Shields Ltd. Partnership v. Bradberry
526 S.W.3d 471
| Tex. | 2017Background
- Commercial tenant Bradberry occupied Shields’s property under sublease/sub-sublease and claimed he timely exercised a written option in Sept. 2011 to extend the lease through May 31, 2017.
- The lease required timely rent (due 1st; default after the 10th), set procedures for exercising options (written notice 90 days before expiration), and included a clear nonwaiver clause: landlord’s acceptance of late rent or failure to enforce provisions "shall not be a waiver" and "all waivers must be in writing."
- Bradberry routinely paid rent late; Shields repeatedly accepted late payments without protest. Bradberry was one month late on the May 2012 payment and paid it after June 1, 2012; Shields accepted it.
- If the option had taken effect, rent would have been CPI-adjusted (approximately $3,340 starting June 1, 2012) and Bradberry would owe pro rata tax bills; Bradberry continued paying $3,000 and did not pay tax shares.
- Shields declared Bradberry a month-to-month holdover, demanded possession, and evicted; lower courts ruled for Bradberry, finding Shields’s acceptance of late rent constituted waiver of strict-option requirements.
Issues
| Issue | Plaintiff's Argument (Bradberry) | Defendant's Argument (Shields) | Held |
|---|---|---|---|
| Whether landlord’s acceptance of late rent waived a contractual nonwaiver clause and any right to insist on strict option compliance | Acceptance of late payments without protest amounted to waiver of landlord’s enforcement rights, so Bradberry’s timely written option was effective | Lease’s explicit nonwaiver clause prevents waiver by mere acceptance of late rent; waiver requires intentional conduct inconsistent with claiming the right | Acceptance of late rent, standing alone, cannot waive a nonwaiver clause; waiver requires acts inconsistent with the clause |
| Whether Bradberry validly extended the lease by exercising the option | He delivered timely written notice in Sept. 2011, so option took effect upon notice | Bradberry was in default (late rent) at lease expiration and thus failed to "fulfill all terms," so the option did not take effect | Court need not decide which scenario applied; Shields established superior right to possession either because option was not validly exercised or because Bradberry defaulted under the extended lease |
| Whether Shields’s failure to bill or calculate CPI-adjusted rent or taxes estops Shields from asserting higher rent owed under an exercised option | Shields should have given notice/billing; its failure to bill means it accepted lower rent | Lease sets the formula; tenant could calculate amounts and rent is due without demand; no billing requirement and no misleading representation | Tenant failed to show any misleading statements or reliance; absence of landlord billing did not estop enforcement of the lease terms |
| Whether Bradberry can assert equitable estoppel based on investments he made relying on the option through 2027 | Bradberry invested in improvements (≈$250k total; ~$30k after Sept. 2011) relying on promised long-term option | No false representation or promise by Shields induced the renovations; Bradberry proceeded without evidence of reliance on any affirmative grant | Estoppel fails: no false representation or detrimental reliance shown |
Key Cases Cited
- New Amsterdam Cas. Co. v. Hamblen, 190 S.W.2d 56 (Tex. 1945) (nonwaiver agreements enforceable; acts inconsistent with their terms required to find waiver)
- Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905 (Tex. 2007) (reaffirming Texas policy favoring freedom of contract)
- Jernigan v. Langley, 111 S.W.3d 153 (Tex. 2003) (waiver requires intentional relinquishment of a known right or conduct inconsistent with claiming that right)
- In re Nationwide Ins. Co. of Am., 494 S.W.3d 708 (Tex. 2016) (discussing contractual waiver and enforcement principles)
Bottom line
The Texas Supreme Court reversed the court of appeals, holding that a landlord’s acceptance of late rent, by itself, does not waive an express nonwaiver clause in a commercial lease. Because Shields did not act inconsistently with preserving its rights, Shields proved a superior right to immediate possession; the case is remanded to award contractual attorney’s fees.