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DDR DB Stone OAK, LP v. Rector Party Co., LLC

Court of Appeals of Texas, Fourth District, San Antonio

December 6, 2017

DDR DB STONE OAK, LP, Appellant
v.
RECTOR PARTY CO., LLC; Don Lasseter; and Joslyn Boberg; Appellees

         From the 438th Judicial District Court, Bexar County, Texas Trial Court No. 2014-CI-01261 Honorable Larry Noll, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice Karen Angelini, Justice Patricia O. Alvarez, Justice

          MEMORANDUM OPINION

          KAREN ANGELINI, JUSTICE

         MOTION TO DISMISS DENIED; REVERSED AND REMANDED IN PART; AFFIRMED IN PART

         This appeal arises from a dispute involving a commercial lease. The landlord, DDR DB Stone Oak L.P., sued its former tenant, Rector Party Co. L.L.C., for breach of contract, and the tenant's guarantors, Don Lasseter and Joslyn Boberg, for breach of the guaranty agreements. After holding a bench trial, the trial court found in favor of DDR and awarded it $35, 757.62 plus interest for unpaid rent and $20, 000.00 for damages arising from Rector's breach of the lease's continuous operation clause. In this appeal, DDR argues the trial court erred by failing to award it additional damages and by excluding expert testimony on attorney's fees. Because we conclude that the trial court erred by excluding the attorney's fees testimony, we reverse the portion of the judgment denying DDR's request for attorney's fees, remand the case to the trial court for a new trial on attorney's fees, and affirm the remainder of the judgment.

         Factual and Procedural Background

         On April 23, 2010, Rector signed a ten-year lease to rent space in a shopping center located in San Antonio, Texas, and owned by DDR. The lease permitted Rector to operate a "Party City" costume and party supply store on the property. Rector's co-owners, Don Lasseter and Joslyn Boberg, executed personal guaranty agreements guaranteeing Rector's performance under the Lease. The lease contained a "continuous operation" clause that required Rector to be open for business, fully stocked and staffed, on all business days for approximately three years. Rector agreed to pay liquidated damages of $100 per day for any breach of the continuous operations clause.

         Nevertheless, on November 23, 2012, Rector closed its store and removed its furniture, fixtures, and inventory from the premises. On November 26, 2013, Rector sent a letter to DDR informing it that Rector was suffering severe operational losses and, therefore, it was discontinuing the operation of its business. Rector further informed DDR that Rector was looking for a replacement tenant to sublet the premises and it would appreciate DDR's assistance in marketing the premises to obtain a suitable replacement tenant.

         Over the next eight months, Rector continued to pay its rent; however, beginning on August 1, 2013, Rector failed to pay its rent and other charges. On September 4, 2013, Rector started to move its inventory back into the leased premises so it could re-open the store. On September 6, 2013, DDR notified Rector of its failure to pay a total of $40, 757.62 in rent and other charges, and provided Rector five days in which to cure its default. On September 10, 2013, DDR received two checks from Rector: a check in the amount of $5, 000.00 and a check in the amount of $35, 757.62. After receiving the checks, DDR sent Rector an email stating: "Your default is cured." On the same day, DDR sent Rector written notice commanding it to vacate the leased premises. In response, Rector vacated the leased premises and stopped payment on the $35, 757.62 check. On September 11, 2013, DDR re-entered the leased premises.

         DDR eventually relet the space to another tenant. DDR retained Rector's $20, 000.00 security deposit.

         DDR sued Rector for breach of contract and Lasseter and Boberg for breach of the guaranty agreements. DDR sought damages for the unpaid rent and for expenses associated with reletting the premises. DDR also requested attorney's fees. Rector, Lasseter, and Boberg (collectively, "Rector") filed an answer in which they generally denied DDR's allegations, asserted the defenses of waiver and estoppel, and claimed that their performance was excused because DDR materially breached the lease.

         The case was tried to the court. After the evidence was presented, the trial court ruled in favor of DDR but awarded it substantially less in damages than it had requested. The trial court signed a judgment awarding DDR damages in the amount of $35, 757.62 plus interest. At DDR's request, the trial court filed findings of fact and conclusions of law. In its conclusions of law, the trial court concluded that (1) DDR waived any of Rector's breaches occurring prior to September 10, 2013, by inaction and by notifying Rector that its default was cured; (2) Rector was liable to DDR for damages for breach of the continuous operations clause from the date of the email stating that the default was cured to the date the replacement tenant began paying rent; (3) $20, 000.00 was the reasonable value of the damages incurred by DDR for Rector's breach of the continuous operation provision of the lease; (4) Rector's security deposit of $20, 000.00 was forfeited and applied to pay the damages due to DDR for breach of the continuous operation provision of the lease; and (5) DDR breached the lease by excluding Rector from the premises the day after it had notified Rector that its default was cured. DDR appealed.

         Issues Presented on Appeal

         DDR presents two issues on appeal. In its first issue, DDR argues the trial court erred in failing to award it additional damages for the expenses it incurred in reletting the premises to the replacement tenant. In its second issue, DDR argues the trial court erred in excluding its expert testimony on attorney's fees. However, before the briefs were filed in this appeal, Rector filed a motion to dismiss arguing that DDR had waived its right to appeal the trial court's judgment based on the acceptance of benefits ...


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