Ashford Partners, Ltd. v. Eco Resources, Inc.
401 S.W.3d 35
| Tex. | 2012Background
- ECO Resources, Inc. leased a build-to-suit office/lab facility from Ashford via TASL; punch list items remained after substantial completion.
- ECO accepted the building as substantially complete with a punch list, and Ashford-assigned ownership occurred shortly after ECO’s acceptance.
- Ashford spent over $313,000 on repairs for foundation-related issues tied to ECO’s punch list items.
- ECO asserted breach of the lease construction-duty; the trial court awarded damages based on diminished leasehold value, later challenged on appeal.
- The court of appeals affirmed the diminished-value damages; the Supreme Court reversed, holding cost of repair is the proper damages measure and ECO neither proved damages nor recovered fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages measure for construction breach under build-to-suit | ECO: diminished value of the leasehold | Ashford: cost to repair the defects | Cost of repair is the proper measure |
| Effect of estoppel certificate on landlord duties | Certificate did not impair ECO’s rights or Ashford’s construction duties | Certificate eliminated remaining duties | Estoppel certificate does not negate duties; ambiguity does not resolve in Ashford’s favor |
| Attorney’s fees under Chapter 38 | ECO entitled to fees if breach/damages existed | No valid contract claim or recoverable damages to justify fees | ECO not entitled to attorney’s fees; stipulation for fees does not justify award on reversal |
Key Cases Cited
- Rainwater v. McGrew, 181 S.W.2d 103 (Tex.Civ.App.-Waco 1944) (difference between rent value and leasehold value for damages in lease disputes)
- Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160 (Tex.1982) (substantial completion limits damage to remediable defects unless substantial noncompliance)
- Hutson v. Chambless, 300 S.W.2d 943 (Tex.1957) (damages framework for construction-related breaches)
- Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480 (Tex.1984) (damages when defects are remediable and building remains functional)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex.2003) (ambiguity in contract terms creates fact issues)
- MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660 (Tex.2009) (fee-shifting under contract requires prevailing party for Chapter 38)