A.G.E., Inc. v. Buford

105 S.W.3d 667, 2003 WL 1339028
CourtCourt of Appeals of Texas
DecidedMay 15, 2003
Docket03-02-00198-CV
StatusPublished
Cited by70 cases

This text of 105 S.W.3d 667 (A.G.E., Inc. v. Buford) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A.G.E., Inc. v. Buford, 105 S.W.3d 667, 2003 WL 1339028 (Tex. Ct. App. 2003).

Opinion

OPINION

BEA ANN SMITH, Justice.

This case involves a dispute over a right of first refusal. Henderson Buford acquired a piece of commercial property subject to a pre-existing ground lease. The lease agreement contained a first refusal granting the lessee the option to buy the property on the same terms as any contemplated sale. Neither Mr. Buford nor the previous owner informed the lessee of the sale to Mr. Buford before it occurred. When Mr. Buford did inform the lessee of the sale, the lessee threatened to enforce its right of first refusal unless Mr. Buford consented to a new sublease. Mr. Buford approved the sublease and the lessee made no further attempt to enforce its right. Three years later, however, the lessee assigned all its interest in the property to its sublessee, A.G.E., Inc. A.G.E. then sought to exercise the option to purchase and demanded the property for its estimated purchase price, less certain “damages.” Shortly thereafter, Mr. Buford terminated the lease because of A.G.E. and the former lessee’s failure to provide him with insurance certificates as required by the lease. After a partial summary judgment in favor of Mr. Buford, and a bench trial on the merits on the remaining issues, the trial court rendered its final judgment. The court determined that A.G.E. was bound by the previous lessee’s election not to enforce its right of first refusal. The court also determined that Mr. Buford properly terminated the lease. A.G.E. appeals these rulings. Finally, the court determined that a lease clause stating that Mr. Buford was to “provide” sewer service unambiguously required him to “maintain” such service throughout the duration of the lease, and that Mr. Buford had breached this obligation. Mr. Buford cross-appeals this ruling. We disagree with AG.E.’s contentions on appeal and will *671 affirm those portions of the trial court’s judgment that A.G.E. challenges. We agree with Mr. Buford’s contention on cross-appeal and will reverse and render judgment in his favor on the issue of sewer-service maintenance.

BACKGROUND

In 1964, Paul Walter leased a tract of commercial property to Ralph Moreland in a standard ground lease with a forty-year term. The lease agreement contained a right-of-first-refusal provision that obligated the lessor to give thirty days’ written notice to the lessee before any contemplated sale and to allow the lessee the option to purchase the land on the same terms. The lease agreement also contained a clause requiring the lessor’s consent to any sublease.

Mr. Walter, the lessor, died in 1975, leaving the property to his daughter, Paulette Miller. Mr. Buford’s law firm represented Ms. Miller in the probate proceedings. To pay her legal bill of $83,419, Ms. Miller assigned to Mr. Buford a 24.7 percent interest in the property. 1 Meanwhile, Mr. Moreland, the lessee, had assigned his interest in the lease to Citizens State Bank of Gorman. Neither Ms. Miller nor Mr. Buford notified Citizens of the assignment to Mr. Buford. In 1995, Citizens assigned its interest in the lease to Mid Texas Banc-shares, Inc. In 1997, Mr. Buford bought the remaining interest in the property from Ms. Miller for $125,000. Neither Ms. Miller nor Mr. Buford gave Mid Texas thirty days’ written notice of this sale.

Mr. Buford eventually informed Mid Texas that he had acquired the property in January 1998. Soon after that conversation, Mid Texas protested that Mr. Buford had violated Mid Texas’s right of first refusal, in breach of the lease agreement. Mid Texas threatened to file suit to enforce its right unless Mr. Buford consented to a new sublease. Mr. Buford did consent, and Mid Texas subleased the property to A.G.E. the next month and made no further attempt to enforce its option to purchase. More than three years later, in March 2001, Mid Texas assigned to A.G.E. its interest in the leasehold, including the right of first refusal and any other claim that Mid Texas might have “in connection with the breach of the Lease when property was sold by Paulette Miller to Henderson Buford III without prior notice of the contemplated sale to Mid Texas.... ” Ten days before this assignment, A.G.E. notified Mr. Buford that it had become the lessee of the property and that it was going to exercise the right of first refusal with a written offer to buy the property for $46,312.00 This amount represented A.G.E.’s determination of what Mr. Buford had paid for the property, $159,362.55, less A.G.E.’s “actual damages” of $113,050.00, which represented the sum of the rent it had paid plus its “lost profits” and $15,000.00 expended for “stop gap repairs to the building.” A.G.E. did not inquire of Mr. Buford what he had paid for his interest before making this offer, but simply made its own determination that he had paid $156,263.55, and that it had suffered damages of $113,050.00.

Mr. Buford responded by sending a letter to Mid Texas and A.G.E. stating that Mid Texas had agreed not to exercise its right of first refusal in exchange for his approval of a new sublease to A.G.E. and that Mid Texas had not attempted to exercise its option within the thirty-day time frame provided by the lease. The letter also announced that, despite repeated requests and notices, Mid Texas had been in *672 default of its obligation under the lease to provide the lessor with insurance certificates, and that he was terminating the lease pursuant to a clause allowing termination “if [the] [l]essee shall neglect or fail to perform all or any of the covenants or agreements or conditions contained in this agreement....”

Three days later, A.G.E. sued Mr. Buford seeking actual damages, specific performance of its purchase option, and attorney’s fees. Mr. Buford filed a counterclaim seeking declaratory relief, damages for A.G.E.’s failure to vacate the property upon termination of the lease, and attorney’s fees. Mr. Buford then filed two motions for partial summary judgment: one was a traditional motion asking the court to grant his request for declaratory relief; the other was a no-evidence motion asking the court to rule that A.G.E. take nothing because it could produce no evidence of several elements of its breach-of-lease claim.

The court granted the traditional motion, declaring that A.G.E. and Mid Texas’s failure to provide insurance certificates to Mr. Buford constituted a breach of the lease which, as a matter of law, entitled Mr. Buford to terminate the lease. The court also declared that Mid Texas elected as a matter of law in 1998 not to accept or exercise its right of first refusal, that A.G.E. is bound by that election, and that any option to buy the property on the terms that Mr. Buford had acquired it had lapsed. The court added that A.G.E.’s attempt to exercise the option was ineffective, and that there was no contract to enforce when A.G.E. filed suit. Finally, the court declared that the lease did not require Mr. Buford to repair or maintain the property. The court also granted the no-evidence motion in part, ruling that A.G.E. failed to produce evidence raising a genuine issue of material fact on the element of Mid Texas’s diligence in giving notice of its intent to exercise its first-refusal right, and ordering that A.G.E. therefore take nothing on its claim for specific performance of its option. The court also ruled that A.G.E.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Diane Piwko v. Stacey Acevedo
Court of Appeals of Texas, 2024
Freeman v. Harleton Oil & Gas, Inc.
528 S.W.3d 708 (Court of Appeals of Texas, 2017)
EWB-I, LLC v. PlazAmericas Mall Texas, LLC
527 S.W.3d 447 (Court of Appeals of Texas, 2017)
Vance v. Popkowski
534 S.W.3d 474 (Court of Appeals of Texas, 2017)
Shields Ltd. Partnership v. Bradberry
526 S.W.3d 471 (Texas Supreme Court, 2017)
Tregellas v. Archer
507 S.W.3d 423 (Court of Appeals of Texas, 2016)
Ben Jarvis v. Robert J. Peltier, Sr. and Calvin C. Smith
400 S.W.3d 644 (Court of Appeals of Texas, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
105 S.W.3d 667, 2003 WL 1339028, Counsel Stack Legal Research, https://law.counselstack.com/opinion/age-inc-v-buford-texapp-2003.