NP Anderson Cotton Exchange, L.P. v. Potter

230 S.W.3d 457, 2007 Tex. App. LEXIS 5480, 2007 WL 2012877
CourtCourt of Appeals of Texas
DecidedJuly 12, 2007
Docket2-06-121-CV
StatusPublished
Cited by71 cases

This text of 230 S.W.3d 457 (NP Anderson Cotton Exchange, L.P. v. Potter) 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
NP Anderson Cotton Exchange, L.P. v. Potter, 230 S.W.3d 457, 2007 Tex. App. LEXIS 5480, 2007 WL 2012877 (Tex. Ct. App. 2007).

Opinion

OPINION

TERRIE LIVINGSTON, Justice.

I. Introduction

Appellant and cross-appellee NP Anderson Cotton Exchange, L.P. appeals from a declaratory judgment in favor of appellee and cross-appellant Sandra Potter d/b/a 7th Street Grill giving Potter the option to extend a commercial lease for five additional years and awarding Potter attorney fees. 1 We affirm the trial court’s judgment on the lease interpretation, but we reverse the trial court’s award of attorney fees and remand for an evidentiary hearing on this point.

II. Background Facts and Procedural Histoiy

A. The Parties

Potter is the sole proprietor of the 7th Street Grill restaurant in downtown Fort Worth. Her husband, Rex Potter, is also substantially involved in this family-owned and operated business. The 7th Street Grill has been in its present location for at least sixteen years and, before a menu expansion, was known as the 7th Street Hamburger Company.

NP Anderson is a limited partnership formed for the purpose of acquiring the *461 Neil P. Anderson Building, located at 411 West 7th Street in downtown Fort Worth, and developing it from an office building into high-end residential condominiums. NP Anderson is affiliated with the real estate development firm Amicus Interest, LLC and its principals.

B. The Original January 2001 Lease

Potter, the tenant, and NP Anderson, the landlord, are both assignees of parties who originally entered into the contract disputed in this case. On January 22, 2001, the original and long-time tenants, Mark and Linda Gabioud d/b/a/ 7th Street Hamburger Company, entered into a lease agreement with TCDFW 411 West Seventh, L.P. (“TCDFW”), the original landlord, and then-owner of the Neil P. Anderson building. The January 2001 lease (“2001 Lease”) was for a 70-month initial term ending on December 31, 2006, and included the following language: “This Lease shall not be amended, changed or extended, except by written instrument signed by both parties hereto.”

Paragraph 42 of the main body of the 2001 Lease also expressly incorporated several attached documents, including “Exhibit ‘D’ — Special Stipulations,” which contained an option for the tenant to renew and extend the lease for one additional term of five years: “Provided no Event of Default exists and Lessee is occupying the entire Leased Premises at the time of such election, Lessee may renew this Lease for one (1) additional period of five (5) years on the same terms provided in this Lease.” [Emphasis in original.]

Exhibit D of the 2001 Lease also contained the following language, which NP Anderson relies upon to support its argument that the option had lapsed:

Lessee’s rights under this Exhibit shall terminate if this Lease or Lessee’s right to possession of the Premises is terminated, Lessee assigns any of its interest in this Lease or sublets any portion of the Premises, or Lessee fails to timely exercise its option under this Exhibit, time being of the essence with respect to Lessee’s exercise thereof.

C. The Assignment of the Lease

In mid-2003, Potter, who is Mark Ga-bioud’s sister and had gained substantial experience managing parts of the 7th Street Hamburger Company for the Ga-biouds, obtained a Small Business Administration loan of $150,000 to purchase the business. Potter purchased the business, expanded the menu, and gave the restaurant its new name, the 7th Street Grill.

Potter, Mark and Linda Gabioud, and then-landlord TCDFW all signed a Consent to Assignment (“2003 Consent”) that was effective May 27, 2003. In the trial court, the most debated portion of the 2003 Consent was the following clause:

Assignee [Potter] agrees to assume Assignor’s [the Gabiouds’] obligations under the Lease and to accept the premises in their present “AS IS” condition. It is agreed and understood that the aforesaid Lease shall remain in full force and effect without modification except as expressly set forth herein. Accordingly, all remaining terms, conditions, and provisions of such Lease shall remain unchanged in full force and effect and are ratified and confirmed.
Landlord [TCDFW] consents to this assignment. [Emphasis added.].

TCDFW and NP Anderson entered into a “Purchase and Sale Agreement” on April 6, 2004. On that same day, TCDFW prepared an Estoppel Certificate for Potter to sign “in connection with the potential building sale.” This certificate verified that the only amendment to the 2001 *462 Lease was the 2003 Consent. The certificate also stated,

[Potter] has no right or option whatsoever to purchase or otherwise acquire the premises leased pursuant to the Lease ... except as follows ...: Extension Option — One (1) additional period of five (5) years on same terms by delivering (90) days written notice before expiration of the original term. [Emphasis in original.]

D. NP Anderson’s Acquisition of the Neil P. Anderson Building and the Subsequent Litigation

On June 23, 2004, pursuant to their Purchase and Sale Agreement, NP Anderson purchased the Neil P. Anderson Building from TCDFW. Upon closing, NP Anderson received an assignment of leases, including Potter’s, and thus became the new landlord.

At some point between June and November of 2004, NP Anderson announced plans to convert the Neil P. Anderson Building from offices to luxury condominiums. Potter originally sued NP Anderson for specific performance (to stop the conversion), for a declaratory judgment that the conversion was improper under the governing rules and regulations of the building, for breach of contract (diminution of sales and consequential damages), and for tortious interference with contract. 2 She later filed a Second Amended Original Petition to add a declaratory judgment claim regarding whether she could extend the 2001 Lease. NP Anderson then filed its own request for declaratory judgment arguing that the Gaboiud-Potter assignment terminated any assignee’s right to an extension, which would have required Potter to vacate by December 31, 2006.

After the trial court denied a wave of summary judgment motions, the remaining claims — largely Potter’s claim for breach of contract damages and the parties’ competing declaratory judgment actions concerning the existence of a five-year lease extension option — went to trial. At the trial of Potter’s breach of contract claim regarding NP Anderson’s conversion of the building from office to residential use, the jury found that NP Anderson had successfully modified the 2001 Lease to permit residential dwellings and had therefore not breached the 2001 Lease.

Regarding Potter’s lease extension claim, the parties disputed the meaning of the language in the 2003 Consent. Potter argued that the language and other circumstances surrounding the assignment meant that the parties agreed she acquired the same five-year lease extension option that the Gabiouds had under the original 2001 Lease.

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Cite This Page — Counsel Stack

Bluebook (online)
230 S.W.3d 457, 2007 Tex. App. LEXIS 5480, 2007 WL 2012877, Counsel Stack Legal Research, https://law.counselstack.com/opinion/np-anderson-cotton-exchange-lp-v-potter-texapp-2007.