BMB Dining Servs. (Willowbrook), Inc. v. Willowbrook I Shopping Ctr.
| Decision Date | 03 June 2021 |
| Docket Number | NO. 01-19-00306-CV,01-19-00306-CV |
| Parties | BMB DINING SERVICES (WILLOWBROOK), INC. AND RCI HOSPITALITY, INC., Appellants v. WILLOWBROOK I SHOPPING CENTER L.L.C., AND LEON VAHN, Appellees |
| Court | Texas Court of Appeals |
On Appeal from the 333rd District Court Harris County, Texas
Appellants BMB Dining Services (Willowbrook), Inc. ("BMB") and RCI Hospitality, Inc. ("RCI") appeal the trial court's judgment in favor of appellees Willowbrook I Shopping Center L.L.C. and Leon Vahn (collectively, "Willowbrook") rendered after a jury trial. In four issues, BMB and RCI argue that (1) the trial court erred by disregarding the jury's finding of future rent due under the parties' commercial lease agreement and substituting its own finding; (2) there is no evidence supporting the jury's findings that RCI breached a related guaranty agreement and that such breach caused Willowbrook damages; (3) the trial court erred by refusing to offset BMB's accrued rent by the value of the replacement commercial lease obtained by Willowbrook; and (4) the trial court abused its discretion by awarding Willowbrook attorney's fees. We affirm the trial court's judgment.
This appeal stems from a commercial lease dispute between two sophisticated parties. BMB owns and operates several Bombshells restaurants, all of which have large outdoor patios. On October 14, 2014, BMB, as tenant, and Willowbrook, as landlord, executed a commercial lease (the "Lease") for a 9,603-square-foot free-standing building with an existing 900-square-foot outdoor side patio (the "Premises"). The parties agreed that BMB would lease the Premises for 10 years. That same month, Willowbrook also executed a limited lease guaranty with BMB's parent company, RCI, as guarantor, in which RCI guaranteed BMB's obligations under the Lease for the first three years, including the prompt payment of rent and all other sums due in connection with the Lease (the "Guaranty"). The Guarantyfurther obligated RCI to pay Willowbrook all costs, expenses, and fees incurred in enforcing the Guaranty.
In January 2015, BMB began constructing a large-scale patio, outside bar, and bandstand on the Premises. According to BMB, having a large patio with an outside bar and bandstand is an integral component of its restaurant concept. The Lease, however, did not contemplate BMB's expanded patio. Rather, the Lease allowed only for the use of the existing 900-square-foot side patio. The Lease also required BMB to obtain Willowbrook's written approval of final plans and specifications for any modifications to the Premises. Although Willowbrook subsequently approved BMB's plans for the interior work to the building, it did not approve the plans for its outdoor patio.
On March 25, 2015, Willowbrook sent BMB a Notice of Breach of Lease and Cease and Desist Demand letter alleging BMB had no right under the Lease to make any modifications to common areas, including to the outdoor space, without Willowbrook's written approval. Later, on April 10, 2015, Willowbrook sued BMB for breach of contract and RCI for breach of the Guaranty.
BMB and RCI filed a general denial. BMB also filed counterclaims against Willowbrook and a third-party petition against its owner, Leon Vahn, for breach of contract, promissory estoppel, quantum meruit, fraud, misrepresentation, fraudulent inducement and non-disclosure, conspiracy, reformation, and rescission.
On August 21, 2015, Willowbrook terminated the Lease and BMB's right of possession of the Premises.1 RCI, as guarantor, was copied on Willowbrook's notice of default and demand and included as an addressee on Willowbrook's notice of termination and demand for payment. Neither BMB nor RCI paid any money due under the Lease to Willowbrook.
In October 2017, Willowbrook signed a replacement commercial lease with FEXY, Inc. ("FEXY"). The parties later tried the case to the jury in September 2018. In addition to evidence regarding each party's alleged failures to comply with the Lease and Guaranty, Willowbrook and BMB also offered competing expert testimony concerning the amount of future rent due under the Lease for the remainder of its term and the fair rental value of the Premises, both discounted to present value. Specifically, Willowbrook's expert, Mark Sikes ("Sikes"), opined that the value of future rent BMB would have paid under the Lease for the remainder of its term, discounted to present value, was $2,231,284. BMB's expert, David Dominy ("Dominy"), did not dispute Sikes's future rent calculation.
Sikes and Dominy, however, disagreed with respect to the fair rental value of the Premises. Sikes testified that he examined four comparable properties at or near the Willowbrook shopping center and opined that the fair rental value of thePremises for the duration of the Lease, discounted to present value, was $1,931,612. Dominy, who had performed a similar analysis using four other properties on behalf of BMB and RCI, opined that the fair rental value of the Premises for the same period of time discounted to present value, was $2,231,284. There was no testimony that the fair rental value of the Premises discounted to present value could ever be "$0."
At the conclusion of trial, the jury was charged with making findings regarding the respective parties' liabilities, if any, and the amount of damages resulting from the parties' failure to comply with their respective contractual obligations. The jury found that although Willowbrook had not breached its contractual obligations to BMB, BMB and RCI had breached their contractual duties to Willowbrook.2 The jury then made certain fact findings regarding the different categories of damages Willowbrook sought to recover, as set forth in jury Question 5.
Jury Question 5 stated:
The jury found in response to Question 5.1 that BMB owed Willowbrook $42,752.73 in unpaid rent and other amounts accrued under the Lease through termination. The jury also found that the "the total Rent that [BMB] would have been required to pay under the Lease Agreement for the remainder of the Lease Term following the date of termination discounted to present value as of the date of termination" (Question 5.4A) and "the fair rental value of the Premises, as of thedate of termination, to the end of the Lease Term, discounted to present value" (Question 5.4B) was "$0." With respect to RCI, the jury found that RCI owed Willowbrook $550,000 for RCI's breach of the Guaranty (Question 10).
Willowbrook filed a motion for entry of judgment asking the trial court to, among other things, disregard the jury's finding of $0 in response to Question 5.4A, because the evidence conclusively established that the total future rent BMB would have been required to pay under the Lease for the remainder of its term, discounted to present value, was $2,231,284.00. Willowbrook also argued that the trial court should award it $557,821.00 in liquidated damages pursuant to Article 17.2(a) of the Lease, which provides in pertinent part that in the event of default, Willowbrook may at its discretion terminate the Lease and recover a sum of money equal to the amounts set forth in subsection (a), including:
(iii) Liquidated Damages in an amount equal to (A) the total Rent that Tenant would have been required to pay for the remainder of the Lease Term following the date of termination discounted to present value as of the date of termination at the rate of six percent (6%) per annum, minus (B) the then present fair rental value of the Premises for such period, similarly discounted. For the purposes of the immediately preceding clause (B), "fair rental value" shall not exceed seventy-five percent (75%) of the amount determined under clause (A).
The trial court rendered judgment awarding Willowbrook actual damages against BMB in the amount of $42,752.73 in unpaid rent and other amounts accrued under the Lease plus $557,821.00 in liquidated damages, and $550,000.00 against RCI for actual damages. The trial court also awarded Willowbrook $298,438.34 intrial attorney's fees, plus $65,000.00 in conditional appellate attorney's fees.3 Pursuant to the final judgment, BMB and RCI are jointly and severally liable for both fee awards.4
The trial court rendered a take-nothing judgment against BMB on its counterclaims and third-party claims against Willowbrook I Shopping Center L.L.C. and Leon Vahn.5 The trial court also denied BMB's and RCI's motions for JNOV and for a new trial. This appeal followed.
In its first issue, BMB argues that the trial court erred by disregarding the jury's findings of $0 in response to Question 5.4A...
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