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Ltd. v. Xerox Commercial Solutions, LLC

Court of Appeals of Texas, Eighth District, El Paso

May 9, 2018

1320/1390 DON HASKINS, LTD., Appellant,

          Appeal from the County Court at Law No. 5 of El Paso County, Texas (TC# 2013DCV1044)

          Before McClure, C.J., Rodriguez, and Palafox, JJ.


          GINA M. PALAFOX, Justice

         Appellant 1320/1390 Don Haskins, Ltd., ("Don Haskins, Ltd." or "Landlord"), is a Texas limited partnership named for two commercial buildings it owns and operates that are located next to each other at 1320 and 1390 Don Haskins Drive in El Paso, Texas. Pursuant to a long-term commercial lease, Don Haskins, Ltd., leased space in one of its buildings to Appellee Xerox Commercial Solutions, LLC ("Xerox" or "Tenant"), as a successor-in-interest of ACS Commercial Solutions, Inc. ("ACS"). In its space, Xerox operated a call center employing hundreds of employees providing customer support and technical services to client businesses. In this appeal, Appellant Don Haskins, Ltd., challenges a partial summary judgment rendered in favor of Appellee Xerox, on the issue of liability only, for Xerox's claim that Don Haskins, Ltd., breached a temporary parking agreement entered in conjunction with the parties' commercial lease. We affirm.


         The Lease

         In December of 2005, Don Haskins, Ltd., as landlord, and ACS, predecessor-in-interest of Xerox, as tenant, entered a seven-year written lease, titled "Standard Industrial Lease" ("Lease"), renewable for two additional terms of five years each, for a portion of a commercial building located at 1390 Don Haskins Drive in El Paso ("Premises" or "Project"). By terms of the Lease, the Landlord promised to lease premises consisting of approximately 50, 263 square feet of a 201, 051square foot building, or nearly 25 percent of the available space, to be used by Tenant for all uses related to a call center, in exchange for payment of a rental obligation, due monthly, beginning after completion of improvements.

         Relevant to this appeal, the Lease included two sections regarding parking for the premises. First, Section 8.1 obligated the Landlord to create a "common area" on the premises, to include a minimum of 350 parking spaces, pedestrian sidewalks, and other improvements, "for the general use in common of tenants of the Project, and their invitees[.]" This common area remained subject to the exclusive control and management of the Landlord in its reasonable discretion. Landlord could modify or make changes deemed reasonably necessary provided such modifications did not unreasonably interfere with tenant's use of, access to, or parking for the premises. Second, Section 8.2 provided that the Landlord may at any time temporarily close any part of the common area to make repairs or changes, or for any other reasonable purpose, provided Tenant had reasonable access to and parking for its premises. Moreover, Landlord could allocate parking spaces among Tenant and other tenants in the Project if, in the Landlord's opinion, such parking facilities became crowded-provided the allocation and reasonable proximity of Tenant parking was not reduced.

          In addition to these sections, the Lease attached and incorporated a Premises/Site Plan referred to as Exhibit A depicting the common areas with parking spaces available for the Project.[1]The lease also included an attachment labeled "Rules and Regulations, " which stated in paragraph 10 that: "Tenant will instruct its employees to park in the areas on the land where the Project is located and in spaces reasonably designated, if any, by Landlord for employee parking [emphasis added]."

         The Amendments and Temporary Parking Agreement

         Beginning in May of 2006 through August of 2012, the parties entered into five additional agreements connected with their Lease. Four agreements were labeled in sequence as the First, Second, Third, and Fourth Amendments to the Standard Industrial Lease, and the fifth agreement was titled, "Temporary Parking Agreement." Each amendment expressly acknowledged that the Lease remained in full force and effect except as modified by terms of the amendment. Beginning with the Temporary Parking Agreement, Xerox was recognized as the successor-in-interest of ACS and Tenant of the Lease dated December 2005.

         Signed in November 2006, the Second Amendment reflected that early in the leasing relationship disagreements arose over parking issues at the leased premises.[2] The landlord objected that certain employees of Xerox's predecessor were parking on the property of the adjacent building-an area not designated for their use. The Second Amendment referenced the parties' contemporaneous settlement agreement in which the Landlord agreed not to sue, and thereby released Tenant and all its agents and affiliates, for all claims related to Tenant's parking use, or other trespasses, of the adjacent premises occurring on or before the date of the agreement. In return, the Tenant formally waived its right to terminate the Lease at the end of the fourth year, and further agreed it would no longer cause or permit any parking or transportation activity to take place on the adjacent premises.

         Despite the settlement, the parties continued to have parking issues which were addressed in the Fourth Amendment, signed in December 2011, [3] and the Temporary Parking Agreement (the "TPA"), signed in August of 2012. Among other things, the Fourth Amendment reduced the base rent effective at the time from $60, 147.76 per month, to $50, 680.85 per month, from January 2012 through February 2013, then increasing thereafter in accordance with a specified schedule through the end of the lease term, which was therein extended to June 30, 2016. Although not expressed in the Amendment itself, according to the Landlord's pleadings below, the reduction in rent occurred due to Xerox's predecessor having earlier entered into a separate agreement with a nearby church to use part of its property as a parking area for its employees (referred to as the "ancillary parking lot"), along with a shuttle service used to transport employees to and from the call center, in exchange for monthly payments paid to the church.[4]

         In August 2012, the parties again addressed parking issues for the call center by signing the Temporary Parking Agreement. By terms of the TPA, the Landlord agreed it would provide no less than three hundred and fifty-eight (358) parking spaces, referred to as "alternate temporary parking spaces, " in temporary parking areas depicted in an exhibit attached and incorporated to the agreement. The exhibit showed an aerial view of both buildings, located at 1320 and 1390 Don Haskins Drive, with parking areas including 358 parking spaces marked and overlapping on both properties. The Landlord further agreed to install signage in the parking lot, to ensure the parking lot was "lit substantially similar to Tenant's existing parking spaces, " and to erect a chain link fence in the rear of the building.[5] By its terms, the TPA restricted Xerox to parking only in the temporary parking areas depicted on the exhibit. Fourteen days after the effective date of the TPA, vehicles that were parked outside of the temporary parking areas were subject to being towed.

         The Termination of the Temporary Parking Agreement

         Months after signing the TPA, the Landlord terminated the agreement, at will, after Cardinal Health, the tenant of the building at 1320 Don Haskins Drive, decided to expand operations. On December 19, 2012, the Landlord sent notice to Xerox that it was terminating the TPA effective ten days later. The notice letter prohibited Xerox from any further use of 200 parking spaces behind the Cardinal Health building. Xerox was provided up to 120 total spaces located directly in front of and behind the leased premises, as reflected on a Site Plan attached as Exhibit "A."

         In response, Xerox sent a letter dated December 20, 2012, notifying the Landlord that reduction of the parking spaces below the "350 space minimum provided in the lease, or the 358 spaces provided in the temporary parking license [was] not acceptable, " and would be viewed as a "material landlord breach of the lease." On January 2, 2013, Xerox additionally sent the Landlord a "Notice of Landlord Default, " which reiterated Xerox's position that the Landlord materially breached both the Lease and the TPA by "unilaterally" reducing the allotted parking by more than 200 spaces, and demanded a cure of the default.

         On February 8, 2013, Xerox sent a second "Notice of Landlord Default, " which listed all of the parties' prior agreements, including the Lease, the four amendments, and the TPA, referring to them collectively as the "Contract." In the February Notice, Xerox stated that it was giving the Landlord notice that it was in default under "the Contract, " but focused solely on the TPA, complaining that the Landlord had agreed to provide Xerox with 358 parking spaces in the TPA, but had improperly reduced the available spaces by over 200, leaving Xerox with only 120 parking spaces for its operations. In the February Notice, Xerox demanded that the default be cured within 30 days or it would seek appropriate legal action.


         On March 1, 2013, the Landlord filed suit against Xerox seeking a declaratory judgment that it had not breached either the Lease or the TPA. Among other things, the Landlord alleged the Lease merely provided a minimum of 350 spaces for the common use of all tenants. Additionally, the Landlord claimed it retained the exclusive right to allocate parking spaces in its "reasonable discretion." The Landlord further asserted that the parties had previously resolved their parking disputes when they signed the Second and Fourth Amendments to the Lease, and that despite being aware of parking issues at the premises, Xerox's predecessor-in-interest agreed to a lease extension to June 30, 2016.

         In response, Xerox filed an answer denying all allegations, together with a counterclaim for breach of contract. For its claim, Xerox referred to the Lease, each amendment thereto, the Settlement Agreement, and the TPA, or collectively the parties' "Contract." Xerox alleged that "[t]he Landlord breached the Contract by reducing the 358 parking spaces the Landlord [was] required to provide for Xerox's use by over 200, leaving Xerox with less than 120 parking spaces available for its use." As a result of the breach, Xerox alleged it suffered damages including having to spend significant sums each month to provide alternative parking arrangements for its employees.

         Thereafter, the Landlord filed a verified answer to the counterclaim denying all of Xerox's allegations and alleged, among other things, that the TPA was unenforceable due to its lack of mutuality of obligation and consideration, and/or on the basis it was terminable at will.

         Xerox's Motions for Partial Summary Judgment

         Pursuant to Texas Rule of Civil Procedure 166a(c), Xerox filed a traditional motion for partial summary judgment on the issue of liability on its counterclaim for breach of contract. Tex.R.Civ.P. 166a(c). In support of its argument, Xerox attached as evidence the Lease, the four amendments, the TPA, and an affidavit from David Jarrett, Vice-President of Real Estate for Xerox, who authenticated the evidence and described the Landlord's unilateral termination of the parking agreement.

         In response, the Landlord objected that Xerox's motion was "defective, " arguing it failed to specify the grounds upon which it was made, pointing out that the motion referred to eight separate documents as being the "Contract" that the Landlord allegedly violated. In addition, the Landlord asserted the TPA was not a valid, enforceable agreement as it lacked mutuality of obligation; and, even if it was enforceable, it was temporary and indefinite in duration. Moreover, the Landlord claimed the TPA lacked any provision preventing it from terminating the temporary parking rights at will and without notice. Finally, the Landlord claimed the only enforceable, valid contract in evidence was the Lease, as modified by amendments, which provided in Section 8.1: "All parking areas … shall at all times be subject to the exclusive control and management of Landlord in its reasonable discretion."

         In support of its response, the Landlord included two affidavits, one from Trudi Farschman, a paralegal working for its property management company, and the other from Randy Lee, its attorney of record. Farschman's affidavit attached twenty-seven documents that included correspondence and emails between the parties pertaining to issues addressed in the Second, Third, and Fourth Amendment, and the TPA. Lee's affidavit attached excerpts from the deposition of David Jarrett, Xerox's property manager.[6]

         In reply, Xerox asserted its motion was not defective as lacking adequate notice of the breach of contract claim as the Landlord responded substantively. Thereafter, the trial court granted Xerox's motion for partial summary judgment on its counterclaim expressly finding that the Landlord had breached the TPA. The court also ruled that the determination of the amount of damages owed by the Landlord, if any, would be determined at trial. Thereafter, Xerox filed a second motion for partial summary judgment seeking to dismiss the Landlord's petition for declaratory judgment and to realign the parties for purposes of trial. The trial court granted Xerox's motion.

         The ...

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