Larry E. Potter v. Clear Channel Outdoor, Inc.

• Court: Court of Appeals of Texas
• Decided: July 2, 2009
• Docket: 01-07-00578-CV
• Status: Published

Opinion

Opinion issued July 2, 2009

In The

Court of Appeals

For The

First District of Texas

____________

NO. 01-07-00578-CV

LARRY E. POTTER, Appellant

V.

CLEAR CHANNEL OUTDOOR, INC., Appellee

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On Appeal from the 333rd District Court

Harris County, Texas

Trial Court Cause No. 2005-66527

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MEMORANDUM OPINION

          Appellant, Larry E. Potter, appeals a judgment rendered upon a motion for summary judgment filed by appellee, Clear Channel Outdoor, Inc. (“Clear Channel”), in a dispute concerning the construction of lease agreements. We determine whether the trial court erred in granting Clear Channel’s motion for traditional summary judgment and in denying Potter’s motion for traditional summary judgment. We reverse the trial court’s judgment in part, affirm the judgment in part, and remand this cause with instructions. Background

          In 1997, National Advertising Company (“National”), a predecessor in interest to Clear Channel, and Potter executed 10 identical ground leases, six of which are the subject of this appeal. The leases were for a 10-year term, with an effective starting date of August 1, 1995. Pursuant to each lease, National was permitted to erect billboard signs on tracts of land belonging to Potter in exchange for the greater of a fixed monthly rental or a percentage of the gross income that National derived from selling advertising space on the billboard signs. Under paragraph nine of each lease, “at the termination of the lease,” National had a “right of first refusal” to continue to rent the land if Potter chose further to rent or to use his land for outdoor advertising. This right expired one month “after the lease expire[d].” Paragraph three of each lease also gave National, under certain conditions, the right to “terminate this lease” and provided Potter the option to purchase the entire sign structures and permits from National “[i]n the event of such cancellation or in the event this lease is terminated for any reason and the parties have not executed a new lease or renewal of this Lease.”

          During the term of the leases, Clear Channel purchased six signs from a predecessor outdoor advertising company, and those six leases were assigned to Clear Channel. Clear Channel did not succeed in contacting Potter regarding renewal of its leases before their expiration date of July 31, 2005. On August 1, 2005, Clear Channel sent the usual lease payments to Potter, but Potter returned the checks by a letter dated August 25, 2005, in which he noted that Clear Channel’s leases had expired by their own terms on July 31, 2005, and that he was “declining to extend the ground leases for an additional one (1) year term on a holdover basis.” On August 25, 2005, a representative of Clear Channel reached Potter, and they discussed renewing the leases. On August 29, 2005, Potter forwarded proposed renewal leases to Clear Channel, which Clear Channel received the following day. On September 1, 2005, Potter sent Clear Channel a letter informing Clear Channel that he intended to exercise his right to purchase the sign structures and permits, with the purchase price to be decided pursuant to the “terms of the ground lease.”

          After receiving Potter’s September 1 letter, Clear Channel’s attorney sent a letter to Potter detailing Clear Channel’s position that, because its leases had not “terminated, but rather [had] expired,” paragraph three of the leases did not provide Potter the option to purchase the sign structures, and stating also that Clear Channel was declining Potter’s offer to purchase the signs. The letter also recited that Clear Channel was willing to continue discussions with Potter to execute new leases or to renew the prior leases, as had already been communicated to Potter on August 30, but that if a new lease agreement was not reached by October 20, 2005, Clear Channel would begin removing the sign structures. Clear Channel continued to attempt to negotiate renewal leases with Potter after this letter, but expressed to Potter that it had problems with the language of the proposed renewal leases, and suggested alternate terms.

          On October 18, 2005, Potter filed suit against Clear Channel. Potter sought (1) a temporary restraining order, temporary injunction, and permanent injunction preventing Clear Channel from removing the billboards; (2) a judgment in the amount equal to the fair market value for the use of the billboards on his properties beyond the contractual period under the theory of quantum meruit; and (3) a declaratory judgment that Clear Channel had exercised its right of first refusal under paragraph nine by declining to accept the terms of Potter’s proposed renewal leases and that Potter was therefore entitled to exercise his right to purchase the entire sign structures and permits from Clear Channel for the current market value of an installed fabricated structure. He also prayed for recovery of his attorney’s fees and costs.

          Clear Channel filed an answer that generally denied the allegations in Potter’s petition, raised the affirmative defenses of waiver and ambiguity, and contained a counterclaim for declaratory judgment. In its counterclaim, Clear Channel sought declarations (1) that in order for the option to purchase under paragraph 3 to become effective, the lease must have “actually been terminated”; (2) that the leases had not terminated, but had expired; and (3) that therefore Potter did not have an option to purchase the signs. It also sought to recover its attorney’s fees and costs.

          Potter filed a motion for traditional summary judgment on his declaratory judgment claim only; while that motion was still pending, Clear Channel filed its own motion for summary judgment that also addressed only the declaratory judgment claims. Neither motion addressed the quantum meruit claim in Potter’s petition, and Clear Channel’s motion did not address Potter’s claim for attorney’s fees and costs.

          Potter’s motion for traditional summary judgment sought declarations that (1) Clear Channel had exercised its right of first refusal by rejecting Potter’s proposed lease agreement and (2) Potter was entitled to exercise his option to purchase sign structures and permits from Clear Channel. As grounds for his motion, Potter argued that

(1)     Clear Channel’s rejection of the terms of Potter’s proposed renewal lease agreements was an exercise of its right of first refusal under paragraph nine of the leases and Clear Channel could no longer accept Potter’s offer to extend the lease agreements and

(2)     Potter was entitled to exercise his right to purchase the entire sign structures and permits pursuant to the terms of paragraph three of the Leases, because such paragraph gave him the option to purchase “in the event [that the] lease [was] terminated for any reason and the parties [had] not executed a new lease or renewal of the lease.” Potter asserted that because the leases had expired and there were no new leases or renewal of the prior leases between the parties, his option to purchase became effective.

In addition to a declaratory judgment in his favor, Potter sought recovery of his attorney’s fees and costs.

         

          In its motion for traditional summary judgment, Clear Channel also pursued a judicial declaration interpreting paragraph three of the leases. Clear Channel’s motion did not specify whether Clear Channel was moving for summary judgment on its declaratory judgment counterclaim, or attempting to defeat Potter’s declaratory judgment claim, or both, although language in the motion suggested the last. As its grounds for the grant of its summary judgment, Clear Channel argued that

          (1)     the Leases were not ambiguous and Potter had no effective option to purchase because the leases had “expired,” rather than “terminated,” and paragraph three provided Potter the option to purchase only upon the “termination” of the lease

          (2)     alternatively, the leases were ambiguous and should be construed against Potter and the leases should be construed to mean that the option to purchase did not arise in the event of the expiration of the leases, but only on their termination; and

          (3)     alternatively, Potter had waived any option to purchase because discussions continued between Potter and Clear Channel about possible renewal of the leases after Potter had attempted to exercise his option to purchase.

          Clear Channel prayed that summary judgment be granted “on all grounds stated” in the motion, that Potter “take nothing on his claim against Clear Channel,” and that the court award Clear Channel its costs of court and reasonable attorney’s fees. Clear Channel also prayed that, “if summary judgment for Clear Channel [was] not rendered as to all of Clear Channel’s claims, or for all the relief requested,” the trial court enter an order specifying the facts that were without substantial controversy.

          On June 18, 2007, the trial court granted Clear Channel’s motion for summary judgment and denied Potter’s motion for summary judgment in an order that read: On this day came to be considered Plaintiff Larry E. Potter’s Motion for Summary Judgment and Defendant Clear Channel Outdoor, Inc.’s Cross-Motion for Summary Judgment. The court, having considered the motion, pleadings, responses, and summary judgment evidence hereby DENIES Plaintiff’s Motion for Summary Judgment and GRANTS Defendant’s Cross-Motion for Summary Judgment.

It is therefore ORDERED that Plaintiff’s Motion for Summary Judgment is DENIED and Defendant’s Cross-Motion for Summary Judgment is GRANTED.

           On August 14, 2007, the trial court issued a final judgment, confirming the grant of Clear Channel’s motion and the denial of Potter’s motion, and denying Clear Channel’s request for attorney’s fees. The judgment read:

By Order dated June 18, 2007, the Court denied Plaintiff Larry E. Potter’s Motion for Summary Judgment and granted Defendant Clear Channel Outdoor, Inc.’s Cross-Motion for Summary Judgment. In doing so, the Court failed to address Clear Channel’s request for an award of attorney’s fees. Accordingly, it is

ORDERED that Defendant Clear Channel Outdoor, Inc.’s request for an award of attorney’s fees is hereby denied.

This is a final and appealable judgment, which, in conjunction with the Court’s order of June 18, 2007, disposes of all claims and parties in this cause.

 Standard of Review

          In two issues, Potter contends that the trial court erroneously granted Clear Channel’s motion for summary judgment and erroneously denied his motion for summary judgment.

            Both parties’ motions sought summary judgments that would declare the parties’ rights pursuant to the declaratory judgment actions. We review declaratory judgments under the same standards as other judgments. See Tex. Civ. Prac. & Rem. Code Ann. § 37.010 (Vernon 2008). We look to the procedure used to resolve the issue below to determine the standard of review on appeal. City of Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). When a trial court resolves a declaratory judgment action on competing motions for summary judgment, “we review the propriety of the declaratory judgment under the same standards that we apply in reviewing a summary judgment.” Id.

          We review a trial court’s decision to grant or to deny a motion for summary judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192, 199 (Tex. 2007) (citing rule for review of grant of summary judgment and reviewing denied cross-motion for summary judgment under same standard). Although a denial of summary judgment is not normally reviewable, we may review such a denial when both parties move for summary judgment and the trial court grants one motion and denies the other. Id. at 192. When the trial court’s ruling granting one summary judgment motion necessarily denies another pending motion for summary judgment on the same issue, such as here, we imply the ruling of denial. See Frank’s Int’l, Inc. v. Smith Int’l, Inc., 249 S.W.3d 557, 559 n.2 (Tex. App.—Houston [1st Dist.] 2008, no pet.). In our review of such cross-motions, we review the summary judgment evidence presented by each party, determine all questions presented, and render the judgment that the trial court should have rendered. Tex. Mun. Power Agency, 253 S.W.3d at 192 (citing Comm’rs Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997)).

          Under the traditional summary judgment standard, the movant has the burden to show that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., Inc., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true, and every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Nixon, 690 S.W.2d at 548–49. A defendant moving for summary judgment must conclusively negate at least one essential element of each of the plaintiff’s causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). If the order granting the summary judgment does not specify the grounds upon which judgment was rendered, we must affirm the summary judgment if any of the grounds in the summary judgment motion is meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

Clear Channel’s Motion for Summary Judgment

          Potter’s first issue complains of the trial court’s grant of Clear Channel’s motion for summary judgment. Potter challenges all three of Clear Channel’s grounds for summary judgment, arguing that the trial court incorrectly interpreted the leases and that he did not waive his right to exercise his option to purchase.

A.      Construction of the Leases

          Clear Channel’s first two grounds for summary judgment related to the construction of the leases and specifically to the question of whether the phrase,

. . . [i]n the event of such cancellation or in the event this lease is terminated for any reason and the parties have not executed a new lease or renewal of this Lease, [Potter] shall have the option to purchase the entire sign structure and permits from [National (later, Clear Channel)] . . .

that is contained in paragraph three of the leases provided Potter an option to purchase the sign structures and permits when the lease terms expired. Clear Channel argued that the word “terminated” did not include the expiration of a lease. Potter argued that the phrase “terminated for any other reason” included the expiration of the leases at the end of their natural terms.

          We construe a lease under the well-established rules of contract construction. See Luccia v. Ross, 274 S.W.3d 140, 146 (Tex. App.—Houston [1st Dist.] 2008, pet. denied). In construing a written contract, the primary concern is to ascertain and to give effect to the parties’ intentions as expressed in the document. Frost Nat’l Bank v. L&F Distribs., Ltd., 165 S.W.3d 310, 311–12 (Tex. 2005). We consider the entire writing and attempt to harmonize and to give effect to all of the provisions of the contract by analyzing the provisions with reference to the whole agreement. Id. at 312. No single provision is given controlling effect. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). “In harmonizing these provisions, terms stated earlier in an agreement must be favored over subsequent terms.” Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). We construe contracts “from a utilitarian standpoint bearing in mind the particular business activity sought to be served” and “will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive.” Frost Nat’l Bank, 165 S.W.3d at 312 (quoting Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). If, after the pertinent rules of construction are applied, the contract can be given a definite or certain legal meaning, it is unambiguous, and we construe it as a matter of law. Id.

          Both parties agree that the leases had expired, and that the parties had not executed new leases or a renewal of the leases, when Potter informed Clear Channel that he was exercising his option to purchase the sign structures and permits under the terms of the leases. Both parties assert that paragraph three of the leases, pertaining to such option to purchase, is unambiguous, although they construe the provision differently.

          We agree that the disputed language is unambiguous and so determined recently in another appeal before us involving three additional leases between Potter and National, containing identical language and executed on the same day as the leases at issue in this appeal. In National Advertising Co. v. Potter, we decided that language identical to that before us in this appeal provided Potter the option to purchase sign structures and permits when the leases expired at the end of their natural terms. See No. 01-06-01042-CV, 2008 WL 920338, at *5–7 (Tex. App.—Houston [1st Dist.] Apr. 3, 2008, pet. denied) (memo op.). We held that the leases were not ambiguous and that the word “terminate,” as used in the leases, included the expiration of the lease term. Id. at *6–7. In so holding, we explained that          [e]xamining paragraph three and giving its terms their generally accepted meaning, it is clear that the parties intended that, in the event that a specific sign or location became useless by the occurrence of one of various specified situations, National was granted the right to immediately terminate its Lease of the specific location. Paragraph three grants Potter the option to purchase the sign structures and permits from National, “[i]n the event of such cancellation.” (Emphasis added.)

          However, paragraph three contemplates a second situation in which Potter is granted the option to purchase the signs and permits from National: “in the event this lease is terminated for any reason and the parties have not executed a new lease or renewal of this Lease.” Paragraph three also governs in the event that the Leases are terminated “for any reason” and the parties do not execute a new lease or a “renewal.” Use of the term “renewal” naturally contemplates an expiration. That the parties could have intended the circumstance in which one party prematurely terminates the Lease and then “renews” it is not a reasonable interpretation. Hence, the parties must have intended “terminated,” as used within the Leases, to include expiration . . . . The term[] “terminated”. . . include[s] the expiration of the Leases on their natural terms . . . .          

Id.

          Clear Channel contends that there are material differences between National Advertising and this cause and cites to different evidence before the trial court in the motions for summary judgment at issue and the fact that, in National Advertising, the parties presented an agreed statement of facts and filed an agreed motion for judgment based on the agreed facts. Clear Channel argues that extrinsic evidence presented to the trial court in this cause—evidence related to the negotiations in the original signing of the leases in 1997 and to the attempts to renew the leases in 2005—supports upholding the trial court’s ruling, even though such ruling implicitly construes the contract contrary to our interpretation of the same language in National Advertising. Clear Channel further argues that it is proper for us to consider the “circumstances surrounding the execution of an unambiguous contract” when interpreting that contract, citing to City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex. 1968).

          Clear Channel has misconstrued the holding of Pinehurst. A reviewing court may consider the surrounding circumstances present at the time that the contract was entered into in order to determine whether the contract is ambiguous, but, once a reviewing court decides that a contact is unambiguous, extrinsic evidence may be not be utilized to determine the parties’ intent. See Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520–22 (Tex. 1995); Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 731–32 (Tex. 1981). Because we have determined that the language at issue is unambiguous, we do not consider the proffered extrinsic evidence in interpreting the unambiguous language of the leases at issue.

          After reviewing the summary judgment motions and responses in this case, and the accompanying evidence to the extent that it may be considered, we determine that our previous interpretation of the same language, in identical leases, signed by the same parties, on the same day, should govern our interpretation of the leases before us in this appeal. We conclude, for the reasons set out in our opinion in National Advertising, that paragraph three of the leases is not ambiguous and declare that, under its terms, Potter had an option to purchase the entire sign structure and permit which was the subject of each lease upon the expiration of the lease term.

B.      Waiver

          Clear Channel’s final ground for summary judgment was its affirmative defense that, if Potter had an effective option to purchase, he had waived that option because discussions continued between Potter and Clear Channel about possible renewal of the leases after the date that the leases expired and after the date on which Potter had attempted to exercise his option to purchase. As evidence for this ground, Clear Channel cited its own attempts to contact Potter in order to renew the leases, Potter’s August 29 forwarding of proposed renewal leases in response to Clear Channel’s overture to Potter on August 25, and a September 30 email from a representative of Clear Channel to Potter, in which the representative mentioned speaking to Potter and proposed certain terms for renewal of the leases.

          “The affirmative defense of waiver can be asserted against a party who intentionally relinquishes a known right or engages in intentional conduct inconsistent with claiming that right.” Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996).   In order to be entitled to a summary judgment on waiver, Clear Channel had to establish conclusively each element of this affirmative defense. See Sci. Spectrum, 941 S.W.2d at 911. Therefore, Clear Channel was required to establish conclusively that Potter had either (1) expressly waived his option to purchase or (2) engaged in conduct inconsistent with his option to purchase. See Tenneco, 925 S.W.2d at 643.

          Clear Channel did not do so. There is no evidence in the record that Potter expressly waived his option to purchase, and the evidence offered on this matter does not conclusively establish an implied intent on the part of Potter to waive his option to purchase. “Waiver is largely a matter of intent, and for implied waiver to be found through a party’s actions, intent must be clearly demonstrated by the surrounding facts and circumstances.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). In order to establish waiver by conduct, the conduct must be “unequivocally inconsistent” with claiming a known right. Van Indep. Sch. Dist. v. McCarty, 165 S.W.3d 351, 353 (Tex. 2005). The evidence on summary judgment does not conclusively establish that Potter engaged in “clear, unequivocal, and decisive acts” evidencing the intention to waive his option to purchase. See Estes v. Wilson, 682 S.W.2d 711, 714 (Tex. App.—Fort Worth 1984, writ ref’d n.r.e.) (“It is an established rule of law that to prove an implied waiver of a legal right, there must be a clear, unequivocal and decisive act of a party showing a purpose or acts which amount to estoppel on his part.”). We hold that Clear Channel did not meet its burden to be entitled to summary judgment on the affirmative defense of waiver.

C.      Resolution

          Having concluded that, under the unambiguous language of paragraph three of the leases, Potter had an option to purchase the entire sign structure and permit that was the subject of each lease upon the expiration of the lease term, and, having determined that Clear Channel did not conclusively establish that Potter waived his option to purchase the sign structures and permits, we hold that Clear Channel was not entitled to the summary judgment requested. We sustain Potter’s first issue.

Potter’s Motion for Summary Judgment

          In his second issue, Potter asserts that the trial court erred in denying his motion for summary judgment. As previously detailed, in his summary judgment motion, Potter sought two declarations from the trial court: (1) that Clear Channel had exercised its right of first refusal by rejecting Potter’s proposed lease agreement and (2) that Potter was entitled to exercise his option to purchase sign structures and permits from Clear Channel. He also sought attorney’s fees.

          We have already determined that the leases provided Potter an option to purchase the sign structures and permits upon the expiration of the leases,and, therefore, we hold that Potter was entitled to summary judgment declaring that he had such an option. Our resolution of Potter’s other question in his declaratory judgment action—whether Clear Channel had exercised its right of first refusal—is likewise guided by our opinion in National Advertising. In that case, when deciding whether National had exercised its right of first refusal under an identical paragraph nine as in the leases before us, we stated, “Here, National declined to renew the Leases on the terms offered by Potter in his August 25, 2005 correspondence. Hence, National exercised its right of first refusal when it rejected Potter’s offer.” Nat’l Adver., 2008 WL 920338, at *4. For the same reasons stated in that opinion, we declare that Clear Channel exercised its right of first refusal when it declined to renew the leases under the terms offered by Potter to Clear Channel in the letter mailed on August 29, 2005.

          However, as to the issue of attorney’s fees, Potter’s summary judgment sought recovery of his attorney’s fees and costs for both the declaratory judgment claim and his quantum meruit claim, and the evidence provided to the trial court did not distinguish between fees related to each distinct claim. Potter may not recover attorney’s fees and costs for the quantum meruit claim on which he did not prevail or recover damages. See Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997). Additionally, any “award [of] costs and reasonable and necessary attorney’s fees as are equitable and just” in a declaratory judgment action is within the discretion of the trial court. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (Vernon 2008).           The trial court presumably did not award attorney’s fees or costs to Potter because it denied his motion for summary judgment on his declaratory judgment claim. Because we have reversed the trial court’s denial of Potter’s summary judgment, because we have declared in his favor the issues before the trial court for declaratory judgment, and because any award for costs and reasonable and necessary attorney’s fees “as are equitable and just” in a declaratory judgment action is discretionary, we conclude that cause should be remand to the trial court for it to consider the issue of Potter’s attorney’s fees and costs on his declaratory judgment.

          We sustain Potter’s second issue.

Conclusion

          We reverse the trial court’s judgment in part, affirm the judgment in part, and remand this cause with instructions. We reverse the judgment to the extent that it rendered summary judgment for Clear Channel and implicitly granted a declaratory judgment for Clear Channel. We affirm the judgment to the extent that it implicitly rendered a take-nothing judgment against Potter on his quantum meruit claim. We remand this cause to the trial court with instructions to render a declaratory judgment in favor of Potter consistent with this opinion and to consider Potter’s request for the award of attorney’s fees and costs under Texas Civil Practice and Remedies Code section 37.009. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009.

                                                                        Tim Taft

Justice

Panel consists of Chief Justice Radack and Justices Sharp and Taft.