Case Information
*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 5/6/2015 4:01:45 PM JEFFREY D. KYLE Clerk *1 ACCEPTED 03-15-00088-CV 5180660 THIRD COURT OF APPEALS AUSTIN, TEXAS 5/6/2015 4:01:45 PM JEFFREY D. KYLE CLERK No. 03-15-00088-CV IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS
GRAYCO TOWN LAKE INVESTMENT 2007, LP Appellant, v.
COINMACH CORPORATION Appellee.
On Appeal from the County Court at Law Number 1 of Travis County, Texas, Trial Court Case No. C-1-CV-08-09655,
Hon. Eric Shepperd, Presiding BRIEF OF APPELLANT
Dobrowski, Larkin & Johnson LLP Frederick T. Johnson SBN 00785429 Cody W. Stafford SBN 24068238 Akilah F. Craig SBN 24076194 4601 Washington Ave, Suite 300 Houston, Texas 77007 Counsel for Appellant ORAL ARGUMENT REQUESTED May 6, 2015
*2
IDENTITY OF PARTIES AND COUNSEL Appellant: Grayco Town Lake Investment
2007, LP
Counsel for Appellant: Frederick T. Johnson
SBN 00785429 Cody W. Stafford SBN 24068238 Akilah F. Craig SBN 24076194 Dobrowski, Larkin & Johnson LLP 4601 Washington Ave, Suite 300 Houston, Texas 77007 Appellee: Coinmach Corporation
Counsel for Appellee: R. Kemp Kasling
Kasling, Hemphill, Dolezal & Atwell, LLP 301 Congress Avenue, Suite 300 Austin, Texas 78701 J. Bruce Bennett Cardwell, Hart & Bennett, LLP 807 Brazos, Suite 1001 Austin, Texas 78701 Trial Court: Hon. Eric Shepperd
Judge, County Court at Law No. 1 Travis County Courthouse 1000 Guadalupe, Room 206 Austin, TX 78701 ii
TABLE OF CONTENTS
Page RECORD REFERENCES .............................................................................................. x
STATEMENT OF THE CASE ...................................................................................... xi
STATEMENT REGARDING ORAL ARGUMENT .................................................... xii
ISSUES PRESENTED ............................................................................................... xiii
STATEMENT OF FACTS ............................................................................................. 1
A. T HE PARTIES . .................................................................................................... 1
B. T HE 1992 LAUNDRY LEASE . ............................................................................... 2
C. T HE 2002 LAUNDRY LEASE . ............................................................................... 2
D. G RAYCO PURCHASES R EGATTA . ......................................................................... 5
E. G RAYCO TRIES TO OPERATE R EGATTA . ............................................................... 7
F. C OINMACH ’ S REVENUES AT R EGATTA STEADILY DECLINED . ............................... 8
G. G RAYCO IS FORCED TO CLOSE R EGATTA . ............................................................ 8
H. T HE TRIAL . ........................................................................................................ 9
SUMMARY OF ARGUMENT ..................................................................................... 10
STANDARD OF REVIEW ........................................................................................... 11
A. L EGAL SUFFICIENCY . ....................................................................................... 11
B. F ACTUAL SUFFICIENCY . ................................................................................... 12
iii
C. C ONCLUSIONS OF LAW . .................................................................................... 12
LEGAL ELEMENTS OF CAUSES OF ACTION ....................................................... 13
A. B REACH OF CONTRACT . .................................................................................... 13
B. C OVENANT OF QUIET ENJOYMENT . .................................................................. 13
ARGUMENT ................................................................................................................ 14
A. G RAYCO WAS A BONA FIDE PURCHASER AND NOT BOUND BY
THE 2002 L EASE . ............................................................................................. 14 1. The 2002 Lease was an encumbrance. ...................................................... 15
2. Grayco had no notice of the 2002 Lease. ................................................... 17
a. Grayco did not have actual or inquiry notice. ....................................... 18 b. Grayco did not have constructive notice. ............................................... 20 c. The judgment must be reversed. ........................................................... 23 B. A LTERNATIVELY , EVEN IF G RAYCO WAS SUBJECT TO THE 2002 L EASE ,
THE JUDGMENT MUST STILL BE REVERSED . ...................................................... 24 1. Grayco’s closure of Regatta did not breach the 2002 Lease. .................... 25
2. Even if Grayco breached the 2002 Lease, Coinmach suffered
no damages. ................................................................................................ 27 a. The 2002 Lease did not guarantee any revenue or profits from Grayco. ........................................................................................... 28 b. Coinmach’s alleged profits are too speculative. .................................... 30 3. Coinmach’s damages calculations are legally and factually
untenable. ................................................................................................... 32 iv
a. Mr. Kemmerer incorrectly determined when damages began to accrue. ...................................................................................... 32 b. Mr. Kemmerer incorrectly included reimbursement of the lease bonus/decoration allowance. .................................................................. 37 c. Mr. Kemmerer’s daily average collection determination was arbitrary. ......................................................................................... 37 PRAYER ....................................................................................................................... 39
v *6 INDEX OF AUTHORITIES Cases
2616 S. Loop L.L.C. v. Health Source Home Care, Inc.,
201 S.W.3d 349 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ....... 15
Abraxas Petroleum Corp. v. Hornburg,
20 S.W.3d 741 (Tex. App.—El Paso 2000, no pet.)............................... 40
Anadarko E & P Co. v. Clear Lake Pines, Inc.,
03-04-00600-CV, 2005 WL 1583506 (Tex. App.—Austin
July 7, 2005, no pet.) ............................................................................. 17
Burlington N. & Santa Fe Ry. v. S. Plains Switching, Ltd.,
174 S.W.3d 348 (Tex. App.—Fort Worth 2005, pet. denied) ............... 13
Cain v. Bain,
709 S.W.2d 175 (Tex. 1986) ................................................................... 13
Catalina v. Blasdel,
881 S.W.2d 295 (Tex. 1994) ................................................................... 11
Chandler v. Darwin,
281 S.W.2d 363 (Tex. App.—Dallas 1955, no writ) .............................. 20
City of Beaumont v. Moore,
202 S.W.2d 448 (Tex. 1947) ................................................................... 18
City of Dallas v. Village of Forest Hills, L.P., Phase I,
931 S.W.2d 601 (Tex. App.—Dallas 1996, no writ) .............................. 35
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) ....................................................... 11, 12, 37
Colvin v. Alta Mesa Res., Inc.,
920 S.W.2d 688 (Tex. App.—Houston, writ denied) ............................ 16
Cooksey v. Sinder,
682 S.W.2d 252 (Tex. 1984) ................................................................... 16
vi
Flack v. First Nat’l Bank,
226 S.W.2d 628 (Tex. 1950) ............................................................. 20, 21
Hampshire v. Greeves,
130 S.W. 665 (Tex. Civ. App. 1910), aff’d, 143 S.W. 147
(Tex. 1912) ............................................................................................. 17
Holmes v. P.K. Pipe & Tubing, Inc.,
856 S.W.2d 530 (Tex. App.—Houston [1st Dist.] 1993, no writ) ......... 14
Holt Atherton Indus., Inc. v. Heine,
835 S.W.2d 80 (Tex. 1992) ..................................................................... 35
HTM Restaurants, Inc. v. Goldman, Sachs & Co.,
797 S.W.2d 326 (Tex. App.—Houston [14th Dist.] 1990,
writ denied) ............................................................................................ 36
Kindred v. Con/Chem, Inc.,
650 S.W.2d 61 (Tex. 1983) ..................................................................... 12
Latham v. Miller,
250 S.W.2d 302 (Tex. App.—Austin 1952, no writ) ............................. 18
Levine v. Turner,
264 S.W.2d 478 (Tex. Civ. App.—El Paso 1954, writ dism’d) ............. 18
Madison v. Gordon,
39 S.W.3d 604 (Tex. 2001) ............................................................. passim
Material P’ships, Inc. v. Ventura,
102 S.W.3d 252 (Tex. App.—Houston [14th Dist.] 2003,
pet denied) ............................................................................................. 11
Mathis v. Wherry,
45 S.W.2d 700 (Tex. Civ. App.—Beaumont 1932, no writ) .................. 39
Mead v. Johnson Grp., Inc.,
615 S.W.2d 685 (Tex. 1981) ................................................................... 40
Nelson Cash Register, Inc. v. Data Terminal Sys., Inc.,
671 S.W.2d 594 (Tex. App.—San Antonio 1984, no writ) .................... 41
vii
New York Life Ins. Co. v. Miller,
114 S.W.3d 114 (Tex. App.—Austin 2003, no pet.) .............................. 14
Pace Corp. v. Jackson,
248 S.W.2d 340 (Tex. 1955) ................................................................... 34
Portman v. Earnhart,
343 S.W.2d 294 (Tex. App.—Dallas 1960, writ ref’d n.r.e.) ................. 24
Realty Portfolio, Inc. v. Hamilton (In re Hamilton),
125 F.3d 292 (5th Cir. 1997) ................................................................. 21
Richardson v. Hughes,
146 S.W.2d 255 (Tex. App.—Austin 1940, no writ) ............................. 21
Serrano v. Union Planters Bank, N.A.,
162 S.W.3d 576 (Tex. App.—El Paso 2004, pet. denied) ..................... 29
Smith v. Smith,
22 S.W.3d 140 (Tex. App.—Houston [14th Dist.] 2000, no pet.) ......... 13
Southwest Battery Corp. v. Owen,
115 SW.2d 1097 (Tex. 1938) .................................................................. 34
Stewart v. Basey,
245 S.W.2d 484 (1952) ........................................................................... 40
Strong v. Strong,
98 S.W.2d 346 (Tex. Comm’n App. 1936, no writ) ............................... 26
Uniroyal Goodrich Tire Co. v. Martinez,
977 S.W.2d 328 (Tex. 1998) ................................................................... 12
Winograd v. Clear Lake City Water Auth.,
811 S.W.2d 147 (Tex. App.—Houston [1st Dist.] 1991,
writ denied) ............................................................................................ 40
Woodward v. Ortiz,
237 S.W.2d 286 (Tex. 1951) ................................................................... 21
viii
Statutes
T EX . P ROP . C ODE § 13.001(a) .................................................................... 20
T EX . P ROP . C ODE § 13.002 (West 2002) .................................................... 24
T EX . P ROP . C ODE § 5.024 ........................................................................... 17
ix *10 RECORD REFERENCES Appellant uses the following format for citations to the Record: CR __ Clerk’s Record
1 RR __ Volume one of the Reporter’s Record
2 RR __ Volume two of the Reporter’s Record
3 RR __ Volume three of the Reporter’s Record
Ex. P- __ Plaintiff/Appellee’s exhibits to the Reporter’s Record
Ex. D- __ Defendant/Appellant’s exhibits to the Reporter’s
Record
Ex. C- __ Court’s exhibits to the Reporter’s Record
x *11 STATEMENT OF THE CASE This is a contract dispute involving a laundry room lease. The laundry room lessee, Coinmach Corporation (“Coinmach” or “Appellee”),
sued the lessor, Grayco Town Lake Investment 2007, LP (“Grayco” or
“Appellant”), for alleged breach of the lease. Following a bench trial, the
trial court (Hon. Eric Shepperd, presiding) entered judgment in favor of
Coinmach, and awarded $67,122.19 in actual damages (mainly lost
profits), $19,695.31 in prejudgment interest, and $44,005.14 in
attorneys’ fees.
xi *12 STATEMENT REGARDING ORAL ARGUMENT Oral argument would be helpful. First, the Court would benefit from the ability to discuss the appeal with counsel because the factual
history of the case is somewhat complicated. Second, oral argument will
likely save the Court time in understanding and handling the evidence.
xii
ISSUES PRESENTED
1. Did the trial court err in entering judgment for Coinmach for
breach of the laundry lease when Grayco was not a party to or bound by the contract?
2. Did Grayco breach any material obligation of the laundry lease, in
light of the absence of any restrictions on its use of its own property?
3. Did Coinmach suffer any damages for any breach of the laundry
lease, which did not guarantee revenue?
4. Did the trial court err by awarding damages to Coinmach that are
not supported by the evidence, and were not caused by any alleged breach?
xiii *14 STATEMENT OF FACTS This case centers on a laundry lease at the Regatta Apartments (“Regatta”), which was an apartment complex on Riverside Drive in
Austin, Texas. The Regatta was owned by Foley Capital Asset, LLC
(“Foley”) and managed by Bridge Management Company (“Bridge”).
Grayco bought Regatta in 2007, was unaware of the terms of the
laundry lease encumbering Regatta, and closed Regatta later that year.
Coinmach sued Grayco in 2008 for breach of the lease, and argued the
lease required Grayco to keep Regatta—and the laundry room—open
even if no one wanted to live there or use the laundry machines. The
story of the disputed laundry lease, however, begins much earlier than
2007.
A. T HE PARTIES .
Appellant Grayco was a partnership created to develop and revitalize certain commercial property in the Austin area. As part of
that effort, Grayco acquired Regatta in 2007.
Appellee Coinmach is a laundry service company. In the 2007 timeframe, Coinmach leased space in residential apartment buildings
and hoped residents would use its coin-operated washing and drying
machines.
B. T HE 1992 LAUNDRY LEASE .
In March 1992—long before the parties here were involved with Regatta—McNair’s Coin Laundry Company contracted with De Norde
Construction Co., then-owner of Regatta, for the lease of a laundry room
(the “1992 Lease”). Ex. D-1. Tab A. As is customary, the 1992 Lease was
filed in the Travis County Real Property Records. See id. The 1992
Lease provided that the lessee and lessor would share the gross receipts
from the laundry room 50/50, and had a 10-year term that renewed
automatically unless notice of termination was given 90 days prior to
the expiration date. Id. By default, then, the 1992 Lease would be
expected to renew in 2002.
C. T HE 2002 LAUNDRY LEASE .
Ten years later, Coinmach, successor-in-interest to McNair’s Coin Laundry Company, and Bridge executed a new laundry lease (the “2002
Lease”). Ex. D-2. Tab B. Unlike the 1992 Lease, however, the 2002
Lease was not filed with the Travis County Real Property Records. 2 RR
23:24-24:1. Instead, Bridge and Coinmach executed a Memorandum of
Lease on April 22, 2002, which was then filed in the Travis County Real
Property Records. Ex. D-4. Tab C. Though recorded, the Memorandum
of Lease makes no reference to the unrecorded 2002 Lease, which
Coinmach never included or identified in the public record. 2 RR 23:21-
23.
The terms of the 2002 Lease were similar to the 1992 Lease in some respects, but quite different in others. For instance, like the 1992
Lease, the 2002 Lease contained a 10-year term (expiring in 2012). Ex.
D-2, GP 000004. The most notable difference between the two leases is
how they divided revenue from the laundry machines among the lessor
and lessee. 2 RR 86:18-25. The 2002 Lease contained the following
language:
LESSEE shall be entitled to the right of exclusive installation and operation of the equipment on the above described premises for which LESSEE shall pay LESSOR a rental of Fifty (50%) percent of the gross receipts. The rental will be paid monthly by check to Lessor, provided however, that the Lessee shall always be entitled to receive at minimum compensation $45.00 per machine, per month.
Ex. D-2 GP 000004.
Unlike the 1992 Lease, which divided gross receipts equally between lessor and lessee, the 2002 Lease allowed the lessee
(Coinmach) to get the first $45 per machine, per month in gross
receipts. 1 2 RR 86:21-25. If a machine made more than $45, the
remainder was divided equally between the lessor and the lessee. Id. If
a machine did not make $45 in a month, however, lessor was not
required to pay lessee the difference. 2 RR 25:4-7; 2 RR 87:1-9. In other
words, the $45 was not a monthly guarantee of revenue—it only
assured that if a machine made revenue, Coinmach received the first
dollars up to $45.00. Id.
The 2002 Lease also contained the following provision: “Lessee shall have exclusive and quiet use and enjoyment of the premises leased
herein during the Lease term.” Ex. D-2, GP 000004 (This provision,
along with the revenue provision discussed above, forms the basis of
Coinmach’s two causes of action.).
At the same time they executed the 2002 Lease, Coinmach and Bridge executed a Supplemental Agreement. Under that agreement,
*18 Coinmach paid Bridge a $14,000 lease bonus/decoration allowance. Ex.
D-2, GP 000006; Ex. D-3. 2
D. G RAYCO PURCHASES R EGATTA .
On December 6, 2006, an entity called Grayco Partners entered into a Real Estate Contract for the purchase of Regatta from Foley. Ex.
D-5. Nearly six months later, on April 27, 2007, Grayco Partners
assigned the Real Estate Contract to Grayco. Ex. D-10. Grayco acquired
Regatta on May 8, 2007. Ex. D-11. Additionally, Foley and Grayco
executed an Assignment and Assumption of Leases and Service
Contracts (the “Assignment”). Ex. D-13. Tab D. The Assignment
specifically enumerated the Leases and Service Contracts Grayco would
acquire from Foley:
*19 Ex. D-13, GP 000064 (emphasis added). Notably, the 2002 Lease was
not included in the assignment. Id.
Prior to acquiring Regatta in May 2007, Grayco was unaware of the 2002 Lease. 2 RR 86:1-8. Indeed, during its due diligence, Grayco
discovered the 1992 Lease and the Memorandum of Lease in the Travis
County records. 2 RR 83:17-24. Grayco reviewed the 1992 Lease, discovered the 10-year term and automatic renewal provisions, and reasonably concluded that the Memorandum of Lease memorialized the expected renewal and extension of the 1992 Lease by the new parties to
that agreement, Coinmach and Bridge. That understanding was
consistent with, and justified by, the representations in the Assignment. 2 RR 85:14-25. Nothing in the real property records indicated otherwise,
and no one informed Grayco differently. 2 RR 85:22-86:8.
E. G RAYCO TRIES TO OPERATE R EGATTA .
Grayco intended to operate Regatta—and improve the property for its tenants—for at least one year. 2 RR 88:8-24. Grayco even
approached Coinmach about renovating the laundry room, which had
fallen into disrepair, in an effort to improve conditions and entice
residents to use Coinmach’s laundry machines. Ex. D-9; Ex. C-1, 17:3-
20. However, Grayco was unable to fulfill its plan.
Regatta was beyond saving. 2 RR 90:7-17. The property was plagued by vagrancy, vandalism, crime, and significant deferred
maintenance issues. 2 RR 26:25-27:2, 27:11-12, 27:17-19, 89:9-14.
Criminal activity was rampant and staff members were fearful of
working at Regatta. Ex. C-1, 13:23-10. In fact, Grayco’s property
managers spent most of their time keeping vagrants out of Regatta. Id.
Moreover, Regatta’s previous owner failed to screen many of the
residents, which created a liability issue if Grayco renewed their leases.
2 RR 88:11-25. These issues, of course, took a serious toll on occupancy.
When Grayco acquired Regatta, its occupancy was only 50-60%, and
declining. Ex. C-1, 28:15-23:29, 29:23-30:1; 2 RR 97:22-98:1.
F. C OINMACH ’ S REVENUES AT R EGATTA STEADILY DECLINED .
Perhaps like the proverbial canary in the mine, Coinmach’s revenues from the laundry lease had steadily declined at Regatta, even
before Grayco became the owner. In fact, the only month in 2007 when
all 24 machines on average made $45 was March. Ex. D-25, GP 000009.
Based on Coinmach’s collection data, excluding March, there was no
month in 2007 in which all 24 machines made $45 each. 3 Id. at GP
000008-9.
Indeed, by the time Grayco acquired and began operating Regatta, Coinmach may never have received $45 per machine. 2 RR 25:11-23.
G. G RAYCO IS FORCED TO CLOSE R EGATTA .
Ultimately, as a result of crime, the condition of the property, and liability concerns, Grayco closed Regatta at the end of October 2007. 2
RR 90:21-91:1. At that time, occupancy was virtually nil. Ex. C-1, 28:15-
21, 29:6-8.
After Regatta’s closure, Coinmach informed Grayco, for the first time, about the 2002 Lease. 2 RR 86:9-14. Coinmach then claimed
Grayco had breached that lease, and demanded nearly $100,000 as
*22 “damages.” Ex. D-22. Nearly a year later, in September 2008, Coinmach
sued Grayco for the alleged breach of the 2002 Lease and the
Supplemental Agreement between Coinmach and Bridge relating to the
$14,000 lease bonus/decoration allowance. CR 213-16.
H. T HE TRIAL .
The case finally proceeded to a one-day bench trial in August 2014. After trial, the court signed a judgment awarding Coinmach
$67,122.19 in actual damages, $19,695.31 in prejudgment interest, and
$44,005.14 in attorneys’ fees. Tab E.
Grayco’s motion for new trial was overruled by operation of law.
Tab F. Grayco timely filed this appeal. CR 508-10.
SUMMARY OF ARGUMENT The evidence was both legally and factually insufficient to support the judgment against Grayco.
First, Grayco was a bona fide purchaser of Regatta; it was not bound by the unrecorded 2002 Lease. Because Grayco had no
obligations under the 2002 Lease, it could not have breached that
agreement. Thus, the trial court’s award of damages for breach of the
lease is error.
Second, even if Grayco had been bound by the 2002 Lease, it did not breach that agreement. Nothing in the 2002 Lease required Grayco
to keep Regatta open, maintain any certain occupancy, or force tenants
to use Coinmach’s laundry machines. As a result, Grayco’s closure of
Regatta was not a breach.
Third, even if Grayco breached the 2002 Lease, Coinmach sustained no damages because it had no guaranteed revenue.
Fourth, even if Coinmach had sustained damages, its damages calculation was fundamentally flawed and constituted no evidence.
For these reasons, the Court should reverse the judgment against Grayco.
STANDARD OF REVIEW The trial court’s implied findings are reviewed for legal and factual sufficiency of the evidence using the same standard applied to a
jury verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); see
also City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005).
When the appellate record contains a reporter’s record, as in this case, the trial court’s findings of fact are not conclusive on appeal if a
contrary fact is established as a matter of law or if there is no evidence
to support the finding. See Material P’ships, Inc. v. Ventura, 102
S.W.3d 252, 257 (Tex. App.—Houston [14th Dist.] 2003, pet denied).
A. L EGAL SUFFICIENCY .
For a legal sufficiency review, the Court should credit evidence supporting the judgment if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not. City of Keller, 168
S.W.3d at 827. A legal sufficiency point must be sustained if the record
reveals: (1) there is a complete absence of evidence of a vital fact; (2) the
court is barred by rules of law or of evidence from giving weight to the
only evidence offered to prove a vital fact; (3) the evidence offered to
prove a vital fact is no more than a scintilla; or (4) the evidence
established conclusively the opposite of the vital fact. See Uniroyal
Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998). More
than a scintilla of evidence exists if the evidence furnishes some
reasonable basis for differing conclusions by reasonable minds about a
vital fact’s existence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63
(Tex. 1983).
B. F ACTUAL SUFFICIENCY .
For a factual sufficiency review, the Court should consider all of the evidence to determine if the finding is so weak or if the evidence to
the contrary is so overwhelming that it should be set aside and a new
trial ordered. Burlington N. & Santa Fe Ry. v. S. Plains Switching, Ltd.,
174 S.W.3d 348, 354 (Tex. App.—Fort Worth 2005, pet. denied).
Findings may be overturned if they are so against the great weight and
preponderance of the evidence as to be clearly wrong and unjust. Cain
v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
C. C ONCLUSIONS OF LAW .
The trial court’s conclusions of law are reviewed de novo. Smith v.
Smith, 22 S.W.3d 140, 143-144 (Tex. App.—Houston [14th Dist.] 2000,
no pet.).
LEGAL ELEMENTS OF CAUSES OF ACTION Coinmach alleged two causes of action: (1) breach of contract; and (2) breach of the covenant of quiet enjoyment.
A. B REACH OF CONTRACT .
The elements of breach of contract are: (1) that a valid contract existed, (2) that the plaintiff performed or tendered performance,
(3) that the defendant breached the contract, and (4) that the plaintiff
was damaged as a result of the breach. New York Life Ins. Co. v. Miller,
114 S.W.3d 114, 121 (Tex. App.—Austin 2003, no pet.).
B. C OVENANT OF QUIET ENJOYMENT .
A breach of the covenant of quiet enjoyment requires an eviction, actual or constructive, brought about by the acts of the landlord, those
acting for the landlord, or those acting with the landlord's permission.
Holmes v. P.K. Pipe & Tubing, Inc., 856 S.W.2d 530, 539 (Tex. App.—
Houston [1st Dist.] 1993, no writ); 2616 S. Loop L.L.C. v. Health Source
Home Care, Inc., 201 S.W.3d 349, 360 (Tex. App.—Houston [14th Dist.]
2006, no pet.).
ARGUMENT Several legal errors by the trial court resulted in a flawed judgment. Each of the errors is an independent basis to reverse. 4
A. G RAYCO WAS A BONA FIDE PURCHASER AND NOT BOUND BY THE 2002
L EASE .
Bona fide purchaser status is a defense against claims and encumbrances of third parties. See Madison v. Gordon, 39 S.W.3d 604,
605 (Tex. 2001). A purchaser who pays value for real property without
notice of an encumbrance is a bona fide purchaser. Colvin v. Alta Mesa
Res., Inc., 920 S.W.2d 688, 691 (Tex. App.—Houston, writ denied)
(citing Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex. 1984). A bona fide
purchaser takes title free from the encumbrance. Hampshire v.
Greeves, 130 S.W. 665 (Tex. Civ. App. 1910), aff’d, 143 S.W. 147 (Tex.
1912).
Grayco indisputably purchased Regatta in good faith and for value. Therefore, the only issues are (1) whether the 2002 Lease was an
encumbrance; and (2) whether Grayco had notice of the 2002 Lease.
*28 Because the 2002 Lease is an encumbrance of which Grayco had no
notice, Grayco is not bound by the laundry lease and could not have
breached it.
1. The 2002 Lease was an encumbrance.
An encumbrance is an interest in realty that diminishes its value and is a burden on its transfer. Anadarko E & P Co. v. Clear Lake
Pines, Inc., 03-04-00600-CV, 2005 WL 1583506 (Tex. App.—Austin July
7, 2005, no pet.); see also T EX . P ROP . C ODE § 5.024. Encumbrances
include:
[E]very right to, or interest in, the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance; anything that impairs the use or transfer of property or real estate….
City of Beaumont v. Moore, 202 S.W.2d 448, 454 (Tex. 1947) (emphasis
added). An encumbrance, then, is any burden resting on property itself,
or on its title, which tends to lessen its value, or interfere with its free
enjoyment. Latham v. Miller, 250 S.W.2d 302, 303 (Tex. App.—Austin
1952, no writ). Generally, a restriction as to the use to which premises
may be put constitutes an encumbrance. Levine v. Turner, 264 S.W.2d
478, 480 (Tex. Civ. App.—El Paso 1954, writ dism’d).
According to Coinmach, the language in the 2002 Lease regarding cleaning and maintaining the laundry room, as well as Coinmach’s
contractual right to quiet enjoyment, prevented Grayco from closing the
apartments to redevelop the area, which was Grayco’s long-term
purpose when it purchased Regatta. 2 RR 33:14-34:7. Coinmach’s
representative, Ed Greene, testified that Grayco was required to
maintain the laundry room and did not have the right to tear the
apartment complex down. 2 RR 36:17-37:4. That type of restriction
encumbers the property, interferes with its value, and impairs its use.
Indeed, Coinmach’s interpretation of the 2002 Lease would prevent Grayco from terminating the 2002 Lease (for any reason, ever),
and would prevent Grayco from using the property it purchased for any
purpose other than residences with a Coinmach-controlled laundry
room. This nonsensical interpretation means Coinmach, mere lessee of
a laundry room, would have more control over Regatta than Grayco, the
owner. It is difficult to imagine a heftier burden on Regatta’s use.
Based on Coinmach’s contentions, because it impaired Regatta’s use, the 2002 Lease was an encumbrance.
2. Grayco had no notice of the 2002 Lease.
At trial, Coinmach argued that the mere fact that the 2002 Lease existed meant Grayco took the property subject to its terms. 2 RR 104:1-
5. The trial court apparently agreed. But that is not the law. Notice—
whether actual, inquiry, or constructive—was required for Grayco to
acquire the property subject to the 2002 Lease. See Chandler v. Darwin,
281 S.W.2d 363, 366 (Tex. App.—Dallas 1955, no writ).
Indeed, under Section 13.001 of the Texas Property Code, an unrecorded conveyance of an interest in real property is void as to a
subsequent purchaser who purchases the property for valuable
consideration and without notice. T EX . P ROP . C ODE § 13.001(a).
To receive bona fide purchaser protection, a party must acquire the property in good faith, for value, and without notice of any third-
party claim or interest. Madison, 39 S.W.3d at 606. Notice is defined as
information concerning a fact actually communicated to a person,
derived from a proper source, or presumed by law to have been
acquired. Flack v. First Nat’l Bank, 226 S.W.2d 628, 631 (Tex. 1950).
Notice can be actual or constructive. Id. Actual notice results from
personal information or knowledge, as well as those facts which
reasonable inquiry would have disclosed. Constructive notice is notice
the law imputes to a person not having personal information or
knowledge. Madison, 39 S.W.3d at 606; Flack, 226 S.W.2d at 631-32.
a. Grayco did not have actual or inquiry notice. If a party has knowledge of facts that, if reasonably pursued, would have disclosed the existence of an unrecorded encumbrance, they
will be charged with notice (and bound by the encumbrance).
Richardson v. Hughes, 146 S.W.2d 255, 258 (Tex. App.—Austin 1940,
no writ). This is known as inquiry notice. Woodward v. Ortiz, 237
S.W.2d 286, 289 (Tex. 1951); Realty Portfolio, Inc. v. Hamilton (In re
Hamilton), 125 F.3d 292, 299 (5th Cir. 1997) (“A hypothetical purchaser
on inquiry notice is chargeable with imputed knowledge of facts that
would have been discovered by a reasonably diligent inquiry.”).
At trial, there was no evidence Grayco had actual notice of the 2002 Lease. The Assignment executed by Grayco and Foley only
referenced the 1992 Lease. Ex. D-13, GP 000064. Further, Grayco’s
corporate representative, John Britton, testified that Grayco conducted
a due diligence search when it purchased Regatta and only discovered
the Memorandum of Lease and the 1992 Lease, which was to renew
automatically in 2002. 2 RR 83:2-4, 83:17-24. And the Memorandum of
Lease did not identify the 2002 Lease, a fact admitted by Mr. Greene. 2
RR 23:21-23. Because of the affirmative representations in the
Assignment and the Memorandum of Lease, Grayco reasonably believed
that the 1992 Lease renewed and that it governed the relationship
between Grayco and Coinmach. In fact, Grayco was not informed of the
2002 Lease until after this dispute arose in late 2007 and early 2008. 2
RR 86:9-14. Therefore, the only evidence is that Grayco did not have
actual notice of the 2002 Lease.
Further, inquiry notice cannot be imputed to Grayco using the Memorandum of Lease. Grayco Partners acquired Regatta from Foley.
Ex. D-5. Foley subsequently assigned all the leases and services
contracts to Grayco on May 8, 2007. Ex. D-13. Foley failed to identify
the unrecorded 2002 Lease, and only disclosed the existence of the
properly recorded1992 Lease. Id. at GP 000064. Prior to the purchase of
Regatta, Grayco conducted all aspects of due diligence, none of which
revealed the 2002 Lease. 2 RR 83:2-9; 2 RR 83:17-24. Grayco reasonably
believed that because the parties to the Memorandum of Lease were
different from the parties to the 1992 Lease, the Memorandum of Lease
served as notice that the two new parties had adopted and reaffirmed
the 1992 Lease, which was set to automatically renew in 2002, the same
year the Memorandum of Lease was executed. 2 RR 85:22-25. Even if a
duty of inquiry arose based on the Memorandum of Lease, the evidence
is undisputed that Grayco diligently inquired and was not made aware
of the existence of the 2002 Lease.
b. Grayco did not have constructive notice. Purchasers of property are charged with constructive notice of the instruments properly recorded in the county where the property is
located. T EX . P ROP . C ODE § 13.002 (West 2002) (“An instrument that is
properly recorded in the proper county is . . . notice to all persons of the
existence of the instrument, . . .”). But, while a purchaser is bound with
constructive notice of all recorded instruments lying within his chain of
title, the record of a deed or instrument laying outside of his chain of
title imports no notice. Portman v. Earnhart, 343 S.W.2d 294, 297 (Tex.
App.—Dallas 1960, writ ref’d n.r.e.).
Importantly, the 2002 Lease—unlike the 1992 Lease—was not filed of record in Travis County (or anywhere else). 2 RR 23:24-24:1.
Hence, there was no constructive notice of the 2002 Lease. The 2002
Lease, though executed prior to Grayco’s acquisition of the property, lay
outside of Grayco’s chain of title because Coinmach failed to record the
instrument. The Memorandum of Lease did not place the 2002 Lease
within the chain of title. As previously discussed, the Memorandum of
Lease is silent as to which lease it referred, and the only lease on file to
which it could reasonably refer was the 1992 Lease. 2 RR 23:21-23.
Because constructive notice can only be imputed when instruments are
within the chain of title, the unrecorded 2002 Lease—lying outside of
the chain of title—imputed no notice to Grayco.
Moreover, the Assignment did not provide Grayco with constructive notice of the 2002 Lease. Rather, the Assignment
confirmed Grayco’s reasonable belief that Coinmach acquired the 1992
Lease from its predecessor-in-interest and allowed the 1992 Lease to
renew for an additional 10 years.
Coinmach also argued that the presence of its laundry machines in the Regatta laundry room was constructive notice to Grayco of the
2002 Lease. Though the law imputes constructive knowledge where a
subsequent purchaser has a duty to ascertain the rights of a party in
possession, the duty to ascertain arises only if the possession is visible,
open, exclusive, and unequivocal. Madison, 39 S.W.3d at 606. However,
possession that is ambiguous or equivocal, which may appear
subservient or attributable to the possession of the holder of the legal
title, is not sufficiently indicative of ownership to impute constructive
notice. Id. Additionally, when an occupant’s possession is consistent or
compatible with another’s ownership assertion, the occupant’s
possession cannot be said to be unequivocal. Id. at 607; Strong v.
Strong, 98 S.W.2d 346, 350 (Tex. Comm’n App. 1936, no writ). In that
case, no notice is imputed.
Here, Coinmach’s possession was arguably open and visible, based on the presence of its laundry machines in the laundry room.
Importantly, however, Coinmach’s open and visible possession was
compatible with the 1992 Lease, of which Grayco was aware. There was
no indication and no reason for Grayco to believe a subsequent—and
substantially different—lease was executed by Coinmach in 2002. The
issue is whether Grayco knew of—and was bound by—the 2002 Lease,
which was not recorded and not provided to Grayco. Even if Grayco was
aware that a laundry lease existed, that does not mean Grayco had
constructive knowledge that the unrecorded 2002 Lease existed or what
its terms were. Indeed, the sole evidence available to Grayco was that
the only laundry lease was the properly recorded 1992 Lease. Based on
the information available through diligent search and inquiry, Grayco
reasonably determined Coinmach’s rights, if any, arose out of the 1992
Lease.
Further, the mere presence of Coinmach’s laundry machines does not qualify as “unequivocal possession” of the premises that was
incompatible with Grayco’s reasonable understanding that only the
1992 Lease was in place. Rather, Coinmach’s machines confirmed
Grayco’s understanding that the 1992 Lease was effective and would
govern the parties’ interactions. So, no constructive knowledge of the
2002 Lease can be imputed to Grayco.
c. The judgment must be reversed. The only evidence presented by either Coinmach or Grayco is that Grayco did not have actual knowledge of the 2002 when it acquired
Regatta. 2 RR 36:7-9, 86:1-4, 86:9-14. And there was nothing that put
Grayco on inquiry notice of the 2002 Lease. Grayco’s belief that the
Memorandum of Lease demonstrated Coinmach’s adoption and renewal
of the 1992 Lease was reasonable. Finally, there was no constructive
notice of the 2002 Lease because the 2002 Lease was never filed and the
Memorandum of Lease did not identify or refer to the 2002 Lease. 2 RR
36:3-6, 85:14-25. Thus, Grayco proved that it had no notice—actual,
inquiry, or constructive—of the 2002 Lease. Because by Coinmach’s
interpretation the 2002 Lease was an encumbrance and Grayco
purchased Regatta without notice, Grayco is not subject to, and is
protected from, the 2002 Lease.
Importantly, Coinmach chose to sue Grayco for an alleged breach of only the 2002 Lease. CR 214; 2 RR 84:7-9. Because Grayco was not
bound by the 2002 Lease, Coinmach cannot recover damages from
Grayco arising out of the 2002 Lease. Further, because Coinmach did
not allege breach of the 1992 Lease, Coinmach cannot recover any
damages from Grayco arising out of the 1992 Lease.
As a result, the trial court’s judgment awarding damages for a breach of the 2002 Lease must be reversed.
B. A LTERNATIVELY , EVEN IF G RAYCO WAS SUBJECT TO THE 2002 L EASE ,
THE JUDGMENT MUST STILL BE REVERSED .
Even if Grayco acquired Regatta subject to the terms of the 2002 Lease, the trial court’s judgment must still be reversed because (1) the
2002 Lease did not prevent Grayco from closing Regatta, and Grayco
could not have breached by doing so; (2) even if Regatta’s closure was a
breach, Coinmach sustained no damages because there was no
guarantee of income; and (3) Coinmach’s calculation of damages is so
flawed that it constitutes no evidence.
1. Grayco’s closure of Regatta did not breach the 2002 Lease. There is no evidence to support Coinmach’s breach of contract claim; thus, the evidence is insufficient to support the judgment.
Serrano v. Union Planters Bank, N.A., 162 S.W.3d 576, 580 (Tex.
App.—El Paso 2004, pet. denied). Coimach failed to identify a single
term, clause, condition or obligation in the 2002 Lease that Grayco
breached. In fact, Coinmach’s corporate representative admitted to the
following, proving Grayco did not breach the 2002 Lease when it closed
Regatta:
There is no provision in the 2002 Lease obligating Grayco to maintain a certain number of occupants at Regatta. 2 RR 26:8-11.
There is no provision preventing Grayco from tearing down Regatta. 2 RR. 26:12-14.
There is no provision in the 2002 Lease requiring Grayco to use its best efforts to ensure tenants use the laundry room. 2 RR 26:15-18
Even under Coinmach’s interpretation, Grayco could choose to renew—
or not renew—as many or as few tenant leases as it wished without
beaching any contractual obligations to Coinmach. This interpretation
makes Coinmach’s current position untenable. If Grayco could exercise
its business judgment and decide not to renew all of the tenant leases
(as it did), then Coinmach’s laundry machines would inevitably make
no revenue. Coinmach admits this would not constitute a breach of the
2002 Lease. 2 RR 26:8-11, 35:21-36:2, 36:17-22. Thus, Coinmach would
not be entitled to any damages, however they be characterized.
Coinmach’s position now, and at trial, is at odds with its admission. If Grayco could properly lease down Regatta—resulting in
Coinmach’s laundry machines accruing no revenue—then Grayco could
close Regatta completely. The result to Coinmach is the same. Yet
Coinmach claims without support that only the latter was a breach of
the 2002 Lease. That is nonsensical.
Further, Grayco’s corporate representative testified many of the tenants of Regatta at the time Grayco acquired the property were
unqualified and created liability concerns for Grayco. 2 RR 89:9-25.
Grayco could not renew many of the tenant leases for two main reasons:
(1) many of the existing tenants could not pass required background
checks; and (2) if Grayco allowed unqualified tenants to live at Regatta,
that would violate Grayco’s insurance policy. 2 RR 93:1-7. Further,
when Grayco acquired the property, occupancy was already low,
(between 50-60 percent) and declining. 2 RR 97:22-98:1; Ex. C-1 28:15-
21. And, as Grayco’s corporate representative clarified, occupancy and
tenancy are two different concepts: many of Regatta’s occupants were
vagrants and squatters who did not pay rent. 2 RR 98:4-7.
Because there were no provisions in the 2002 Lease requiring any minimum occupancy or requiring mandatory use of the laundry room by
tenants, Grayco’s good faith business decision to lease down and
ultimately close Regatta was not a breach of the 2002 Lease. The trial
court’s finding to the contrary is error and requires reversal.
2. Even if Grayco breached the 2002 Lease, Coinmach suffered no damages.
Even assuming, arguendo, that Grayco could have breached the 2002 Lease, Coinmach could not have suffered damages as a matter of
law. And, in any event, Coinmach failed to present legally or factually
sufficient evidence of any damages.
a. The 2002 Lease did not guarantee any revenue or profits from Grayco.
As previously discussed, the 2002 Lease did not guarantee Coinmach any minimum monthly earnings for the laundry machines. 2
RR 24:8-11, 24:16-19, 25:4-7. If tenants chose not to use the laundry
machines, or if there were no tenants to use them, the laundry
machines would accumulate zero revenue, and Coinmach would not be
entitled to anything from Grayco. 2 RR 26:15-18, 35:24-36:2. As a
result, Coinmach knew when it signed the 2002 Lease that part of its
bargain was inherent uncertainty of future revenues and its inherent
dependence on the complex’s owner’s plans for development and leasing.
Perhaps a competitor might open a laundromat next door to Regatta
and attract tenants with newer machines and cheaper prices. Perhaps
Regatta could become a haven for college students who took their
clothes home for their parents to launder. Or perhaps Regatta’s owner
would close the apartments for any number of business reasons. These
were all risks Coinmach knowingly accepted in the 2002 Lease. Of
course, Coinmach was handsomely rewarded for its risks for many
years, and made substantial profits from its machines. Ex. D-25, GP
000010-13. 5 That said, Coinmach never had any contractually-
guaranteed revenues, and it knew that from the outset.
As previously discussed, the 2002 Lease gave Coinmach the first $45 per machine, per month (assuming the machine made revenue). Ex.
D-2, GP 000004. Coinmach was not guaranteed $45 per machine. 6 2 RR
24:12-19. Instead, if the machines made $45, Coinmach would be
entitled to that amount, and Grayco would receive no compensation for
the lease of its laundry room that particular month. 2 RR 24:20-22. If
the machines made less than $45, Coinmach received whatever the
machines generated. 2 RR 25:4-7. If the machines made more than $45,
Coinmach would get $45; then, Coinmach and Grayco would split the
remaining gross receipts 50/50. 2 RR 19:2-13. But, of course, there was
no guarantee the machines would make any revenue, let alone $45.
*43 b. Coinmach’s alleged profits are too speculative.
Coinmach’s corporate representative agreed that there were many months when none of the machines made $45. 7 2 RR 25:11-23. Further
Coinmach acknowledged that gross receipts had been declining since
2006. 2 RR 19-21. Despite decreasing revenues, Coinmach asked the
Court to speculate as to what the revenue would have been, using the
assumptions that there would be tenants to use the laundry room and
the tenants would, in fact, have used the laundry rooms but for Grayco’s
decision to lease-down and then demolish Regatta. But a party may not
recover damages for breach of contract if those damages are remote,
contingent, speculative or conjectural. Southwest Battery Corp. v.
Owen, 115 SW.2d 1097, 1099 (Tex. 1938); Pace Corp. v. Jackson, 248
S.W.2d 340, 348 (Tex. 1955); City of Dallas v. Village of Forest Hills,
L.P., Phase I, 931 S.W.2d 601, 605 (Tex. App.—Dallas 1996, no writ).
Lost profits claimed as damages must be established to a reasonable
certainty. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.
1992).
*44 Based on the unrefuted testimony from Mr. Britton, occupancy at Regatta was declining due to the terrible condition of the apartments. 2
RR 90:21-25. The conditions—which were present before Grayco
acquired the property—were such that vagrants had taken up residence
there. 2 RR 98:4-7. Neither Coinmach nor the trial court had any
reasonable basis to assume that there would have been tenants at
Regatta, or that any tenants there would be willing and able to use the
laundry machines through the expiration of the 2002 Lease.
Therefore, Coinmach’s claim for damages fails for at least two reasons: (a) there were no provable damages suffered because Coinmach
was not entitled to any specific amount of revenue or profits; and (b)
any damages Coinmach claims are impermissibly speculative.
Importantly, Coinmach’s failure to prove its damages extends to both its breach of contract claim and its breach of the covenant of quiet
enjoyment claim. Even assuming that Grayco breached the covenant of
quiet enjoyment, Coinmach suffered no damages for the same reasons
that it suffered no damages from its breach of contract claim. 8
*45 3. Coinmach’s damages calculations are legally and factually untenable.
Coinmach’s sole evidence of damages is the testimony of its expert, John Kemmerer. The trial court erred by accepting Mr. Kemmerer’s
contradictory, baseless, and assumption-filled testimony, as well as his
hopelessly flawed damages calculations. When the assumptions on
which an expert’s opinion is based conflicts with undisputed evidence,
then the expert’s testimony lacks any probative value. City of Keller,
168 S.W.3d at 813. 9 Because Mr. Kemmerer’s testimony was wholly
based on unsupported assumptions—and because Coinmach offered no
other evidence of damages—there is legally insufficient evidence to
support the trial court’s damages award.
a. Mr. Kemmerer incorrectly determined when damages began to accrue.
Mr. Kemmerer incorrectly determined that Coinmach’s damages began to accrue in March 2006, more than a year before Grayco
acquired Regatta and more than 18 months before Regatta was closed.
2002 Lease. See, e.g., HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d
326, 328 (Tex. App.—Houston [14th Dist.] 1990, writ denied).
[9] I.e., “garbage in, garbage out.”
The error of this assumption afflicts the entirety of Mr. Kemmerer’s
calculations, and manifests itself in numerous ways.
First, Mr. Kemmerer testified that the reason damages began to accrue in March 2006 is because Grayco indicated it intended to change
the use of the property via email on March 7, 2006. 2 RR 53:21-54:8.
The email was authored by an attorney named Bradley Jones and sent
to Coinmach. 2 RR 53:21-54:1. Mr. Kemmerer admitted, however:
that the email does not mention Grayco; that he did not know who Mr. Jones was; that he did not know whether Mr. Jones worked for Grayco; and
that he did not know whether Mr. Jones was authorized by Grayco to communicate with Coinmach regarding changing the use of the Regatta.
2 RR 54:3-20, 55:2-6. Further, Grayco’s corporate representative
testified that Grayco did not hire Mr. Jones and was unaware on whose
behalf Mr. Jones was acting when he communicated with Coinmach. 2
RR 82:2-15.
Second, Mr. Kemmerer incorrectly assumed that Grayco’s decision not to renew tenant leases, which he claimed started in March 2006,
caused the decrease in income from the laundry room, and thus,
Coinmach’s damages. Ex. P-7, pg. 3. Mr. Kemmerer admitted, however,
he did not review any information regarding how many tenant leases
were renewed at the Regatta in March 2006, nor did he review the
number of tenant leases that came up for renewal at the end of
February 2006. 2 RR 47:8-20. Indeed, Mr. Kemmerer had no
information regarding how many leases came up for renewal or were
renewed at any time. 2 RR 47:8-20.
In addition, Grayco did not even acquire Regatta until April 2007, more than a year after Mr. Kemmerer began attributing damages to it
for breach. Ex. D-10. The undisputed testimony is that Grayco had
absolutely no control over whether tenant leases were renewed prior to
April 2007. 2 RR 81:11-82:1. Thus, Mr. Kemmerer’s “expert” opinion
that lost profits beginning in March 2006 were attributable to Grayco is
indefensible and mars his calculations and his credibility.
Third, and perhaps most importantly, Mr. Kemmerer began calculating Coinmach’s damages before the date even Coinmach claims
Grayco breached the 2002 Lease. Coinmach’s corporate representative
testified that the alleged breach did not occur until October 31, 2007,
after Grayco closed and demolished Regatta. 2 RR 32:23-25. Mr.
Kemmerer’s opinion, on the other hand, is inconsistent with Coinmach’s
claims and Texas law.
Actual damages must flow from the wrongful breach of a contract before they can be assessed against the offender, as compensation for
the alleged wrong. Mathis v. Wherry, 45 S.W.2d 700, 701-02 (Tex. Civ.
App.—Beaumont 1932, no writ). Indeed, to recover compensatory
damages, the plaintiff must establish that it suffered some pecuniary
loss as a result of the breach of the contract. Stewart v. Basey, 245
S.W.2d 484, 486 (1952); Abraxas Petroleum Corp. v. Hornburg, 20
S.W.3d 741, 758 (Tex. App.—El Paso 2000, no pet.).
The evidence must show that the damages are the natural, probable, and foreseeable consequence of the defendant’s conduct. Mead
v. Johnson Grp., Inc., 615 S.W.2d 685, 687 (Tex. 1981); Winograd v.
Clear Lake City Water Auth., 811 S.W.2d 147, 156 (Tex. App.—Houston
[1st Dist.] 1991, writ denied). The absence of this causal connection
between the alleged breach and the alleged damages precludes
recovery. Abraxas, 20 S.W.3d at 758; Nelson Cash Register, Inc. v. Data
Terminal Sys., Inc., 671 S.W.2d 594, 600 (Tex. App.—San Antonio 1984,
no writ).
Texas law precludes Coinmach from recovering damages from any reduction in laundry machine revenue prior to Grayco’s alleged breach.
As a matter of law, Grayco could not have breached a contract to which
it was not a party, and could not have caused Coinmach to suffer lost
profits prior to Grayco’s acquisition of Regatta. Assuming those
damages existed, they could not have flown from, or had any causal
connection to, a breach that had yet to occur. The damages awarded in
the judgment are unsustainable for this reason. (Mr. Kemmerer’s
inexplicable decision to base his calculation on this flawed methodology
also renders the entirety of his opinions unreliable.)
In short, Coinmach failed to establish a causal link between the decline in revenues prior to Grayco’s acquisition of Regatta and
Coinmach’s damages as a result of Grayco’s alleged breach. Thus, there
was legally insufficient evidence supporting a damages award that
included amounts incurred prior to October 31, 2007. Alternatively, the
damages award is against the great weight and preponderance of the
evidence, and must be reversed because it is factually insufficient.
b. Mr. Kemmerer incorrectly included reimbursement of the lease bonus/decoration allowance.
Further, Mr. Kemmerer incorrectly included in his damages calculation an amount for reimbursement of the lease bonus/decoration
allowance Coinmach paid to Bridge. Ex. P-7, pg. 3-4. Grayco was not a
party to the Supplemental Agreement between Coinmach and Bridge
whereby Coinmach agreed to pay Bridge $14,000 as a lease bonus
decoration allowance. Ex. D-2, GP 000006. Coinmach’s corporate
representative admitted that Coinmach did not pay the $14,000 lease
bonus to Grayco and he was unaware as to whether Bridge paid any
portion of the $14,000 to Grayco when Grayco acquired Regatta. 2 RR
28:2-14. Grayco’s corporate representative confirmed that Bridge did
not pay Grayco the lease bonus amount. 2 RR 87:7-21. Thus, there is
legally insufficient (or, alternatively, factually insufficient) evidence to
support a damages award that includes a reimbursement of the $14,000
lease bonus amount.
c. Mr. Kemmerer’s daily average collection determination was arbitrary.
To calculate the damages Coinmach allegedly suffered, Mr.
Kemmerer used a daily collection rate of $99.81. Ex. P-7, pg. 4. Mr.
Kemmerer explained that $99.81 represented the daily average
collections from December 22, 2004 (the first date available) through
March 1, 2006, the date Mr. Kemmerer alleged Grayco changed the use.
Ex. P-7, pg. 4. However, as discussed above, Grayco could not have
changed the use of the Regatta in March 2006 because it did not own or
control Regatta at that time. 2 RR 81:20-82:1. Thus, the collection rate
used by Mr. Kemmerer is arbitrary, baseless, and only serves to
impermissibly inflate the damages calculation. 10
Because there is no competent evidence to support the amount of damages suffered by Coinmach, the trial court erred in awarding
damages based on Mr. Kemmerer’s calculations.
*52 PRAYER
The judgment should be reversed and rendered. Alternatively, the judgment should be reversed and remanded for a new trial on damages.
Respectfully submitted, D OBROWSKI , L ARKIN & J OHNSON LLP By:/s/ Cody W. Stafford Frederick T. Johnson SBN 00785429 Cody W. Stafford SBN 24068238 Akilah F. Craig SBN 24076194 4601 Washington Ave, Suite 300 Houston, Texas 77007 713.659.2900 – Telephone 713.659.2908 – Facsimile C OUNSEL FOR A PPELLANT G RAYCO T OWN L AKE I NVESTMENT 2007, LP CERTIFICATE OF COMPLIANCE I hereby certify that the computer program used to prepare the foregoing Brief of Appellant shows that 7,070 words are in the Brief of
Appellant. This word count does not include those words that T EX . R.
A PP . P. 9.4(i)(1) excludes from such word count. I further certify that
the Brief of Appellant was prepared using l4-point font with footnotes
typed in l2-point font.
/s/ Cody W. Stafford Cody W. Stafford *53 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of Brief of Appellant Grayco Town Lake Investment 2007, LP has been served on this 6th
day of May, 2015 as follows:
V IA C ERTIFIED M AIL R ETURN R ECEIPT R EQUEST AND E-F ILING
R. Kemp Kasling
Kasling, Hemphill, Dolezal & Atwell, L.L.P.
301 Congress Avenue, Suite 300
Austin, TX 78701
J. Bruce Bennett
Cardwell, Hart & Bennett, LLP
807 Brazos, Suite 1001
Austin, Texas 78701
/s/ Cody W. Stafford Cody W. Stafford *54 A PPELLANT ’ S A PPENDIX
1992 Lease (Ex. D-1) ........................................................................... Tab A
2002 Lease (Ex. D-2) ........................................................................... Tab B
April 22, 2002 Memorandum of Lease (Ex. D-4) ............................... Tab C
Assignment and Assumption of Leases and Service Contract
(Ex. D-13) ............................................................................................ Tab D
Final Judgment signed November 6, 2014 (CR 484-86) ................... Tab E
Grayco’s Motion for New Trial (CR 489-99) ...................................... Tab F
TAB A
DEFENDANT EXHIBIT
*57 0:>\ J.Jrwt ett , ) .41~(4 J ~ [1:i • • ~ '£.... . . ·'ta'D~~~~,5.l) IT ""'7 ~ /':" ., ~,~022551 FILHCOOf -+t/~r .:::::COIft'RAC'p~~~FOR~S=ERV=I:.:::CS:::S~A.~RD=-.!:L:.=EA:.:::S:.:e....:A:::C::!!R~==tI D 0 O~ SO 464 s i :j\M ~"AsP:'a_ent: ill '.ado ·t:1Us / / ".~ Of contract:' . ?td, ~~_ • 199:1 by' and, between Do N0.r6a construction Co. ('5Wnar) ~II
pri1'\Cipa1 o!li.ae .1~ l~atoc1 at; %23 A:vi,,,t:lon, in th4 CJ,.ty of Fall-brook, .... Cpl.ltoTl'11.&, herfUll rofCCX'o<I to liS l.BSSOR. and MoNALR' S CODt LAUNDRY.co. o~ lIusti.n. TIIIXaIl. bGta:Ln refsrred. to . . I.ESSSS. for the purpose of estiIbll!llU.ng agd q:lPt:a:l.:D!ng ccrln-l.~ room. f'ac.iliti_ at 1f1c.dja..er .Apa.rt..atrts, 1201 '!'oWn ~oot. AuJOt1,a. ~, horoiQ re~e:r;red to all 'l'HB PROJEC'l'. j;a!1Ji. ot LaundJy llooiIL! LESSOR 4Jaa hereby base to LRSSBl!: all. present end IIWn, lcundr3( :roqII ~oea loaa~ on or .. t the project (trMch er, COl.iect1.vel!, X'Q{errw to lUI thGl -l.cailSCc! pr8lda&S-) IIXld Vh1(Jb are located in ~ rea.l. PJ:o~l."tr ~~ 'O<Uow. for the teXJII and on the oondit.f.0Q8 stated - ... ,.~ balOW and QJI \;he revc.£" aU. b8rao.£. for the fol.lowing conaJ.daration! . ' .. . .. - - . . , Ca) iMeellllUon. mil .Dlnt~. by Lnse.E o~ the 'louoving '-'he .' coin-lal.la&:l" e'i(u:l:pIaent ("I:be~t·) and :lm~_nw to the leaficld fM IIIX '~c;: ;' '. ",;< I 1 UJtDm , l:,U 1'1' 'l. . . . 1:& - ~ Ma,yteg. V.a~ t" • " 1. 1 -1J3lW:J2 is - 'J\IIa23,~ -'~a.g Dryers '. 3:23:" ~ , , (bL,~ ~t br., t.KS$B2-:0.f nf'ty percemt (5Ot""o.f ~e groa.e. ~. c;ol).~a by USS2l. ~ i;tI.wash8ra 'IInil dryQrs Ulataqaci by ~. " . ';1itt9- tbe i'rojOQt, to be ~d mO~th~y. .
fbR ,de$o.r19~ o£ the' ree1 prOpei:tjr upon. whlch tbo Proj &Ci; ;La located 1.5: . I ~1I1te . ,l,aZa.. a~iJb&..,.~ Ul 'l'ra.V1.lJ COUnty, faqs. ,~ f1v. (S) thro\l9h ~~t (8}' .1Gcl.U$.:1.ve, Bloat c, l.Gc~~).t" ~. aC "f4a.' .,,~j~ A~t:v. nOl '1'otm . i t::l:r4~, . Au~ 'f:effl~ CWl:.tY. 'J'exas .: i " I. ·1 L£.6~. ~l ~ 'the dgllt oJ! J;ngriSnJ and j!I~1I to .nd ~ tho ~ prlllil:l.~ aftc1 ~III be) , ~ Prpj~t q is noolUf~q to install, I ( --, ce~~ ~ ~;~~i1 ~~~i$.t ~1ed 'by' Llt~B and 1:0 eou.~ ~~ t1J8m£rma. 1iQ4' t.USli! 'iibll.l be eiltitJ.ed 'to the gUiol: enj0:idllant to t::he 'i~ ~._ ~ 1;:iw' tIIm-1uaraoE ~ eny renow.l ho~l. ~ PbXtillla. h~ a~8 thet:: ~. Contract and Lease I\greemsmt 1. ",!b,:f;~. ~ aU cd. the tanaII ami c:onditionll on ~ i:e~ d.Oo twnot; '~~~t CCampanTCa. the elIIM.ay b$) WOCTut. t~t ;Lt; MIs the ftlu ~:t:J< ~ l'l!iJb1;, to R;Oter Ulto th;ta agtilllUWnt aild lease aa ev1d&bC&d by Us s1:gnatui-c btU.OW'. . :x,:::;:z .t:.
LSSSIlR'1 ~SJ:':: .
. : , ~~~.
.. ~ra!. ftaA~~er ; . . ~ ": ~~ot·~. ~'~~'
, .~ :!nsti;uq~~W~ .. ~l.~goa , ~o.c,"1J 11:1'1. ~t.\~ . ~.- ) ~b.it A - D£il1t:Ln9 ot! LoM~~~1t~·.;;;eC;::·:;:·,,:.:e:.:s:...-.~~~, ( --. . (~) • .P.~.t9~ CodL!l~', D.UlIt~ . "~1lI;6,K . anoe ~eaent ' . bII!r~~"lIM JutG~\_ ~I'MPUTT liED!lftllS ..... ns COIIlITY. T£X.U EXHIBIT .....
t't.' I II G~g 01 J I " .. I r , "
" GP 000096
~~ .,~7 ",,:Y *58 " " 7' • . .;>., • I-t-J.I -'~ ...,~ aDd ~8. Le:soor. .;,u.n., .,d ~89 ~ CIIU$t'ba:in SOla tha I:lavs ahol.l part:i.es. kn _ ~ by eigne!! IIln4 wrltLng rtgnt: ~t: this to _anibnen.t My apartmenta). :i:.ndiT1dua,1 in equ.1p111ent - .insteu.~ ouobprieo :mall. .. shall bs leUe J.aasl".'8 .xel.uSJ.VCl r~ab1.e_ Utl.ly .. ~ be ~_ya ",- but: the co':tn-laUO\trY oqUipMnt, [01] \lS8o tho for priOa the $$t tQ CO., loaaed tb4 to en LaSS_,' as to ~iJliilt&r ral~ed o101USlve 1.ea1l8 LAtJJmItY S COIN .. I (.eBsor hereby 9rontB to McNAll!. !lI~:, EXCLUSXYB and serviclOS ..:':.o.; .... ~ •• ,.. '.'. aqu1.~tmt l'rojeot. the ?:be to pravJ..do, loundr,i D%ll1 ope.nte w right: .,.cl\U1tve ) irubj60t teI\QI').t •• r.aslo'IQr'. their :l.nTi~.1J e.nd t:o thu Wl8 by .. "'.l. \..4.1"~"" ~Ul·ll' . (1nolwJiJlg to the exelus~on of LUsor ";..ol_~\..o,_·~:";""L " :' .. v.l
#- . . t • , ,- of :remain ~e l:IIlual.~utolY bY. proparty the ~ ~~CS OB~GiI\TIOBS: Le-.- l.e1OBee.. ,wnl .iroJtall. aerv:t.eo and ...untun tne, :fl:Oa lind woar flOrJlIa1 o~__ ~ haria and pJ.l.£era9c ~~. 'tear :prOP'l1;ty r..ssoo·Q protoct to Pruesul;JDri5 take ±nnall,e~ p-.r:I!'OJ:'Jl .nd .,.111 p~t l.tt~ "!:ri tldlJ tUlJ.lnat1~ of ttue, had or any ~tlD9W41, Ile%'cof. oqiripillent an4 Lease upon J;_VO ~ ~IP :l.n COO\;:root -th. ~t «ma. :f1l~9'U auoh ~6r:vl~va as :stated tunuslUnga OP ~: A:ll. eq"iPJlllent.' [800] can¢!. tlon at au tilltas. wurldng rep.e.ir and pood in itqUi~lIUII1t expense at\a.u. ma1.n"te.1.n. the ~t. ~_.t.11:3 :fJ.x1;Uro. ' . . . . 1 :_ l ' t " ~,' .~....... ........ _ , ' ," . .Lessor $ball -
~.: Lea~ w.f.l.l ~tI!1n the laUnclrY r~ in ~o(I.~r~d 11\. Clftrl ·aaa _1~ ~~ fi:Ae .. end ~l.ear o~ all tr~ ~ :r1S~~.
!i!P'PXSS: '~or $hall at ~ts a~_ ~$h uttl.i:t;lCis ill' '1;bo 14:aHd p~ 1nC;J.udJ.ng ~B~~ ao4 siuU.i~1e1\i; ·~t ancvor ,air eOaaitiiabing • .n~; dtalnaga anl!el~1cf.tY tOl" a u.imary xOCU. 'P~1fBl; l"Ofotcns: -Ui, parllQDDal: -.poy~ ~ ~lJseo ~ell. at,a+;t ~ be ,~,: :,*,,~~;~. ~~.4~~'r.~ ~~ ~i.va~~~~$=, 15.' .~ ~r1y erad ~t'.t.G:t.ent 'c;ondut;rt O;f !Ill ilct:LV1UU on ~~'e prCnljes. r~Ji~tb.e ~ of' ~ l~, r.~e ~. ~diI,~k~ in ~rt~.~~ ~ ~~;aJ. u!!~~~f~~~ =~~~ , \ Mju~ l!irl~. ±ft.~.q.pe- ~D. ~e .o~l no" be l:1Alilei·1:o Lessor « . ~~ .. .i;,!!-';~ -.. ~' . . ~ ~ to the loaee<i ~~ U1c:;l.~ ~ to tho l:~~ prJIIa~ X1tSJtl~ ~ water. nrXXU.ng. ~~1\.t U1Z pl~ 'hf'~ii? ~~:~~ ~~.~. ' . , . .' .', ,tfi.tr~or~· ;bshS·· '.iino ~ ''''':~
. ~~l;"~=a :~~~!11;~~: ' . ' . ~~t~ UpOn. ~ ~VWli41;f.b:ll ~ ,~, ..... tdtbbald. ~ ~'sholl Of ~~. ~:w;-,.\JOb n(>t PIIrl' ~ -PT :.tn a.t' ii:s!i 9ri1 lIPb,loaGa [1] -~. .,' .. ' .. ' -- , i :' ) ,~~ of· ,fo-.or'" b~. loaolY~~ or ag)\~t. ~Bs.e!l ~~.:6'fl :~ts! ~lvn" tue ~fi.08b.i!Jl.Q~"" ,lilt ~M'"\IJ:IoO~~ ..... ~":(of:~d"~ .~~~ w-1.1:bP\.I;t. 1tUb~~:1tT of ~,~"tf. ~ c)(" ~nr ., 1I.im. IBR6! . %, - 'rlIw,: . Btid:tee' til. :,.' . , ~·en I . . . . ~ Hit· "tih.,~, it 'h.~ ~.nh;t,gi:n ~:fpr. ~', •. , 0:): '~::.a.l =,~.~K...-;~ 're!iIt:iot- 'a ·mr~ i ~~~i ~ '~' 'iJ;~~!;ln "~' .,,~. '0. e~'~ bY . ~O~ ~=Oli 'tb~l-.dll .a:d '004~t 'jiij tie' : ~ ".; option, f'ar unpro:f.1"ti1ilWtY.by giviAg suty' '1;0 Lessor. . . ' -
..r" ,liUlnOPatlnEOOJIPS TllAWUOUJrfY. mu
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GP 000097 *59 TAB B
DEFENDANT EXHIBIT
*61 08/04/2008 15:16 #176 P.003/014 210 697 8368 From:COINMACH SAN ANTONIO
COIN"MACH COltPollATION
I...MSE AGJmEMENT
STATE OF TEXAS DATE; J'anllltt}' 30. 2002 WCATION U-6293
COUNTY OF TRAVIS
M.ema!.1rOOWi of agreement ~Em COJNMACH CORPORATION~ bereirurller ca11cci'I.ESSEB. and ijrldge Management CJ!.,
OwnerIar acting with full authority Iijl owners agent, hereinafter ca.Iled LESSOR of the property cansistJng of (lU) Ap!ll'fmen.t .
Units ]ocate4 at the 1I.ti.dres.s ~only .k:no\V1\ as .1iMI¢!a . A(:lar!mentlI, located I l~Ol Town Cre"k Drive • ..A.u!titL ~
1mL.
1. J'...'llSSOR herewith leues unto LESSEE. IIm1 LESSEE hereby rents fh:Jm LESSOR. the Iaundry room(li) on the premises qel!c:ribed «bove com.mCll~ tlIl·da~ of Lease and ~g 1m (ll!) years after LeIU!e Agreement. il 8i~ LESSEE sluill. be entitled to tbt: right of exclusive _llatiott Itt1d opemti.o.n of the equipment nil the fllxr1e
2, described premises far which LESSEE shall pay 10 LESSOR a rentt.l.l of ~ ~ %) percent of tilt:! sros B receipts, 't:bI!I 1linta1 will be paid In(mthl;y by check to LeMar,. provided bowev~. that the le8sec aha:ij e1WByt be entitled to receive flS minimum compensa:ti.an $45.00 P(II.' macll.Ine. pt;:r month. DedootiObj;l from. 1h<= IIIlttl to ~ paid LruiSOR &ba.Il mcl.1Jdc, if imd vrll.en applicable, any lllIl.IIicipal or state license fm Md I,lilcupatiorud, salOl!, use rental, personal ~ or fi:tmol.tise ~ and refunds to U9fi. . LESSOR ,ball. at its OWA ~e, provide IIl'I.d rtuuntain 1111 necessary electric, gas, water, ~ IIlld 1111
3. other facllitios required to properly ~ the equip.tnOfit, Including utility CO,IitieI:lljone. LESSOR shall clean lIIla maintain the pt'(lttIlsei lind promptly DQtify LBSSlill if end When the equi~t OMseli to operate In a normal. 111rult'IeI:'. LESSEE, sholl own and maintain tl1e ~quipment that it inJIUdb, without exponal.l to LESSOR. LESSOR agrees t() provide w.fficient me laundry rootn(e)with adequate lIPI.tOO, 'Which will allow the
4. LESSEE to install an /ltkIqt.mte tlltlOunt ofWUliher(s) and. dryar(*). In the event LEsSOR request/!, in wrltlng, tho ~em.mt of fifty p~ or MQt¢ of LESSEE' Ii lllUlldty equipment during thetenn Of th.ill Leru!e with new machines. the U!:8SE'E ma:,r. upon reeai.pt of said writtetll\4ti¢e and. replace.tne!l.t of the laundty equipment. axteru1 the original term Ilf fhiB Le~ fbt a period. of five (5) yem. All additir.uuil renewal terms lIhall then be: onlIJ.rsed to ~ the ~ origirud term. LESSEE ~ the right to install other vend.h1s equip.ment in.tl'Ic pratni~$ and to e.ffi.x ~ble IIj~1I or other notices to tl!e walls and . eqw~
5. LESSEE shall maintain It reasonable amount of CQmp.rehen&ive gentlt'~ liability and ptopM:y dam. fnsurltll,Ce.
6. LESStm Bballlmve eKciu!!iw 8.tld quiet uac, posseaainn and enjo}'ll*)t oftbe premise! ~ed herein during tl\c L~ te.nn. This Letll'!e IiliIIll be automatlcelly ren.evved for succesllive periOds !:if time ll1l1e$s CWlCeled in wri~ by " ~ed or re~d mail by Gither party at 1eut oo~ year prior to its ~riltion.
EXHIBIT GP 000004 *62 08/04/2008 15:16 #176 P.004/014 210 697 8368 From:GOINMACH SAN ANTONIO
,~ .. ____ ._ • • __ n . . . . . . . . . . . _. " ' • • - . •• __ ~--;--_& , ......... ': 8. LESSOR imd. LESSEE agrell that ill CODiidera.~ of' 1ful provisions of this ~ Lease Agreement. LESSEE shaU be entitled to the right of exclusive installations and rental of any tlOn~ laundry equipmw in ctu: apartment units on the above dcsoribed premises. . 1'hia in8tWliltion and:retltlU IIhaU either be where LESSES leuell the laundry equipment to the owill'mlloWllell:S ~ or wh~ LESSEE leaaelJ directly'to the rosident. 9. LESSEE ahall have the right to terminate this Lwe. upau w.ritt.tm ntrtire to LESSOR, if (a) y!lllrllllism, theft. Ill' attempted thaft at tbe premllleS ~ eooleSsive lIO as to seriously ~ LESSEE'S ability t,o pll1fOm1 under the Lease, CIt (b) WJaSC of the equipment in any three (3) ~ve months does not ~ed an average aU QYCiclrper ~ per day. CQINMACa CORPORATION. or illl assignee!!, is horeby g1'VC1l1l right offirst rofusal to CIlOtinue providinB
10. lllUll(lry service to the pt'e!JlWCII upon the expiration Of termination of '!bill Lealie for. any realIQn, LESSOR IIhAll not IMtle the premises to a LHSSER other than C~c:h Corporation unles!J (1) LESSOR h.as first provided CoimnaOh Corporation with a. ~py tiC the dreCUtCd prtlpO&ed lease containing bont'tfide termJi of t1)e o1fer beinS no ll!ll!l$ thpn five ycam. and (2) within thirty .(30) dttys Bfter Coin:tnrlclt Corpomtion flCltua1 .receipt I,lf a copy ()(' tha pro}Xlaed lealfe, co.irunach lAporation hal flliled to notifY LESSOR of Coimnacl1 Cor,porationll' ·agreement to .InIl.tth !W:lb offer. If Coininac;h Corpo:ratlO1l does liO notifY L'ESSOR of its ~ to matcb.1l1lrJl otrer within such t4irty (30) day peci(xJ. LESSOR. Bgrees to lease the l'J.'C1lliae& to Cointruu::h COIpOftltion mbjed. to the tertn. ottllf:l PfQPOIed lwe.
11. tBBSOR shall :infotm allsublJequent OWllI!:r:ll of the ~ of the rights ofLE8SBE under this Lease, In tho cft1lt Iitly aation is bW:itnted to enforce any provisfon of the Loose. the pmvtilli:ui party shall ba 12. entitled to 1"5llOllllble attorney fees, court cost and ~8. 13. 'l'1tiJJ Lease sha.ll be binding on the. partieJ hereto, theit bein, executors, IIIlCCes3Olll, !Slip and personal ~~. LESSOR and LESSEE lI.Ckno'wledge tlud this I..eaee A&recme.nt ilan ~on. ~1, and ml',)dificati.tm.
14. of that certain Lea8$ A.g:reemerrt dated Mareh 1.1. 129.2 between u.e @r4s Conm;w,:tion Co" LESSO:R" • LESSEE. n is acknowledged that BridgQ Manaaement Co. has and ~!!jrtICOinI.an!l4!:lCo, 8W.lee&id in fttt.erest ItS r..ESSOR, IIlld Q9inmach CUJ1lQ!J!tion has II1lCCeOOOO in int~ /lS LESSEE, A labor duq.e of S% of OrosI! Receipt(l will be deducted from LESSOR'S SUM if OO11t1tifig Qt1. site is U. l'«J.Uired. i Lessor is: __ Individtutl ~ertnershi:p _ Corporlrtion
Enter Social Seourlty number or the FedenIl ldentificatkm u1.lmber in the appropriate space. S0C1AL8ECUlUTY# ___ - _ _ _ _ COMMl8SJOl:'iS TO BB SENT TO:
'f FEDERAL I.D. # t3 7 - C!)'" '2. t.. l.t. 'Z.. APARTMENTS ~ OWNImlAGENl' __ 67 . cP (.". "2.1!.. £ 'Z. "Z...
LESSOR LIlSSEII: cOlN>W!Hg0N"
BJUDGE MANAGEMIU'ff co.
1"7&_ ~~ :-,. fBY~i~ BynIlAu~~S~ ~ ... 4.1 .. 6
'rDATB: 7 .. ZO·oL DATE: _ *63 08/04/2008 15:16 #176 P.005/014 210 697 8368
From:COINMACH SAN ANTONIO
COINMACH CORPORATION
S1JPPLEMENTAL AGImEMENT
LQCAnON i#J-6293
A one time Leaso BonuS/Decoratlon A~lowance ofFQllrteen Thousand M4 noIIOO ($14.000,00) Dollars will be made payable to Bridge M!nft~t Co. within forty~fivc (4S) days after the iusta11!lti()tl
of the equipment. Apceptancc and dtposit of the check for this amount is aoknow1edgment of recoipt of
payment This Lease covors aU coin operated laundry space in the multi .. :fiunlly COttmluniq known as
. ~ ApartmentB. LESSOlt, Bridge Management CQ. is owner or acting with fUll authority llS
owner's agent of this pl'Qp«ty.
LESSOR warrants that the unearned pi:Qrate share of the lease bonusIdccotation allowance will be ~ to LESSEE if LESSEE, for any reMOO sbaWd be req~d to remove its laundry equipment
£rom these premises prior to the expimtion of the original tean of the Lease. The Originall:..ease wat for a period of 120 ttlOn.ths. Its monthly value is $116.ti7 fo~ pro-ration determination. AlsQ. in the event
LESSOR insWled, or causes f.Q be installed. during the temr. of this Lease. WQbers and/or dtyc:rB in the
units tlurt are the snbject of this Lease; LESSOR win llotify LESSEE of such lnBtalIation and return to the LESSEE the unearned pro-..ra.ta portion of the lease bonus/decoration allowance. The following formula
will apply! (Number of units where washers and/or dtye.rB have been installed, divided by the total
ntllnber of lUIits) multiplied by (the number of years remfti'Qing on the Lease,. divided by the toUd years of
the subject Lease) 1lIUltipliod by (t:be original lease bonus/decora.tion allowance) equals t]:u, amount of
money to be refunded by the LESSOR. The fonnU.1a for pro tata determination delineated herein relates
only to calculating pro rata rcrtum of the leaso bonusl4e«lration alloWlUttle paid to LESSOR by LESSEE.
Nothing stated herein aIf.ects in any WIlY LESSEE'S tight to receive oompensation for lost b:I.coine in the
O'\"Ont of LESSOR' ~ breach of the leslie agreement
LESSEE;
GP 000006 *64 TAB C
DEFENDANT EXHIBIT
*66 lOt
COJNMACH CORPORATION
Memorandum of Lease DATE April 22,2002 STATE OF TEXAS COUNTY 0'F'TiAVIs TbJs ll1SU'UfDent Mil CVldence and when ro::orded serve BRIDGE MANAGEMENT CO, owner« Ilctmg With full authOf'll)' as owners agent. hctemsAer called LESSOR oflbe pre:ml3CS commonly kAowD a.< REGEn A APTS_.I~M:d at 1201 TOWN CREEK DR., AUSTIN, TX 7JlU ,. Lessor and COINNACij CORPORATION, u Le:!sce did a.ecotc II Wl"1ttI2t Lease Agreement of real
esI:.ak v.fuch )X'OVJdes m part that dunng the penod therem. set Iiiih> t:CiieC Jli$ tbC ngbt to oocupy the rea) estate on Willdl all laundry rooms lICe IX" WIn be SJtuated OD. the land and ~ named above tlIldc:r: the !emu and coodItJons of said lease 100\ ~ ~ "".f Lcssoc Ex=odth./J
Lessee and CopIeS of saW Lease: (whJcb IS meorporated herem lespedJVC the at filo [011] ~ rdi:n:nce) by of offices ZL ~3. Before me the anderstgnai IIllthonty on thIS day personally appeared Mth We!Itq. &gloom Vu% Presldenl of COlnmach Corporation. known to me to be the pc:rsoo whose llIIme lS suI:=nbc:d to the fore&omg .l1I.StriJmcDt and ac:Ialawlc:dged to me that be a.CCI.Iled the same fur the purposes and eonsidemllXl
therelll expressed 4L Ql<'i::)3,. ONeIl und~ my band and $Cal Ous I (f day of ~ -2M-
·~~s2~-£2<'
Izn& Jean TiemaJ6 Notary Public State ofTc:x:as My CamlllS9l!lIl ExpIres August 7, 2004
RETURN TO: COlNMACH CORl"ORATION 3S6} Dime Circle Swte 101 Aostin. Tens 787«-2300
FILED AND RECORDED
DFF1CIAL PlJll.re RECORDS EXHIBIT e3-25-Z8al 12 If,7 Pn ZH306!!e71 ~$9" DAHl! Da[AlJ'lOtR • COUNTY CLERK: TRAVIS CO\JNTY. TElCAS ~~: V8775 COJ:I!mellt: ,scription, [1] 99-PrtlSellt l'6£r.DocXD 2003.65071 PAge: :n-av:i.8',:r.r of .
*67 TAB D *68 DEFENDANT EXHIBIT
Assignment and Assnmption of Leases and Service Contracts Date: dAyl5 ,2007 FOLEY CAPITAL ASSET, LLC, a California limited liability company
Assignor:
Assignor's Mailing Address: 6103 Avenida Picacho t Rancho Santa Fe, San Diego County,
California 92067
Assignee: GRA YCO TOWN LAKE INVESTMENT 2007 LP. a Texas limited partnership
Assignee's Mailing Address: 55 Waugh Drive, Suite 500, Houston. Harris County. Texas 77007 The real property more particularly described on
Property (including any improvements):
Exhibit "A" attached hereto.
Leases: All residential leases to or on the Property.
Service Contracts.: The contracts relating to the Property set forth on Exhibit "B" attached
hereto.
Consideration: TEN DOLLARS (SI0.00) and other good and valuable consideration. the
receipt and sufficiency of which are hereby acknowledged.
Assignor is conveying the Property to Assignee by warranty deed dated this date.
Assignor, for the consideration and subject to the Reservations :from the Conveyance and the Exceptions to Conveyance and Warranty in the warranty deed. to the extent they affect the
Leases, assigns to Assignee all of Assignor's right, title. and interest in and to the Leases and the
Service Contracts. Assignor binds Assignor and Assignor's heirs and successors to warrant and
forever defend all and singular the Leases and the Service Contracts to Assignee and Assignee's
heirs. successors, and assigns against every person whomsoever lawfully claiming or to claim the
same or any part thereof, except as to the Reservations from Conveyance and the Exceptions to
Conveyance and Warranty in the warranty deed, to the extent they affect the Leases and the
Service Contracts.
Assignee assumes and agrees to perform the landlord's obligations under the Leases and the owner's obligations under the Service Contracts arising after this date. The obligation to repay
security and prepaid rental deposits to tenants under the Leases is limited to the amount of cash
delivered or credited by Assignor to Assignee with respect to security and prepaid rental deposits.
Assignee will indemnifY> defend, and hold Assignor harmless from any loss, attorney's fees,
expenses, or claims arising out of or related to Assignee's failure to penorm any of the
47.24S2Ov.21301691OOOO2 EXHIBIT
GP 000060 *70 obligations of the landlord under the Leases or the obligations of the owner under the Service
Contracts after this date.
Assignor will indemnifY. defend, and hold Assignee harmless from any loss, attorney's fees, expenses, or claims arising out or related to Assignor's failure to perform any of the
obligations of the landlord under the Leases or the obligations of the owner under the Service
Contracts before this date.
When the context requires, singular nouns and pronouns include the plural.
ASSIGNOR:
FOLEY CAPITAL ASSET. LLC, a California limited liability company [Signatures Continue on the Following Page] 472452Ov.2130169100002
GP 000061 *71 ASSIGNEE:
GRA YCO TOWN LAKE INVESTMENT 2007 LP, a Delaware limited parlnen;hip By: Grayco Project Town Lake GP LLC, its general partner
By: Grayco Partners, LLC, its sole member
[End ofSignaturesJ
4724520v.2130169/oo002
GP 000062 *72 Exhibit "A"
(Legal Description)
TRACT 1: Lot 4, Block "c" of Resubdivision of Lots 1,2,3 and 4, Block "C", TOWNLAKE
PLAZA, a subdivision in Travis County. Texas. according to the map or plat thereof, recorded in
Volume 49, Page 56 of the Plat Records of Travis County, Texas.
TRACT 2: Lots 5, 6, 7 and 8, Block .. C·., of TOWNLAKE PLAZA, a subdivision in Travis
County, Texas. according to the map or plat thereof: recorded in Volume 18, Page 38 of the Plat
Records of Travis County, Texas.
A-I
472452Ov.21301691OO002
GP 000063 *73 Exhibit "B"
(Service Contracts) Gas Transportation Agreement dated February 19. 2003, with Texas Gas Service
1.
. Company Vending Agreement dated January 8, 2003, with Vending Solutions, L.L.C.
2.
3. Communications Services Agreement dated May 15,2001, with Grande Communications
Networks, Inc.
4. Contract for Services and Lease Agreement dated March II, 1992, with Coinmach
Cotporafun (as successor-:in-interest ofMcNajr's Coin Laundry Co.) Service Agreement dated March 28, 2002, with waste Management of Texas, Inc. 5.
6. Ad Insertion Contract dated September 30, 2004, with Apartments for Rent
A-I
472452Qv.2130169100002
GP 000064 *74 TAB E *75 CAUSE NO. C-I-CV-08-009655
COINMACH, CORPORATION § IN THE COUNTY COURT §
Plaintiff § § v. ~ '~'-. § l.~) -n § () GRAYCO TOWN LAKE § )J INVESTMENT 2007 LP § )J § rn n Defendant § u ;1 C) . CAME ON the 20 th of August, 2014, the above entitled and numbered cause wherein Coinmach Corporation ("Coinmach'j is the Plaintiff and GrayeD Town Lake Investment 2007, LP ("Grayeo") is the Defendant. The parties appeared by and through their 0=== 0 - attorneys of record and announced ready to proceed. . o~ co= All matters in controversy, both legal and factual, were submitted to the Court for its
1 \ ) - (..)=== co_ 0 _
[J ' I_ === determination. The Court, having heard the evidence, including testimony and exhibits
admitted into the record, and considering the arguments of counsel, has announced its decision in favor of the Plaintiff Coinmach. The Court hereby renders judgment in favor of Plaintiff Comach.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Coinmach have and recover damages from Defendant Grayco in the sum of $67,122.]9, plus prejudgment interest in the amount of $19,695.31.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Coinmach have and recover from Defendant Grayco its reasonable and necessary legal fees, which the Court finds to be the sum of $44,005.14 through the trial of this matter, including conditional awards of $2,500.00 in the event that Defendant Grayco files an unsuccessful I
Motion for New Trial, and $5,000.00 in the event Defendant fIles an unsuccessful appeal to the Court of Appeals, and $5,000.00 in the event Defendant files an unsuccessful appeal or petition for review to the Texas Supreme Court.
All costs are taxed against Defendant Grayco. All amounts ~warded herein and unpaid shall bear interest at the rate of 5% per annum from the date of this judgment until paid. This is a final judgment. All writs and process may issue to enforce same as allowed under Texas law.
IT IS SO ORDERED ON TmS ~ DAY OF NOVEMBER, 20 *77 •.. ~ .. 'I'
Agreed as to form and substance:
KASLING, HEMPHILL, DOLEZAL
& ATWELL, L.L.P.
301 Congress Avenue, Suite 300
Austin, Texas 78701
Telephone: (512) 472-6800
Telecopier: (512) 472-6823
Br. R. k~i;f k=.A~
R.KempKasl'
State Bar No. 11104800
ATTORNEYSFORPL~F
Agreed as to form only;
DOBROWSKI, LARKIN & JOHNSON, L.L.P.
4601 Washington Street, suite 300
Houston, Texas 77007
Phone: (713) 659-2900
Fax (713) 659- 8
By: ---+-J,--*,~~------- F eri Johnson
te ar No. 00785429
Cody W. Stafford
State Bar No. 24068238
Akilah F. Craig
State Bar No. 24076194
TAB F *79 • •
Filed: 12/8/20143:36:42 PM Dana DeBeauvoir Travis County Clerk C-1-CV-08-009655 CAUSE NO C-I-CV-08-09655 Andrea Scott COINMACH CORPORATION § IN THE COUNTY COURT
§
Plaintiff §
§
v. AT LAW, NUMBER 1 §
§ LAKE §
GRAYCO TOWN
INVESTMENT 2007 LP §
§ Defendant § TRAVIS COUNTY, TEXAS DEFENDANT'S MOTION FOR NEW TRIAL Defendant Grayco Town Lake Investment 2007 LP ("Town Lake"), requests the Court set aside the judgment in favor of Plaintiff Coinmach Corporation
("Coinmach"), and grant a new trial because-among other things-Town Lake did
not breach the 2002 Lease.
I. INTRODUCTION 1. This motion is filed within 30 days of the judgment in accordance with Rule 329b of the Texas Rules of Civil Procedure.
2. The Court signed the judgment against Town Lake on November 6, 2014. The judgment awards Coinmach $67,122.19 in actual damages and
$19,695.31 in attorneys' fees based on the Court's determination that Town Lake
breached the 2002 Lease.
3. The evidence admitted at trial, however, does not support the judgment; thus, the Court should order a new trial.
Case # C-1-CV-08-009655
'-'IIIIJ ""' JIIII 11111 11111 111111111111111 11111 11111111
• • II. ARGUMENT AND AUTHORITIES 4. To recover on a claim for breach of contract, Coinmach must prove (1) that the defendant was a party to the contract, (2) that the defendant failed to perform a material obligation of the contract, (3) that the plaintiff performed or tendered performance (4) that the plaintiff was damaged as a result of the breach. New York Life Ins. Co. v. Miller, 114 S.W.3d 114, 121 (Tex. App.- Austin 2003, no pet.). Here, Plaintiff admitted no competent evidence sufficient to support a finding on three of these elements. Alternatively, any finding by the Court on these elements is against the great weight and preponderance of the evidence, requiring a new trial.
A. Grayco Was Not Party to or Bound by the 2002 Lease Because it Was, as a Matter of Law, a Good Faith Purchaser for Value Without Notice of the 2002 Lease
5. A bona fide purchaser is one who buys property in good faith, for valuable consideration, and without notice, actual or imputed, of outstanding claims
of a third party. Swanson v. Grassedonio, 647 S.W.2d 716, 718 (Tex. App.-Corpus
Christi 1982, no writ); Colvin v. Alta Mesa Res. Inc., 920 S.W.2d 688, 691 (Tex.
App.-Houston 1996, no writ) (citing Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex.
1984».
6. Actual notice results from personal information or knowledge, as well as those facts which reasonable inquiry would have disclosed. Fletcher v. Minton,
217 S.W.3d 755, 758 (Tex. App.-Dallas 2007, no pet.). Constructive notice, on the
other hand, is notice the law imputes to a person not having personal information or *81 •
• knowledge. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001). A purchaser has
constructive notice of instruments recorded at the country clerk's office, and lying
within the purchaser's chain of title. TEX. PROP. CODE § 13.002; see also Porter v.
Earnhart, 343 S.W.2d 294, 297 (Tex. App.-Dallas 1960, writ refd n.r.e.).
7. A bona fide purchaser of real property takes title free from any encumbrances of which the purchaser did not have actual or constructive notice. See
Smith v. Shamburger, 273 S.W. 645, 646 (Tex. Civ. App.-Amarillo 1925, writ.
dismissed); see also Hampshire v. Greeves, 130 S.W. 665, 668 (Tex. Civ. App. 1910)
affd, 143 S.W. 147 (Tex. 1912); see also Flack v. First Nat'l Bank, 226 S.W.2d 628,
631 (Tex. 1950).
8. In 2007, Grayco Partners, LLC ("Grayco") purchased the Regatta Apartments and assigned its interests to Town Lake. While a 1992 Lease was
recorded in the Deed of Records for Travis County, it is wholly undisputed that the
2002 Lease was not recorded. Despite conducting a search of the real property
records in Travis County, Texas, Grayco was not aware of the existence of the 2002
Lease because it had not been recorded.
9. Grayco purchased the property in good faith, for value, without actual or imputed notice of the 2002 Lease. Because Grayco was a bona fide purchaser of
the property, it cannot be held liable for the terms and conditions of the 2002 Lease,
and likewise could not breach the 2002 Lease.
10. Town Lake then acquired the property from Grayco free of any obligation to Coinmach on or about April 26, 2007. As the successor in interest to
*82 • • Grayco, Town Lake acquired the property from a bona fide purchaser and, as such,
cannot be held liable under the 2002 Lease. Ball v. Presidio County, 29 S.W. 1042,
1043 (Tex. 1895) ("To be a bona fide holder, one must be himself a purchaser for
value without notice or the successor of one who was.").
11. Consequently, Town Lake was not bound by the 2002 Lease and could not have breached the 2002 Lease. Alternatively, any finding that Town Lake was
on notice (whether actual, constructive or inquiry notice) of the 2002 Lease is
against the great weight and preponderance of the evidence. Thus, the judgment
against Town Lake for a breach of the 2002 Lease is in error, and a new trial should
be ordered.
B. Grayco Did not Breach Any Material Obligation of the 2002 Lease 12. The judgment against Town Lake is in error because the evidence is legally and factually insufficient to prove Town Lake breached the 2002 Lease.
Because there is a complete absence of evidence to support Coinmach's breach of
contract claim, the evidence is legally insufficient to support the judgment. Serrano
v. Union Planters Bank, N.A., 162 S.W.3d 576,580 (Tex. App.-EI Paso 2004, pet.
denied).
13. Coinmach failed to identify a single term, clause, condition, or obligation in the 2002 Lease that Grayco breached. No provision of the 2002 Lease
required Grayco to continue operating an apartment complex on the site or to
maintain occupancy at a specified level. Coinmach's corporate representative, Ed
Greene, testified that the 2002 Lease did not require Town Lake to maintain a
*83 • • mInImUm occupancy level at the Regatta Apartments. Even under Coinmach's
interpretation of the 2002 Lease, then, Town Lake could choose to renew-or not
renew-as many tenant leases as it wished without breaching its contractual
obligations to Coinmach.
14. Here, Town Lake's corporate representative, John Britton, testified that Town Lake had difficulty finding qualified tenants for the Regatta Apartments,
which ultimately led to the decision to close and demolish Regatta. Coinmach then
sued Town Lake for shuttering the Regatta Apartments. Under Coinmach's own
understanding of the 2002 Lease, Town Lake had every right to lease-down, close,
and demolish Regatta. Indeed, demolition of the property is no different from
maintaining Regatta with minimum or zero occupancy-both have the effect of
eliminating revenue for Coinmach. Neither scenario is prohibited by the 2002
Lease.
15. Further, Coinmach admitted that Town Lake had no obligation to ensure that the tenants at the Regatta Apartments actually used Coinmach's
laundry machines. Coin mach admitted that the 2002 Lease did not require Town
Lake to force the tenants to use the laundry room; thus, Coinmach had no
contractual expectation for any future revenues. This is especially true when read
in conjunction with Coinmach's own position that the 2002 Lease required no
minimum occupancy.
16. Coinmach argues that an alleged lease-down of Regatta-which supposedly began before Town Lake even acquired the apartments-was a breach of
*84 493 • •
the 2002 Lease. But no provision of the 2002 Lease purports to impose a
requirement that Grayco maintain a mlrumum occupancy level, as Coinmach
admits. [1] Indeed, Coinmach's damages expert testified that he began calculating
damages prior to the 2007 demolition based on this supposed breach. But, as
discussed above, Coinmach admits that a lease-down would not be a breach of the
2002 Lease.
17. As a result, based on the plain language of the 2002 Lease-as well as Coinmach's own interpretation-Town Lake did not breach the 2002 Lease by
either allegedly leasing-down Regatta, or by demolishing the property.
18. Alternatively, any finding of breach by Grayco is against the great weight and preponderance of the evidence.
C. Coinmach Suffered No Damages
19. Even if Coinmach had proved Town Lake breached the 2002 Lease, Coinmach utterly failed to prove that it suffered any damages. As previously
discussed, the 2002 Lease did not guarantee any minimum monthly earnings for the
laundry machines. If tenants chose not to use the laundry machines, or there were
no tenants to use them, the laundry machines would have had zero revenue, and
Coinmach would not be entitled to anything else. As a result, Coinmach never had
any contractually-guaranteed revenues.
20. Coinmach asked the Court to speculate as to what the revenue would have been, using the assumptions that there would be tenants to use the laundry
I The only way to impose such a requirement would be to impose it as a concomitant of the duty of good faith. Texas courts have unambiguously rejected the notion that there is a duty of good faith in an ordinary contract.
English v. Fischer, 660 S.W.2d 551, 522 (Tex. 1983). *85 --
• room and the tenants would, in fact, have used the laundry rooms but for Town
Lake's supposed decision to lease-down and then demolish the Regatta
Apartments. [2] But a party may not recover damages for breach of contract if those
damages are remote, contingent, speculative or conjectural. Southwest Battery Corp.
v. Owen, 115 SW.2d 1097, 1099 (Tex. 1938); Pace Corp. v. Jackson, 248 S.W.2d 340,
348 (Tex. 1955); City of Dallas v. Village of Forest Hills, L.P., Phase I, 931 S.W.2d
601, 605 (Tex. App.-Dallas 1996, no writ). Lost profits claimed as damages must
be established to a reasonable certainty. Holt Atherton Indus., Inc. v. Heine, 835
S.W.2d 80, 84 (Tex. 1992).
21. Based on the unrefuted testimony from Mr. Britton, occupancy at the Regatta Apartments was declining due to the terrible condition of the apartments.
The conditions-which were present before Town Lake acquired the property-were
such that vagrants had taken up residence at the Regatta Apartments. Coinmach
has absolutely no basis to assume that there would have been tenants at the
Regatta Apartments willing and able to use the laundry machines through the
expiration of the 2002 Lease.
22. Therefore, Coinmach's claim for damages fails for two reasons: (a) there were no provable damages suffered because Coinmach was not entitled to any
specific amount of revenue or profits from the machines; and (b) any damages
Coinmach claims it is entitled to are speculative at best. *86 7
• • 23. Importantly, Coinmach's failure to prove its damages extends to both its breach of contract claim and its breach of the covenant of quiet enjoyment claim.
Even assuming that Town Lake breached the covenant of quiet enjoyment,
Coinmach suffered no damages for the same reasons that it suffered no damages
from its breach of contract claim.
24. Alternatively, any finding that Coinmach suffered damages as a result of the alleged breach of the 2002 lease by Grayco is against the great weight and
preponderance of the evidence.
D. Coinmach Failed to Mitigate its Damages
25. The mitigation of damages doctrine requires an injured party, following a breach, to exercise reasonable care to minimize his damages. Great Am.
Ins. Co. v. N. Austin Mun. Util. Dist. No.1, 908 S.W.2d 415,426 (Tex. 1995); Walker
v. Salt Flat Water Co., 96 S.W.2d 231, 232 (Tex. 1936). A plaintiff has a duty to use
ordinary care and reasonable diligence to minimize its damages. Geotech Energy
Corp. v. Gulf States Telecomm. and Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex.
App.-Houston [14th Dist.] 1990, no writ).
26. When an injured party fails to comply with the duty to mitigate damages, recovery is not permitted as to that part of damages that could have been
avoided or was incurred as a result of the failure to mitigate. Pinson v. Red Arrow
Freight Lines, Inc., 801 S.W.2d 14, 15 (Tex. App.-Austin 1990, no pet.) (citing
Alexander & Alexander of Tex., Inc. v. Bacchus Indus., Inc., 745 S. W.2d 252, 253
(Tex. App.-EI Paso 1988, writ denied».
•
27. The evidence at trial, however, proved that Coinmach unreasonably failed to mitigate its damages. For instance, Exhibit 15 is a letter from Town
Lake-through its agent, Greystar-informing Coinmach of the decision to close
Regatta, discussing the reasons behind the decision, and requesting Coinmach
collect its laundry machines. [3] And Exhibit 16 is an email from Greystar again
asking Coinmach to collect the washing machines and dryers prior to the demolition
of Regatta. Coinmach admitted that it received these correspondences.
28. Despite being provided with ample notice of Town Lake's intent to demolish the Regatta Apartments, Coinmach chose to ignore Town Lake's request,
leave the laundry machines, and allow them to be demolished. That decision is
inexcusable because Mr. Greene admitted that Coinmach has, on occasion, removed
laundry machines from one location and placed them in another location. Mr.
Greene also testified that Coinmach could have collected the machines from the
Regatta Apartments and placed them in another facility in order to generate
revenue and offset the alleged damages suffered by Coinmach.
29. Thus, Coinmach's failure to mitigate its damages bars its recovery of the amount awarded in the judgment. Alternatively, any finding that Coinmach
exercised reasonable diligence to mitigate its damages is against the great weight
and preponderance of the credible evidence.
III. CONCLUSION Town Lake proved it was a bona fide purchaser of the Regatta Apartments.
As such, Town Lake was neither a party to nor bound by the obligations of the 2002 *88 9
,.
Lease. Alternatively, even if Town Lake was subject to the obligations of the 2002
Lease, the evidence Coinmach presented at trial is legally and factually insufficient
to support its claim that Town Lake breached the 2002 Lease. Further, even if
Town Lake breached the Lease, Coinmach suffered no damages and, in any event,
completely failed to mitigate its damages, which precludes recovery. Because
Coinmach failed to prove its contract claims against Town Lake, the award for
attorneys' fees should also be vacated.
Therefore, Defendant, Grayco Town Lake Investments 2007 LP, asks the Court to vacate its judgment and grant a new triaL
Respectfully submitted, DOBROWSKI, LARKIN & JOHNSON LLP By: / s / Akilah F. Craig Frederick T. Johnson SBN 00785429
Cody W. Stafford SBN 24068238
Leah N. Maxwell SBN 24073454
Akilah F. Craig SBN 24076194
4601 Washington Ave, Suite 300 Houston, Texas 77007 713.659.2900 - Telephone 713.659.2908 - Facsimile ATTORNEYS FOR DEFENDANT GRAYCO TOWN LAKE INVESTMENT 2007 LP •
CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of Defendant Grayco Town Lake Investment 2007, LP's Motion for New Trial has been served on this 8th
day of December, 2014 as follows:
VIA EMAIL AND FACSIMILE
R. Kemp Kasling
Kasling, Hemphill, Dolezal & Atwell, L.L.P.
301 Congress Avenue, Suite 300
Austin, TX 78701
/s/ Cody W. Stafford Cody W. Stafford
[1] Coinmach kept 24 machines—12 washers and 12 dryers—at Regatta. Ex. D-26.
[2] What, exactly, the lease bonus was used for is unclear. What is clear, however, is that Grayco did not receive any of the $14,000, a fact that will become important later. 2 RR 87:12-24.
[3] Indeed, based on Coinmach’s own data, the machines made far less than $45 in most months. Ex. D-25, GP 000008-9.
[4] Both of Coinmach’s causes of action fail for the same reasons. Both arise directly from the 2002 Lease, both are dependent on Grayco being bound by that lease, and both gave rise to the same alleged damages (Coinmach sought the same measure of damages for both causes of action.). Thus, both causes of action suffer the same defects, and neither can support the judgment.
[5] As the Court can see, Coinmach averaged $36,828.38 during the first couple of years of the lease. See Ex. D-25. That average later declined for the reasons discussed above.
[6] In other words, Grayco would never have to come out of pocket to ensure Coinmach made $45 per machine, per month.
[7] Thus, Coinmach effectively paid no rent during those months.
[8] In reality, Coinmach’s claim for breach of the covenant of quiet enjoyment is a breach of contract claim (which is how Coinmach pled it). CR 410, ¶ 3. Indeed, any implied covenant of quiet enjoyment was subsumed within the express terms of the
[10] Mr. Kemmerer took his arbitrary $99.81 daily average collection and extended it through the term of the 2002 Lease to arrive at his ultimate damages number, which was accepted by the trial court. Coinmach utterly failed to provide the trial court with a defensible daily average supported by the evidence (or Texas law).
[2] Notably, Coinmach's entire damages analysis is premised on supposed actions by Town Lake that even Coinmach admits were not breaches. This is fatal to Coinmach's claims.
[3] All referenced exhibits were admitted at trial.