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Johnson Kidz, Inc. v. Veritex Community Bank, N.A.

Court of Appeals of Texas, Fifth District, Dallas

May 12, 2017

JOHNSON KIDZ, INC., Appellant
v.
VERITEX COMMUNITY BANK, N.A., Appellee

         On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-14-06164

          Before Justices Lang, Fillmore, and Schenck

          MEMORANDUM OPINION

          DAVID J. SCHENCK JUSTICE

         Appellant Johnson Kidz, Inc. ("Kidz"), the tenant of commercial property owned by appellee Veritex Community Bank, N.A. ("Veritex"), sued Veritex after the property became uninhabitable due to vandalism. Veritex answered asserting various affirmative defenses and conditionally counter sued Kidz for breach of contract and Kidz's owner, Nelson Johnson, for breach of a guaranty agreement, should there be a finding Veritex ratified a lease agreement (the "Lease") that was in effect when it acquired the property. Veritex sought traditional-summary judgment on its affirmative defenses and/or alternatively on its counterclaims should the court determine Veritex ratified the Lease, which Veritex denied it had. The trial court granted Veritex's motion without specifying the grounds on which the ruling was based. The order granting summary judgment awards no damages and states all relief not expressly granted is denied and indicates the order is a final judgment disposing of all parties and all claims including attorney's fee claims and is intended to completely dispose of the entire case.

         We conclude genuine issues of material fact exist as to Kidz's claims of breach of contract, constructive eviction, and violations of the property code, and note that Veritex did not move for summary judgment on Kidz's gross negligence and willful misconduct claims. We conclude there are no genuine issues of material fact as to Kidz's common-law fraud, fraudulent inducement, and negligent misrepresentation claims. Accordingly, we reverse, in part, the trial court's judgment dismissing Kidz's breach of contract, constructive eviction, violations of the property code, gross negligence, and willful misconduct claims, and remand those claims for further proceedings. We affirm, in part, the trial court's judgment dismissing Kidz's common-law fraud, fraudulent inducement, and negligent misrepresentation claims.

         It appears from the trial court's order granting summary judgment that the trial court did not grant Veritex its alternative, conditional request for relief on its counterclaims as no damages or attorney's fees were awarded. Thus, it appears the trial court found the summary judgment evidence established Veritex did not ratify the Lease and the condition upon which Veritex asserted its counterclaims was not triggered. Because we conclude a fact issue exists as to whether Veritex ratified the Lease, Veritex's counterclaims are remanded for further proceedings. Because all issues are settled in law, we issue this memorandum opinion. Tex.R.App.P. 47.4.

         Background

         On February 1, 2011, Kidz entered into a Commercial Lease Agreement (the "Lease") with Eoff Savannah Square, LLC ("Eoff"), as landlord, for commercial space in a multi-use office building located in Plano, Texas (the "Property"). Kidz operated a daycare center in that commercial space. The Lease term was from February 1, 2011, through March 31, 2017. Veritex succeeded Eoff as landlord through a foreclosure sale on May 1, 2012. On or about October 6, 2013, after operating hours, someone broke into the Property and vandalized both real and personal property, making the premises uninhabitable. Kidz reported the event to the police department and Veritex. The police suspected a former disgruntled employee of Kidz was the perpetrator. Veritex told Kidz that the Property would be repaired within 120 days, but the Property remained in a state of unusable disrepair thereafter. As a result, Kidz notified Veritex that it was terminating the Lease and demanded a refund of rental payments, the return of a security deposit, and payment for lost income in accordance with the governing Lease terms.

         When Veritex refused to accept Kidz termination notice, Kidz sued Veritex asserting claims of breach of contract, constructive eviction, violation of various property code provisions, fraud, fraudulent inducement, negligent misrepresentation, gross negligence and willful misconduct. Veritex counter sued Kidz for breach of the Lease and sued Johnson for breach of a guaranty agreement and requested an offset for funds recovered by Kidz. Initially, Veritex filed both no-evidence and traditional motions for summary judgment. Veritex abandoned those motions and later filed a traditional motion for summary judgment claiming: (1) Kidz does not have a claim for breach of contract because Veritex did not ratify the Lease; (2) if Veritex ratified the Lease, Kidz's claims are barred by the Lease's indemnity and exemptions from liability provisions; (3) Kidz caused the damages it claims support its constructive eviction claim; (4) because Kidz owed rent, the property code provisions governing security deposits do not apply; (5) Kidz's fraud and negligence claims are centered on nothing more than speculative comments about what might occur in the future; (6) Kidz recovered its damages from its insurance carrier; and (7) if Veritex ratified the Lease, Kidz breached the Lease by giving notice of termination after the deadline specified in the Lease. Veritex requested that the court enter a take-nothing judgment against Kidz, and/or alternatively, should the court find Veritex ratified the Lease, which Veritex denied, that Veritex have and recover of and from Kidz and Johnson, jointly and severally, rental payments and attorney's fees.

         The trial court granted Veritex's traditional motion for summary judgment without specifying the basis for its decision. The court's order granting summary judgment does not award Veritex damages or attorney's fees and includes recitals that "[a]ll relief not expressly granted is hereby denied" and "[t]his is a final judgment disposing of all parties and all claims including attorney's fee claims. It is the Court's intention to completely dispose of the entire case."[1]

         Standard of Review

         The standard of review in traditional-summary-judgment cases is well established. Gonzalez v. VATR Constr. LLC, 418 S.W.3d 777, 782 (Tex. App.-Dallas 2013, no pet.). The issue on appeal is whether the movant met its summary judgment burden by establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c). The movant bears the burden of proof and all doubts about the existence of a genuine issue of material fact are resolved against the movant. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). All evidence and any reasonable inferences must be viewed in the light most favorable to the nonmovant. Id. Evidence favoring the movant's position will not be considered unless it is not controverted. Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965). When, as is the case here, a party moves for summary judgment on multiple grounds and the trial court's order granting summary judgment does not specify the ground or grounds on which it was based, a party who appeals that order must negate all possible grounds upon which the order could have been based. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970).

         Discussion

         I. Summary Judgment on ...


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