Argent Development, L.P. v. Las Colinas Group, L.P. and Billy Bob Barnett, 05-15-00626-CV

Background

Las Colinas Group (LCG) entered a Development Agreement with the City of Irving (Dec. 11, 2008) to design and lease an entertainment center; the amended agreement expressly terminated automatically if LCG failed to close private financing by August 6, 2012.
LCG borrowed from Argent (Promissory Note, Dec. 1, 2010). Billy Bob Barnett executed a conditional guaranty (July 27, 2011) that made his guaranty contingent on either city bond issuance or LCG’s sale/assignment/transfer of all or any interest in the Development Agreement (30 days after the earlier event).
The City did not issue the bonds and the Development Agreement terminated by its own terms on August 6, 2012. LCG sued the City on Aug. 7, 2012 seeking damages and, alternatively, specific performance/estoppel.
The City later entered a new development arrangement with ARK (via an MOU and separate Development Agreement), and ARK funded a settlement between LCG and the City that included a broad release by LCG of claims "arising from or related to" the Development Agreement; the LCG-City suit was dismissed with prejudice.
Argent then sued LCG and Barnett, arguing the release triggered LCG’s payment obligation under the Promissory Note and thereby triggered Barnett’s guaranty; the trial court granted summary judgment for Barnett, holding the condition precedent was not satisfied.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether LCG’s release of claims in the Settlement Agreement constituted a “sale, assignment, or other transfer” of an interest in the Development Agreement that would trigger the guaranty	The release (broadly discharging "covenants, contracts, agreements" arising from the Development Agreement) operated as a transfer that satisfied the Guaranty’s LCG-transfer trigger	A release of claims is distinct from a transfer of an interest in the underlying contract; LCG only gave up claims, it did not convey or assign the contract or any contractual interest to a third party	Release of claims is not a transfer of an interest in the contract; condition precedent not satisfied
Whether ARK’s funding of the settlement and then obtaining its own development agreement means LCG transferred its Development Agreement to ARK	ARK’s payment and the practical effect of clearing the way for ARK’s development show the economic substance of a transfer	ARK obtained a new, independent Development Agreement; ARK funding settlement to end litigation is not an acquisition of LCG’s contractual interest	Funding a settlement and entering a new agreement does not equate to a transfer of LCG’s contractual interest
Whether the Development Agreement had already expired (so nothing remained to transfer)	Argent contends the settlement and surrounding transactions evidence a transfer despite the expiration language	The amended Development Agreement automatically terminated on Aug. 6, 2012; multiple documents and parties consistently treated it as terminated before the settlement	The Development Agreement had expired by its terms before the settlement; nothing remained to transfer
Whether judicial estoppel or alternative pleading binds Barnett because LCG previously sought specific performance/estoppel against the City	Argent argues LCG’s alternative pleading (seeking estoppel) is inconsistent and should bar LCG (and thus Barnett) from denying the contract survived	No sworn inconsistent prior statement was relied on, LCG did not successfully obtain relief on the alternative position, and Barnett was not in privity with LCG	Judicial estoppel does not apply; elements (sworn prior inconsistent statement, success on prior position, privity) are not met

Key Cases Cited

Grohman v. Kahlig, 318 S.W.3d 882 (Tex. 2010) (discusses definition and scope of “transfer” in a corporate-conversion context)
Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1 (Tex. 2008) (judicial estoppel requires prior sworn inconsistent statement and related elements)
Dearborn Stove Co. v. Caples, 236 S.W.2d 486 (Tex. 1951) (distinguishes assignment of contract rights from assignment of causes of action)
City of Brownsville v. AEP Tex. Cent. Co., 348 S.W.3d 348 (Tex. App.—Dallas 2011) (recognizes distinction between contract rights/interests and claims arising from contract)
King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (standard for reviewing summary judgment)