The opinion
In The
Court of Appeals
For The
First District of Texas
____________
NO. 01-01-01040-CV
____________
VICTOR M. ZURITA, D.D.S., INDIVIDUALLY AND D/B/A HEIGHTS
MEDICAL AND DENTAL CLINIC, Appellant
V.
FERNANDO LOMBANA, M.D. AND HOUSTON MEDICAL AND DENTAL
CENTER CORP., Appellees
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 99-48871
MEMORANDUM OPINION ON REHEARING
The Court today considered appellee’s motion for rehearing and motion for
rehearing en banc. The motions are DENIED. However, we withdraw our opinion
of October 24, 2002, and our Supplemental Memorandum Opinion of January 23,
2003, and issue this opinion in their stead.
Appellant, Victor M. Zurita, D.D.S. (“Landlord”), appeals a partial summary
summary judgment, which became final after a jury trial and subsequent final
judgment was rendered in favor of appellees, Fernando Lombana, M.D. and Houston
Medical and Dental Center Corp. (“Tenant”), in a breach-of-contract claim arising
out of Tenant’s lease of office space from Landlord.
On appeal, Landlord argues that
the trial court erred in (1) granting Tenant’s motion for partial summary judgment on
liability; (2) denying Landlord’s motion for summary judgment on the same issue; (3)
awarding lost profit damages because there was no evidence to support the jury’s
award; (4) allowing Tenant’s expert to testify concerning lost profits and in admitting
the written summary of his testimony into evidence; and (5) awarding Tenant’s
attorney’s fees. We reverse the judgment and render a judgment that Tenant take
nothing from Landlord.
BACKGROUND
Historical Facts
Landlord owns the Yale Clinic, an office building in Houston’s Heights area.
Landlord ran his dental practice out of the Yale Clinic and built a medical clinic in
the same location. In April 1996, Tenant approached Landlord about leasing space
at the Yale Clinic for his pediatric practice. Although Landlord and Tenant handled
specific lease negotiations themselves, the majority of the lease was a form lease.
Landlord and Tenant modified the lease by deleting inapplicable or changed
conditions and added their own language to complete their agreement.
The Lease
The parties entered into a three-year lease beginning June 1, 1996. Landlord
granted Tenant an option to extend the lease for two subsequent five-year periods
after the initial term expired. The leased premises included approximately “1,351
square feet and pharmacy.” The word “pharmacy” was hand-written into both the
premise description and “uses” sections of the lease, and the word was also present
on the schematic drawing of the clinic. Rent was due on the first of the month and
subject to annual increases, based on adjustments in the cost of living.
The lease contained the following obligation by Tenant:
Tenant agrees not to–
6. Assign this lease or sublease any portion of the premises
without Landlord’s consent.
The contract also contained the following lease-extension option:
27. Extension Option. Tenant shall have the option to extend the term
as provided below
Landlord grants Tenant an option to extend the term for two five-year options.
Tenant’s rights under this option shall terminate if (1) the lease
or Tenant’s right to possession of the premises is terminated, (2)
Tenant assigns its interest in the lease or sublets any portion of
the premises , (3) Tenant fails to timely exercise the option, or (4)
default exists at the time Tenant seeks to exercise the option.
. . .
1. During the additional term the lease shall continue as written.
2. The option to extend for the additional term shall be exercised
by a written notice delivered to Landlord ninety days before the
termination date.
(Emphasis added.)
The Rent Dispute and Eviction
The initial lease ended on May 30, 1999. Over 90 days before the termination
date of the lease, Tenant purported to exercise his option to extend the lease by
sending written notice to Landlord. Landlord asked for an additional $1,200.00 rent
per month, which Tenant refused to pay. In June, July, August, and September of
1999, Tenant delivered monthly rental checks of $1,800.00 to Landlord. Landlord
held, but did not cash, these checks. Landlord filed eviction proceedings against
Tenant in September and was awarded possession of the premises, after which
Landlord cashed the checks he had been holding.
The Lawsuits
After he was evicted, Tenant sued Landlord for breach of contract, fraud, and
negligent misrepresentation. Tenant moved for summary judgment, contending that,
under the terms of the contract, he had validly exercised the extension option.
Therefore, Tenant argued, the eviction was improper. Landlord responded and then
filed his own motion for summary judgment, claiming that Tenant had no right to
extend the term of the lease because Tenant’s rights to exercise the extension option
had terminated when Tenant subleased a portion of the premises to a pharmacist.
The trial court granted Tenant’s motion for partial summary judgment on the
issue of liability, did not expressly rule on Landlord’s motion, and proceeded to a jury
trial only on the issue of Tenant’s damages. The jury awarded Tenant $950,000 in
lost profits, $92,600 in miscellaneous damages, and $450,000 in attorney’s fees. The
trial court entered a final judgment reflecting the jury’s verdict.
SUMMARY JUDGMENT
In issue one, Landlord contends the trial court erred in granting partial
summary judgment on contractual liability in favor of Tenant. In issue two, Landlord
claims the trial court erred in denying his motion for partial summary judgment on
contractual liability. In both points of error, Landlord contends that Tenant had no
right, as a matter of law, to extend the term of the contract.
Standard of Review
To prevail on a motion for summary judgment, a movant must establish that
there is no genuine issue of material fact and that the movant is entitled to judgment
as a matter of law. Tex. R. Civ. P. 166 a(c) . When reviewing a summary judgment,
we must accept as true evidence in favor of the nonmovant and indulge every
reasonable inference and resolve all doubts in the nonmovant’s favor. Randall’s
Food Mkts, Inc., v. Johnson , 891 S.W.2d 640, 644 (Tex. 1995). Further, when both
parties move for summary judgment and the trial court grants one motion and denies
the other, we may determine all questions presented, including the propriety of
overruling the losing party’s motion. Jones v. Strauss , 745 S.W.2d 898, 900
(Tex.1988); State Farm Mut. Auto. Ins. Co. v. Brown , 984 S.W.2d 695, 697 (Tex.
App.—Houston [1st Dist.] 1998, pet. denied).
When both parties move for summary
judgment, we review the summary judgment evidence presented by both sides and
grant the relief the trial court should have granted. See Commissioners Court v.
Agan , 940 S.W.2d 77, 81 (Tex.1997); Valero Marketing & Supply Co. v. Kalama
Intern. , 51 S.W.3d 345, 351 (Tex. App.—Houston [1st Dist.] 2001,no pet.).
Lease-Extension Option
The sole issue presented for our review is whether Tenant had a right to
exercise the extension option in the lease or whether he had forfeited that right by
subleasing a portion of the premises.
A court’s primary concern in construing a written contract is to ascertain the
true intent of the parties as expressed in the instrument. Nat’l Union Fire Ins. Co. v.
CBI Indus., Inc. , 907 S.W.2d 517, 520 (Tex. 1995). If an instrument is worded so that
it can be given an exact or certain legal interpretation, the instrument is not
ambiguous, and a court can construe the contract as a matter of law. La. Natural Gas
Pipeline, Inc. v. Bludworth Bond Shipyard, Inc. , 875 S.W.2d 458, 461 (Tex.
App.—Houston [1st Dist.] 1994, writ denied). Absent a finding of ambiguity, a court
must interpret the meaning and intent of any contract from the four corners of the
document without the aid of extrinsic evidence. Carrabba v. Employers Cas. Co. ,
742 S.W.2d 709, 716 (Tex. App.—Houston [14th Dist.] 1987, no pet.). We are
obliged, if possible, to give effect to all the terms of a contract so none will be
rendered meaningless. Kelley-Coppedge, Inc. v. Highlands Ins. Co. , 980 S.W.2d 462,
464 (Tex. 1998). Parties to an instrument are presumed to intend every clause to have
some effect or to evidence their agreement, and a reasonable interpretation of an
agreement is preferred to one that is unreasonable. See Westwind Exploration, Inc.
v. Homestate Sav. Ass’n , 696 S.W.2d 378, 382 (Tex. 1985).
With these principles in mind, we turn to the contract in this case. We hold that
the extension option was not valid and enforceable because of Tenant’s sublease to
the pharmacy. The language of the extension option expressly provides, “Tenant’s
rights under this option shall terminate if . . . Tenant assigns its interest in the lease
or sublets any portion of the premises.”
The undisputed summary judgment evidence shows that Tenant sublet a
portion of the premises to the pharmacy without the Landlord’s written consent. As
we stated earlier, the issue of whether the Landlord ratified the sublease is not before
us. The extension option does not contain any notice provision, nor does it provide
an opportunity for Tenant to cure by terminating the sublease. The option provides
only that the option “shall terminate” once the Tenant enters a into sublease.
This language of the extension option is different from that of the default
provision of the lease itself. The default provision of the lease provides as follows:
10. Defaults by Tenant are (a) failing to pay timely rent, (b) abandoning
or vacating a substantial portion of the premises, or (c) failing to comply
within 10 days after written notion with any provision of this lease
[including presumably, the no-sublease provision] other than the
defaults set forth in (a) and (b) above.
(Emphasis added.)
Therefore, under the terms of the original lease, the Tenant would have been
given 10 days to cure a default caused by violating the sublease provision. However,
as we stated above, the extension option did not contain a notice-of-default provision.
Instead, it provided that the option terminated automatically once the Tenant entered
into a sublease.
We must presume that the parties to the contract intended a different result by
providing a notice of default provision under the original lease, but excluding such
a provision under the extension option. Therefore, we hold that the extension option
terminated in 1997, when Tenant first entered the subcontract. The three-year
original term, however, continued because Tenant was never given a 10-day notice
of default. Therefore, once the original term of the contract had expired, the lease
contract was terminated, and Tenant could not exercise the extension option.
Accordingly, the trial court erred by granting Tenant’s motion for summary
judgment on liability and denying Landlord’s cross-motion for summary judgment
on the same grounds.. Accordingly, we sustain appellant’s first and second issues.
We reverse the judgment and render judgment that Tenant take nothing from
Landlord.
In light of our disposition of issues one and two, we need not address the
remaining issues and decline to do so.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Nuchia and Jennings.
Do not publish. Tex. R. App. P. 47.