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Austin Property Associates LLLP v. Huntington Beach 2, LLC

United States District Court, W.D. Texas, Austin Division

May 30, 2017




         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Defendant Huntington Beach 2, LLC (Huntington)'s Motion for Partial Summary Judgment [#31], Plaintiff Austin Property Associates LLLP (APA)'s (I) Response In Opposition to Defendant's Motion for Partial Summary Judgment and (II) Cross-Motion for Partial Summary Judgment [#32], Huntington's Reply [#33], Huntington's Response to APA's Cross-Motion for Partial Summary Judgment [#34], APA's Reply [#36], and the Report and Recommendation of the United States Magistrate Judge [#40] (R & R). Having reviewed the documents, the governing law, and the file as a whole, the Court now enters the following opinion and orders ACCEPTING the Magistrate Judge's recommendations.

         All matters in this case were referred to United States Magistrate Judge Mark Lane for report and recommendation pursuant to 28 U.S.C. § 636(b) and Rule 1(d) of Appendix C of the Local Court Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. The parties are entitled to de novo review of the portions of the Magistrate Judge's report to which they filed specific objections. 28 U.S.C. § 636(b)(1). All other review is for plain error. Douglass v. United Servs. Auto. Ass 'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc). Neither party in this case filed any objections. Nevertheless, this Court has reviewed the entire file de novo, and agrees with the Magistrate Judge's recommendation.


         I. The Dispute

         Long after the pebble of a personal injury lawsuit disrupts a pond, ancillary lawsuits continue to ripple outward. Here, an underlying personal injury suit disrupted the status quo, instigating the instant landlord-tenant dispute between APA and Huntington.

         At all times relevant to this lawsuit, HEB Grocery Company (HEB) subleased the property located at 9411 North Lamar Avenue in Austin, Texas (the Premises) from Huntington. See Def Mot. Summ. J. [#31-1] (Sublease). Huntington, however, does not own the property but is the successor-in-interest to the original lessee and leases the Premises from APA, the successor-in-interest to the original lessor. Compl [#1] ¶ 7. A master lease agreement governs APA and Huntington's landlord-tenant relationship (Master Lease), while a sublease agreement governs Huntington and HEB's relationship (Sublease). See id.

         Months before this lawsuit was filed, APA was named as a defendant in a personal injury lawsuit concerning events on the Premises (Castimore Litigation), [1] for which APA incurred legal expenses. Id. ¶ 11. Under the terms of the Master Lease and Sublease, APA sought reimbursement for these expenses from its lessee, Huntington. Id. ¶¶ 11-12. In particular, the Master Lease explicitly obligates Huntington to reimburse APA for "any and all liability, damage, expense, cause of action, suits, claims, or judgments arising from injury to person or property" on the Premises. Compl. [#1-1] Ex. A (Master Lease) at 2.

         Although Huntington initially refused to reimburse APA for its Castimore Litigation expenses, Huntington eventually agreed to fulfill its reimbursement obligations under the Master Lease. Compl. [#1-3] Ex. C (Letter Agreement) at 1. Huntington also agreed to provide proof of insurance on the Premises as required under the Master Lease by December 29, 2015. Id. at 2. Specifically, the Master Lease requires Huntington to:

[K]eep in effect upon [the Premises], fire insurance with extended coverage endorsement, written by a responsible insurance company or insurance companies authorized to do an insurance business in the state ... in an amount equal to not less than eighty per centum (80%) of the insurable value of the building improvements thereon ... [and which] provide that payment for any losses covered under or by said policy or policies of insurance shall be made to lessor and/or lessee ....

         Master Lease at 3. APA and Huntington memorialized their renewed understanding by executing an agreement (Letter Agreement). Letter Agreement at 4. By the end of December 2015, Huntington tendered only partial payment of the amount sought by APA, arguing APA sough an excessive and unreasonable amount for its legal expenses. Compl. [#1] ¶¶ 17-18; Def.'s Mot. Summ. J. [#31] at 5.

         Additionally, independent from the Master Lease and Huntington's relationship with APA, Huntington requires its subtenant, HEB, to maintain insurance on the Premises. Sublease at 12-14. HEB is self-insured for worker's compensation, commercial general liability, and auto liability in the amount of $2 million. Def.'s Mot. Summ. J. [#31-2] Ex. B (HEB Memorandum). HEB also has an umbrella liability policy, which covers the liability of HEB above the self-insured $2 million retention. Frost Aff. [#23-1, #23-2] Exs. A, B (Certificates of Liability Insurance).

         II. Procedural History

         APA filed this suit against Huntington on September 19, 2016, bringing claims for declaratory judgment and for breach of the Master Lease, Sublease, and Letter Agreement based on Huntington's failure to fully reimburse the attorneys' fees amount sought from the Castimore litigation. Compl. [# 1 ]. According to APA, Huntington failed to or refused to fully reimburse APA for the fees and costs incurred as a result of the Castimore litigation, including such fees and costs for enforcing its indemnification rights under the Master Lease. Id. ΒΆ 18. APA further claims Huntington failed to provide proof of insurance by December 29, ...

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