529 S.W.3d 102
Tex. App.2017Background
- Parkway Dental leased commercial space under a 2004 lease containing a covenant prohibiting any portion of the shopping-center "Project" from being used for a "Competitive Business," which the lease defined to include businesses practicing general dentistry. The lease also contained an extension option conditioned on Tenant not being in default.
- During the lease term a parcel of the Project was sold and later developed and leased to Aquarium Dental, which posted signage indicating imminent opening; Parkway sued in 2007 claiming breach of the Covenant and seeking injunctive and monetary relief.
- The trial court initially granted summary judgment for Landlord; this court reversed summary judgment as to the breach and anticipatory repudiation claims and remanded for trial on those issues and fees.
- On remand a jury found (1) Landlord failed to comply with the Covenant; (2) Tenant had an event of default during the lease that remained uncured; (3) that default was excused; (4) damages to Tenant of $11,500; and (5) substantial attorney’s fees for Tenant; the trial court entered judgment on the verdict.
- Landlord appealed, challenging (inter alia) sufficiency of evidence on breach, excuse/waiver of Tenant default, damages, attorney fees, several jury-charge rulings, and the prejudgment-interest calculation.
Issues
| Issue | Plaintiff's Argument (Parkway) | Defendant's Argument (Landlord Parties) | Held |
|---|---|---|---|
| 1. Legal and factual sufficiency of breach finding (Covenant) | Evidence (Pham’s testimony and operations at Aquarium Dental) shows another portion of Project was used for general dentistry during lease term so Covenant breached materially | No competent evidence that Aquarium Dental practiced general dentistry or competed with Parkway; verdict not supported | Court: Evidence legally and factually sufficient to support material breach finding; overrules challenge |
| 2. Effect of jury finding Tenant default (Question 3) on Tenant’s recovery | Even if Tenant defaulted at some point, jury also found that default was excused; default finding does not automatically bar recovery because timing may be after Landlord breached | Tenant default before March 31, 2009 that remained uncured meant condition precedent bars Covenant/extension, so judgment for Landlord required | Court: Denies Landlord's claim — Question 3 did not establish timing of default and Question 4 permitted excuse (waiver/prior landlord breach); Landlord waived charge-based objections; no entitlement to judgment as a matter of law |
| 3. Sufficiency of evidence that Tenant’s default was excused (waiver / prior landlord breach) | Landlord received repeated complaints about noise but took no remedial action, accepted rent, and thus waived enforcement or materially breached earlier — evidence supports excuse | No evidence of effective waiver or prior material landlord breach to excuse tenant default | Court: Under the charge given, evidence legally sufficient to support jury’s finding that Landlord waived the Loud-Noise default (and thus default was excused) |
| 4. Damages, attorney fees, and prejudgment interest calculations | Damages were properly measured as reliance (build-out costs less benefit) and supported by trial evidence; attorney-fee testimony supported jury award; prejudgment interest accrues under Finance Code from plaintiff’s pleading date | Damages unsupported or misstated (should be depreciated equipment value); fees excessive relative to small damages; prejudgment interest should run from date of breach, not suit filing | Court: Award of $11,500 falls within evidentiary range; attorney-fee findings legally supported by expert testimony (factual sufficiency/excessiveness not briefed); prejudgment interest properly calculated to start no later than date suit filed per Finance Code; all challenges overruled |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency review framework for jury findings)
- Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402 (Tex. 1998) (standard for factual-sufficiency review)
- Trelltex, Inc. v. Intecx, L.L.C., 494 S.W.3d 781 (Tex. App.—Houston [14th Dist.] 2016) (waiver requires clear demonstration by facts and circumstances)
- Tenneco Inc. v. Enterprise Prods. Co., 925 S.W.2d 640 (Tex. 1996) (silence/inaction can demonstrate waiver)
- Osterberg v. Peca, 12 S.W.3d 31 (Tex. 2000) (failure to object to jury charge at trial limits appellate review)
- Dynegy Midstream Svcs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 164 (Tex. 2009) (contract interpretation — party’s remedies under lease language)
- Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998) (application of Finance Code interest provisions to prejudgment interest)