Basic Capital Management, Inc. v. Dynex Commercial, Inc.
348 S.W.3d 894
| Tex. | 2011Background
- Basic Capital Management managed ART, TCI, and related Continental entities; SABREs were single-asset, bankruptcy-remote entities used as borrowers; Dynex funded a $160 million two-year commitment with three SABREs and a New Orleans property plan; Dynex later refused further funding, claiming the agreements were not for ART/TCI’s benefit or Dynex’s obligation; plaintiffs alleged ART/TCI were intended third-party beneficiaries and sought lost profits and related costs; the trial court granted summary judgment to Dynex on capacity but the jury later returned verdicts in petitioners’ favor; the court of appeals held ART/TCI not third-party beneficiaries and limited Basic’s damages, then this Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are ART and TCI third-party beneficiaries of the Commitment? | ART/TCI were intended beneficiaries | ART/TCI lack standing/capacity to sue as nonparties | Yes, they are third-party beneficiaries. |
| Is TCI a third-party beneficiary of the New Orleans Agreement? | TCI, as borrower, benefits directly | TCI not a beneficiary of the notes | Yes, TCI is a third-party beneficiary. |
| Are Basic’s lost profits as consequential damages foreseeable and recoverable? | Damages were foreseeable given Dynex’s knowledge of uses; foreseeability supports recovery | Foreseeability not shown for specific investments; damages should be limited | Foreseeability exists; remand for further consideration of recoverable amount. |
Key Cases Cited
- National Bank of Cleburne v. M.M. Pittman Roller Mill, 265 S.W.1024 (Tex. Comm'n App.1924) ( Foreseeability of damages in loan-commitment breach case allowed if known use of funds)
- Schoellkopf v. Pledger, 739 S.W.2d 914 (Tex.App.-Dallas 1987) (clarifies capacity/standing and pleading requirements in appeal)
- Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492 (Tex.1991) (capacity/standing and verified pleading considerations)
- MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647 (Tex.1999) (contract damages; intention of contracting parties controlling)
- Banker v. Breaux, 128 S.W.2d 23 (Tex.1939) (intentions of contracting parties; controlling emphasis on contract terms)
- 254 S.W.3d 508, 254 S.W.3d 508 (Tex.App.-Dallas 2008) (Dallas court of appeals decision on third-party beneficiary status and damages)