Rainier Southlake DST, a Delaware Statutory Trust Rainier DST Services, LLC, in Its Capacity as Signatory Trustee for Rainier Southlake DST, a Delaware Statutory Trust And Rainier Capital Management, LP v. Woodbury Strategic Partners Fund, LP and Lago Del Sur, LLC
02-16-00263-CV
| Tex. App. | Dec 7, 2017Background
- Rainier owned a 21‑building portfolio and defaulted on a $15.4M loan; Midland (special servicer) controlled the loan and sought to avoid foreclosure.
- QCC introduced Woodbury as a potential investor; Woodbury submitted a Proposed Term Sheet (Feb 15, 2012) for a discounted payoff and formation of a “Partnership” (defined in the sheet as a single‑purpose LLC).
- Rainier signed and sent a redlined version back (March 2012) changing disposition fee and property‑management provisions and circulated an 18‑page proposed property‑management agreement; parties never finalized the property‑management agreement or exchanged an executed term sheet as required by its deadline.
- Midland ultimately auctioned the loan; Woodbury’s affiliate, Lago Del Sur, purchased it; Rainier alleged Woodbury used Rainier’s confidential information in bidding.
- Rainier sued Woodbury for breach of fiduciary duty and breach of contract (seeking constructive trust and exemplary damages); Woodbury moved for combined no‑evidence and traditional summary judgment; trial court granted summary judgment for Woodbury; Rainier appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a partnership existed such that fiduciary duties arose | The Proposed Term Sheet and related communications show a partnership (or at least raise fact issues under Tex. Bus. Orgs. Code §152.052 factors) | The Term Sheet was not a binding contract; Rainier’s redline was a counteroffer and no acceptance occurred; no partnership factors are supported | No partnership as a matter of law; no evidence of contract or statutory partnership factors; summary judgment proper |
| Whether the Proposed Term Sheet was an enforceable contract | Term Sheet memorialized agreement; Rainier treated QCC/Woodbury as one and accepted by executing and sending the sheet to Midland | Acceptance required delivery to Woodbury by deadline; Rainier missed deadline, made material changes (counteroffer), and did not deliver intended acceptance to Woodbury | Term Sheet not an enforceable contract—Rainier’s changes were material and extinguished acceptance; no binding contract |
| Whether summary judgment on breach‑of‑contract claim was improper because defendant didn’t move on it expressly | Rainier: Woodbury didn’t seek summary judgment on the contract claim, so granting judgment on that claim was error | Woodbury: challenged the common element (existence of a valid contract/partnership); lack of partnership/contract defeats both claims | Although Woodbury didn’t expressly move on contract claim, error was harmless because no valid contract existed; judgment affirmed |
| Whether remedies (constructive trust and exemplary damages) survived summary judgment | Rainier: factual record supports imposition of constructive trust and exemplary damages | Woodbury: remedies depend on underlying liability; no partnership/contract => no liability | Remedies fail with the underlying claims; summary judgment proper on constructive trust and exemplary damages |
Key Cases Cited
- Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004) (no‑evidence summary judgment standard guidance)
- Timpte Indus., Inc. v. Gish, 286 S.W.3d 306 (Tex. 2009) (standard for no‑evidence motions after discovery)
- Hamilton v. Wilson, 249 S.W.3d 425 (Tex. 2008) (no‑evidence summary judgment review principles)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (crediting evidence and reasonable inferences in summary‑judgment review)
- Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009) (use of totality test and five statutory partnership‑formation factors)
- Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507 (Tex. 2014) (acceptance must be identical to offer; material changes create counteroffer)
- G & H Towing Co. v. Magee, 347 S.W.3d 293 (Tex. 2011) (harmless‑error doctrine where summary judgment is granted on unraised grounds)
- Brown v. Sabre, Inc., 173 S.W.3d 581 (Tex. App.—Fort Worth 2005) (elements required for contract formation)