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Williams v. G&E Reit II Ennis Mob, LLC

Court of Appeals of Texas, Tenth District

May 3, 2017


         From the 40th District Court Ellis County, Texas Trial Court No. 90395

          Before Chief Justice Gray, Justice Davis, and Justice Scoggins (Chief Justice Gray concurring with a note) [*]


          AL SCOGGINS Justice.

         In two issues, appellant, Kevin Williams, M.D., contends that the trial court erred in granting summary judgment in favor of appellee, G&E HC REIT II Ennis MOB, LLC. Specifically, appellant argues that the trial court erred by denying his motion to continue the hearing on appellee's motion for summary judgment and by granting summary judgment in favor of appellee, even though he purportedly established that the underlying lease and guaranty agreements had been materially altered and, thus, were illusory. We affirm.

         I. Background

         On or about December 1, 2009, New Bardwell Partners, LP entered into a lease agreement with Bluebonnet Medical Care, P.A., whereby Bluebonnet was required to pay monthly rent on a commercial property. Also on December 1, 2009, Bart Crosby, D.O., Jason Moses, and appellant executed a Guaranty of Lease, wherein the guarantors agreed to be personally obligated under the lease. On or about December 22, 2010, appellees acquired New Bardwell Partners, LP.

         Under the lease, Bluebonnet and the guarantors were required to pay an annual basic rent of $129, 410.75, which was subject to an increase of 2% per annum. Broken into monthly payments, Bluebonnet and the guarantors were jointly and severally required to pay $10, 784.23 on the first day of each month, commencing on March 1, 2010. However, starting in August 2013, Bluebonnet and the guarantors began to fall behind in the rent payments, which triggered an Event of Default under the lease.

         Under the terms of the lease, in the event of default, Bluebonnet and the guarantors were jointly and severally responsible to pay all costs incurred by appellee, including court costs, reasonable attorney's fees, and expenses. Because Bluebonnet and the guarantors failed to pay such costs, on September 12, 2013, appellee terminated Bluebonnet and the guarantors' right to possession of the property. Appellee also elected to accelerate all amounts due under the lease, which, at the time of filing of appellee's original petition, was $550, 924.55.

         Once again, Bluebonnet and the guarantors did not make any payments. Thereafter, on October 21, 2014, appellee filed its original petition, asserting breach-of-contract claims and claims for attorney's fees against Bluebonnet and the guarantors.[1]Appellant filed an original answer denying the allegations made by appellee. He later amended his answer to include a counterclaim for breach of the lease against appellee and numerous affirmative defenses, including unclean hands, failure to mitigate, doctrine of illegality, doctrine of first material breach, and that appellee's damages were caused by its own actions or inaction or the actions of third parties.

         On May 18, 2015, appellee filed no-evidence and traditional motions for summary judgment, which were later amended. In its live motions for summary judgment filed on August 12, 2016, appellee asserted that: (1) appellant breached the lease by failing to make payments in connection therewith; (2) appellant is liable for attorney's fees under section 38.001 of the Texas Civil Practice and Remedies Code and the lease, see Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (West 2015); and (3) appellant's affirmative defenses and counterclaim fail as a matter of law. Attached to appellee's motions for summary judgment were the following documents, among other things: (1) the lease dated December 1, 2009; (2) a Tenant Estoppel Certificate dated December 14, 2010; (3) an Assignment and Assumption Agreement dated December 22, 2010; (4) a Notice of Default dated August 20, 2013; (5) a Notice of Lockout for Nonpayment of Rent dated September 12, 2013; (6) two affidavits of Robert Hooper, a Senior Portfolio Manager for Newmark Grubbs Knight Frank; and (7) the billing records for appellee's attorneys.

         On September 8, 2016, appellant responded to appellee's motions for summary judgment, arguing that appellee materially breached and/or altered the lease in 2012 by failing to keep the foundation on the premises in good working order and by failing to repair the foundation. Appellant also alleged that appellee breached the lease by failing to deliver to Bluebonnet the agreed-upon "finish-out" until well into 2011. And finally, appellant asserted that appellee failed to minimize its damages by re-letting the premises. In support of his response, appellant attached an affidavit he executed on September 8, 2016, as well as a copy of the lease, his guaranty, and the Assignment and Assumption Agreement.

         On September 13, 2016, appellee filed a reply to appellant's response to the summary-judgment motions. Included in appellee's response were objections to and a motion to strike appellant's September 8, 2016 affidavit. Appellee alleged that several portions of appellant's affidavit were conclusory and speculative, included improper lay witness opinion, did not demonstrate personal knowledge, and failed to lay a proper foundation to establish appellant's expertise and knowledge of the market rental value of the premises.

         On September 15, 2016, the day of the hearing on the motions for summary judgment, appellant filed a motion to continue the summary-judgment hearing "so that any defects in the form or substance of the affidavit in support of the Defendant's response may be supplemented and corrected." The trial court denied appellant's motion for continuance and granted, in part, appellee's objections and motion to strike portions of appellant's affidavit. Furthermore, after a hearing, the trial court granted appellee's amended motions for summary judgment and ultimately entered its final judgment against appellant on September 20, 2016. The final judgment required appellant to pay appellee $550, 924.55 under the lease, pre-judgment interest, $101, 035.32 in reasonable attorney's fees, and reasonable attorney's fees for possible appeals to this Court and the Texas Supreme Court. This appeal followed.

         II. Standard of Review

         Different standards of review apply to summary judgments granted on no-evidence and traditional grounds. See Tex. R. Civ. P. 166a(c), (i). A no-evidence summary judgment is equivalent to a pre-trial directed verdict, and we apply the same legal sufficiency standard on review. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). Once an appropriate no-evidence motion for summary judgment is filed, the non-movant, here appellant, must produce summary judgment evidence raising a genuine issue of material fact to defeat the summary judgment. See Tex. R. Civ. P. 166a(i). "A genuine issue of material fact exists if more than a scintilla of evidence establishing the existence of the challenged element is produced." Ford Motor Co. ...

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