J. Michael Epstein and Robert B. Sisson v. Wendy's International, Inc. and Emerald Land Company, L.C.

Court of Appeals of Texas

J. Michael Epstein and Robert B. Sisson v. Wendy's International, Inc. and Emerald Land Company, L.C.

DecidedMarch 7, 2006

Docket14-04-00704-CV

StatusPublished

This text of J. Michael Epstein and Robert B. Sisson v. Wendy's International, Inc. and Emerald Land Company, L.C. (J. Michael Epstein and Robert B. Sisson v. Wendy's International, Inc. and Emerald Land Company, L.C.) 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.

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J. Michael Epstein and Robert B. Sisson v. Wendy's International, Inc. and Emerald Land Company, L.C., (Tex. Ct. App. 2006).

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Opinion

Affirmed and Memorandum Opinion filed March 7, 2006

Affirmed and Memorandum Opinion filed March 7, 2006.

In The

Fourteenth Court of Appeals

____________

NO. 14-04-00704-CV

J. MICHAEL EPSTEIN and ROBERT B. SISSON, Appellants

V.

WENDY=S INTERNATIONAL, INC. and EMERALD LAND COMPANY, L.C., Appellees

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Cause No. 01-05091

M E M O R A N D U M O P I N I O N

Appellants, J. Michael Epstein and Robert B. Sisson, appeal the summary judgment granted in favor of appellees, Wendy=s International, Inc and Emerald Land Company, L.C., on their claim for specific performance. We affirm.

Background

In 1985, Dayton Hudson Corporation (ADHC@) owned a shopping center on Loop 610 South in Houston. On October 29, 1985, DHC sold a portion of that tract of land to Wendy=s. At the time of the sale, DHC and Wendy=s entered into a ARepurchase Agreement-Right of First Refusal (the AAgreement@). The Agreement required Wendy=s to provide DHC with written notice of any bona fide offer to purchase the property that Wendy=s desired to accept. The Agreement also provided that DHC would have the right of first refusal and option to repurchase the property on the same terms and conditions offered by the prospective buyer.^{^[1]} The Agreement further provided an exception to the right of first refusal if Wendy=s sold the property to Aan affiliate, franchisee, or subsidiary of [Wendy=s], for use as a fast food facility under a franchise or similar agreement with [Wendy=s].@ The Agreement was recorded in the Harris County real property records in November 1985.

On March 13, 1989, DHC conveyed the remaining portion of the shopping center to Epstein and Sisson. On May 22, 1992, Wendy=s leased its portion of the property to Emerald Foods, Inc., J. David Karam, Donald L. Feinstein, and Mark George. The lease included an option to purchase the premises. In December 1998, pursuant to the option to purchase in the lease, Wendy=s sold the property leased by Emerald Foods to the real estate holding company, Emerald Land Company, L.C. On January 2, 2001, more than two years after the sale of the property to Emerald Land, DHC assigned the right of first refusal to appellants.

Appellants moved for summary judgment on the ground that Wendy=s breached the right of first refusal when it sold the property to Emerald Land because Emerald Land is not a Wendy=s affiliate, franchisee, or subsidiary. Appellees filed a motion for summary judgment in which they argued the conveyance to Emerald Land fell within the exception to the right of first refusal because Emerald Land was a franchisee. The trial court denied the parties= competing motions for summary judgment. After having conducted additional discovery, appellees filed a second motion for summary judgment on the ground that Emerald Foods and Emerald Land constituted a single business enterprise or, alternatively, are alter-egos, and, therefore, the sale to Emerald Land fell within the exception. The trial court also denied this motion for summary judgment. Appellees filed their third motion for summary judgment on the ground that appellants did not own the right of first refusal at the time of the December 1998 sale. The trial court granted this motion.

Appellants appeal the granting of the summary judgment in favor of appellees on the ground that they did not own the right of first refusal at the time of the December 1998 sale and also the denial of their motion for summary judgment that was based on their argument that the sale of the property to Emerald Land did not fall within the exceptions to the right of first refusal. Appellees bring a contingent cross-appeal requesting that, if we find it was error for the trial court to grant summary judgment on appellants= lack of ownership of the right to first refusal, we consider the grounds raised in the other motions for summary judgment, find, as a matter law, that Emerald Land was a franchisee of Wendy=s and, therefore, the December 1998 sale was not subject to the right of first refusal, and affirm the judgment.

Standard of Review

To prevail on a motion for summary judgment, a defendant must establish that no material fact issue exists and that it is entitled to judgment as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999). Once a defendant establishes that no genuine issue of material fact exists regarding an element of the plaintiff=s claim, the plaintiff must present competent summary judgment evidence raising a fact issue on that element. Guest v.

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Affirmed and Memorandum Opinion filed March 7, 2006

Affirmed and Memorandum Opinion filed March 7, 2006.

In The

Fourteenth Court of Appeals

____________

NO. 14-04-00704-CV

J. MICHAEL EPSTEIN and ROBERT B. SISSON, Appellants

V.

WENDY=S INTERNATIONAL, INC. and EMERALD LAND COMPANY, L.C., Appellees

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Cause No. 01-05091

M E M O R A N D U M   O P I N I O N

Appellants, J. Michael Epstein and Robert B. Sisson, appeal the summary judgment granted in favor of appellees, Wendy=s International, Inc and Emerald Land Company, L.C., on their claim for specific performance. We affirm.

                                                  Background

In 1985, Dayton Hudson Corporation (ADHC@) owned a shopping center on Loop 610 South in Houston. On October 29, 1985, DHC sold a portion of that tract of land to Wendy=s. At the time of the sale, DHC and Wendy=s entered into a ARepurchase Agreement-Right of First Refusal (the AAgreement@). The Agreement required Wendy=s to provide DHC with written notice of any bona fide offer to purchase the property that Wendy=s desired to accept. The Agreement also provided that DHC would have the right of first refusal and option to repurchase the property on the same terms and conditions offered by the prospective buyer.^{^[1]} The Agreement further provided an exception to the right of first refusal if Wendy=s sold the property to Aan affiliate, franchisee, or subsidiary of [Wendy=s], for use as a fast food facility under a franchise or similar agreement with [Wendy=s].@ The Agreement was recorded in the Harris County real property records in November 1985.

On March 13, 1989, DHC conveyed the remaining portion of the shopping center to Epstein and Sisson. On May 22, 1992, Wendy=s leased its portion of the property to Emerald Foods, Inc., J. David Karam, Donald L. Feinstein, and Mark George. The lease included an option to purchase the premises. In December 1998, pursuant to the option to purchase in the lease, Wendy=s sold the property leased by Emerald Foods to the real estate holding company, Emerald Land Company, L.C. On January 2, 2001, more than two years after the sale of the property to Emerald Land, DHC assigned the right of first refusal to appellants.

Appellants moved for summary judgment on the ground that Wendy=s breached the right of first refusal when it sold the property to Emerald Land because Emerald Land is not a Wendy=s affiliate, franchisee, or subsidiary. Appellees filed a motion for summary judgment in which they argued the conveyance to Emerald Land fell within the exception to the right of first refusal because Emerald Land was a franchisee. The trial court denied the parties= competing motions for summary judgment. After having conducted additional discovery, appellees filed a second motion for summary judgment on the ground that Emerald Foods and Emerald Land constituted a single business enterprise or, alternatively, are alter-egos, and, therefore, the sale to Emerald Land fell within the exception. The trial court also denied this motion for summary judgment. Appellees filed their third motion for summary judgment on the ground that appellants did not own the right of first refusal at the time of the December 1998 sale. The trial court granted this motion.

Appellants appeal the granting of the summary judgment in favor of appellees on the ground that they did not own the right of first refusal at the time of the December 1998 sale and also the denial of their motion for summary judgment that was based on their argument that the sale of the property to Emerald Land did not fall within the exceptions to the right of first refusal. Appellees bring a contingent cross-appeal requesting that, if we find it was error for the trial court to grant summary judgment on appellants= lack of ownership of the right to first refusal, we consider the grounds raised in the other motions for summary judgment, find, as a matter law, that Emerald Land was a franchisee of Wendy=s and, therefore, the December 1998 sale was not subject to the right of first refusal, and affirm the judgment.

                                           Standard of Review

To prevail on a motion for summary judgment, a defendant must establish that no material fact issue exists and that it is entitled to judgment as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999). Once a defendant establishes that no genuine issue of material fact exists regarding an element of the plaintiff=s claim, the plaintiff must present competent summary judgment evidence raising a fact issue on that element. Guest v. Cochran, 993 S.W.2d 397, 401 (Tex. App.CHouston [14th Dist.] 1999, no pet.). In conducting our review of the summary judgment, we take as true all evidence favorable to the nonmovant, and make all reasonable inferences in the nonmovant=s favor. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). A defendant, as movant, is entitled to summary judgment if it either disproves at least one essential element of each of the plaintiff=s causes of action or establishes all the elements of an affirmative defense. American Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

                        Ownership of the Right of First Refusal

In their first issue, appellants claim the trial court erred in granting appellees= motion for summary judgment because they owned the right of first refusal at the time of the December 1998 conveyance of the property to Emerald Land. Appellees argue appellants have no right to enforce the right of first refusal because they were not parties to the Agreement and such right was not assigned to them.

Generally, a plaintiff may not enforce a contract to which he is not a party. Rodriguez v. U.S. Sec. Assocs., Inc., 162 S.W.3d 868, 876 (Tex. App.CHouston [14th Dist.] 2005, no pet.); IP Petroleum Co. v. Wevanco Energy, L.L.C., 116 S.W.3d 888, 898 (Tex. App.CHouston [1st Dist.] 2003, pet. denied) (op. on reh=g). For appellants to be entitled to enforce the right of first refusal, the right must have been specifically assigned to them by DHC, as provided in the Agreement:

The provisions of this Agreement are intended in each instance to be binding upon and inure to the benefit of the signatories hereto, to the successors and assigns of [Wendy=s] who become owners of the property and to the successors and assigns of DHC to whom the right, title and interest herein is specifically assigned.

The term Aassignment@ has a comprehensive meaning and in its most general sense means the transfer or setting over of property or some right or interest from one person to another. Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc., 938 S.W.2d 102, 113 (Tex. App.CHouston [14th Dist.] 1996, no writ); University of Tex. Med. Branch at Galveston v. Allan, 777 S.W.2d 450, 452 (Tex. App.CHouston [14th Dist.] 1989, no writ). It is a manifestation by the owner of a right or property of his intention to transfer such right or property to another. Twelve Oaks Tower I, Ltd., 938 S.W.2d at 113; Pape Equip. Co. v. I.C.S., Inc., 737 S.W.2d 397, 399 (Tex. App.CHouston [14th Dist.] 1987, writ ref=d n.r.e.). An assignment is a contract between the assignor and the assignee, and operates by way of agreement or contract. Allan, 777 S.W.2d at 453.

On January 2, 2001, DHC [Target] assigned its interest in the right of first refusal to appellants:

For valuable consideration, the receipt of which is hereby acknowledged, TARGET CORPORATION, formerly named DAYTON HUDSON CORPORATION (AASSIGNOR@) does GRANT, ASSIGN, and CONVEY to J. MICHAEL EPSTEIN and ROBERT B. SISSON (AASSIGNEES@) all of ASSIGNOR=S right, title, and interest in the First Refusal . . .

The sale of the subject property to Emerald Land occurred in December 1998, more than two years prior to DHC=s [Target=s] assignment of its right of first refusal to appellants in January 2001. Thus, there was no contractual relationship by way of assignment between Wendy=s and appellants in December 1998, and, therefore, appellants have no right to complain of any alleged breach of the right of first refusal by Wendy=s. See Temple EasTex, Inc. v. Old Orchard Creek Partners, Ltd., 848 S.W.2d 724, 730 (Tex. App.CDallas 1992, writ denied) (op. on reh=g) (explaining that only parties to a contract generally have the right to complain of its breach).^{^[2]}

Appellants admit the January 2001 assignment was obtained from Target (formerly DHC) without payment or consideration of any kind. However, appellants further contend appellees are barred by the doctrine of quasi-estoppel to deny them the right of first refusal as allegedly established by correspondence in 1992 acknowledging appellants= purported ownership of the right:

!       On June 25, 1992, Wendy=s sent a letter to DHC requesting execution of a Termination of Option to Repurchase.

!       On July 6, 1992, DHC responded that it had sold its interest in the property to appellant in 1989, and that Wendy=s Ashould send this termination agreement to [appellants] as they now have the first right of refusal [sic].@^{^[3]}

!       On July 8, 1992, Wendy=s forwarded a copy of DHC=s July 6 letter and the Termination of Option to Repurchase to appellants, requesting that they execute it. The Option states, in relevant part, AOn March 13, 1989, DHC sold its interest in the property, along with the option to repurchase, to Epstein and Sisson.@

!       On July 21, 1992, Wendy=s sent a copy of the Repurchase Agreement - Right of First Refusal to appellants= attorney, requesting execution of the Termination of Option to Repurchase.

!       On August 10, 1992, Wendy=s notified appellants= attorney that it had found a recorded Release of Repurchase Right by DHC and, therefore, nothing was required of appellants, but that Ayour clients have the Right of First Refusal pursuant to paragraph 5 of the Repurchase Agreement. This right only becomes an issue if Wendy=s sells the property. We are currently leasing to a franchisee.@^{^[4]}

Quasi-estoppel precludes a party from asserting, to another=s disadvantage, a right inconsistent with a position previously taken by that party. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). The doctrine is applicable when it would be unconscionable to allow a party to maintain a position inconsistent with one in which he acquiesced, or of which he accepted a benefit. Id. Quasi-estoppel is a defensive doctrine. Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 136 (Tex. App.CHouston [14th Dist.] 2000, pet. dism=d); see also Sun Oil Co. v. Madeley, 626 S.W.2d 726, 734 (Tex. 1981) (AEstoppel . . . is a defensive theory.@); Watson v. Nortex Wholesale Nursery, Inc., 830 S.W.2d 747, 751 (Tex. App.CTyler 1992, writ denied) (A[E]quitable estoppel is defensive in character.@). Moreover, estoppel does not create a contract right that does not otherwise exist without the estoppel. Sun Oil Co., 626 S.W.2d at 734; Watson, 830 S.W.2d at 751; Clifton v. Ogle, 526 S.W.2d 596, 602 (Tex. Civ. App.CFort Worth 1975, writ ref=d n.r.e.).

Appellants contend a contract already existed, i.e., the contract was formed by the execution of the Repurchase Agreement - Right of First Refusal by DHC and Wendy=s and, therefore, the issue is one of identity in the contractual relationship. A contract existed between Wendy=s and DHC, but there was no contract between Wendy=s and appellants as DHC=s successors because there was no assignment of the right of first refusal from DHC to appellants. We are not persuaded that the series of correspondence upon which appellants rely constitutes an assignment for quasi-estoppel. Estoppel cannot be used to create a contract between Wendy=s and appellants where, without an estoppel, none would exist. See Sun Oil Co., 626 S.W.2d at 734; Watson, 830 S.W.2d at 751; Clifton, 526 S.W.2d at 602. The Agreement provides for a specific assignment. Therefore, appellants may not rely on quasi-estoppel to establish an enforceable contract. Appellants= first issue is overruled.

Because of our disposition of appellants= first issue, we need not reach their second issue or the issues raised in appellees= contingent cross-appeal. Accordingly, the judgment of the trial court is affirmed.

/s/      J. Harvey Hudson

Justice

Judgment rendered and Memorandum Opinion filed March 7, 2006.

Panel consists of Justices Hudson, Frost, and Seymore.

^{^[1]} The Agreement states, in relevant part, with respect to DHC=s right to first refusal:

First Refusal: If [Wendy=s] receives a bona fide offer to repurchase the Property and/or any improvements thereon, or any part thereof, or any tract or parcel which includes the Property within twenty (20) years from the date hereof which [Wendy=s] desires to accept, [Wendy=s] shall give DHC notice in writing of such offer, setting forth the name and address of the proposed purchaser, the amount of the purchase price, and all other terms and conditions of said offer, and DHC shall have the first right and option for a period of thirty (30) days following receipt of such notice to repurchase the premises which are the subject of such offer to the purchaser therein identified upon the same terms and conditions given to DHC.

^{^[2]} Appellants point out that DHC conveyed the property to them by way of general warranty deed Atogether with all rights, privileges and appurtenances thereto . . .@ Appellants do not state that DHC conveyed the right of first refusal at that time, but assert that DHC recognized the transfer of that right to them. Although it is not entirely clear, it appears appellants are arguing that the right of first refusal was transferred to them when the property was conveyed to them in 1989. However, there was no specific assignment of the right of first refusal as expressly required in the Agreement between DHC and Wendy=s.

^{^[3]} Emphasis added.

^{^[4]} Emphasis added.

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