could not differ about the conclusion to be drawn from the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
We review de novo both a trial court's grant of traditional summary judgment and its interpretation of an unambiguous contract. See Knott, 128 S.W.3d at 215 (regarding summary judgment); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983) (stating, if written instrument is so worded it can be given certain or definite legal meaning or interpretation, it is not ambiguous and court will construe contract as matter of law).
In reviewing a traditional summary judgment, we examine the entire record in the light most favorable to the non-movant, indulging every reasonable inference and resolving any doubts against the motion. Yancy v. United Surgical Partners Int'l, Inc., 236 S.W.3d 778, 782 (Tex. 2007). When a trial court's order granting summary judgment does not specify the grounds on which it was granted, we will affirm the judgment if any theory advanced in the motion is meritorious. See Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989). Thus, to prevail on appeal, the landlords must show that each of Aaron's theories is meritless. See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
Aaron's summary judgment motion rested on the affirmative defenses that the landlords had first breached the lease in two ways — by violating the quiet-enjoyment provision and by violating the conditions-subsequent provision of the lease. When one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance. Mustang Pipeline, Inc. v. Driver Pipeline, Inc., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam).
In Paragraph 35 of the lease, captioned "Quiet Enjoyment," the landlords warranted they had "good and indefeasible fee simple title" to the shopping center and the premises leased to Aaron. Paragraph 35 also provided, "Landlord further warrants that Tenant, subject to the terms and conditions of this Lease, will peaceably and quietly hold and enjoy the Premises and use the Common Areas during the Term without hindrance or interruption, so long as no Default by Tenant shall occur."
The record contains the following, undisputed, summary judgment proof:
$ Two letters sent January 16, 2002, from the City of Houston to the landlords in response to the landlords' December 20, 2001 applications concerning the availability of city water and waste water facilities to the shopping center;
in one letter, the City explained there was no record of an easement connecting the landlords' property to the nearby city sanitary sewer;
in the other letter, the City explained the landlords' property was built over existing water line and existing storm sewer easements, the City required documentation allowing the encroachments, and the City stated it would issue no building permit until the problems described in the letter were resolved;
$ Deposition testimony of Milton Wells, the landlords' property manager, that the matters raised in the January 16 letters affected the landlords' entire property, as well as that of the tenants;
$ The deposition testimony of Hardam S. Azad that the landlords were responsible for "removing" or "dissolving" the easement problem;
$ The affidavit of Willie Chandler, Aaron's construction manager, in which he stated it was important for Aaron to secure a building permit to allow it to finish its build-out of the leased space, and without a permit, Aaron was unable to begin construction;
$ The deposition testimony of the landlords' designated expert, Neresh Dham, former Division Manager for the Plan Review Section of the Public Works and Engineering Department, that, until the Department was satisfied an easement existed, a building permit would not issue, "[t]hen, depending on the building permit, the certificate of occupancy would not issue";
$ The deposition testimony of Rudolfo Moreno, an engineer in the Department of Public Works, that generally speaking, he believed that, without a building permit, one could not get a certificate of occupancy;
$ Dham's deposition testimony that, without a certificate of occupancy, Aaron's occupancy of the premises was illegal and could be terminated after thirty days' notice and failure to correct the problem;
$ Moreno's and Azad's testimony the City and landlords did not resolve the easement issue until August, 2004; and
$ Wells's testimony the landlords eventually resolved the easement matters because they were considering re-leasing locations and knew the easement matters had to be resolved eventually if the new tenants were to obtain building permits.
In their response to Aaron's motion for summary judgment, the landlords did not address Aaron's affirmative defense based on the landlords' purported breach of the "quiet enjoyment" provision in the lease. Instead, the landlords focused solely on Aaron's defense based on the landlords' purported breach of conditions subsequent. By not presenting the trial court with the argument that the pleadings and summary judgment evidence precluded summary judgment on Aaron's breach-of-quiet-enjoyment affirmative defense, the landlords have waived this argument on appeal. See Augusta Court Co-Owners' Ass'n v. Levin, Roth Kasner, 971 S.W.2d 119, 122 (Tex. App.-Houston [14th Dist.] 1998, pet. denied) ("[I]ssues a non-movant contends avoid summary judgment that are not expressly presented to the trial court by written answer or other written response to the summary judgment motion are waived on appeal.").
The landlords attached and incorporated by reference their response to Aaron's May 2005 motion for summary judgment. In that response, the landlords addressed Aaron's defense that the landlords had breached the lease by not providing a certificate of occupancy. That defensive ground is not the same as Aaron's 2006 ground based on the landlords having not resolved the easement problems, a breach that led to Aaron's inability to obtain a certificate of occupancy.
Additionally, in this court, the landlords have only minimally briefed their argument that summary judgment was precluded on Aaron's breach-of-quiet-enjoyment affirmative defense. The landlords' entire argument on the quiet enjoyment ground comprises (1) quotation of Paragraph 35 of the lease, (2) conclusory statements there was no summary judgment proof the landlords did not have good and indefeasible fee simple title to the shopping center or that Aaron was not in exclusive, peaceful and quiet possession of the premises, and (3) an assertion the summary judgment evidence indicated Aaron had exclusive, continuous, and uninterrupted possession of the premises from the time it accepted possession until it vacated the premises, without any claims or demands by the landlords, City, or any third party, that it cease conducting business or vacate the premises. Other than case law setting forth the general standard of summary judgment review, the landlords cite no law. Their sole record citation comprises twenty consecutive pages of summary judgment proof consisting of Wells's two-page affidavit with the attached documents. They do not direct this court to any specific parts of that proof.
The landlords filed the affidavit and documents with their response to Aaron's May 2, 2005 motion for summary judgment, and Wells's statements in the affidavit are responsive to the grounds raised in the May 2, 2005 motion. See note 3, supra.
To present an issue on appeal properly, an appellant must provide a clear and concise argument for the contentions made, with appropriate citations to the record and authorities. Tex. R. App. P. 38.1(i). It is not our responsibility to sift the record to find error or evidence in support of an appellant's argument. Melendez v. Exxon Corp., 998 S.W.2d 266, 280 (Tex. App.-Houston [14th Dist.] 1999, no pet.).
In sum, we conclude the landlords have not shown that a fact issue exists that would defeat summary judgment on Aaron's defensive theory of prior breach of the promise of quiet enjoyment in Paragraph 35 of the lease; the landlords have not shown this summary judgment ground is meritless. We therefore affirm summary judgment in favor of Aaron on this ground and need not address the landlords' argument challenging summary judgment on the ground of breach of the conditions-subsequent provision. See Star-Telegram, 915 S.W.2d at 473; Carr, 776 S.W.2d at 569.
Accordingly, we overrule the landlords' first issue. As noted above, we have overruled the landlords' second issue, directed at an earlier summary judgment motion, as moot.
See note 3, supra.
III. ATTORNEY'S FEES
In issue three, the landlords argue "the parties' lease contract precluded the trial court from entering a judgment on attorney's fees." The landlords do not dispute the amounts awarded, but challenge the award of any attorney's fees before rendition of a final, nonappealable judgment.
The parties to a contract are free to adopt the standard of their choice for recovery of attorney's fees, and we are bound by that choice. See One Call Sys., Inc. v. Houston Lighting Power, 936 S.W.2d 673, 676 (Tex. App.-Houston [14th Dist.] 1996, writ denied). In construing the parties' contract, we give the language its plain and grammatical meaning unless it would defeat the parties' intentions. Id. at 675. In the present case, the landlords rely on Paragraph 30 of the lease, which provided:
Attorney's Fees . In any action, suit or proceeding to enforce, defend or interpret the rights of either Landlord or Tenant under the terms of this Lease or to collect any amounts due Landlord or Tenant hereunder, the prevailing party , pursuant to a final order of a court having jurisdiction over said matter as to which applicable periods within which to appeal have elapsed , shall be entitled to recover all reasonable costs and expenses incurred by said prevailing party in enforcing, defending or interpreting its rights hereunder, including, without limitation, all collector [sic] and court costs, and reasonable attorney's and paralegal fees, whether incurred out of court, at trial, on appeal, or in any bankruptcy proceeding. (Emphasis added.)
The landlords argue that, pursuant to this paragraph, there can be no "prevailing party" until a final court order, which is not subject to further appeal, is in place. Put differently, they argue an unappealable order is a condition precedent to any party's entitlement to, claim for, and recovery of, attorney's fees. The landlords further argue Aaron was required to prove performance of all conditions precedent and failed to do so.
Under Paragraph 30, a party is "entitled" to attorney's fees if it is "the prevailing party, pursuant to a final order . . . [for] which applicable periods within which to appeal have elapsed. . . ." Even if one construes this language to mean that all possibilities for appeal must have expired before the ultimately "prevailing" party may receive its attorney's fees, there is no language in Paragraph 30 that precludes a party from making its claim for attorney's fees before that time or that precludes the court from making a conditional award of those fees before disposition of the final appeal.
The landlords' interpretation of Paragraph 30 would result in the necessity of a second lawsuit for the prevailing party in the contract suit to recover its attorney's fees for the contract suit. Such piecemeal litigation is generally disfavored. See Fid. Mut. Life Ins. Co. v. Kaminsky, 820 S.W.2d 878, 882 (Tex. App.-Texarkana 1991, writ denied) (stating (1) for policy purposes, allowing separate suit for attorney's fees arising out of a transaction encourages multiplicity of suits and delays in litigation, and (2) facts and complexity of suit is before court at time of initial action, and neither judicial economy nor litigants' and counsels' time is well served by allowing separate suits).
The court made such a conditional award in the present case. According to the judgment, if the landlords did not file a valid appeal from the trial court's judgment, the award for trial attorney's fees would become due and payable to Aaron according to the deadlines set forth in Texas Rule of Appellate Procedure 26.1; and, depending on whether Aaron prevailed on appeal and in any supreme court review, attorney's fees would become due and owing on the dates the mandate issued from the court of appeals or the supreme court.
In short, the trial court's award of attorney's fees is consistent with the attorney's fees provision in the lease. Accordingly, we overrule the landlords' third issue.
IV. CONCLUSION
Having overruled the landlords' three issues, we affirm the judgment of the trial court.