Duane K. Rossmann v. Bishop Colorado Retail Plaza, L.P.
455 S.W.3d 797
Tex. App.2015Background
- Bishop leased two five-year retail suites (commencing Nov. 29, 2010) to LTHM; WestMed guaranteed performance. LTHM and WestMed defaulted on rent in December 2011.
- FNB held multiple security interests in WestMed/LTHM assets, foreclosed on certain collateral in December 2011 and conveyed assets to Dufek; a bill of sale (signed by FNB) broadly assigned “all leases, including ground leases.”
- LTHM and WestMed forfeited corporate privileges in March/July 2012 for franchise-tax noncompliance; Bishop sued LTHM, WestMed, Rossmann (officer/director), Dufek, and others for breach of the leases and related damages.
- The trial court awarded Bishop damages and attorney’s fees jointly and severally against LTHM, WestMed, Dufek, and Rossmann, but limited Rossmann’s exposure under Tex. Tax Code §171.255.
- On appeal, the court considered (1) whether Rossmann could be personally liable under §171.255 for debts “created or incurred” after forfeiture, and (2) whether Bishop’s breach claim against Dufek was barred by the statute of frauds because Dufek did not sign the leases or an assignment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rossmann is personally liable under Tex. Tax Code §171.255 for Bishop’s lease-related damages | Bishop: §171.255 applies because certain damages (reletting costs, unamortized construction allowance, brokers’ fees) were not ascertained until after forfeiture and thus were "created or incurred" after forfeiture | Rossmann: Debts arose from the 2010 Leases; under Curry and related precedent debts are created when the contract is made, so §171.255 does not reach him | Court: Reversed as to Rossmann; debts arose when leases were executed, so §171.255 does not impose personal liability; judgment that Bishop take nothing from Rossmann |
| Entitlement to attorney’s fees against Rossmann | Bishop: fees awarded as part of prevailing-party recovery | Rossmann: No statutory or contractual basis; not a prevailing party on appeal | Court: Reversed fee award as to Rossmann because Bishop did not prevail; judgment that Bishop take nothing from Rossmann |
| Whether Bishop’s contract claim against Dufek is barred by the statute of frauds | Bishop: FNB’s bill of sale (transferring “all leases”) conveyed the leases to Dufek; exceptions (delivery/acceptance, performance, equitable estoppel) apply | Dufek: It never signed the Leases or an assignment; bill of sale does not sufficiently describe the leases; statute of frauds bars enforcement | Court: Reversed as to Dufek; statute of frauds applies and Bishop failed to prove any exception (no evidence FNB had a valid, enforceable security interest in or properly foreclosed on the specific leases) |
| Attorney’s fees and presentation-of-claim against Dufek | Bishop: fees and claim presentation supported by record | Dufek: Fees improper because statute-of-frauds bars claim and Bishop failed to present a claim to Dufek | Court: Did not reach separate fee/claim-presentation issue after rendering judgment for Dufek; Bishop takes nothing from Dufek |
Key Cases Cited
- Curry Auto Leasing, Inc. v. Byrd, 683 S.W.2d 109 (Tex. App.—Dallas 1984) (debts arising from contract are treated as created when contract executed for §171.255 analysis)
- PACCAR Fin. Corp. v. Potter, 239 S.W.3d 879 (Tex. App.—Dallas 2007) (§171.255 is penal and must be strictly construed; officer/director culpability focus)
- Seay v. Hall, 677 S.W.2d 19 (Tex. 1984) (definition of "debt" as a specified sum owing and right to enforce payment)
- Dynegy, Inc. v. Yates, 422 S.W.3d 638 (Tex. 2013) (statute of frauds is an affirmative defense; party claiming exception must plead and prove it)
- AIC Mgmt. v. Crews, 246 S.W.3d 640 (Tex. 2008) (writing must describe property with reasonable certainty to satisfy statute of frauds)
- Long Trusts v. Griffin, 222 S.W.3d 412 (Tex. 2006) (transfers or assignments of leases are within the statute of frauds)