Opinion
No. 04-04-00586-CV
Delivered and Filed: June 15, 2005.
Appeal from the 37th Judicial District Court, Bexar County, Texas, Trial Court No. 2003-CI-02293, Honorable Lori Massey, Judge Presiding.
Affirmed.
Sitting: Alma L. LÓPEZ, Chief Justice, Karen ANGELINI, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
S.A. Dome, L.L.C. d/b/a RIVE appeals a summary judgment granted in favor of Maloney Development Partnership, L.L.P. and Pat Maloney, Jr. (collectively referred to herein as "Maloney") in a lawsuit involving a lease dispute. The judgment declared that the lease contract between the parties was clarified and/or modified to obligate RIVE to pay its pro rata share (18.75%) of the real estate ad valorem taxes attributable to RIVE's leased space in the Plaza Building. RIVE presents four issues on appeal asserting that the purported lease modification was void and unenforceable or, in the alternative, the modification created a genuine issue of material fact with regard to whether RIVE was obligated to pay the taxes. We affirm the trial court's judgment.
Background
On August 23, 2002, RIVE entered into a lease contract with Maloney Development. RIVE leased a retail unit located in the Plaza Building generally known as Presidio Plaza (the "Leased Premises"). The lease provided that RIVE would pay Maloney Development a "Minimum Rental" of "$17,500 gross per month." The term "Basic Cost" was defined in the lease as "[a]n additional pro rata share of Ad Valorem tax is 18.75% of total Ad Valorem tax as provided for and defined in Section 7.4."
Section 6.2 of the lease provided in pertinent part:
Section 6.2. Tax and Insurance Reimbursement. Included in the "Minimum Rental" in section 1 (I). During the term of this Lease, Tenant shall also not be liable for "Tenant's proportionate share" (as defined below) of all "real estate charges" (as defined below) and "insurance expenses" (as defined below) related to the Plaza Building or Landlord's ownership of the Plaza Building.
The term "real estate charges" is defined to include ad valorem taxes.
Section 7.4 of the lease provided in pertinent part:
Section 7.4. Tenant's Proportionate Share of Expenses. In addition to the rentals and other charges prescribed in this Lease, Tenant shall pay to Landlord, as additional rental, Tenant's proportionate share of the Basic Cost (as defined herein) of operation and maintenance of the Plaza Building (including Common Area). For all purposes of the Lease, unless agreed otherwise in writing by Landlord and Tenant, Tenant's Proportionate Share shall be included in section 1. (i) under "minimum Rental" and therefore be none (0)% under "Basic Cost."
By letter dated October 16, 2003, Maloney Development informed RIVE that it was electing the split payment option with regard to the property tax payment. The letter stated, "According to the lease agreement, S.A. DOME, L.L.C. is responsible for 18.75% of the property tax assessment from January to December, 2003, of which $11,819.00 represents S.A. DOME, L.L.C.'s pro-rated portion of the total tax due at this time of $63,032.00. Please remit payment by October 26, 2003."
After a meeting between the parties, RIVE signed a handwritten agreement on November 16, 2003, that stated as follows:
I agree that S.A. Dome, L.L.C. is responsible for 18.75% of the total real estate taxes as described in section 6.2 of the lease agreement with Maloney Development Partnership, Ltd. Starting in December 2003.
Sometime in November of 2003, RIVE also signed an estoppel certificate addressed to International Bank of Commerce and to Rio Plaza, L.P., an entity to which the Plaza Building was sold and to which RIVE's lease was assigned. The estoppel certificate stated as follows:
The current Minimum Guaranteed Rental due under the Lease is $17,500.00 per month, the current Percentage Rental due under the Lease is 10% of Gross Sales, the current expense reimbursements due under the Lease are included in the monthly Minimum Guaranteed Rental and other payments due under the Lease is, beginning December 1, 2003 and each month thereafter, Tenant's Proportionate Share (18.75%) of Real estate charges;
The estoppel certificate was signed as a condition to the sale of the Plaza Building by Maloney Development.
When RIVE refused to pay the taxes, Maloney Development amended its pleading in a pending lawsuit to seek a declaration that RIVE was obligated to pay 18.75% of the real estate taxes assessed against the Plaza Building. Due to the ongoing dispute between the parties regarding whether RIVE was liable for the ad valorem taxes, Pat Maloney, Jr. was required to sign a payment agreement in order for the sale of the building to close. Under the terms of the payment agreement, Pat Maloney, Jr. is required to guarantee payment of the tax obligation in the event RIVE does not pay the taxes. After the payment agreement was signed, Pat Maloney, Jr. joined the pending lawsuit as an additional plaintiff.
Maloney Development initially sued RIVE in February of 2003 over a dispute regarding the rent owed for the months of January and February of 2003.
On March 10, 2004, the parties filed competing motions for summary judgment. Maloney moved for summary judgment on the ground that RIVE was contractually obligated to pay 18.75% of the taxes assessed against the Plaza Building. Maloney attached a copy of the November 13, 2003, handwritten agreement which Maloney asserted clarified the lease contract after RIVE failed to pay its tax obligation in response to the letter from Maloney Development dated October 16, 2003. In its motion for summary judgment, RIVE asserted that it was not liable for the taxes under the terms of the lease contract. Because the lease contract provided that it could not be amended except by written instrument signed by both parties, RIVE asserted that neither the handwritten agreement nor the estoppel certificate amended the lease contract because they were not signed by Maloney Development. Furthermore, RIVE asserted that both the handwritten agreement and the estoppel certificate lacked consideration. RIVE contended that the alleged forgiveness of the debt for the taxes accrued prior to December 2003 was not adequate consideration because RIVE was not obligated to pay those taxes under the terms of the lease contract. The trial court granted Maloney's motion and denied RIVE's motion concluding that the lease contract "has been effectively clarified and/or modified so that RIVE, beginning December 1, 2003, is legally obligated to pay its pro rata share" of the taxes.
Standard of Review
The party moving for summary judgment carries the burden of establishing that no material fact issue exists and that it is entitled to judgment as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant. Id. We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Id. When competing motions for summary judgment are filed, and one is granted and the other denied, the reviewing court must review the summary judgment evidence presented by both sides and determine all questions presented. Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex. 1997).
Discussion
Whether a contract is ambiguous is a question of law for the court to decide. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000). A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). We must presume that the parties to a contract intend every clause to have some effect. Id.
In this case, the provisions of the lease are internally inconsistent. The first sentence in Section 7.4 imposes an obligation on RIVE to pay its proportionate share of the Basic Cost or 18.75% of the ad valorem taxes; however, the second sentence provides that the Tenant's Proportionate Share shall be included "under `minimum Rental' and therefore be none (0) % under `Basic Cost.'" In addition, the fourth full paragraph of Section 7.4 states, "Tenant shall, during the term of this Lease, pay as additional rent an amount equal to Tenant's Proportionate Share of actual Basic Costs of the Plaza Building."
Because we presume that the parties to a contract intend every clause to have some effect, the contract is reasonably susceptible to more than one interpretation making its meaning uncertain or doubtful. Accordingly, the lease contract is ambiguous. Given the ambiguity in the lease contract, the question then becomes whether the trial court properly granted summary judgment in favor of Maloney by concluding that the lease contract was effectively clarified and/or modified.
A modification must satisfy the elements of a contract: a meeting of the minds supported by consideration. Hathaway v. General Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986). RIVE contends that summary judgment was erroneously granted because the handwritten agreement modifying or clarifying the ambiguity in the contract was not supported by consideration. Maloney responds that the handwritten agreement was supported by consideration because RIVE's insertion of "starting in December 2003" required Maloney Development to forego its right to assert a claim for taxes that accrued prior to December of 2003.
To constitute valid consideration, forbearance to sue must be upon a right asserted in good faith, and as to a contention which the party relying on the forbearance had reasonable grounds for believing would be upheld. Wells v. Timms, 275 S.W. 468, 471 (Tex.Civ.App.-Fort Worth 1925, writ dism'd w.o.j.); see also Bank One, Texas, N.A. v. Tyler, 970 F.2d 16, 25-26 n. 10 (5th Cir. 1992). In this case, Maloney Development had asserted the right to collect taxes that accrued prior to December of 2003 in its letter to RIVE dated October 16, 2003. Under the terms of the handwritten agreement, Maloney Development was required to forbear the collection of the taxes that accrued prior to December of 2003. In his affidavit, Steve Lubbering, the property manager for Maloney Development, stated that Maloney Development agreed to forgive the ad valorem taxes owed for the previous year in return for the clarification agreement in which RIVE acknowledged that it owed the taxes and would pay them from December 2003 forward. By holding that the lease contract is ambiguous with regard to RIVE's obligation to pay taxes, it follows that Maloney Development's assertion of the right to collect the taxes was in good faith, and Maloney Development had reasonable grounds for believing it would be upheld.
In his deposition, Samuel Panchevre stated that Lubbering told him that Maloney Development "may work something out in the future relating to percentage rental." Panchevre characterized Lubbering's statements as "an agreement to agree sometime." Even if Lubbering's statement is considered sufficient to give rise to a claim by RIVE, the statement does not detract from the valid consideration that Maloney Development gave in exchange for RIVE's execution of the handwritten agreement — that being its forbearance in asserting a claim for the payment of past taxes.
RIVE asserts that "good faith" is a fact question; therefore, summary judgment was improper. In various contexts, however, courts have found the element of "good faith" to be established as a matter of law. See, e.g., Shell Oil Co. v. HRN, Inc., 144 S.W.3d 429, 431 (Tex. 2004) (commercial dispute); U.S. Fire Ins. Co. v. Williams, 955 S.W.2d 267, 269 (Tex. 1997) (insurance dispute); Kistner v. Pfannstiel, 107 S.W.3d 7, 11 (Tex.App.-San Antonio 2002, no pet.) (immunity); Lane v. State Farm Mut. Auto. Ins. Co., 992 S.W.2d 545, 553 (Tex.App.-Texarkana 1999, pet. denied) (insurance dispute). Just as in the insurance context where a reasonable dispute over coverage gives rise to a finding of good faith as a matter of law, see Williams, 955 S.W.2d at 268-269, the assertion of a claim based on a reasonable dispute regarding the interpretation of an ambiguous contract can also give rise to a finding of good faith as a matter of law.
In its reply brief, RIVE contends that the handwritten agreement was not a valid amendment because the lease contract required all amendments to be made in writing and to be signed by both parties. However, written provisions against alteration may themselves be waived, modified or changed by subsequent oral or written agreements. See American Garment Properties, Inc. v. CB Richard Ellis-El Paso, L.L.C., 155 S.W.3d 431, 435 (Tex.App.-El Paso 2004, no pet.); Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 153 (Tex.App.-Texarkana 1988, writ denied). In addition, to constitute a valid contract, an agreement is not required to be signed by both parties; the contract is valid if one party signs and the other party accepts by his acts, conduct or acquiescence in the terms of the contract. Augusta Development Co. v. Fish Oil Well Servicing Co., 761 S.W.2d 538,544 (Tex.App.-Corpus Christi 1988, no pet.); Velasquez v. Schuehle, 562 S.W.2d 1,3 (Tex.Civ.App.-San Antonio 1977, no writ).
RIVE further asserts that if the handwritten agreement was a valid modification, the handwritten agreement gave rise to genuine issue of material fact because its terms conflicted with the original lease contract. When parties to a contract make a valid modification of their contract, however, the terms of the latest contract control. Lake LBJ Mun. Utility Dist. v. Coulson, 839 S.W.2d 880, 887 (Tex.App.-Austin 1992, no pet.); INA v. Leonard, 714 S.W.2d 414, 416 (Tex.App.-San Antonio 1986, writ ref'd n.r.e.). The handwritten agreement provided that RIVE would be responsible for 18.75% of the taxes, and the terms of the handwritten agreement control over any conflicting provisions contained in the original lease contract.
Conclusion
Because the trial court did not err in concluding that the lease agreement was "effectively clarified and/or modified" by the handwritten agreement, the judgment of the trial court is affirmed.
Because we affirm the trial court's judgment on the basis that the handwritten agreement effectively clarified and/or modified the lease, we do not address the effect of the estoppel certificate.