Bob E. Woody v. J. Black's, LP And J. Black's GP, LLC

ACCEPTED

03-15-00293-CV

8312780

THIRD COURT OF APPEALS

AUSTIN, TEXAS

12/18/2015 5:38:37 PM

JEFFREY D. KYLE

CLERK

________________________________________________

NO. 03-15-00293-CV FILED IN

3rd COURT OF APPEALS

_________________________________________________

AUSTIN, TEXAS

12/18/2015 5:38:37 PM

In the Court of Appeals

JEFFREY D. KYLE

For the Third Judicial District of Texas Clerk

Austin, Texas

____________________________________________________

BOB E. WOODY,

Plaintiff-Appellant,

v.

J. BLACK’S, LP and J. BLACK’S, GP, LLC,

Defendants-Appellees.

__________________________________________________________________

On Appeal from Cause No. D-1-GN-09-001436, In the 345th Judicial District Court of

Travis County, Texas, The Honorable Steven Yelenosky Presiding

BRIEF FOR APPELLEES

Eric Taube

State Bar No. 19679350

etaube@taubesummers.com

Andrew Vickers

State Bar No. 24084021

avickers@taubesummers.com

Taube Summers Harrison Taylor

Meinzer Brown LLP

100 Congress Avenue, Suite 1800

Austin, Texas 78701

Telephone: (512) 472-5997

Telecopier: (512) 472-5248

ATTORNEYS FOR APPELLEES

ORAL ARGUMENT REQUESTED

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................... i

INDEX OF AUTHORITIES......................................................................................v

ABBREVIATIONS ................................................................................................. ix

STATEMENT OF THE CASE ................................................................................ xi

REQUEST FOR ORAL ARGUMENT ................................................................. xiv

ISSUES PRESENTED.............................................................................................xv

STATEMENT OF FACTS ........................................................................................1

I. THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE

SUBLEASE, UNDER WHICH J. BLACK’S WAS READY, WILLING AND

ABLE TO PERFORM. ..............................................................................1

A. The Parties Entered a Sublease Agreement in August 2006

for a Three-Year Term with Four Extension Options. .........1

B. J. Black’s Properly Exercised its First Extension Option,

Woody Improperly Rejected J. Black’s Exercise of the

Extension Option and thereby Breached the Sublease. ........2

C. Woody Improperly Accused J. Black’s of default and

disregarded the default terms of the Sublease. ......................4

D. J. Black’s was Ready, Willing, and Able to perform each

and every one of its Obligations under the Lease. .................5

II. THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS

PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS

ATTORNEY’S FEES. ...............................................................................6

A. The Parties Counter-Sued against Each Other: Woody

Sought to Remove J. Black’s as the Tenant, and J. Black’s

Sought to Remain in the Subleased Space. .............................6

B. J. Black’s First Motion for Partial Summary Judgment was

Granted, Holding that J. Black’s Properly Exercised its

Extension Option and that Woody Breached the Sublease. .7

i

C. Three Sanctions Orders were Granted in J. Black’s Favor .8

D. J. Black’s Second Motion for Partial Summary Judgment

was Granted, Dismissing all of Woody’s Claims. ..................9

E. J. Black’s Third Motion for Summary Judgment was

Granted, Resulting in a Final Judgment, which was then

Partially Vacated. ......................................................................9

F. Woody’s Motion for Summary Judgment was Denied—and

a Fourth Sanctions Order was Granted in J. Black’s

Favor—because the Court had Already Conclusively

Determined that J. Black’s Properly Exercised its Extension

Option and that Woody was in Breach of the Sublease. .....11

G. J. Black’s Motion for Entry of a Final Judgment was

Granted, and a Final Judgment was Entered in J. Black’s

Favor.........................................................................................12

H. Appeal and Remand by Amarillo Court of Appeals ...........13

I. Grant of J. Black’s Final Summary Judgment and Entry of

Final Judgment ........................................................................14

SUMMARY OF THE ARGUMENT ......................................................................15

ARGUMENT ...........................................................................................................21

I. WOODY BREACHED THE SUBLEASE ...................................................21

A. Woody’s Breach was established by the District Court ......21

B. Woody’s Breach affirmed by the Amarillo Court of Appeals

...................................................................................................23

C. Woody’s new defense that he did not actually “breach” the

Sublease, but merely “repudiated” his obligations

thereunder, is untimely and unsupported by legal authority

or the facts of this case ............................................................24

II. THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT

AWARDING SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO

J. BLACK’S ON THE BASIS OF WOODY’S BREACH. ............................27

ii

A. J. Black’s is entitled to specific performance of the Sublease

and its extensions because it was ready, willing and able to

perform its own obligations under the Sublease at all

relevant times...........................................................................28

1. J. Black’s was Ready, Willing and Able to perform its

Obligations under the Sublease ......................................29

2. J. Black’s Remedies at Law are inadequate ...................31

B. Woody’s arguments against the availability of the award of

specific performance are a school of red herrings. ..............33

1. Woody’s “Three-Way Characterization” finds no support

in the record, or in the authority .....................................34

2. Woody’s claim that the decree of specific performance

lacks a “mutuality of remedy” is incorrect .....................35

3. The grant of specific performance does not require

“continuous supervision” of the parties. .........................37

4. The decree of specific performance does not deprive

Woody of rights under the Sublease ...............................38

III. WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED

SUMMARY JUDGMENT EVIDENCE AND THE EXCLUSION OF A

PORTION OF HIS OWN AFFIDAVIT IS SPURIOUS ..................................39

A. The District Court Correctly Overruled Woody’s

Objections to J. Black’s Summary Judgment Evidence .....40

B. The District Court correctly excluded the February 4, 2015

Affidavit of Bob E. Woody, and its exclusion was not

material to the award of specific performance in this Case41

IV. J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER

ATTORNEY’S FEES AS THE PREVAILING PARTY IN A BREACH OF

CONTRACT CASE UNDER CPRC § 38.001. .........................................43

A. The Law permits the award of fees under Chapter 38 upon

the award of specific performance ........................................43

iii

PRAYER ..................................................................................................................44

CERTIFICATE OF COMPLIANCE .......................................................................45

CERTIFICATE OF SERVICE ................................................................................46

iv

INDEX OF AUTHORITIES

Cases

Albataineh v. Eshtehardi,

01-12-00671-CV, 2013 WL 1858864 (Tex. App.—Houston [1st Dist.]

May 2, 2013, no pet.) .....................................................................................43

Allstate Ins. Co. v. Hallman,

159 S.W.3d 640 (Tex. 2005) .................................................................. 14, 17

Azad v. Aaron Rents, Inc.,

No. 14-07-01087-CV, 2009 WL 4842761,

(Tex. App.—Houston [14th Dist.] 2009, no pet.)...........................................34

Bd. of Trustees of Fire and Police Retiree Health Fund v.

Towers, Perrin, Forster & Crosby, Inc.,

191 S.W.3d 185 (Tex.App.–San Antonio 2005, pet. denied) .......................39

Burford v. Pounders,

145 Tex. 460, 199 S.W.2d 141 (1947) ..........................................................30

City of Houston v. Socony Mobil Oil Co.,

421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967),

writ refused NRE (Apr. 10, 1968) .......................................................... 13, 24

DiGiuseppe v. Lawler,

269 S.W.3d 588 (Tex.2008) ..........................................................................29

Downer v. Aquamarine Operators, Inc.,

701 S.W.2d 238 (Tex.1985) ..........................................................................40

E.M. Goodwin, Inc. v. Stuart,

52 S.W.2d 311 (Tex. Civ. App.—San Antonio 1932), writ granted

(Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632 (Comm'n App. 1935) 36

Edwards v. Mid-Continent Office Distribs., L.P.,

252 S.W.3d 833 (Tex. App.—Dallas 2008, pet. denied) ..............................28

First State Bank of Bishop v. Grebe,

162 S.W.2d 165 (Tex. Civ. App.—San Antonio1942, writ ref’d w.o.m.) ....24

v

Fitzsimmons v. Anthony,

716 S.W.2d 719 (Tex. App.—Corpus Christi 1986, no writ) .......................28

Frank v. Kuhnreich,

546 S.W.2d 844 (Tex. App.—San Antonio 1977, writ ref’d n.r.e.) ....... 28, 32

Garner v. Fidelity Bank, N.A.,

244 S.W.3d 855 (Tex.App.–Dallas 2008, no pet.) ........................................39

Hayes v. E.TS. Enterprises, Inc.,

809 S.W.2d 652 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991) .....41

Henry S. Miller Co. v. Stephens,

587 S.W.2d 491 (Tex.Civ.App.-Dallas 1979, writ ref’d n.r.e.) ....................29

Hudson v. Wakefield,

711 S.W.2d 628 (Tex. 1986) .........................................................................24

Humble Oil & Refining Co. v. Westside Inv. Corp.,

428 S.W.2d 92 (Tex. 1968) ...........................................................................35

In re Hecht,

213 S.W.3d 547 (Tex. Spec. Ct. Rev. 2006) .................................................31

Jarvis v. Peltier,

No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, 2013 WL 1755797

(Tex.App.-Tyler Apr. 24, 2013, n.p.h.) .................................................. 30, 41

Jones v. Kelley,

614 S.W.2d 95 (Tex. 1981) ...........................................................................43

Jones v. Pesak Bros. Const.. Inc.,

416 S.W.3d 618 (Tex. App.—Houston [1st Dist.] 2013, no pet.) .................42

Miller v. Compton,

185 S.W.2d 754 (Tex. Civ. App.—Eastland 1945, no writ) .........................36

Norra v. Harris County,

No. 14-05-01211-CV, 2008 WL 564061,

(Tex. App.—Houston [14th Dist.] 2008, no pet.)...........................................34

Paciwest, Inc. v. Warner Alan Properties, LLC,

266 S.W.3d 559 (Tex. App.—Fort Worth 2008, pet. denied) .......................40

vi

Parson v. Wolfe,

676 S.W.2d 689 (Tex. App.—Amarillo 1984, no writ) ................................36

Perez v. Williams,

01-14-00504-CV, 2015 WL 5076294

(Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.) .............................42

Rasmusson v. LBC PetroUnited, Inc.,

124 S.W.3d 283 (Tex. App.—Houston [14th District] 2003, pet. denied) ....44

Redwine v. Hudman,

104 Tex. 21, 133 S.W. 426 (1911) ................................................................38

Roundville Partners, L.L.C. v. Jones,

118 S.W.3d 73 (Tex. App.—Austin 2003, pet. denied) ................................28

Rus-Ann Dev., Inc. v. ECGC, Inc.,

222 S.W.3d 921 (Tex. App.—Tyler 2007, no pet.) .......................................31

S. Plains Switching, Ltd. v. BNSF Ry.,

255 S.W.3d 690 (Tex.App.-Amarillo 2008, pet. denied) ..............................37

San Antonio Joint Stock Land Bank v. Malcher,

164 S.W.2d 197 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) ...36

Smith v. Dass, Inc.,

283 S.W.3d 537 (Tex. App.—Dallas 2009, no pet.) .....................................28

Stafford v. S. Vanity Magazine, Inc.,

231 S.W.3d 530 (Tex. App.—Dallas 2007, pet. denied) ..............................28

Tello v. Bank One, N.A.,

218 S.W.3d 109 (Tex. App.—Houston [14th Dist.] 2007, no pet.) ...............34

Trevino & Associates Mech., L.P. v. Frost Nat. Bank,

400 S.W.3d 139 (Tex. App.—Dallas 2013, no pet.) .............................. 13, 23

United Coin Meter Co. v. Johnson-Campbell Lumber Co.,

493 S.W.2d 882 (Tex.Civ.App.--Fort Worth 1973, no writ) ........................16

vii

Statutes

Tex. Civ. Prac. & Rem. Code § 38.001(8)...............................................................43

Tex. R. App. P. 38.1 ............................................................................................... xiv

Tex. R. App. P. 39.1 ............................................................................................... xiv

Tex. R. App. P. 43.4 .................................................................................................45

Tex. R. Civ. P. 139 ...................................................................................................45

viii

ABBREVIATIONS

For ease of reference, Appellees employ the following abbreviated

references to the record and the parties herein:

Abbreviation Reference

Woody Appellants/Plaintiffs and Counter-Defendants,

Bob E. Woody and The Ranch, LLC

(collectively, unless otherwise noted)

Cárdenas Plaintiffs’ Trial Counsel,

Hector H. Cárdenas, Jr.

J. Black’s Appellees/Defendants and Counter-Plaintiffs,

J. Black’s, L.P. and J. Black’s, G.P., L.L.C.

(collectively, unless otherwise noted)

11CR Original Clerk’s Record, pgs. 1-959, filed 5/17/12

12CR Supplemental Clerk’s Record “B,” pgs. 1-1361, filed

5/31/12

15CR Clerk’s Record, pgs.1–1751, filed 7/20/ 15.

1 RR Reporter’s Record from Hearing on Woody’s

Application for Temporary Restraining Order, 5/6/09

2 RR Vol. I-III Reporter’s Record from Hearing on Woody’s Motion for

Temporary Injunction, 5/14/09;

Vol. I: Master Index

Vol. II: Transcript

Vol. III: Exhibits

3 RR Reporter’s Record from Hearing on J. Black’s

Third/Final Motion for Summary Judgment, 12/20/10

ix

Abbreviation Reference

4 RR Vol. I-III Reporter’s Record from Hearing on J. Black’s Motion

for Entry of Final Judgment, 1/5/12;

Vol. I: Master Index

Vol. II: Transcript

Vol. III: Exhibits

5 RR Reporter’s Record from Trial on issue of Attorney’s

Fees, 3/25/15

x

STATEMENT OF THE CASE

Nature of Appellant Bob Woody (as Sublessor) and The Ranch (Woody’s

the Case business entity) filed suit against Appellees J. Black’s L.P. (as

Sublessee) and J. Black’s G.P., L.L.C. (its general partner),

regarding various disputes over their commercial sublease

agreement. (11CR 8-15). J. Black’s counter-sued to establish

that it had properly exercised its unilateral option to extend the

term of the Sublease and that Woody breached the Sublease by

falsely accusing J. Black’s of default, rejecting the proper

exercise of J. Black’s option, and demanding that J. Black’s

vacate the premises or pay holdover rent. (11CR 99-93).

Course of The trial court granted J. Black’s First Motion for Partial

Interlocutory Summary Judgment, holding that J. Black’s had properly

Proceedings exercised its option while in good standing under the Sublease,

and Woody breached the Sublease by his improper rejection of

that exercise. (11CR 491-492).

The trial court granted three sanctions orders in J. Black’s

favor based on Woody’s abuse of discovery. (11CR 493-494;

12CR 1068-1069). Woody and The Ranch did not appeal those

orders.

The trial court granted J. Black’s Second Motion for Partial

Summary Judgment, dismissing all of Woody’s and The

Ranch’s claims because J. Black’s was not in default of (had

not breached) the Sublease and was not liable for conversion,

theft, or trespass. (11CR 710-711, 949). Woody and The

Ranch do not appeal this order.

The trial court granted J. Black’s Third Motion for Summary

Judgment, and issued a Final Judgment that affirmed the status

of the pleadings and the conclusive legal determinations about

Woody’s liability and J. Black’s non-liability, and awarded

affirmative relief to J. Black’s on that basis. (11CR 946-948).

The trial court later vacated only the portion of this order

awarding relief to J. Black’s, reserving that issue for

subsequent trial. (12CR 618). Woody and The Ranch did not

appeal these orders.

xi

The trial court denied Woody’s Motion for Summary

Judgment because all of the arguments made therein had been

conclusively decided against them in the previous orders.

(11CR 1080-1081).

The trial court granted J. Black’s Fourth Motion for

Sanctions on the basis that Woody’s Motion for Summary

Judgment was frivolous and filed for purposes of delay and

harassment. (11CR 1080-1081).

The parties signed a Stipulation regarding the reasonable and

necessary amount of attorney’s fees incurred by J. Black’s.

(11CR 1164-1165).

Original Trial Upon a hearing before the Honorable Steven Yelenosky of the

Court 345th District Court of Travis County on J. Black’s Motion for

Disposition Entry of a Final Judgment, the trial court granted a Final

Judgment, which incorporated the prior orders and the parties’

Stipulation and awarded J. Black’s specific performance,

attorney’s fees, and interest based on Woody’s breach of the

Sublease. (12CR 1302-1304).

Woody and The Ranch appealed (1) the orders granting

J. Black’s First Partial Motion for Summary Judgment and

denying Woody’s Motion for Summary Judgment, (2) the

award of specific performance and attorney’s fees in the Final

Judgment, and joined by their counsel Hector Cárdenas, (3) the

fourth award of sanctions.

Disposition by The Amarillo Court of Appeals overruled Woody’s first,

7th Circuit second and third issues on appeal and determined that Woody

Court of breached the sublease, finding Woody’s contentions to the

Appeals contrary “meritless.” The Court of Appeals reversed the trial

court on the issue of J. Black’s failure to prove it was “ready,

willing and able” to perform its obligations under the Sublease,

and on the sanctions levied against Woody and Cardenas.

After determining the issue was not moot, the Court of Appeals

remanded the case for further proceedings consistent with its

opinion. (15CR 881–898; 15 CR 900).

xii

Subsequent After a hearing on the parties’ cross-motions for summary

Trial Court judgment before the Honorable Judge Yelenosky of the 345th

Disposition District Court of Travis County, the Court granted in part

J. Black’s Motion for Final Summary Judgment, excluding

only the amount of attorney’s fees, and denied the Motion for

Summary Judgment of Counter-Defendants Bob E. Woody and

the Ranch. (15CR 1639–1640).

Pursuant to the parties’ March 19, 2015 stipulation as to

reasonable and necessary attorney’s fees (15CR 1645–1646),

on March 31 2015, the Trial Court entered Final Judgment in

this Cause, ordering Woody to specifically perform the entirety

of his obligations under the Sublease Agreement dated

August 21, 2006 as it has been extended and modified, finding

that J. Black’s was entitled to recover its attorney’s fees under

Tex. Civ. Prac. & Rem. Code §38.001, and awarding J. Black’s

$173,438.85 in attorney’s fees (as well as an additional $40,000

in appellate fees conditioned on successfully prevailing on

appeal). (15CR 1653–1654).

On May 6, 2015, Judge Yelenosky denied Woody’s Motion for

New Trial and Alternative Motion to Modify Judgment. (15CR

1707). On May 13, 2015, Woody timely noticed his appeal.

(15CR 1708 – 1709).

xiii

REQUEST FOR ORAL ARGUMENT

Appellees J. Black’s L.P. and J. Black’s G.P., L.L.C. respectfully request

that this Court grant oral argument to aid in the Court’s decisional process.

Appellants have raised multiple issues on appeal that must be construed in light of

the arguments presented and legal rulings made through a series of interlocutory

proceedings, covering five years in the trial court, which ultimately resulted in a

Final Judgment. Oral argument will assist the Court in synthesizing the

substantive merits and procedural status of Appellants’ issues on appeal. Tex. R.

App. P. 38.1(e), 39.1.

xiv

ISSUES PRESENTED

Appellants have asserted three multifaceted issues, many of which complain

about the same decision and/or legal conclusion of the trial court. In response,

J. Black’s simplifies and restates the operative issues on appeal as follows:

ISSUE 1 Summary Judgment Rulings on Liability and Award of Specific

Performance of Sublease:

Did the trial court err in granting summary judgment for J. Black’s

and not for Woody on J. Black’s request for specific performance?

Responsive to Appellants’ Issues 1, 2, and 3.

ISSUE 2 Trial Court’s discretion in excluding and considering of evidence:

Did the trial court abuse its discretion and commit harmful error in

excluding certain of Woody’s summary judgment evidence and failing

to exclude certain of J. Black’s summary judgment evidence?

Responsive to Appellants’ Issue 2.

ISSUE 3 Award of fees, interest and costs:

Did the trial court err in awarding J. Black’s attorney’s fees, interest,

and costs?

Responsive to Appellants’ Issue 1–3.

xv

STATEMENT OF FACTS

I. THE SUBSTANTIVE FACTS SHOW THAT WOODY BREACHED THE SUBLEASE,

UNDER WHICH J. BLACK’S WAS READY, WILLING AND ABLE TO PERFORM.

The key dispute in this appeal –– framed by the prior appellate court

decision issued by the Amarillo Court of Appeals on October 23, 2013. and the

otherwise-undisturbed Orders granting J. Black’s various Motions for partial

Summary Judgment –– is whether the evidence shows J. Black’s was ready,

willing, and able to perform its obligations under the Sublease after Woody had

breached the Sublease and J. Black’s had given timely notice of the intent to

exercise the extension of the terms of the Sublease. As shown by the record, Judge

Yelenosky correctly decided this issue in J. Black’s favor based on the plain

language of the Sublease, the evidence of preparedness and actual performance of

the Sublease by J. Black’s, and the well-established law of this State.

A. The Parties Entered a Sublease Agreement in August 2006 for a

Three-Year Term with Four Extension Options.

On August 21, 2006, Bob Woody (sublessor) and J. Black’s, LP (sublessee)

entered a sublease agreement (“the Sublease”) to allow J. Black’s to sublet the

ground floor of a two-story commercial building for the purpose of operating a

restaurant and bar in the popular “West 6th Street” entertainment district of Austin,

Texas. (11CR 19-52, 621). Woody leased the building (under a Master Lease with

Montwalk Holdings, Ltd.). (11CR 19). He used a portion of the building to

operate a bar and rooftop patio (called “The Ranch”) on the top floor and in part of

1

the ground floor adjacent to the space subleased by J. Black’s. (12CR 33–48).1

The interest in real property at this location contains intrinsic and intangible value

to J. Black’s business. (15CR 1199, at ¶ 2).

The original term of the Sublease was for 36 months (three years), from

September 1, 2006, to August 31, 2009. (11CR 21). Thereafter, J. Black’s was

given a unilateral option to extend the Sublease term for four successive periods of

36 months each (the four “Option Periods”), for a total of 144 additional months

(twelve additional years, through August 31, 2021). (11CR 21-22).

To exercise its extension option, J. Black’s had to be in good standing (i.e.,

not in default) under the Sublease, and had to send notice to Woody of its intent to

exercise the option at least 180 days prior to the expiration of the existing term.

(11CR 21, Sublease § 3.01, Term).

B. J. Black’s Properly Exercised its First Extension Option, Woody

Improperly Rejected J. Black’s Exercise of the Extension Option

and thereby Breached the Sublease.

In compliance with the Sublease, J. Black’s sent written notice to Woody,

stating its intention to exercise the first extension option on February 23, 2009,

1

Although originally named as a Plaintiff in this lawsuit, The Ranch, L.L.C. was not a party to

either the Sublease or the Master Lease. (11CR 19, 33). And although the Sublease named

J. Black’s, L.P. as the Sublessor, the Sublease was executed by Sean Fric, Manager of J. Black’s,

G.P., L.L.C., on behalf of J. Black’s L.P. (12CR 30, 108).

2

which was more than 180-days before the expiration of the original sublease term.

(11CR 21-22, 162, 164). 2

Although Woody acknowledged that J. Black’s properly and timely mailed

its notice of extension to his stated address, Woody unconvincingly contended that

the notice did not extend the Sublease term because he claims to have not actually

“received” it. Based on this contention, Woody rejected J. Black’s timely exercise

of its extension option and, instead, demanded that J. Black’s vacate the premises

and/or pay holdover rent. (11CR 158–159, 171-173). Woody has never repudiated

the demand for holdover rent or notice to vacate.

The trial court granted J. Black’s November 20, 2009 Motion for Partial

Summary Judgment in full on its counterclaim for breach of contract related to the

rejection of the extension. (15CR 81–84, 95, 478, 769–771). The Amarillo Court

of Appeals affirmed the conclusion that the extension notice was properly and

timely sent to Woody in full compliance with the Sublease agreement, and did not

in any way disturb or reverse the trial Court’s December 17, 2009 Order granting

summary judgment on the counterclaim for breach of contract. (15CR 887–889).

2

The original term was set to expire on September 1, 2009, meaning that J. Black’s 180-day

advance deadline to exercise its option was on March 4, 2009. (11CR 184, ¶ 13). J. Black’s sent

the required notice more than a week ahead of the deadline.

3

C. Woody Improperly Accused J. Black’s of default and disregarded

the default terms of the Sublease.

In furtherance of his efforts to eject J. Black’s from the subleased premises,

nine days after J. Black’s sent its extension notice, Woody for the first time

claimed that J. Black’s was in default under the Sublease. (11CR 108, 144–145).

Specifically, Woody manufactured claims that J. Black’s had “defaulted” by

providing “substandard food service” to The Ranch’s customers and by installing

an “offensive neon sign” outside the premises. (11CR 144). Woody later claimed

that J. Black’s was in default based on its installation of three gas heaters. (11CR

146-147). None of these actions were “defaults” contemplated by the Sublease’s

specific provisions and Woody’s “notices” were therefore also outside of the

parties’ agreement.

The trial court determined that the Sublease contained no requirements

regarding the type, quality, or quantity of food service by J. Black’s (other than to

state that “the only food sold or provided [at The Ranch] will be provided by

[J. Black’s]”), and J. Black’s had worked diligently to provide such service and

that J. Black’s fully complied with the Sublease when it installed a basic marquee

sign (11CR 28-29, 502–503, 511-515, 613-614, 616-623). The trial court also

determined that J. Black’s installation of the heaters did not violate the Sublease

but, even if it did, J. Black’s promptly cured the issue by removing the heaters and

4

paying Woody for any increased gas expenditure upon notice. (11CR 500-502,

505-510, 614-615; 15CR 636).

All of these facts were the subject of J. Black’s Second Motion for Partial

Summary Judgment, which was decided in J. Black’s favor, concluding as a matter

of law that J. Black’s was not in default of the Sublease, and dismissing all of

Woody’s claims on that basis. (11CR 497, 517, 949; 15CR 636). Woody did not

appeal from this Order. Hence, the record is conclusive that J. Black’s was not in

default (i.e., was in good standing) when it exercised its extension option by

sending written notice to Woody, and that it was Woody who in fact was in breach

of the Sublease.

D. J. Black’s was Ready, Willing, and Able to perform each and

every one of its Obligations under the Lease.

Although Woody makes this the focus of his argument, on appeal there is no

serious dispute that J. Black’s was not at all times relevant to this dispute ready,

willing and able to perform its obligations under the lease, and did in fact perform

its obligations under the Lease. No evidence controverts J. Black’s clear testimony

–– from Mr. Sean Fric, a manager of J. Black’s with full knowledge of J. Black’s

ability to meet the entirety of its Sublease obligations at all relevant times –– of

J. Black’s readiness, willingness and ability to perform, and Woody’s only

challenge to such evidence comes through spurious legal objections to the affidavit

of Mr. Fric that were properly denied by the trial court.

5

II. THE PROCEDURAL HISTORY DEMONSTRATES THAT J. BLACK’S WAS

PROPERLY AWARDED SPECIFIC PERFORMANCE AND ITS ATTORNEY’S

FEES.

On appeal, Woody seeks reversal of the relief awarded to J. Black’s (specific

performance and attorney’s fees). The record fully supports these awards,

however, and they should be affirmed.

A. The Parties Counter-Sued against Each Other: Woody Sought to

Remove J. Black’s as the Tenant, and J. Black’s Sought to

Remain in the Subleased Space.

Woody filed his Original Petition in May 2009 alleging causes of action

against J. Black’s for conversion, breach of contract (based upon alleged

contractual provisions that did not even exist), trespass and theft, and seeking

injunctive relief, damages, and attorney’s fees. (15CR 6–13; see also 12CR 921-

929). Woody complained about J. Black’s refusal to surrender the subleased

premises. (15CR 8). His goal was to terminate the Sublease and eject J. Black’s.

J. Black’s timely answered and counterclaimed, asserting claims for breach

of contract and fraud. (11CR 88-93; see also 12CR 495-49, 1138-1143). In its

answer and counterclaim, J. Black’s explained why none of its actions constituted

a default and that it had properly extended the Sublease term. (11CR 89-91).

J. Black’s further pled that, by refusing to acknowledge the extension of the

Sublease term and by improperly accusing J. Black’s of defaults under terms that

did not exist, and seeking a judicial determination that the Sublease was

6

terminated, Woody had breached the Sublease. (11CR 91). On this basis,

J. Black’s sought specific performance, damages, and attorney’s fees. (11CR 91-

92). By its pleadings, J. Black’s sought to maintain its successful business in the

subleased premises and compel Woody’s performance of the entirety of his

obligations under the Lease.

Following an evidentiary hearing, Woody and The Ranch’s request for a

temporary injunction was denied. (11CR 95; 1 RR Vol. 2, p. 99).

B. J. Black’s First Motion for Partial Summary Judgment was

Granted, Holding that J. Black’s Properly Exercised its Extension

Option and that Woody Breached the Sublease.

J. Black’s filed its first Motion for Partial Summary Judgment seeking an

affirmative finding on its counterclaim that Woody was liable for breaching the

Sublease. The crux of J. Black’s argument was that — because it had fully

complied with the Sublease’s extension notice provisions while in good standing

— Woody’s refusal to acknowledge the extension and his demand for holdover

rent constituted a material breach. (15CR 92-197). Woody filed a response, and

both parties filed additional replies. (15CR 163–477). 3

3

Woody filed a Cross-Motion for Partial Summary Judgment, contained within the same

document as his Response. (11CR 174). J. Black’s objected to the Cross-Motion because it had

been filed just seven days prior to the hearing. (11CR 475). The trial court correctly refused to

hear the Cross-Motion, and Appellants have never asserted any error on that basis. Two years

later, Woody filed another Motion for Summary Judgment (11 CR 624-645), which was properly

denied. (12CR 948).

7

A hearing was conducted, and the district court granted J. Black’s Motion

“in full” on December 17, 2009. (15CR 478). The impact of this order was to

determine, as a matter of law, that because J. Black’s had properly exercised its

extension option while in good standing, Woody was liable for breach of contract

based on his refusal to acknowledge this extension, while reserving all relief to be

awarded on that breach for a later date. (15CR 478).

C. Three Sanctions Orders were Granted in J. Black’s Favor

Thereafter, Woody engaged in discovery abuse, requiring J. Black’s to file

multiple motions for relief between June-August 2010. First, Woody refused to

appear for his properly-noticed deposition. (12CR 21-26). The district court

granted J. Black’s Motion to Compel the deposition, and awarded J. Black’s

$1,500.00 as sanctions. (11CR 493). Woody failed to appear as ordered by the

court, so J. Black’s filed a Motion for Contempt and for Sanctions. (12CR 55-57).

The district court also granted that motion, awarding J. Black’s an additional

$3,000.00 as sanctions against Woody. (12CR 494). Finally, the court awarded

J. Black’s an additional $1,000.00 in sanctions based on Woody’s improper motion

to compel discovery from J. Black’s on matters that had already been dismissed by

the prior summary-judgment ruling. (12CR 230-237, 1068-1069).

8

D. J. Black’s Second Motion for Partial Summary Judgment was

Granted, Dismissing all of Woody’s Claims.

J. Black’s filed its Second Motion for Partial Summary Judgment in

August 2010. (15CR 481-631). That motion requested, on both traditional and no-

evidence grounds, that all of Woody’s claims be dismissed, including Woody’s

claim that J. Black’s had breached the Sublease. (15CR 501; see also 11CR 699-

701). Woody failed to respond to J. Black’s Second Motion for Summary

Judgment. (15CR 636; see also 11CR 700, 949).

Following a hearing, the Second Motion for Summary Judgment was

originally granted in October 2010, but the order was then twice amended. (15CR

636; 11CR 949). Ultimately, the order held that Woody and The Ranch shall “take

nothing by their claims that [J. Black’s] defaulted under the Sublease agreement”

and “for conversion, trespass to personal property, and theft.” (11CR 949). The

order also expressly reserved J. Black’s ability to seek affirmative relief on its

counterclaims at a later date. (11CR 949; 4 RR Vol. II, p. 13). 4 The Plaintiffs did

not appeal from this October 13, 2010 Order.

E. J. Black’s Third Motion for Summary Judgment was Granted,

Resulting in a Final Judgment, which was then Partially Vacated.

Having successfully obtained the first summary judgment holding that

J. Black’s had properly extended the Sublease term and that Woody was in breach

4

Woody and The Ranch attempted an interlocutory appeal of this order. The Third Court of

Appeals dismissed that appeal for want of jurisdiction. See Woody v. J. Black’s LP, No. 03-11-

00024-CV (Tex. App.—Austin June 28, 2011, no pet.) (unpublished mem. op.) (12 CR 1073).

9

of the Sublease and a second summary judgment dismissing all of Woody’s and

The Ranch’s claims, J. Black’s then sought a third, final summary judgment

awarding it specific performance and attorney’s fees. (15CR 637-647). This

Motion was granted, resulting in entry of a “final” judgment in January 2011.

(15CR 769–771). The judgment held, as a matter of law, that (1) J. Black’s

counterclaims, as set forth in its Original Answer and Counterclaim (including the

ability to obtain affirmative relief thereon) remained pending before the court; 5

(2) Woody and The Ranch shall take nothing by their claims; (3) Woody breached

the Sublease; (4) J. Black’s did not breach the Sublease; (5) J. Black’s properly

exercised its extension option, resulting in the Sublease continuing in full force and

effect; and (6) J. Black’s was entitled to specific performance, attorney’s fees, and

interest as sought in its third and final motion for summary judgment. (15CR 769–

771).

Woody filed a Motion to Modify/Motion for New Trial (15CR 772-849),

which was “granted only with respect to Defendant’s Motion for Final Summary

Judgment” in April 2011. (15CR 850). The basis of the court’s ruling was that the

attorney’s fee claim presented fact issues not appropriate for summary disposition.

(12 CR 1145; 4 RR Vol. II, p. 17). Hence, the order retained all portions of the

5

The district court determined that Woody had tried J. Black’s counterclaims by consent and that

J. Black’s original counterclaim remained in force and effect, and would be accepted as a trial

amendment. Additionally, the court granted J. Black’s permission to file an amended

counterclaim as a trial amendment, which J. Black’s did. (11CR 947-948; 12CR 1138-1143).

Appellees have not asserted any error relating to these procedural facts on appeal.

10

January 2011 judgment except for the affirmative relief (specific performance,

attorney’s fees, and interest) that had been awarded pursuant to J. Black’s final

motion. (See 4 RR Vol. II, p. 15-16, 18-19). Thus, as of April 2011, the final issue

pending for decision by the court was the relief to be awarded to J. Black’s based

on Woody’s breach.

F. Woody’s Motion for Summary Judgment was Denied—and a

Fourth Sanctions Order was Granted in J. Black’s Favor—

because the Court had Already Conclusively Determined that

J. Black’s Properly Exercised its Extension Option and that

Woody was in Breach of the Sublease.

Despite the fact that the district court had already conclusively ruled that

(1) J. Black’s properly exercised its extension option and was not in breach, and

that (2) Woody breached the Sublease by refusing to acknowledge J. Black’s

extension and demanding holdover rent, Woody moved for summary judgment in

October 2011 asking the court to again decide these same issues, but in the

opposite manner. (12CR 625-645). J. Black’s responded to this motion and

requested sanctions against Woody and Cárdenas based on their filing of a

harassing and frivolous motion, which asserted legal arguments that had already

been rejected at least three times. (12CR 930-948).

The district court denied Woody’s Motion for Summary Judgment and

granted J. Black’s Fourth Motion for Sanctions on November 21, 2011, awarding

11

an additional $6,958.00 as sanctions against Woody and Cárdenas. (12CR 1080-

1081).

G. J. Black’s Motion for Entry of a Final Judgment was Granted,

and a Final Judgment was Entered in J. Black’s Favor.

J. Black’s filed a Motion for Entry of Final Judgment on December 21,

2011. (12CR 1144-1163). This motion incorporated all of the prior, interlocutory

rulings (which determined as a matter of law that J. Black’s had properly exercised

its option to extend the Sublease, that J. Black’s had not breached the Sublease and

was not liable for any other claim asserted by Woody, and that Woody had

breached the Sublease), and the parties’ stipulation on J. Black’s attorney’s fees

(which confirmed the reasonable and necessary amount of fees to be awarded to

J. Black’s). (12CR 1144-1163). Based on these prior orders and the stipulation,

there were no remaining fact issues, and the only step remaining was for the court

to exercise its discretion to award J. Black’s the legal equitable relief to which it

had shown itself entitled (specific performance, attorney’s fees, and interest).

(12CR 1146; 4 RR Vol. II, p. 21, 35-36).

The district court granted J. Black’s motion and entered a Final Judgment on

January 13, 2012. (15CR 868–870; 4 RR Vol. II, p. 41-45). The Final Judgment

specifically incorporated the prior summary-judgment and sanctions orders and

awarded J. Black’s specific performance, attorney’s fees in the exact amounts

12

stipulated by the parties, and post-judgment interest. (15CR 868–870). 6 Woody,

The Ranch, and Cardenas appealed. (12CR 1350).

H. Appeal and Remand by Amarillo Court of Appeals

In its decision issued October 18, 2013, the Amarillo Court of Appeals

overruled Woody’s first three points of error and thereby affirmed this Court’s

finding that the Sublease was validly extended and that Woody was in breach

thereunder. 7 (15CR 887, 889). Although Woody’s procedural (and sanctioned)

gamesmanship had lasted throughout nearly the entirety of the First Extension

Period, the Court of Appeals also raised and disposed of the argument that the

issue of whether J. Black’s was entitled to attorney’s fees might be moot because

“before briefing was completed on appeal, the first option period had expired.”

(15CR 889–890, at note 3). The Court of Appeals specifically held, sua sponte,

6

Woody filed a Motion to Modify/Motion for New Trial (12 CR 1216-1238), which was denied

following a response by J. Black’s (12CR 1329-1343).

7

Specifically, Woody sought by its Issues number 1-3 that this Court’s grant of J. Black’s

original Motion for Partial Summary Judgment (and the denial of Woody’s First Motion for

Summary Judgment), were improper. J. Black’s first Motion for Partial Summary Judgment was

granted on the explicit grounds that Woody had breached the Sublease. The Court of Appeals,

by overruling the Appellants issues number 1-3 and thereafter addressing the issue of whether

Specific Performance was appropriately granted as a remedy for Woody’s breach, therefore

upheld the Order granting the first Motion for Partial Summary Judgment and the grounds upon

which this Court granted the same. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank,

400 S.W.3d 139, 144 (Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial

summary judgment is granted, the issues it decides cannot be litigated further, unless the trial

court sets the partial summary judgment aside or the summary judgment is reversed on appeal”);

City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427 (Tex. Civ. App. – Houston [1st Dist.]

1967), writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an

interlocutory summary judgment has been merged, presents an opportunity for an appeal from

the summary judgment. If the appeal results in a reversal on points not involved in the summary

judgment, that portion of the case decided on summary judgment will not be remanded for a new

trial”).

13

that “[t]he issue whether the trial court’s decree of specific performance was

correct might thus be moot…But, because J. Black’s award of attorney’s fees is

contested on appeal, and depends on the viability of the trial court’s decree of

specific performance, the issue is not moot.” (15 CR 889–890, at note 3)

(emphasis added), citing Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642–43

(Tex.2005) (appellee’s remaining issue in recovering attorney’s fees precluded

application of mootness doctrine).

On April 29, 2014, the Amarillo Court of Appeals then issued its mandate to

the trial court stating “it is ordered, adjudged and decreed that the judgment of the

trial court regarding J. Black’s timely notice of its intention to carry the sublease

into the first option period is affirmed. Otherwise the judgment is reversed and

remanded for further proceedings consistent with the opinion.” (15CR 900).

I. Grant of J. Black’s Final Summary Judgment and Entry of Final

Judgment

The parties filed dueling motions for summary judgment heard before the

Court on March 5, 2015. (15CR 911–1271). In addition, the parties filed a variety

of objections to the summary judgment evidence that was heard on that same day.

(15 CR 1272–1291; 1570–1602; 1610–1616). On March 11, 2015, the Court

issued its Order on Motions for Summary Judgment, Objections and Attendant

Motions, thereby sustaining objections to the affidavit of Sean Fric to the extent it

offers a legal opinion (and otherwise overruling such objections) and the affidavit

14

regarding attorney’s fees of the undersigned counsel, granting in part J. Black’s

Motion for Summary Judgment (excluding only the amount of attorney’s fees) and

denying Woody’s Motion for Summary Judgment. (15CR 1639-1670). On

March 25, 2015, the parties appeared for trial on the issue of attorney’s fees, at

which time the Court accepted into evidence the stipulation of the parties as to the

amount of attorney’s fees accrued by J. Black’s. (RR. 3.25.15 4–26); 15CR 1644–

1646).

On March 31, 2015, the Court again entered Final Judgment in this suit.

(15CR 1652–1654). In the Final Judgment, the Court rendered judgment in favor

of J. Black’s and decreed that “Woody shall specifically perform the entirety of his

obligations under that certain Sublease Agreement dated August 21, 2006 as it has

been extended and modified and that J. Black’s was entitled to recovery of

attorney’s fees under Tex. Civ. Prac. & Rem. Code §38.001 in the amounts set

forth therein. (15CR 1652–1654). The Court then denied Woody’s Motion for

New Trial and Alternative Motion to Modify Judgment (15CR1658–1667; 1707).

On May 13, 2015, Woody noticed this appeal. (15 CR 1708–1710).

SUMMARY OF THE ARGUMENT

Throughout the history of this long and tortured case, J. Black’s has

prevailed on four separate summary-judgment motions (and successfully defeated

two others filed by Woody), in front of at least four separate district judges. In

15

ruling on those various summary judgment motions, both the trial courts and the

Amarillo Court of Appeals determined that J. Black’s had prevailed by proving

liability for its counterclaim that Plaintiff Bob Woody had breached the parties’

sublease agreement, and the Courts have disposed of all of Plaintiffs’ claims for

breach.

After upholding the trial court’s determination that J. Black’s had given

timely notice of the intent to exercise the extension of the terms of the Sublease,

the Amarillo Court of Appeals remanded to the Trial Court for the presentment of

evidence related to whether J. Black’s was ready, willing and able to perform its

obligations under the Sublease in order to be eligible for the remedy of specific

performance and be entitled to the recovery of attorneys’ fees. Although the

Court of Appeals noted at the time that it rendered its decision the “1st Extension”

period of the sublease had expired, it nevertheless specifically refused to hold the

claims made by J. Black’s had thereby been rendered moot, and instead instructed

the District Court to consider proof of whether the decree of specific performance

would be proper. 8 The controversy is no less alive and true now that Woody’s

8

Woody appears to have retreated from his “mootness” argument in this appeal, however,

J. Black’s would note that the Amarillo Court of Appeals specifically stated: “The nub of the

question concerns extending the sublease into the first option period, that is from August 31,

2009, through August 31, 2012. But before briefing was completed on appeal, the first option

period had expired. The issue whether the trial court's decree of specific performance was correct

might thus be moot. See United Coin Meter Co. v. Johnson-Campbell Lumber Co., 493 S.W.2d

882, 890-91 (Tex.Civ.App.--Fort Worth 1973, no writ) (appellate challenge of trial court's

refusal to order specific performance of lease dismissed as moot because secondary term of lease

16

procedural maneuvering has brought the parties through the Second and into the

Third Extension period, because the continuing viability of the Sublease depend

on the parties’ performance of all obligations throughout the original and all

extension terms of the Lease.

Mr. Woody has never repudiated or retracted his rejection of the 1st

Extension Option or his demand for holdover rent. To the contrary, and through

the first appeal, Woody has consistently asserted that the first extension was non-

compliant and ineffective, that J. Black’s ability to continue to operate in the

leased premises had expired, and that J. Black’s was subject to the holdover rent

provisions of the Sublease. While Woody would have this Court believe that his

failure to file a forcible entry and detainer action to exclude J. Black’s from the

property is significant and somehow insulates him from his breach, Woody

maintained throughout the pendency of the district court case and through the first

appeal that the Sublease had not been extended, that J. Black’s had no right to

occupy the property, and that he should be paid contractual hold over rent as a

consequence. He also ignored the default provisions of the Sublease and

expired while case was on appeal). But, because J. Black’s award of attorney's fees is

contested on appeal, and depends on the viability of the trial court's decree of specific

performance, the issue is not moot. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642-43

(Tex. 2005) (appellee's remaining issue in recovering attorney's precluded application of

mootness doctrine)”) (emphasis added). (15CR 890). J. Black’s further noted below that had the

Amarillo Court of Appeals believed that J. Black’s claims were mooted by operation of the

Seventh Circuit Court’s decision, it could have reversed and rendered judgment on such claims,

rather than reversing and remanding to the district court for a determination of whether J. Black’s

was ready, willing and able to perform its obligations under the Sublease. (15CR 1010).

17

continuously asserted that J. Black’s was in default based on non-existent

breaches. Woody never repudiated such claims and required the Court of Appeals

to tell him that his demand to vacate or pay holdover rent was improper and in

violation of the Sublease. Without the grant of specific performance, and

especially in light of Woody’s demonstrated intent to improperly terminate the

Sublease for non-existent and non-contractual defaults, J. Black’s needed a

judicial direction entitling it to enforcement of the Sublease going forward.

On remand, the district court determined that J. Black’s had shown with

competent, uncontroverted summary judgment evidence that it was ready, willing

and able to perform its obligations under the Sublease, and that J. Black’s had no

adequate remedy at law, so as to be eligible for specific performance of that

agreement and that as a consequence, J. Black’s was therefore entitled to

attorneys’ fees in connection with its affirmative claim of breach under chapter 38

of the Texas Civil Practice and Remedies Code. Both the trial Court and the

Amarillo Court of Appeals thus determined and affirmed that Woody breached the

Sublease by, among other things, refusing to acknowledge that the Sublease

continues in full force and effect and has been properly extended by J. Black’s and

by, asserting unsupportable and contractually non-existent defaults and

demanding holdover rent.

18

On December 12, 2014, Woody filed its latest summary judgment motion

(the “Woody Motion for Summary Judgment”), seeking summary judgment that

specific performance and the granting of attorneys’ fees were not available. (15CR

911–995). That Fifth Summary Judgment Motion was merely a re-hash of the

same legal arguments that both the Trial and Appellate Courts already found

meritless –– first when this Court granted J. Black’s summary judgment motions

and overruled most of the arguments raised in the Counter-Defendants’ prior

motion for new trial; and subsequently when the Amarillo Court of Appeals

determined that J. Black’s was entitled to specific performance (and therefore its

consequent claim for attorney’s fees was not moot), if this Court found that

J. Black’s was ready, willing and able to perform the sublease. On January 27,

2015, J. Black’s filed its own Motion for Final Summary Judgment. (15CR 996–

1261). On March 11, 2015, the Court denied Woody’s Motion for Summary

Judgment, and granted J. Black’s Motion for Summary in part, excepting as to the

issue of attorney’s fees. (15CR1639–1640).

At trial on this case on the issue of attorney’s fees, held March 25, 2015,

Woody acknowledged that the only issues before the Court on remand were

“[J. Black’s] requests for relief for specific performance and attorney’s fees against

us.” (5 RR 13). Because the uncontroverted evidence before the Court shows that

J. Black’s was ready, willing and able to perform, and did in fact perform, its

19

obligations under the Sublease at all times, the district court complied with

instructions from the Court of Appeals and awarded J. Black’s the Specific

Performance of the Sublease and its extensions to which it is entitled, a decision

which this Court should affirm.

20

ARGUMENT

I. WOODY BREACHED THE SUBLEASE

A. Woody’s Breach was established by the District Court

On November 20, 2009, J. Black’s filed its first Motion for Partial Summary

Judgment (the “First Motion for Summary Judgment”), by which it sought “partial

summary judgment on its breach of contract counterclaim, which alleges in part

that Woody has breached the Sublease by refusing to acknowledge the extension of

the Sublease and by demanding holdover rent,” and prayed the court grant it relief

on the basis of the same request. (15CR 87, 95). On December 17, 2009, the

Court granted the First Motion for Partial Summary Judgment “in full.” (15CR

478). Subsequently the Court granted J. Black’s second Motion for Partial

Summary Judgment filed August 27, 2010 (the “Second Motion for Summary

Judgment”), 9 and on the basis thereof and upon the basis of J. Black’s third Motion

for Final Summary Judgment filed November 23, 2010 (the “Third Motion for

Summary Judgment”), the Court entered its January 25, 2011 “Amended

9

The Second Motion for Summary Judgment prayed that the Court grant J. Black’s Motion for

Summary Judgment “(a) J. Black’s has not breached the Sublease as alleged by Plaintiffs,

(b) Woody has breached the Sublease by asserting groundless defaults, and (c) Plaintiffs'

claims for conversion, trespass to personal property, and theft fail as a matter of law.” (15 CR

482, 501). The subsequent “Corrected Order Granting Defendants’ Second Motion for Partial

Summary Judgment” and final “Amended Interlocutory Order Granting Defendants’ Second

Motion for Partial Summary Judgment” granted the Second Motion for Partial Summary

Judgment without reservation on the issue of breach. (15CR 636). Although Woody emphasizes

the fact that one version of the Order crossed through the specific reference to a finding of

breach, such a finding was not necessary to the granting in full of the Second Motion for

Summary Judgment because Woody’s breach of the Sublease had already been established by

the Court’s grant of the First Summary Judgment.

21

Interlocutory Order Granting Defendants’ Second Motion for Partial Summary

Judgment” and “Final Judgment on Defendants’ Motion for Final Summary

Judgment and Granting Defendants’ Request for Leave to File Trial Amendment.”

(15CR 636, 768, 769–771). The January 25, 2011 Judgment incorporated the prior

orders on the Defendants’ motion for summary judgment, granted the Third

Motion for Summary Judgment in all respects, and rendered final judgment.

(15CR 769-771).

After the January 25, 2011 Judgment was entered, the Court later granted a

new trial “only with respect to Defendants' Motion for Final Summary Judgment”

on April 27, 2011, and after a significant delay engendered by Woody’s refusal to

respond to requests to agree to a trial date, a new “Final Judgment” was entered on

January 13, 2013 (15 CR 850, 868-870). The new Final Judgment also

incorporated the prior Summary Judgment Orders and decreed that “Plaintiff Bob

E. Woody breached the Sublease between the parties,” that “Defendants properly

exercised their right to extend the Sublease for an additional term and the Sublease

continues in full force and effect” and that “specific performance of the contract is

equitable and necessary to afford Defendants sufficient relief; the Sublease

continues in full force and effect” and that “Defendants are entitled to recover

attorney fees under Tex. Civ. Prac. & Rem. Code 38.001.”

22

B. Woody’s Breach affirmed by the Amarillo Court of Appeals

On Appeal of the original Final Judgment, the Amarillo Court of Appeals

overruled Woody’s first three issues, in which Woody’s “contend[ed] the trial

court erred in adjudging Woody breached the sublease by refusing to acknowledge

its extension by J. Black’s,” and in fact found such contentions “meritless.” (15CR

885, 887, 889).

Although the Court of Appeals sustained Woody’s subissue number 4(c) and

remanded for the trial court’s consideration of evidence as to whether J. Black’s

was “ready, willing, and able” to perform its obligations under the Sublease, the

court of appeals did not otherwise disturb the Court’s Final Judgment or the prior

Summary Judgment Orders determining Woody had breached the Sublease.

The issue of Woody’s breach was established by the Court’s Summary

Judgment rulings, 10 which were incorporated and merged into the Final Judgment,

and cannot be litigated further absent a reversal of summary judgment on that

issue. See Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139

(Tex. App.—Dallas 2013, no pet.) (“After an interlocutory, partial summary

judgment is granted, the issues it decides cannot be litigated further, unless the trial

court sets the partial summary judgment aside or the summary judgment is

reversed on appeal”). The Final Judgment of the District Court was reversed by

10

Woody has admitted this point multiple times. See e.g, Appellant’s Brief at p. 12–13.

(“…J. Black’s did obtain a finding from the trial court that Woody breached the sublease by

“refusing to acknowledge” J. Black’s exercise of its first extension of the sublease…”).

23

the Amarillo Court of Appeals solely on the issue of whether J. Black’s was ready,

able and willing to perform. Therefore the Court’s prior ruling that Woody

breached the Sublease remains undisturbed, and Woody should not now be

permitted to challenge the determination of his breach for failure to acknowledge

the extension of the Sublease Agreement on appeal. See City of Houston v. Socony

Mobil Oil Co., 421 S.W.2d 427, 430 (Tex. Civ. App. – Houston [1st Dist.] 1967),

writ refused NRE (Apr. 10, 1968) (“An appeal from a final judgment, in which an

interlocutory summary judgment has been merged, presents an opportunity for an

appeal from the summary judgment. If the appeal results in a reversal on points not

involved in the summary judgment, that portion of the case decided on summary

judgment will not be remanded for a new trial”).

C. Woody’s new defense that he did not actually “breach” the

Sublease, but merely “repudiated” his obligations thereunder, is

untimely and unsupported by legal authority or the facts of this

case

Despite acknowledging that the Court had previously found (and the

Amarillo Court of Appeals affirmed) that Woody had breached the Sublease,

Woody argues the issue should be re-litigated because “the effect of the remand is

to re-open the case in its entirety on all factual issues,” citing Hudson v. Wakefield,

711 S.W.2d 628, 630 (Tex. 1986) and First State Bank of Bishop v. Grebe, 162

S.W.2d 165 (Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.). As shown

24

above, the Amarillo Court of Appeals did not reverse on the issue of Woody’s

breach and that issue was not reopened for the District Court.

Even were the issue of breach not already determined by the previous ruling

of the trial court and Amarillo Court of Appeals, however, the determination that

Woody breached the Sublease is still correct because (a) the issue of breach has

been decided as a matter of law and the effect of the district court’s granting each

of the prior Motions for Summary Judgment necessarily precludes the existence of

a material issue of fact; and (b) the Court did not limit its March 25, 2015 Final

Judgment solely to those determinations of breach made in the prior Summary

Judgment Orders. (5 RR 8). As such, even if this Court of Appeals does not deem

the issue of Woody’s breach to have been previously decided and affirmed by the

Courts before, the entirety of the record and evidence –– including the notices of

rejection of the 1st Option Extension, the notices of default for non-existent and

extra-contractual breach and demand for Holdover Rent made by Woody in

October 2009 –– before the trial Court was enough to sustain its finding of breach.

By rejecting the Sublease’s extension made pursuant to the terms thereunder,

Woody breached the agreement of the parties. Without citation to any relevant

authority or factual record, however, Woody argues that his actions in fact

constituted an “anticipatory repudiation,” and not an “actual” breach of the

25

Sublease. 11 Woody further argues that since J. Black’s determined to ignore the

repudiation and itself continued to perform its obligations under the Sublease, there

was no breach for which specific performance could be ordered. Woody’s

arguments in this regard are substantively without merit.

In addition to refusing to honor the extension after the necessary time of

performance, Woody also sent demands and notices of default based upon non-

existent and extra-contractual obligations (e.g. bad food quality). These fabricated,

and contractually non-existent, defaults were not simply a contemporaneous

repudiation of the effectiveness of the contract, but were also assertions of

contractual breaches that had no basis in fact or in the contract.

The parties agreed in the Sublease that certain specific activities (or the

failure to perform certain actions – e.g. timely payment of rent) would constitute

defaults. (15 CR 23–24). With respect to the variety of his claims of default, 12

however, Woody did not assert J. Black’s committed any act that the parties agreed

fit within the Sublease’s frame work for determining a “default,” but rather made

up provisions that were asserted as contractual defaults that are nowhere found in

the Sublease. In doing so, Woody further breached the terms of the Sublease by

asserting claims that were not within the four corners of the instrument and outside

the parties’ agreement.

11

Woody’s “Anticipatory Repudiation” argument is further refuted in Section II.B.1, below.

12

See 11CR 108, 144–145 158–159, 171-173; 15CR 8–11, 163–164.

26

Thus, by rejecting the continuing effectiveness of the Sublease before,

during and after the time for performance of Woody’s obligations, by demanding

holdover rent, and by asserting that certain factual situations constituted defaults

under the agreement (even though the Sublease contained no such terms) the

district court found that Woody’s acts properly constituted violations of the

Sublease found by the district court.

II. THE TRIAL COURT CORRECTLY ENTERED FINAL JUDGMENT AWARDING

SPECIFIC PERFORMANCE AND ATTORNEY’S FEES TO J. BLACK’S ON THE

BASIS OF WOODY’S BREACH.

As shown above, on appeal, the Amarillo Court of Appeals overruled

Woody’s first three points of error and thereby affirmed this Court’s finding that

Sublease was validly extended and that Woody breached the lease. Then after

having determined that the question of Specific Performance was not moot, the

Court of Appeals reversed and remanded this Court’s decision on the sole issue of

whether J. Black’s had offered proof that it was ready, willing, and able to

perform the Sublease and extension, as would be required for specific

performance. On March 31, 2015, the district court, accounting for the Amarillo

Court of Appeals’ decision, the prior Summary Judgment Orders, and the

evidence before it, correctly determined that specific performance was an

available and equitable remedy and awarded such performance of the Sublease to

J. Black’s.

27

A. J. Black’s is entitled to specific performance of the Sublease and

its extensions because it was ready, willing and able to perform its

own obligations under the Sublease at all relevant times

Specific performance is an equitable remedy that may be awarded upon a

showing of breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d

530, 535 (Tex. App.—Dallas 2007, pet. denied). The decision to award J. Black’s

specific performance of the Sublease based on Woody’s breach of contract was an

equitable matter wholly within the trial court’s discretion. See Roundville

Partners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex. App.—Austin 2003, pet.

denied) (whether to award specific performance is left to trial court’s discretion). 13

A trial court’s award of specific performance is reviewed for an abuse of

discretion, giving deference to the trial court’s decision. Smith v. Dass, Inc.,

283 S.W.3d 537, 542 (Tex. App.—Dallas 2009, no pet.). As an equitable remedy,

this Court should not disturb the trial court’s ruling on specific performance unless

it is arbitrary, unreasonable, and unsupported by guiding rules and principles.

Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 836

(Tex. App.—Dallas 2008, pet. denied); Fitzsimmons v. Anthony,

716 S.W.2d 719, 720 (Tex. App.—Corpus Christi 1986, no writ). Woody has

13

See also Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007,

pet. denied) (equitable remedy of specific performance may be awarded upon showing of breach

of contract); Frank v. Kuhnreich, 546 S.W.2d 844, 848 (Tex. App.—San Antonio 1977, writ

ref’d n.r.e.) (affirming summary judgment awarding plaintiff specific performance of lease upon

proof that default claimed by sublessor had been cured by sublessee within time allowed by

lease).

28

failed to establish an abuse of the trial court’s discretion in awarding specific

performance.

1. J. Black’s was Ready, Willing and Able to perform its

Obligations under the Sublease

As noted by the Amarillo Court of Appeals, “to obtain specific

performance, a party must, among other things, plead and prove it was ready,

willing and able to timely perform its obligations under the contract.” See

DiGiuseppe v. Lawler, 269 S.W.3d 588, 593 (Tex.2008). To do so, “a plaintiff

must show it could have performed its contractual obligations.” Id. (citing

Corzelius v. Oliver, 148 Tex. 76, 220 S.W.2d 632, 635 (1949) (“[T]o be entitled

to specific performance, the plaintiff must show that it has substantially performed

its part of the contract, and that it is able to continue performing its part of the

agreement. The plaintiff’s burden of proving readiness, willingness and ability is a

continuing one that extends to all times relevant to the contract and thereafter”);

see also Henry S. Miller Co. v. Stephens, 587 S.W.2d 491, 492 (Tex.Civ.App.-

Dallas 1979, writ ref’d n.r.e.) (noting a party seeking specific performance must at

all times remain ready, willing and able to perform its contractual responsibilities

according to the terms of the contract).

The Amarillo Court of Appeals also took note of a recent case decided by

the Tyler Court of Appeals, which determined it was “enough on a seller’s breach

for a purchaser to merely plead readiness, willingness and ability to perform,”

29

when the movant for summary judgment in that case “stated his readiness,

willingness and ability to perform in his summary judgment affidavit.” Jarvis v.

Peltier, No. 12–12–00180–CV, 2013 Tex.App. Lexis 5017, at *20, 2013 WL

1755797 (Tex.App.-Tyler Apr. 24, 2013, n.p.h.) (citing Burford v. Pounders, 145

Tex. 460, 199 S.W.2d 141, 145 (1947). J. Black’s proof far exceeded that

required by the various Courts of Appeal to address this issue.

The Affidavit of Sean Fric, a manager of J. Black’s GP, LLC, the general

partner of J. Black’s, L.P., attests that J. Black’s benefits immeasurably from its

downtown location and the brand associations related thereto. (15CR 1199).

While the ability, willingness and readiness of J. Black’s to perform under the

Sublease is not seriously in question, contained in the affidavit of Sean Fric is also

uncontroverted and incontrovertible evidence that J. Black’s was at all times

ready, willing, and able to perform, and did in fact perform, all of its obligations

under the Sublease, including without limitation all obligations to pay all rental

amounts due and owing and to provide all notices of extension under the terms of

the Sublease. (15CR 1199–1120, 1256–1261).

Further, the district court has repeatedly found, and Woody now freely

admits, that J. Black’s is not now, nor has ever been, in default of its obligations

under the Sublease –– despite the demands of Woody for performance that was

not required, and for the payment of Holdover Rent which would have only been

30

required as a result of wrongful possession after termination of the Sublease.

(15CR 481-631, 636; 11CR 949). As such, J. Black’s is entitled to the grant of

specific performance of the Sublease and its judgment that Woody be compelled

to comply with its obligation to allow J. Black’s to peaceably and quietly maintain

its right to possess and enjoy the Premises thereunder.

2. J. Black’s Remedies at Law are inadequate

The district court found that J. Black’s had an inadequate remedy at law for

Woody’s breach of the Sublease as a prerequisite to its award of specific

performance. (15CR 869; 1005–1006; 1639–1640). This determination was of

course correct insofar as the Sublease granted to J. Black’s a unique interest in real

estate. 14 The Trial Court considered evidence on this issue from Mr. Fric as part of

J. Black’s Fourth Motion for Summary Judgment, who proved that J. Black’s

immeasurably benefits from its location and brand associations related thereto.

(15CR 1199). Although Woody has claimed that J. Black’s could have been made

whole if Woody were permitted to wrongfully and without cause in the Sublease

eject it from the premises and simply pay some amount of lost profits, this

argument overlooks the unique features of agreements for the use and possession

of real estate—location, location, location. See Rus-Ann Dev., Inc. v. ECGC, Inc.,

222 S.W.3d 921, 927 (Tex. App.—Tyler 2007, no pet.) (specific performance is

14

See In re Hecht, 213 S.W.3d 547, 550 (Tex. Spec. Ct. Rev. 2006) (recognizing "location,

location, location" as the "appropriate axiom" in real estate to "capsulize the core of the

undertaking").

31

more readily available as a remedy for the sale of real estate than for the sale of

personal property because damages are generally believed to be inadequate in

connection with real property). Woody argues (without evidence or any expert

opinion in support) that because there was an operating history for the business,

J. Black’s damages must be calculable. But the existence of an operating history

does not negate the uniqueness of the interest in real estate or make the loss of the

location any less irreparable. See e.g., Frank v. Kuhnreich, 546 S.W.2d 844,848

(Tex. App.—San Antonio 1977, writ ref’d n.r.e.) (affirming summary judgment

awarding plaintiff specific performance of lease upon proof that default claimed by

sublessor had been cured by sublessee within time allowed by lease, but remanding

on issue of calculation of lost profit damage award for same time period and on

cross-issue of whether to award specific performance of subsequent option to

renew).

The plain fact remains that the Sublease entitles J. Black’s to operate a bar

and restaurant in a very popular entertainment district of Austin, Texas. The

district court below was permitted to find, and did find, that mere damages for lost

profits would not adequately compensate J. Black’s if it were required to suddenly

lose its interest in the Subleased premises or move from this location, where it had

established a successful and well-known business. Specific performance is

therefore warranted because J. Black’s lacked an adequate remedy at law due to the

32

unique nature of this interest in real estate. In addition, Woody’s repeated and

continuing assertions of non-existent and contractually absent breaches of the

Sublease clearly justified the Court’s judicial remedy of specific performance, and

was required to preserve the unique interest in real estate possessed by J. Black’s

by virtue of the terms of the Sublease.

As such, J. Black’s is entitled to a grant of specific performance of the

Sublease and a judgment that Woody be compelled to comply with its obligation

to allow J. Black’s to peaceably and quietly maintain its right to possess and enjoy

the Premises thereunder.

B. Woody’s arguments against the availability of the award of

specific performance are a school of red herrings.

Woody attempts to create his own new legal doctrines related to the law of

specific performance, by proffering unsupported arguments and extrapolations

from case law that is inapposite to the facts of this dispute. For example, Woody

asserts, without support, that there exists a “three way distinction between (1) an

actual breach of a performance obligation; (2) an anticipatory repudiation of a

performance obligation; and (3) a legal dispute” in the law related to specific

performance. See Appellant’s Brief, at p. 27. Woody’s arguments that “an order

of specific performance must compel performance by both parties,” and that this

award requires “continuing supervision” of the parties, and/or “deprives Woody of

future rights” are equally unpersuasive. See Appellant’s Brief at p. 31–32, 34.

33

These are simply a remix of arguments Woody has urged without success below,

and this court should not now be swayed by their inclusion again here.

1. Woody’s “Three-Way Characterization” finds no support

in the record, or in the authority

The argument that a “legal dispute” does not constitute a breach of a contract

is particularly confusing and unpersuasive with respect to this dispute. Even if

such an argument was not waived by Woody’s failure to raise it before the trial

court, 15 however, it finds no support in any authority cited by Woody, and is a

mischaracterization of the actual breach found multiple times by the district court,

and affirmed by the Court of Appeals.

Similarly, Woody’s arguments regarding “anticipatory repudiation” and the

district court’s failure to find Woody violated “present performance obligations”

are equally murky and inapplicable. Not only are the cases he cites regarding

anticipatory repudiation and present performance obligations inapposite and

inapplicable to cases related to the award of specific performance, either generally

15

See Norra v. Harris County, No. 14-05-01211-CV, 2008 WL 564061, *1 (Tex. App.—

Houston [14th Dist.] 2008, no pet.) (although appellant labeled challenge as one to legal

sufficiency, court “conclude[d] that these complaints are not challenges to the legal sufficiency

of the evidence and are instead legal arguments that were not presented to the trial court. As

such, [appellant] has failed to preserve error on these challenges, and we therefore affirm the

judgment of the trial court.”); see also Azad v. Aaron Rents, Inc., No. 14-07-01087-CV, 2009

WL 4842761, *6 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (where appellants’ response to

appellee’s motion for summary judgment focused on different issues than were raised in

appellants’ brief, the appellants’ new challenges were not construed as ones to the legal

sufficiency of evidence and were deemed waived); Tello v. Bank One, N.A., 218 S.W.3d 109,

119 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (appellant’s new legal challenge on appeal,

claiming damages should be offset, was not a challenge to legal sufficiency, and was not

adequately briefed in terms of legal sufficiency, and therefore was waived on appeal).

34

or to this case, but Woody’s undisputed breaches of the Sublease (which he

attempts to characterize as “repudiation”) were never found to be “anticipatory.”

Rather, the evidence upon which the district court relied in fact shows that Woody

rejected the 1st Extension of the Sublease, fabricated non-existent defaults under

the Sublease, and demanded holdover rent after his time for performance of the 1st

Extension (and subsequent extensions) had come. (15CR 17–28, 1254–1255; see

also 15CR 6–79). In fact, Woody’s attempted termination and unabated demand

for holdover rent due to the alleged expiration of the original term has itself never

been repudiated or withdrawn, imperiling the current viability of the Sublease and

requiring the Court’s award and enforcement to protect J. Black’s’ continuing

rights. While Woody attempts to make much of his failure to physically expel

J. Black’s from the location, the fact that Woody refused to acknowledge the

extension, asserted multiple factually and contractually non-existent defaults and

demanded holdover rent are no less breaches.

2. Woody’s claim that the decree of specific performance lacks

a “mutuality of remedy” is incorrect

To the extent Woody would argue J. Black’s be deprived of specific

performance on the basis that there is no “mutuality of remedy,” or complains that

the Judgment entered by the District Court does not “compel performance by both

parties” under the Sublease and its extension terms, Woody is plainly wrong.

Humble Oil & Refining Co. v. Westside Inv. Corp., 428 S.W.2d 92, 97 (Tex. 1968)

35

(where buyer of real estate timely communicated its unconditional exercise of

option to purchase, it was entitled to specific performance of option by seller);

Parson v. Wolfe, 676 S.W.2d 689, 692 (Tex. App.—Amarillo 1984, no writ) (in

contract for sale of real property, sellers had option to perform or pay damages;

thus, there was no lack of mutuality of remedies to bar specific enforcement);

Miller v. Compton, 185 S.W.2d 754, 757 (Tex. Civ. App.—Eastland 1945, no writ)

(option to purchase contained in lease agreement is not subject to attack on ground

that it lacks elements of a binding contract; right conferred thereby may be

enforced by suit for specific performance to compel seller to execute a conveyance

to tenant); San Antonio Joint Stock Land Bank v. Malcher,164 S.W.2d 197, 200

(Tex. Civ. App.—San Antonio 1942, writ ref’d w.o.m.) (where optionee tendered

money for purchase of realty and optionor refused to accept the tender, optionee

was entitled to specific performance). The case cited by Woody to prove

otherwise, E.M. Goodwin, Inc. v. Stuart,52 S.W.2d 311, 314 (Tex. Civ. App.—San

Antonio 1932), writ granted (Dec. 22, 1932), aff'd, 125 Tex. 212, 82 S.W.2d 632

(Comm'n App. 1935), is completely inapposite, because the Court in E.M.

Goodwin simply refused to uphold specific performance when the contract

required on the one hand the personal services of one of the parties, which personal

services can never be compelled by specific performance because the amount to

indentured servitude.

36

Here, J. Black’s is merely asking for the performance of a Sublease for real

property, which is entirely capable of performance by each party upon order of the

Court. The extension of the Sublease is only one aspect of performance, which

merely extends the term of the Sublease, but continues all of the mutual obligations

of the parties to it. These further obligations remain mutual and interdependent.

Woody’s remedies for any future breach by J. Black’s under the Sublease (which

this Court has determined did not previously exist) remain, and the argument that

there is lack of mutuality related to the extension fails to contemplate that the

Sublease as a whole contains mutual obligations which have not been eradicated

by the granting of specific performance.

3. The grant of specific performance does not require

“continuous supervision” of the parties.

The equitable remedy of specific performance by its very nature operates to

compel a party violating a duty under a valid contract to comply with its

obligations. S. Plains Switching, Ltd. v. BNSF Ry., 255 S.W.3d 690, 703

(Tex.App.-Amarillo 2008, pet. denied). By its grant of specific performance, the

district court required Woody to treat J. Black’s as a tenant in good standing, allow

it to peacefully exist in the subleased space pursuant to the terms of the Sublease as

executed, and not continuously demand holdover rent at an increased rate. Thus,

there were obligations of Woody to be “specifically performed” under the

agreement. The fact that the Sublease contains more than a single responsibility

37

Woody is obliged to uphold over the course of the term of the Sublease and its

extensions should not prohibit the Court from ordering its performance, nor does it

require any onerous supervision on this Court’s behalf. In fact, so long as the

parties comply with the obligations in the Sublease as they originally agreed to do,

this Court’s involvement should no longer be required at all.

4. The decree of specific performance does not deprive Woody

of rights under the Sublease

Woody makes the unsupported allegation that a decree of specific

performance of the Sublease might somehow “deprive Woody of future contractual

rights under the sublease that might arise on J. Black’s defective future

performance or non-performance under the sublease.” 16 Woody cites a century-old

case, Redwine v. Hudman, for this proposition, but Redwine is clearly inapposite to

the facts at issue in this suit. See 104 Tex. 21, 26, 133 S.W. 426, 429 (1911). In

Redwine, the Supreme Court declared it could not decree specific performance of

an option contract, because it could not compel the performance of a contract to

sell real property on the basis that the non-performing party had the contractual

right to make an election of how to perform the contract. In this case, Woody has

no election of whether to perform its obligations under the Sublease for so long as

J. Black’s exercises its sole discretion to extend the terms of the Sublease, and

therefore, the Court can and should decree the specific performance of Woody’s

16

See Plaintiff’s Motion for Summary Judgment, at ¶ 6.

38

obligations under the Sublease and its extensions. Further, as set forth above in

sections B(2) and B(3) for so long as the terms of the Sublease are in existence,

Woody will maintain all of his rights thereunder.

III. WOODY’S CHALLENGE TO J. BLACK’S UNCONTROVERTED SUMMARY

JUDGMENT EVIDENCE AND THE EXCLUSION OF A PORTION OF HIS OWN

AFFIDAVIT IS SPURIOUS

This Court will review a trial court's ruling sustaining or overruling

objections to summary judgment evidence for an abuse of discretion. Garner v.

Fidelity Bank, N.A., 244 S.W.3d 855, 859 (Tex.App.–Dallas 2008, no pet.); Bd. of

Trustees of Fire and Police Retiree Health Fund v. Towers, Perrin, Forster &

Crosby, Inc., 191 S.W.3d 185, 192–93 (Tex.App.–San Antonio 2005, pet. denied).

Woody complains that the district court abused its discretion in accepting and

considering the testimony of Sean Fric, a manager of the general partner in the

entities that operate and control the business of J. Black’s with knowledge of

J. Black’s business, and asks this Court to find error with the decision to overrule

Woody’s objection thereto. (15CR 1288–1291, 1613–1616, 1639). Woody is

incorrect, as the affidavit of Mr. Fric was competent evidence of J. Black’s

readiness, willingness, and ability to perform its obligations under the Sublease,

and such evidence as was offered by Mr. Fric has been repeatedly found sufficient

to prove the prerequisite conditions to the award of specific performance.

39

A. The District Court Correctly Overruled Woody’s Objections to

J. Black’s Summary Judgment Evidence

To determine whether a trial court abused its discretion, this Court must find

the trial court acted without reference to any guiding rules or principles; in other

words, whether the act of the trial court was arbitrary or unreasonable. Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985). Woody

attempts to challenge the affidavit testimony of Sean Fric by arguing about the

quantum of the evidence provided about willingness and ability of J. Black’s to

perform under the Sublease. Woody suggests that J. Black’s could have provided

more evidence of ability to perform by providing bank account statements and

other operating history, but J. Black’s was not required to provide such evidence to

demonstrate the effectively undisputed fact that it was ready and able to perform its

obligations under the Sublease and did exactly that. Mr. Fric’s affidavit provides

sufficient factual certainty to the determination that J. Black’s was financially

capable to perform, and as referenced in other portions of Woody’s briefing, did

perform the Sublease through and past the first extension of it.

Simply put, the evidence proffered by J. Black’s to show it was ready, able,

and willing to perform its obligations under the contract, and that J. Black’s lacked

adequate remedy at law, has been found sufficient in analogous cases. See

Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559, 575 at fn 6 (Tex.

App.—Fort Worth 2008, pet. denied) (obligor averred additional funds were

40

available to supplement pre-payment penalty); Jarvis v. Peltier,

400 S.W.3d 644, 654 (Tex. App.—Tyler 2013), review denied (Aug. 30,

2013)(evidence sufficient for award of specific performance when movant for

summary judgment stated he was “ready, able and willing” to perform and

“included this language in his first amended petition, in his motion for summary

judgment, and in his affidavit submitted as summary judgment evidence”). As

such, Woody’s point of error number 2 should be overruled.

B. The District Court correctly excluded the February 4, 2015

Affidavit of Bob E. Woody, and its exclusion was not material to

the award of specific performance in this Case

Woody further complains that the district court struck paragraph 3 of Bob E.

Woody’s February 4, 2015 affidavit (“Woody’s February 2015 Affidavit”). In

addition to having been filed after the 21-day notice required for affirmative

evidence in support of Woody’s own Motion for Summary Judgment, Woody’s

February 2015 Affidavit’s statements to the effect that he had, as of February 4,

2015, “accepted, acknowledged and agreed” that J. Black’s “timely exercised its

third option to extend the Sublease” was a declaration of his own mental state, and

inappropriate, self-serving and conclusory testimony made by an interested

witness, and was therefore properly struck. See e.g., Hayes v. E.TS. Enterprises,

Inc., 809 S.W.2d 652, 657 (Tex. App.Amarillo 1991 ), writ denied (Oct. 9, 1991).

(15CR 1270, 1610-1612).

41

In addition to being an improper attempt to introduce incontrovertible

testimony of “mental workings of an individual’s mind,” Woody fails to show

how the excluded testimony from paragraph 3 of his February 2015 Affidavit was

material to any of the dispositive issues on this case and “probably caused the

rendition of an improper judgment,” as is required to show the district court

abused its discretion. See e.g, Perez v. Williams, 01-14-00504-CV, 2015 WL

5076294, at *11 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no pet.), citing

Jones v. Pesak Bros. Const., Inc., 416 S.W.3d 618, 632 (Tex. App.—Houston [1st

Dist.] 2013, no pet.). The single statement by Woody that he had accepted,

acknowledged, and agreed that the 3rd Extension Option had been exercised –– in

addition to being a complete contradiction of his repeated acts in breach of the

parties’ agreement throughout five years of legal maneuvering –– does not

counteract or in any way cure his prior and continuing breaches of the Sublease or

vitiate the need and availability of the award of specific performance and

attorney’s fees). The exclusion was therefore proper, and not an abuse of the

district court’s discretion.

42

IV. J. BLACK’S ESTABLISHED ITS ENTITLEMENT TO RECOVER ATTORNEY’S

FEES AS THE PREVAILING PARTY IN A BREACH OF CONTRACT CASE UNDER

CPRC § 38.001.

A. The Law permits the award of fees under Chapter 38 upon the

award of specific performance

Woody claims that J. Black’s is not entitled to recover its attorney’s fees

under Texas Civil Practice and Remedies Code § 38.001, despite J. Black’s having

fully prevailed on a breach of contract claim, because the affirmative relief

awarded to J. Black’s was specific performance rather than monetary damages.

Like the other arguments that Woody has made over several years of this dispute,

Woody’s argument is legally untenable. The award of fees to J. Black’s must be

affirmed.

Chapter 38 of the Texas Civil Practices and Remedies Code provides that a

“prevailing party” may recover its attorneys’ fees in a suit based upon breach of

contract. See Tex. Civ. Prac. & Rem. Code § 38.001(8) (allowing recovery of

attorney’s fees “in addition to the amount of a valid claim” for breach of contract).

The law is clear that a “valid claim” for purposes of Section 38.001(8) includes a

claim for specific performance. See Jones v. Kelley, 614 S.W.2d 95, 96, 100-01

(Tex. 1981) (awarding attorney’s fees under predecessor statute to section 38.001

in suit for specific performance of earnest money contract); See also Albataineh v.

Eshtehardi, 01-12-00671-CV, 2013 WL 1858864, at *2 (Tex. App.—Houston [1st

Dist.] May 2, 2013, no pet.) (“A judgment requiring specific performance of a

43

material contract right can support an award of attorney's fees”); Rasmusson v.

LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th District]

2003, pet. denied) (where party sought attorney’s fees in addition to claim for

specific performance, its failure to recover other money damages did not preclude

award of attorney’s fees). Because J. Black’s prevailed on its breach of contract

claim against Woody, it is entitled to recover its attorney’s fees –– in the amount

stipulated to by the parties and awarded in the Final Judgment, in addition to the

additional and necessary attorneys fee accrued in further litigating this case upon

remand and to protect the Final Judgment during the pendency of this second

appeal –– pursuant to Section 38.001.

PRAYER

Based on the foregoing, Appellees J. Blacks, L.P. and J. Black’s G.P.,

L.L.C. respectfully pray that this Court overrule each of the issues presented by

Appellant Bob E. Woody, and, on that basis, affirm the relief awarded by the trial

court in its entirety, specifically including (1) the trial court’s grant of J. Black’s

Motion for Summary Judgment and its denial of the Appellants’ Motion for

Summary Judgment; and (2) the specific performance, attorney’s fees, and interest

awarded to J. Black’s in the Final Judgment.

44

Appellees further pray that this Court tax all costs against Appellants, in this

Court and below, and award Appellees any such other relief at law or equity to

which they may be justly entitled. Tex. R. App. P. 43.4; Tex. R. Civ. P. 139.

Respectfully submitted,

By: /s/ Eric J. Taube

Eric J. Taube

State Bar No. 19679350

etaube@taubesummers.com

Andrew P. Vickers

State Bar No. 24084021

avickers@taubesummers.com

100 Congress Avenue, Suite 1800

Austin, Texas 78701

Telephone: (512) 472-5997

Telecopier: (512) 472-5248

ATTORNEYS FOR APPELLEES

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I hereby certify that this Appellees’ Brief complies with the typeface

requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a

conventional typeface no smaller than 14-point for text and 12-point for footnotes.

This document also complies with the word-count limitations of Tex. R. App.

P. 9.4(i)(2)(B). According to the word count tool of the computer program used to

prepare this document, this Brief contains 11,093 words, excluding any parts

exempted by Tex. R. App. P. 9.4(i)(1).

/s/ Eric J. Taube

Eric J. Taube

45

CERTIFICATE OF SERVICE

Pursuant to the Texas Rules of Appellate Procedure and Local Rule 4(d), a

true and correct copy of the foregoing was served, via e-filing and via email on

counsel listed below, on the 18th day of December, 2015.

Tom C. McCall

tmccall@themccallfirm.com

David B. McCall

dmccall@themccallfirm.com

THE MCCALL FIRM

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Austin, TX 78746-7759

Telephone: (512) 477-4242

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Jeremy J. Gaston

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HAWASH, MEADE & GASTON LLP

1221 McKinney Street, Suite 3150

Houston, TX 77010-2034

Telephone: (713) 658-9007

Telecopier: (713) 658-9011

Hector H. Cárdenas, Jr.

hcardenas@cardenas-law.com

THE CÁRDENAS LAW FIRM

2600 Via Fortuna, Suite 200

Austin, TX 78746

Telephone: (512) 477-4242

Telecopier: (512) 477-2271

/s/ Eric J. Taube

Eric J. Taube

etaube@taubesummers.com

7440-2\00546688.001 46

AUTHORITIES

Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013)

2013 WL 1858864

the restrictive covenant is of value, and affords a recovery of

attorney's fees to the aggrieved partner as a prevailing party.

2013 WL 1858864

We affirm.

Only the Westlaw citation is currently available.

SEE TX R RAP RULE 47.2 FOR

DESIGNATION AND SIGNING OF OPINIONS. Background

MEMORANDUM OPINION Hossein Eshtehardi and Mohamed Albataineh were partners

Court of Appeals of Texas, in operating the Joy of Houston Sports Bar, a sexually

Houston (1st Dist.). oriented business. To comply with a Harris County regulation

prohibiting sexually oriented businesses from operating

Mohamed ALBATAINEH, Appellant

within 1,500 feet of a residence, they purchased a nearby

v.

property specifically to prevent it from becoming a residence.

Hossein M. ESHTEHARDI, JK & HE Business,

LLC d/b/a Joy of Houston Sports Bar, Appellees. In December 2010, the partners had a falling out. As part

of a buy-out settlement agreement, Albataineh received title

No. 01–12–00671–CV. | May 2, 2013.

to the property. Eshtehardi formed JK & HE Business,

On Appeal from the 80 District Court, Harris County, Texas, LLC to run the club. In their “Transfer and Settlement

Trial Court Cause No.2011–51347. Agreement” the parties prohibited the use of the property

as a residence, because the club's continued operation under

Attorneys and Law Firms Harris County regulations depended upon this restriction.

A special warranty deed transferring the property contained

Adolph R. Guerra Jr., for Mohamed Albataineh. a restrictive covenant to the same effect. In May 2011,

Albataineh leased the property to Michael Leo. The lease

Casey Todd Wallace, Benjamin Allen, for Hossein M.

agreement expressly required that Leo use the property for

Eshtehardi, JK & HE Business, LLC d/b/a Joy of Houston

residential purposes only. Eshtehardi and the corporation he

Sports Bar.

formed sued Albataineh for breach of the agreement and

Panel consists of Justices JENNINGS, BLAND, and restrictive covenant.

MASSENGALE.

Discussion

MEMORANDUM OPINION

Standard of Review

JANE BLAND, Justice. We review a trial court's award of attorney's fees based on

breach of contract for an abuse of discretion. Weaver v.

*1 In this restrictive covenant case, a partner in a strip

Jamar, 383 S.W.3d 805, 813 (Tex.App.-Houston [14th Dist.]

club venture sued his former partner, later ousted from

2012, no pet. h.). The test for an abuse of discretion is whether

the business, for breach of a settlement agreement and for

the trial court's decision was arbitrary or unreasonable. Id.

declaratory and injunctive relief. After a bench trial, the trial

court found a breach of the agreement. The breach arose

from the former partner's violation of a restrictive covenant

prohibiting residential use of property near the strip club, Analysis

property that had been parceled out to the former partner in

Albataineh contends that Eshtehardi could not recover

the settlement agreement. Although the trial court awarded no

attorney's fees under section 38.001(8) of the Texas Civil

money damages, it enjoined the ousted partner from using the

Practice and Remedies Code, because Eshtehardi did not

property as a residence, and it awarded the aggrieved partner

recover monetary damages. Section 38.001(8) provides for

$119,000 in attorney's fees. On appeal, the ousted partner

the recovery of reasonable attorney's fees in a claim on an

challenges the award of attorney's fees. We conclude that the

oral or written contract “in addition to the amount of a

trial court's injunctive relief requiring specific performance of

valid claim and costs.”TEX. CIV. PRAC. & REM.CODE

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1

Albataineh v. Eshtehardi, Not Reported in S.W.3d (2013)

2013 WL 1858864

ANN. § 38.001(8) (West 2008). A “Valid claim” under

Eshtehardi obtained a permanent injunction prohibiting

section 38.001(8) is not limited to a claim for monetary

Albataineh from using the property as a residence—an award

damages. Butler v. Arrow Mirror & Glass, 51 S.W.3d 787,

of specific performance of the parties' settlement agreement

797 (Tex.App.-Houston [1st Dist.] 2001, no pet.). Instead,

and of the restrictive covenant in the special warranty

it includes any claims for which the party recovers “at least

deed. The trial court heard evidence that the injunction was

something of value.” Id. (quoting Rogers v. RAB Ins., Ltd.,

necessary, because enforcement of the restrictive covenant

816 S.W.2d 543, 551 (Tex.App.-Dallas 1991, no writ)). An

has intrinsic value to Eshtehardi's continuing business

award of an injunction to enforce specific performance under

operations. A judgment requiring specific performance of a

a contract is something of value. Id. (holding that injunction

material contract right can support an award of attorney's fees.

enforcing covenant not to compete was something of value);

See Butler, 51 S.W.3d at 797.

Williams v. Compressor Eng'g Corp., 704 S.W.2d 469, 474

(Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e) (same);

Accordingly, we hold that the trial court did not abuse its

Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287

discretion in awarding attorney's fees under section 38.001(8)

(Tex.App.-Houston [14th Dist.] 2003, pet. denied) (holding

of the Texas Civil Practice and Remedies Code. See Butler,

that award of specific performance permitted recovery of

51 S.W.3d at 797.

attorney's fees under section 38.001).

*2 Albataineh contends, citing MBM Financial Corporation

v. Woodlands Operating Company, L.P., that money damages Conclusion

in particular are required to recover attorney's fees under

section 38.001. 292 S.W.3d 660, 670 (Tex.2009).MBM We affirm the judgment of the trial court.

Financial held that “a client must gain something before

attorney's fees can be awarded.”Id. at 663.It does not stand

All Citations

for the proposition that injunctive relief awarding specific

performance precludes the recovery of attorney's fees under Not Reported in S.W.3d, 2013 WL 1858864

chapter 38. See id. at 670.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)

48 Tex. Sup. Ct. J. 474

fees in insurer's declaratory judgment action; the

controversy remained live because a finding of

KeyCite Yellow Flag - Negative Treatment a duty to defend would necessitate a remand to

Disagreed With by ACMAT Corp. v. Greater New York Mut. Ins. Co.,

the trial court to consider an award of attorney

Conn., May 29, 2007

fees. V.T.C.A., Civil Practice & Remedies Code

159 S.W.3d 640 § 37.009.

Supreme Court of Texas.

44 Cases that cite this headnote

ALLSTATE INSURANCE COMPANY, Petitioner,

v. [2] Action

Ruth HALLMAN, Respondent. Moot, Hypothetical or Abstract Questions

A case becomes moot if a controversy ceases

No. 03–0957. | Argued Oct. 20,

to exist or the parties lack a legally cognizable

2004. | Decided March 11, 2005.

interest in the outcome.

Synopsis

57 Cases that cite this headnote

Background: Homeowners' insurer brought action against

insured for declaratory judgment that policy did not

cover her liability to neighbors for property damage and [3] Insurance

bodily injury caused by limestone mining companies that Pleadings

leased property from insured. Insured counterclaimed for To determine liability insurer's duty to defend,

declaratory judgment. The 86th Judicial District Court, courts look at the allegations in the pleadings and

Kaufman County, Glen M. Ashworth, J., entered summary the insurance policy's language.

judgment in favor of insurer, but denied requests for attorney

fees. Insured appealed. The Dallas Court of Appeals, Wright, 6 Cases that cite this headnote

J., 114 S.W.3d 656, reversed and remanded. Insurer's petition

for review was granted.

[4] Insurance

Pleadings

If the pleadings do not allege facts within the

[Holding:] The Supreme Court, Jefferson, C.J., held as a scope of the policy's coverage, a liability insurer

matter of first impression that the insured's lease of her does not have a duty to defend.

property for limestone mining was a “business pursuit”

within the meaning of business pursuits exclusion of liability 8 Cases that cite this headnote

coverage.

[5] Insurance

Pleadings

Reversed and rendered.

In the event of an ambiguity, courts construe the

pleadings liberally in the suit against the insured,

resolving any doubt in favor of coverage and the

West Headnotes (7) liability insurer's duty to defend.

11 Cases that cite this headnote

[1] Declaratory Judgment

Appeal and Error

Judgment for insured in underlying tort suit for [6] Insurance

which liability insurer had provided defense did Business Pursuits

not render moot a determination whether the The “business pursuits” inquiry as an exception

insurer owed a duty to defend and indemnify the to liability coverage involves two elements: (1)

insured, where she continued to seek attorney continuity or regularity of the activity, and (2) a

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)

48 Tex. Sup. Ct. J. 474

profit motive, usually as a means of livelihood, mining on her property. Hallman sought coverage under her

gainful employment, earning a living, procuring homeowners insurance policy (“the policy”) with Allstate

subsistence or financial gain, a commercial Insurance Company (“Allstate”), requesting that Allstate

transaction or engagement; the profit need not defend and indemnify her in the lawsuit. Allstate and Hallman

be realized since the issue is the expectation or both sought a declaratory judgment to determine whether

anticipation for profit in the future and business the policy covered the underlying litigation. The trial court

ventures often result in a loss. granted summary judgment in Allstate's favor. The court of

appeals reversed the trial court's judgment and remanded

6 Cases that cite this headnote for further proceedings, holding that Allstate had a duty

to defend and indemnify Hallman in the limestone mining

[7] Insurance litigation. 114 S.W.3d 656, 663. Because we conclude that

Business Pursuits damages to third parties caused by commercial limestone

mining conducted on an insured's property fall within the

Insured's lease of her property for limestone

policy's business pursuits exclusion, we reverse the court of

mining was a “business pursuit” within the

appeals' judgment and render judgment for Allstate.

meaning of business pursuits exclusion of

liability coverage in homeowners' insurance

policy; although the insured executed only

one lease, she was perpetually engaged in the I

continuous act of leasing her property to the

mining company until the lease expired, and

Background

even though the pleadings in the neighbors' suit

against the insured did not contain any reference In 1995, Hallman leased property she owns in rural Kaufman

to a pecuniary interest in the lease or expound on County to Norton Crushing, Inc. (“Norton”) for limestone

insured's motive for leasing her property, a profit

mining. 1 In 1996, neighboring landowners sued Hallman,

motive could be inferred from the nature of the

Norton, and all subcontractors involved in the mining project,

activity.

alleging that the blasting from the mining damaged their

13 Cases that cite this headnote property and their health. Hallman filed a claim under

the policy requesting defense and indemnification. Allstate

agreed to defend Hallman under a reservation of rights but

filed this declaratory judgment action seeking a determination

that Hallman's claim was not covered under the policy's terms.

Attorneys and Law Firms

Hallman counterclaimed seeking a declaration that Allstate

*641 Roy L. Stacy, Pamela J. Touchstone, Stacy & Condor, had a duty to defend and indemnify her in the underlying

LLP, Dallas, for Petitioner. litigation. Both parties sought attorney's fees.

David Taubenfeld, Erika Lea Blomquist, Matthew Scott Allstate moved for summary judgment, arguing that the

Carol, Charles George Orr, Haynes and Boone, LLP, Dallas, injuries and damages relating to the limestone mining did

for Respondent. not constitute an “occurrence” as required for coverage under

the policy, and alternatively, that the mining operations were

Opinion

excepted from coverage under the policy's business *642

Chief Justice JEFFERSON delivered the opinion of the Court. pursuits exclusion. Hallman moved for partial summary

judgment, asserting that she was entitled to a defense because

In this case we must determine whether, under a homeowners her neighbors' allegations constituted an “occurrence” as

insurance policy's terms, an insurer has a duty to defend defined in the policy. The trial court granted Allstate's

and indemnify an insured's potential liability for damages motion, denied Hallman's, and denied both parties' requests

resulting from limestone mining operations conducted on for attorney's fees. The court of appeals reversed, concluding

the insured's property. Neighboring property owners sued that the policy covered Hallman's claim because: (1) the

Ruth Hallman (“Hallman”) for damages related to limestone mining damages constituted an “occurrence,” and (2) the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)

48 Tex. Sup. Ct. J. 474

business pursuits exclusion did not apply. 114 S.W.3d at 663. The Texas Employment Commission appealed, arguing that

The court of appeals remanded the attorney's fees issue to the amendment rendered the case moot. Id. The farm workers

the trial court for further proceedings. Id. at 663–64. We cross-appealed, contesting the denial of attorney's fees. Id.

granted Allstate's petition for review to determine whether the The court of appeals held that the case was moot and that

policy covers potential liability for damages from commercial attorney's fees were barred by sovereign immunity. Id. at 150–

limestone mining. 47 Tex. Sup.Ct. J. 753 (July 2, 2004). 151. We disagreed, holding:

During oral argument before this Court, the parties announced Clearly, a controversy exists between

that the underlying lawsuit between Hallman and her the farm workers and TEC. The “live”

neighbors had recently concluded with a jury verdict issue in controversy is whether or

in Hallman's favor. Allstate provided Hallman with a not the farm workers have a legally

defense throughout the trial and does not intend to seek cognizable interest in recovering their

reimbursement for the defense costs. attorney's fees and costs. The fact

that the Legislature wisely undertook

action to bring the farm workers

within the scope of TUCA does not

II moot or void the workers' interest in

obtaining attorneys *643 fees and

Mootness costs for the successful disposition of

their claim. Contrary to the court of

[1] As a preliminary matter, we must consider whether the appeals' suggestion, the attorney's fees

conclusion of the underlying litigation renders this case moot. issue need not be severed in order to

The main issue here is whether Allstate has a duty to defend be considered; it is an integral part of

and indemnify Hallman in the mining litigation. Allstate, the farm workers' claim and as such

however, has already provided the requested defense, for breathes life into the appeal. Due to

which it will not seek reimbursement. Additionally, because the existence of the “live” issue of

Hallman was not found liable at trial, there is nothing for attorney's fees and costs, we hold that

Allstate to indemnify. Nevertheless, both parties maintain that the suit was not moot.

a justiciable controversy remains because Hallman continues

to seek an award of attorney's fees for expenses incurred in Id. at 151.

defending against Allstate's declaratory judgment action and

in pursuing her own declaratory relief. Similarly, Hallman's remaining interest in obtaining

attorney's fees “breathes life” into this appeal and prevents

[2] We agree with the parties that this case is not it from being moot. See id. The parties correctly point

moot. A case becomes moot if a controversy ceases to out that in order to resolve the attorney's fees dispute,

exist or the parties lack a legally cognizable interest we must first determine whether Allstate had a duty to

in the outcome. Bd. of Adjustment of San Antonio v. defend and indemnify under the policy. In a declaratory

Wende, 92 S.W.3d 424, 427 (Tex.2002). In Camarena judgment proceeding, the trial court has the discretion to

v. Texas Employment Commission, 754 S.W.2d 149, 151 award “equitable and just” attorney's fees. Tex. Civ. Prac.

(Tex.1988), we held that a dispute over attorneys fees is a & Rem.Code § 37.009. Here, the trial court, having found

live controversy. In that declaratory judgment action, farm against Hallman on the coverage issue, also denied her

workers sued to challenge the constitutionality of the Texas request for attorney's fees. Because the court of appeals found

Unemployment Compensation Act's (“TUCA”) agricultural that Hallman prevailed on the coverage issue, it remanded

exemption. Id. at 150. The trial court held that the act the attorney's fees question to the trial court. 114 S.W.3d

was unconstitutional but found that sovereign immunity at 663–64. Our decision in this case will resolve whether

barred the farm workers' request for attorney's fees. Id. Four Allstate had a duty to defend. The controversy is live because

months later, the Legislature amended the TUCA, rectifying an affirmative answer would necessitate a remand to the

the offending provision. Id. Consequently, the trial court trial court to consider whether an award of attorney's fees is

modified its judgment, holding that the amended act was appropriate in light of the changed status of prevailing parties.

constitutional and enjoining the former act's enforcement. Id.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)

48 Tex. Sup. Ct. J. 474

Accordingly, we will address the merits of this coverage or financial gain, a commercial transaction or engagement.”

dispute. Id. at 780 (citations omitted). Regarding the second element,

the court further noted: “The profit need not be realized—the

issue is the expectation or anticipation for profit in the future

—since often business ventures result in a loss.” Id.

III

Most jurisdictions follow similar versions of this two-part

Discussion inquiry when construing business pursuits exclusions. See,

e.g., Sun Alliance Ins. Co. of P.R., Inc. v. Soto, 836 F.2d

[3] [4] [5] To determine an insurer's duty to defend, we 834, 836 (3d Cir.1988); Stuart v. Am. States Ins. Co. 134

look at the allegations in the pleadings and the insurance Wash.2d 814, 953 P.2d 462, 465 (1998); Frankenmuth Mut.

policy's language. Nat'l Union Fire Ins. Co. of Pittsburgh, Ins. Co. v. Kompus, 135 Mich.App. 667, 354 N.W.2d 303,

Pa. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 307–308 (1984); see also Lee R. Russ & Thomas F. Segalla,

(Tex.1997); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., Couch on Insurance § 128:13 (3d ed. 1997 & Supp.2004). A

387 S.W.2d 22, 24 (Tex.1965). If the pleadings do not allege few jurisdictions, however, limit the exclusion's application

facts within the scope of the policy's coverage, an insurer

to those activities that constitute an insured's principal

does not have a duty to defend. Am. Physicians Ins. Exch. v.

occupation. See, e.g., Brown v. Peninsular Fire Ins. Co., 171

Garcia, 876 S.W.2d 842, 848 (Tex.1994). However, in the

Ga.App. 507, 320 S.E.2d 208, 209 (1984); Asbury v. Ind.

event of an ambiguity, we construe the pleadings liberally, Union Mut. Ins. Co., 441 N.E.2d 232, 239 (Ind.Ct.App.1982).

resolving any doubt in favor of coverage. Merchs. Fast Motor

Because the policy's definition of business as “including

Lines, Inc., 939 S.W.2d at 141; Heyden Newport Chem.

trade, profession or occupation” encompasses more than

Corp., 387 S.W.2d at 26. an insured's primary occupation, we conclude that the

majority approach more accurately describes the exclusion's

Under the terms of the policy, Allstate has a duty to defend

parameters. Accordingly, we adopt the two-part standard

Hallman against a suit alleging damages caused by an

articulated in Pennington for determining whether a claim

“occurrence.” However, the policy specifically excludes from

is excluded from coverage under the business pursuits

coverage: “bodily injury or property damage arising out of

exclusion. See Pennington, 810 S.W.2d at 780.

or in connection with a business engaged in by an insured.

But this exclusion does not apply to activities which are

[7] Applying the Pennington standard, the court of appeals

ordinarily incidental to non-business pursuits.” “Business”

concluded that the underlying petition did not allege

is defined as “includ[ing] trade, profession or occupation.”

continuity of activity because Hallman entered into only one

Allstate argues that Hallman's claim is barred from coverage

lease agreement, which was executed nearly ten years ago.

under this business pursuits exclusion.

114 S.W.3d at 662. The court further noted the petition's

failure to allege that Hallman leased her property as a means

[6] Although the business pursuits exclusion is a fairly

of livelihood, or earning a living, or that her principal business

common provision of insurance policies, we have never

was leasing property. Id. Based on these conclusions, the

directly addressed its application. 2 The parties and the court of appeals held that the business pursuits exclusion did

court of appeals relied on the standard set forth by the San not apply to Hallman's claim. See id. at 662–63.

Antonio Court of Appeals in United Services Automobile

Ass'n v. Pennington, 810 S.W.2d 777, 778–80 (Tex.App.- We disagree. By narrowly limiting its focus to Hallman's

San Antonio 1991, writ denied), a case involving a business initial execution of the lease, the court of appeals

pursuits exclusion provision substantially *644 identical misconstrued the nature of commercial leasing activity. The

to the one here. The Pennington court, after reviewing pleadings establish that the mining activity conducted on

the dictionary definitions of “trade,” “profession,” and Hallman's property pursuant to the lease began in 1995, was

“occupation,” as well as case law from other jurisdictions, ongoing at the time the plaintiffs initiated their suit in 1996,

defined the “business pursuits” inquiry as involving two and remained ongoing at the time the plaintiffs filed their

elements: “(1) continuity or regularity of the activity, and sixth amended petition in 2001. Although Hallman executed

(2) a profit motive, usually as a means of livelihood, only one lease, until that lease expires, she is perpetually

gainful employment, earning a living, procuring subsistence engaged in the continuous act of leasing her property to the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4

Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (2005)

48 Tex. Sup. Ct. J. 474

Furthermore, as numerous courts have recognized, the

mining company. Thus, the limestone mining lease meets the

purpose of the business pursuits exclusion is to lower

continuity requirement of the business pursuits exclusion.

homeowners insurance premiums by removing coverage for

activities that are not typically associated with the operation

Next, we consider whether profit was Hallman's motivation

and maintenance of one's home. See, e.g., Buirkle v. Hanover

for leasing her property. The court of appeals, noting

Ins. Cos., 832 F.Supp. 469, 486–487 (D.Mass.1993); Kepner

that courts are limited to the language in the pleadings

v. W. Fire Ins. Co., 109 Ariz. 329, 509 P.2d 222, 223 (1973);

and the policy when determining an insurer's duty to

LeBlanc v. Broussard, 396 So.2d 535, 536 (La.Ct.App.1981).

defend, concluded that the lease failed to meet the profit

Commercial limestone mining is not an activity typically

motive requirement. 114 S.W.3d at 662–63. Admittedly, the

associated with owning and maintaining a home. Thus, the

pleadings do not contain any reference to Hallman's pecuniary

limestone mining lease at issue here is exactly the type of

interest in the lease, nor do they expound on her motive

commercial enterprise that the business pursuits provision

for leasing her property. However, *645 we conclude that,

was designed to exclude.

in this circumstance, a profit motive can be inferred from

the nature of the activity. One generally does not allow

We hold that Hallman's lease to Norton constituted a business

limestone mining with dynamite blasting to occur on his

pursuit and therefore the allegations in the underlying

or her property without some expectation of remuneration

litigation are excluded from coverage under the policy.

or monetary gain. See Lee R. Russ & Thomas F. Segalla,

Couch on Insurance § 128:13 (3d ed.1997) (noting that

courts look “particularly to the nature of the activity” when

determining if an activity constitutes a “business pursuit”); IV

cf. In re San Juan Dupont Plaza Hotel Fire Litig., 789

F.Supp. 1212, 1220 (D.P.R.1992) (holding that business

Conclusion

pursuits exclusion defeated coverage because “[i]nvestment

activities are commercial ventures which, by their very Therefore, even if the allegations in the underlying lawsuit

nature, are entered into with the intent to earn profit”); Vallas state an “occurrence,”—a question we do not reach—we

v. Cincinnati Ins. Co., 624 So.2d 568, 571 (Ala.1993) (finding nevertheless conclude that the business pursuits exclusion

business pursuits exclusion applicable and noting “we cannot applies and bars coverage. Because the trial court reached

say that the limited partnership, which was formed to buy the same conclusion and denied Hallman's request for fees,

and sell investment real property for capital gain, was not there is no need to remand this case to the trial court for

‘an undertaking ... for gain [or] profit’ ”); State Farm Fire & a determination of Hallman's request for attorney's fees.

Cas. Co. v. Drasin, 152 Cal.App.3d 864, 199 Cal.Rptr. 749, Accordingly, we reverse the court of appeals' judgment and

750, 753 (1984) (claims arising from partnership agreement render judgment for Allstate. See Tex.R.App. P 60.2(c).

to acquire mining leases fell under business pursuits exclusion

where “[t]he purpose of acquiring the mining leases was

to enjoy the production of income, profits and write-offs All Citations

incidental to the mining operations”).

159 S.W.3d 640, 48 Tex. Sup. Ct. J. 474

Footnotes

1 Meridien Aggregates, Co., L.L.P. (“Meridien”) purchased Norton's interest in 1999 and now operates the lease.

2 We have, however, addressed the “activities incidental to non-business pursuits” exception to the exclusion. See State

Farm Fire & Cas. Co. v. Reed, 873 S.W.2d 698, 698–701 (Tex.1993).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5

Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)

2009 WL 4842761

Bradley M. Whalen, Stephen H. Lee, N. Kimberly Hoesl, for

2009 WL 4842761 Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron

Only the Westlaw citation is currently available. Rents, Inc.

SEE TX R RAP RULE 47.2 FOR Panel consists of Chief Justice HEDGES and Justices

DESIGNATION AND SIGNING OF OPINIONS. ANDERSON and SEYMORE.

SUBSTITUTE MEMORANDUM

OPINIONON REHEARING

Court of Appeals of Texas, SUBSTITUTE MEMORANDUM

Houston (14th Dist.). OPINIONON REHEARING

Hardam S. AZAD and Manohar S. Mann, Appellants CHARLES W. SEYMORE, Justice.

v.

*1 On appellants' motion for rehearing, we deny the

AARON RENTS, INC., d/b/a Aaron Rents, requested relief, but withdraw our opinion filed August 13,

Inc., d/b/a Texas Aaron Rents, Inc., Appellee. 2009, and issue this substitute memorandum opinion.

No. 14–07–01087–CV. | Dec. 17, 2009.

In this commercial lease case, Hardam S. Azad and Manohar

S. Mann (collectively, the landlords) appeal a summary

West KeySummary judgment in favor of, and an award of attorney's fees to,

Aaron Rents, Inc., d/b/a Aaron Rents, Inc., d/b/a Texas Aaron

Rents, Inc. (“Aaron”). In three issues, the landlords contend

1 Landlord and Tenant (1) the pleadings and summary judgment proof precluded

Breach by lessor the trial court from granting summary judgment on Aaron's

Landlord and Tenant affirmative defenses of breach of quiet enjoyment and breach

What constitutes breach of covenant of conditions subsequent, (2) the pleadings and summary

Landlords committed material breach of judgment proof precluded granting summary judgment on

commercial lease's quiet-enjoyment provision, an earlier summary judgment motion (which the court,

and thus tenant was discharged from further in fact, denied), and (3) the lease contract precluded the

performance of lease. The provision required trial court from rendering a judgment on attorney's fees.

that the tenant be able to enjoy the premises Because all dispositive issues of law are settled, we issue this

without hindrance. Landlords' failure to follow memorandum opinion and affirm. SeeTex.R.App. P. 47.4.

city's requirements for proper water and

sanitation easement prevented tenant from

obtaining a certificate of occupancy. I. FACTUAL AND PROCEDURAL BACKGROUND

Cases that cite this headnote In October 2001, the landlords leased Aaron approximately

7,500 square feet of the South Village Shopping Center. The

initial term of the lease was five years, but the lease contained

a provision that, if the anchor tenant, Auchan Hypermart, at

On Appeal from the 333rd District Court, Harris County, any time ceased business, Aaron could terminate the lease

Texas, Trial Court Cause No.2004–53200. between the thirty-sixth and the forty-eighth month of the

term by giving a ninety-day notice. The lease also contained

Attorneys and Law Firms the following warranty of quiet enjoyment:

William F. Harmeyer, for Hardam S. Azad and Manohar S.

35. Quiet Enjoyment.Landlord

Mann.

warrants that it has good and

indefeasible fee simple title to the

Center, including the premises, and

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1

Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)

2009 WL 4842761

has the lawful authority to enter

into this Lease. Landlord further b. Landlord will provide Tenant with all reasonable

warrants that Tenant, subject to the assistance to aid Tenant in obtaining the aforesaid permits

terms and conditions of this Lease, and approvals.

will peaceably and quietly hold and

c. If any of the aforesaid conditions subsequent is not

enjoy the Premises and use the

satisfied ... upon notice to Landlord, Tenant may elect to

Common Areas during the Term

terminate this Lease....

without hindrance or interruption, so

long as no Default by Tenant shall

Finally, the lease provided for attorney's fees in actions to

occur.

enforce, defend, or interpret the rights under the lease:

Additionally, pursuant to Paragraph 37 of the lease, Aaron's 30. Attorney's Fees.In any action, suit

performance was conditioned on its ability to obtain the or proceeding to enforce, defend or

necessary permits and certificates to complete its build-out of interpret the rights of either Landlord

the leased premises and to operate its business. Paragraph 37 or Tenant under the terms of this

provided, in relevant part: lease or to collect any amount due

landlord or Tenant hereunder, the

37. Conditions Subsequent. prevailing party, pursuant to a final

order of a court having jurisdiction

a. Landlord and Tenant agree that their obligations under

over said matter as to which applicable

this Lease are expressly contingent upon the following:

periods within which to appeal have

(i) The ability of Tenant to secure, through the exercise elapsed, shall be entitled to recover

of due diligence and good faith efforts, ... a Certificate of all reasonable costs and expenses

Occupancy and such use and other permits and approvals incurred by said prevailing party in

from all appropriate zoning and other governmental enforcing, defending or interpreting its

and quasi-governmental authorities as are necessary to rights hereunder, including, without

permit Tenant to ... conduct its business ... without any limitation, all collector [sic] and court

requirement that ... Tenant alter or improve the Premises costs, and reasonable attorney's and

or any ... sewer ... or other system ... which is contained paralegal fees, whether incurred out

on or about the Premises ...; of court, at trial, on appeal, or in any

bankruptcy proceeding.

(ii) The ability of Tenant to secure, through the exercise

of due diligence and good faith efforts, all building and On January 2, 2002, Aaron opened for business in the leased

related permits necessary for Tenant to make its intended premises although many of the renovations and alterations

Initial Alterations ...; required under the lease were not complete. Aaron prepared

to complete its build-out of the leased premises and applied

*2 ...

for building permits from the City of Houston (“the City”).

(iv) The ability of Tenant to secure, through the exercise

of due diligence and good faith efforts, ... all necessary On January 16, 2002, the City's Utility Analysis Section,

permits, ... easements and approvals pertaining to the Water/Wastewater Department sent two letters, addressed to

Building, occupancy ... and any other governmental the landlords, describing defects with the landlords' property.

permits which, in the sole judgment of Tenant, are In the first letter, the City explained there was no record

necessary to permit it to construct the Alterations and of an easement connecting the landlords' property to the

operate upon the Premises.... Landlord agrees to execute nearby city sanitary sewer. In the second letter, the City

any applications or other documents requested by Tenant explained the landlords' property was built over an existing

in order to obtain any permits ... and approvals.... water line and an existing storm sewer easement and the City

would require documentation allowing the encroachments.

In the second letter, the City stated it would issue no

building permit until the problems described in the letter

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2

Azad v. Aaron Rents, Inc., Not Reported in S.W.3d (2009)

2009 WL 4842761

were resolved: “Until such time that proper documentation leased premises the following day and intended to seek

is presented to this office allowing this encroachment or the reimbursement and damages.

water line/easement is abandoned and relocated through the

City's Joint Referral Committee, a building permit cannot be On September 24, 2004, the landlords sued Aaron, alleging

issued.”The City included an identical statement regarding claims for breach of the lease. Aaron answered, raising,

the storm sewer easement. Milton Wells, the landlords' among other matters, the affirmative defense of prior breach

property manager, immediately went to the City, explained by the landlords based on their failure to (1) obtain a

the City's records were in error, and asked the City to certificate of occupancy, (2) complete all improvements

withdraw their letters. 1 The City refused to do so. by October 31, 2001, (3) provide electrical, mechanical,

plumbing, sewer, and heating and ventilation systems

*3 Willie Chandler, Aaron's construction manager, also met in good order, and (4) secure all necessary permits,

with City personnel. According to Chandler, Wells had given licenses, variances, easements and approvals. Aaron also

Chandler a “single 8 ½ x 11 inch document plat showing counterclaimed against the landlords for expenses incurred in

the layout of the shopping center where the lease[d] premises partially building out the leased space and for its attorney's

was [sic] located.”The City told Chandler the document was fees and expenses, pursuant to both the lease and “applicable

insufficient to solve the easement problem and the landlords Texas Code and Statutes.”

would have to resolve the problem themselves.

In May 2005, Aaron filed a traditional motion for summary

In January and February 2002, the landlords and Aaron judgment. It argued the landlords could not enforce a contract

exchanged correspondence regarding Aaron's late or non- they had breached before Aaron vacated the premises.

payment of rent and the landlords' failure to obtain a permit Specifically, Aaron argued the landlords had breached the

before beginning improvements and their failure to complete contract by failing to deliver a certificate of occupancy and

the improvements. By letter dated February 7, 2002, Aaron to complete the improvements by October 31, 2001. The trial

also asked the landlords to resolve the easement issues court orally denied the motion and noted the denial on the

immediately. According to Wells, in April 2002, he gave docket sheet.

Chandler all the surveys he had obtained in his research and

Chandler said he would take care of what was needed to *4 In March 2006, Aaron again moved for traditional

obtain a certificate of occupancy. summary judgment on the grounds of the landlords' prior

breach of the lease. In the 2006 motion, Aaron specifically

Without a building permit, Aaron could not complete its relied on the landlords' obligations under Paragraphs 35

build-out of the space and could not obtain a certificate of (quiet enjoyment) and 37 (conditions subsequent). After

occupancy. A certificate of occupancy is necessary for a considering the pleadings, the motion, the response, and

business to operate. According to the landlords' designated the summary judgment evidence, the trial court granted

expert, if the City learns a business is occupying a building the motion. 2 Aaron subsequently non-suited its claims for

without a certificate of occupancy, the City will give it thirty breach-of-contract damages, but maintained its claims for

days to obtain one, and if it cannot do so, the City will lock the attorney's fees and expenses.

premises. The landlords and their designated expert agreed

that Aaron would not be allowed to obtain the final building The landlords filed a motion for a take-nothing judgment on

permit or the certificate of occupancy until the easement Aaron's claim for attorney's fees. The trial court denied the

issues were fully resolved. The landlords also agreed the motion.

easement issues affected the landlords' ownership of the entire

property, not just the portion leased by Aaron, and knew they Following a non-jury trial on attorney's fees, the trial court

had to resolve these issues in order to re-lease the property. rendered final judgment, decreeing that the landlords take

The landlords did not fulfill these conditions while Aaron nothing on their claims against Aaron. The trial court

occupied the leased property. found Aaron was the prevailing party, and ordered that

Aaron recover the following amounts from the landlords: (1)

In March 2003, Auchan closed. By letter dated April 29, $75,000 attorney's fees for

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