# Bob E. Woody v. J. Black's, LP And J. Black's GP, LLC > Texas Court of Appeals, 3rd District (Austin) · December 18, 2015 URL: https://www.frixlaw.com/law-library/cases/4076226 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** December 18, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4076226 ## How later opinions describe it (automated extraction) - recognizing that courts focus on facts alleged and recovery sought to categorize action as one for money had and received or for restitution - recognizing that specific performance is an equitable remedy ## Opinion text 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 CERTIFICATE OF COMPLIANCE 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 3660 Stoneridge Road, Suite F-102 Austin, TX 78746-7759 Telephone: (512) 477-4242 Telecopier: (512) 477-2271 Jeremy J. Gaston jgaston@hmgllp.com 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. [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4076226. Public record. Not legal advice.