Grayco Town Lake Investment 2007 LP v. Coinmach Corporation
03-15-00088-CV
| Tex. App. | May 6, 2015Background
- Coinmach leased and operated coin laundry machines at the Regatta Apartments under a recorded 1992 lease and a later 2002 lease. The 2002 lease (signed by Coinmach and the manager Bridge) was not itself recorded; a brief Memorandum of Lease was recorded in 2002 but did not identify or attach the 2002 lease.
- In 2007 Grayco (via Grayco Partners) purchased Regatta; the written Assignment of Leases from the seller listed the 1992 lease but did not reference the unrecorded 2002 lease.
- After acquiring the property Grayco attempted to operate and rehabilitate Regatta but, citing severe crime, vandalism, deferred maintenance and declining occupancy, closed and later demolished the complex in late 2007.
- Coinmach first notified Grayco of the existence of the 2002 lease after closure, then sued Grayco in 2008 for breach of the 2002 lease and related supplemental agreement (including a $14,000 lease-bonus item).
- A one-day bench trial resulted in judgment for Coinmach for $67,122.19 (actual damages), prejudgment interest and attorneys’ fees; Grayco appealed arguing (inter alia) it was a bona fide purchaser not bound by the unrecorded 2002 lease and, alternatively, that there was no breach or provable damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether Grayco was bound by the 2002 lease | Coinmach argued the 2002 lease created rights that bound successors and supported recovery against Grayco | Grayco argued it purchased for value without notice of the unrecorded 2002 lease (bona fide purchaser) and thus is not bound | Trial court found for Coinmach; on appeal Grayco asserts reversal because it lacked notice of the unrecorded lease |
| 2. Whether Grayco breached the 2002 lease by closing Regatta | Coinmach claimed Grayco’s closure violated Coinmach’s exclusive/quiet enjoyment and revenue provisions | Grayco argued the lease did not require minimum occupancy, force tenant use of machines, or bar demolition; closure was not a contractual breach | Appellant argues closure was permissible under the lease language; court’s judgment found breach at trial (subject to appeal) |
| 3. Whether Coinmach proved contract damages | Coinmach presented expert lost-profit calculations and sought recovery for lost machine revenues and the $14,000 bonus reimbursement | Grayco argued the lease did not guarantee revenue, damages are speculative, expert’s methodology was flawed and included pre-breach losses and the $14,000 that Grayco never received | Trial court awarded damages based on expert; Grayco contends legal/factual insufficiency and urges reversal or new trial |
| 4. Mitigation and recoverability of supplemental-agreement payment | Coinmach sought reimbursement/credit related to the $14,000 lease-bonus/decoration allowance and other consequential losses | Grayco argued it was not party to the supplemental agreement, did not receive the $14,000, and Coinmach failed to mitigate by leaving machines after notice | Grayco challenged inclusion of the $14,000 and mitigation; trial court nonetheless awarded damages and fees (appeal disputes legal basis and evidence) |
Key Cases Cited
- Madison v. Gordon, 39 S.W.3d 604 (Tex. 2001) (bona fide purchaser standard and notice principles)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for legal and factual sufficiency review of fact findings)
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (lost-profits proof requires reasonable certainty)
- Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328 (Tex. 1998) (standards for legal sufficiency review)
- Flack v. First Nat’l Bank, 226 S.W.2d 628 (Tex. 1950) (definition and types of notice in property contexts)