U.S. Restaurant Properties Operating L.P. v. Motel Enterprises, Inc.

104 S.W.3d 284, 2003 Tex. App. LEXIS 3299, 2003 WL 1883678
CourtCourt of Appeals of Texas
DecidedApril 17, 2003
Docket09-02-018-CV
StatusPublished
Cited by23 cases

This text of 104 S.W.3d 284 (U.S. Restaurant Properties Operating L.P. v. Motel Enterprises, Inc.) 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
U.S. Restaurant Properties Operating L.P. v. Motel Enterprises, Inc., 104 S.W.3d 284, 2003 Tex. App. LEXIS 3299, 2003 WL 1883678 (Tex. Ct. App. 2003).

Opinion

OPINION

DAVID B. GAULTNEY, Justice.

Motel Enterprises, Inc. (“Motel”) sued U.S. Restaurant Properties Operating L.P. (“USRP”) and U.S. Restaurant Properties, Inc. for breach of contract. A jury awarded Motel $550,000. This appeal challenges the sufficiency of the evidence, the measure of damages, the jury charge, eviden-tiary rulings, and the calculation of prejudgment interest. 1

BACKGROUND

Motel owned numerous Dairy Queens (“DQs”). Thirty-seven of the DQs were sold to USRP, which then leased them to Bar S Restaurants, Inc. (“Bar S”) in a lease-purchase arrangement. USRP paid Motel almost $12,000,000 in cash for the Dairy Queens, but that amount was $500,000 short of the actual price. Motel agreed to finance the remaining $500,000 by taking a promissory note on which Bar S, the lessee of the Dairy Queens, was the maker. USRP, Motel, and Bar S entered into a purchase and sale agreement containing the following “put option:”

At any time after the eighteenth (18th) month following the execution of this Agreement, Motel shall have the right to cause USRP, upon delivery of ten (10) days’ prior written notice, to purchase that promissory note (the “Note”) of even date herewith, executed by Maker [Bar S] and payable to the order of *288 Motel in the principal sum of $500,000.00....
Motel may not exercise the put option provided by this paragraph at any time there is a continuing material uncured default by Maker [Bar S] under the Lease Agreement (the “Lease Agreement”) described in the Note....

The restaurant lease (“lease”) between Bar S and USRP obligated Bar S to keep and maintain each of the Dairy Queens in good order, condition, and repair, as follows:

Tenant [Bar S] shall at its sole cost and expense keep and maintain each of the Premises and Buildings, including sidewalks, landscaping and driveways located on the Premises, in good order and condition and repair, and shall ... make all needed repairs and replacements, interior and exterior, structural and nonstructural, ordinary and extraordinary, including but not limited to, roof, air conditioning and heating systems, replacements of cracked or broken grass [sic], repair of parking areas and driveway. ...

In April 1997, USRP sent Bar S the first of a series of letters claiming a lease default — specifically the failure to maintain and appropriately repair the properties. USRP’s last letter of default to Bar S was in late September 1997. In early November 1997, Motel notified USRP of Motel’s exercise of the put option requiring USRP to purchase the note. Claiming Bar S was in default under the lease, USRP refused to purchase the note. Motel’s lawsuit followed.

Liability

USRP argues the evidence is legally and factually insufficient to support the jury’s answer to the following question:

Do you find from a preponderance of the evidence that at the time Motel Enterprises, Inc. sought to exercise the put option, Bar S Restaurant, Inc. was not in an uncured, material default on the Restaurant Lease [of] Thirty-Seven Dairy Queen Restaurants with U.S. Restaurant Properties Operating L.P.?
_ Bar S Restaurant Inc was not in an uncured, material default; or _ Bar S Restaurant Inc was in an uncured, material default.

The jury found Bar S was not in an uncured, material default on the lease. Using language from the lease, the jury instruction contained the following definition:

You are instructed ... “an uncured, material default on the Restaurant Lease Thirty-Seven Dairy Queen Restaurants” (“the Lease”) is defined as follows:
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(d) A failure by [Bar S] to observe and perform any other provision of this Lease to be observed or performed by [Bar S], where such failure continues for twenty (20) business days after written notice thereof by the Landlord to [Bar S], However, if the nature of the default is such that the default cannot be reasonably cured within the twenty (20) business day period, [Bar S] shall not be deemed to be in default if [Bar S] shall within such period of time commence such cure and thereafter diligently prosecute the same to completion^]

When an appellant attacks the legal sufficiency of an adverse finding on which it does not have the burden of proof, it must demonstrate on appeal there is no evidence to support the adverse finding. 2 See Croucher v. Croucher, 660 S.W.2d 55, *289 58 (Tex.1988). On appeal, the evidence is viewed in “a light tending to support the jury’s verdict,” and “all evidence and inferences contrary to the jury’s finding” must be disregarded. Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex.2002). In a factual sufficiency review, an appellate court examines all the evidence, and will set aside a verdict only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that the verdict is clearly wrong and unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).

When USRP leased the properties to Bar S, some DQs were in disrepair, while others were in “okay” condition. At the beginning of the lease, “[i]t was understood on both sides that the properties were underperforming due to their current condition.” The parking lots were a concern, but it was understood that putting the parking lots in “A-l condition” “wouldn’t be immediate.” As one witness explained, maintenance on the DQs was a “continuous process;” there were always problems on the facilities that needed addressing.

The record reveals Bar S was performing maintenance on seven stores at issue here. USRP’s letters specified that the condition of the seven DQs placed Bar S in default. USRP said the parking lot in Diboll had potholes and needed to be resurfaced and restriped, and the roof required repair. Bar S’s improvements and maintenance in Diboll included filling of potholes, a new menu board, new outside fighting, and retrofitting of inside fighting. The Diboll parking lot was scheduled for resurfacing in the summer. USRP’s letter alleging defaults at the Humble DQ included no specifics. Bar S responded by noting the following improvements: new parking lot with striping; new paint job inside and out; roof repair; new flooring; and gravel patio with outside tables. Improvements and repairs at the Kountze DQ included a paint job inside and out, restriping of the parking lot, installation of an air conditioning unit, and repair of the overhang. At Waskom, Bar S patched the parking lot and put the building on a schedule for repainting. The resurfacing and striping of the parking lot had not been done. At the Rusk DQ, the parking lot had not been resurfaced, but Bar S was waiting on finalization of a joint site plan with Taco Bell.

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Cite This Page — Counsel Stack

Bluebook (online)
104 S.W.3d 284, 2003 Tex. App. LEXIS 3299, 2003 WL 1883678, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-restaurant-properties-operating-lp-v-motel-enterprises-inc-texapp-2003.