Archer v. DDK Holdings LLC

463 S.W.3d 597, 2015 Tex. App. LEXIS 2749, 2015 WL 1393299
CourtCourt of Appeals of Texas
DecidedMarch 24, 2015
DocketNO. 14-14-00017-CV
StatusPublished
Cited by7 cases

This text of 463 S.W.3d 597 (Archer v. DDK Holdings LLC) 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
Archer v. DDK Holdings LLC, 463 S.W.3d 597, 2015 Tex. App. LEXIS 2749, 2015 WL 1393299 (Tex. Ct. App. 2015).

Opinion

OPINION

Tracy Christopher, Justice

This is an appeal from a nonjury trial of two sets of competing breach-of-contract claims between the parties to a commercial lease and the parties to a sublease of the same property. James and Gidget Archer challenge the legal sufficiency of the evidence to support the judgment against them. Finding no error, we affirm.

I. BACKGROUND

When James Archer and his wife Diane Campbell divorced, Campbell was awarded a large commercial property. She leased the property back to James, who sublet a portion of it to Hayes Leasing Co., Inc.; thus, James is the tenant under the Master Lease, and Hayes is the subtenant under the Sublease.1 James and his then-wife Gidget sued Campbell and Campbell’s successor, primarily for claims allegedly arising from the Master Lease, and sued Hayes for claims allegedly arising from the Sublease. We discuss the two contracts sepai'ately.

A. The Master Lease

Under the terms of the Master Lease that Campbell and James executed in February 2004, James was required to pay Campbell base rent, and to pay “additional rent” equal to the ad valorem taxes on the property and its improvements. James was not required to pay this additional rent before December 31st of the tax year. The Master Lease also addressed the parties’ maintenance-and-repair obligations, and provided that if Campbell wished to transfer the property, she had to give James thirty days’ written notice so that he could make an offer to purchase it.

After providing advance notice to James, Campbell sold a large portion of the property to a third party in October 2006. Effective as of the date of the sale, James and Campbell amended the Master Lease to exclude the part of the property that had been sold. Both at the time of the sale and in 2007, Campbell demanded that James pay additional rent in the amount of the 2006 ad valorem taxes that had accrued prior to the sale, but James refused.

B. The Sublease

James subleased a portion of the property to Hayes Leasing Co., Inc. in March 2004; in the sublease, James is the sub-landlord and Hayes is the subtenant. The Sublease included James’s warranty that the premises “are in compliance with all laws, ordinances, codes, rules and regulations” covering the premises. Like the Master Lease, the Sublease addressed the contracting parties’ respective obligations to maintain and repair the property. Among other things, the Sublease provided that James was responsible for the costs of repairing latent defects and for the property’s compliance with present and future laws relating to health and safety. The Sublease further provided that a party failing to perform its nonmon-etary obligations within thirty days after [601]*601written notice of the nonperformance would be in default. If James were in default, then Hayes could cure the default and demand reimbursement; if James failed to reimburse Hayes within ten days, then Hayes could deduct the unreimbursed expenses from the rent. The parties to the Sublease further agreed that an “Event of Default” under the Master Lease also would be an “Event of Default” under the Sublease.

In 2007, Hayes discovered that there were six or seven open building permits on the property, and that Hayes could not obtain a certificate of occupancy unless it first brought the property into compliance with city codes. Over a period of several years, Hayes spent over $18,000 to remedy these violations. James refused to reimburse Hayes for the work.

In November 2008, James notified Hayes that he had transferred the Sublease to his then-wife Gidget, but he continued to be Hayes’s primary contact for communications about the property. Like James, Gidget refused to reimburse Hayes for the costs of remedying code violations.

At around the same time that James transferred the Sublease to Gidget, a portion of the building’s roof was damaged by storm winds, and Hayes decided to replace the entire' roof. When contractors removed the existing roof, they discovered that the concrete underlay was crumbling and the metal supports had deteriorated. Because the roof repairs could not be completed until this damage was addressed, Hayes paid over $45,000 for these repairs to be performed on an emergency basis. After Hayes had emailed James at least three times and written to Gidget twice about reimbursement for the cost of repairing these items, Gidget’s attorney responded asserting that the defects were discoverable in 2004 and requesting additional support for Hayes’s conclusion that these were latent defects. Hayes then deducted the costs of repair from the rent. The parties resolved that dispute in March 2010, when Gidget signed a settlement agreement with Hayes, agreeing to share equally in the costs of these repairs. Because Hayes already had deducted the full amount of the repair costs from the rent, they agreed that Hayes would pay rent at a higher rate for sixteen months until Gidget had been repaid for her share of the repair costs.

In the meantime, additional repair issues had arisen. Less than two weeks before Gidget and Hayes settled their dispute about the roof repairs, Hayes wrote to Gidget regarding an awning that had begun slipping and holes in the parking lot. Hayes reported that one sinkhole in particular appeared to be related to an underground plumbing line. Once again, James was the one who responded, asserting that the awning “is not our expense”; he did not address the holes in the parking lot at that time. Before the end of March 2010, Hayes emailed James again, repeating earlier demands for a copy of James’s agreement with Gidget about the assignment of the Sublease and seeking copies of all correspondence to or from Campbell regarding the property. This time, however, Hayes sent a courtesy copy of the email to Campbell’s attorney, and Campbell began to demand that James maintain and repair the property in accordance with the Master Lease.

C. Campbell’s Repair Demands and Termination of the Master Lease

On March 25, 2010, Campbell wrote to James, demanding that he “commence repairs of all defects of the Premises” within fifteen days. The only defects mentioned at that time were the sinkhole and the awning. James’s attorney replied that [602]*602Hayes was making arrangements to complete the repairs.

Campbell responded on April 20, 2010. She noted that a provision in the Master Lease required the tenant to be given thirty days’ written notice before, a failure to perform became an “Event of Default,” and' that James had been given notice on March 25, 2010 to repair the awning and the sinkhole. She stated that James had until April 26, 2010 to address those matters. Campbell also included a lengthy report by Professional Engineering Inspections, Inc. regarding other repairs and maintenance that the property required, and gave James thirty days to remedy those issues.

On April 26, 2010, James’s attorney responded, “The alleged notice is rejected. Nearly all of the material items identified ... were conditions that were in existence [when the parties executed the Master Lease] on February 25, 2004. [James] took the Premises as is and had no obligation to improve the condition.” James took the position that he was required to perform only those repairs that were necessary to the continued use of the property, and he reasoned that because Hayes was still using the property, no repairs were necessary.

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Bluebook (online)
463 S.W.3d 597, 2015 Tex. App. LEXIS 2749, 2015 WL 1393299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/archer-v-ddk-holdings-llc-texapp-2015.