Columbia/HCA v Tea Cake French Bakery

• Decision Date: 09 September 1999
• Citation: 8 S.W.3d 18
• Parties: <!--8 S.W.3d 18 (Tex.App.-Houston 1999) COLUMBIA/HCA OF HOUSTON, INC., et al., Appellant v. TEA CAKE FRENCH BAKERY AND TEA ROOM, Appellee NO. 14-98-00417-CV In The
• Court: Texas Court of Appeals

Page 18

8 S.W.3d 18 (Tex.App.-Houston[14th Dist.] 1999)

COLUMBIA/HCA OF HOUSTON, INC., et al., Appellant v TEA CAKE FRENCH BAKERY AND TEA ROOM, Appellee

NO. 14-98-00417-CV

In The

Fourteenth Court of Appeals

September 9, 1999.

Rehearing Overruled December 16, 1999.

On Appeal from the 190th District Court Harris County, Texas Trial Court Cause No. 96-34092

Panel consists of Justices Yates, Amidei, and Fowler.

O P I N I O N

Wanda McKee Fowler, Justice

This case presents a statute of frauds issue regarding the termination or modification of a lease. Appellant, Columbia/HCA of Houston, Inc., the landlord, appeals from a judgment in favor of Tea Cake French Bakery and Tea Room, the tenant. We (1) reverse and render the jury verdict in favor of Tea Cake because no written agreement existed between HCA and Tea Cake to modify or terminate the lease, and render that Tea Cake take nothing on this claim, and (2) reverse and remand Tea Cake's cause of action for constructive eviction because the trial court improperly granted a motion for directed verdict on this claim.

BACKGROUND

Tea Cake was a bakery owned and operated by Hung Van Vu and Yen T.H. Trinh in the Red Oak Shopping Center since 1981. The bakery's lease was to expire on November 30, 1996. However, in July of 1995, the shopping center where Tea Cake was located was purchased by HCA. HCA planned to build a hospital on the site in early 1997. To meet that deadline, HCA was going to have to relocate the tenants and demolish the center. HCA posted a large sign in front of the shopping center announcing the opening of the new hospital in early 1997. Ed Myers, Columbia's CEO, was in charge of the project and was responsible for negotiating with the shopping center tenants for early termination of their leases. In August of 1995, Myers met with all the tenants of the center to inform them that HCA was interested in buying out the remaining terms of their leases and that he would meet with them individually to gather information to negotiate each tenant's buyout plan.

In early September of 1995, Myers met with Vu at the bakery. During this meeting, Vu told Myers that he would relinquish his lease if HCA would pay the bakery's relocation costs. At this meeting, Myers toured the bakery and made some handwritten notes which outlined the general categories of cost bids Vu would obtain such as build-out of the new bakery, moving expenses, and advertising expenses. Myers asked Vu to gather all the necessary bids and estimates and submit them to HCA. After three weeks of gathering bids and estimates, Tea Cake submitted a written estimate to HCA on September 25, 1995. In this estimate, Tea Cake requested $287,000 for moving expenses, build-out costs, and other expenses. HCA rejected the estimate, feeling that it was excessive; it was approximately ten times the amount Tea Cake owed on the remaining 14 months of its lease.

Over the next few months, Tea Cake submitted other estimates, but they also were rejected because they were higher than what HCA was paying other tenants. Most other tenants left the shopping center by December, but Tea Cake did not move.

In October of 1995, HCA's architects determined that the shopping center would not need to be demolished until after November of 1996, which also happened to be the end of Tea Cake's lease. HCA informed Tea Cake that it could remain in the shopping center until its lease expired. However, because the shopping center was virtually empty, Tea Cake still wanted to change locations. The parties attempted to work out an agreement, but none was reached.

Finally, on July 9, 1996, after it was evident that HCA would not pay what Tea Cake wanted, Tea Cake sued HCA for breach of contract, fraud, promissory estoppel, and constructive eviction. The trial court granted a summary judgment in HCA's favor on this issue of fraud. Tea Cake voluntarily dismissed its promissory estoppel cause of action before the case was submitted to the jury. The trial court granted HCA's motion for directed verdict on the issue of constructive eviction. Only the breach of contract claim went to the jury. On that issue, the jury returned a verdict in Tea Cake's favor and awarded it $108,000 in damages and $25,000 in attorney's fees. HCA appeals this judgment on three points of error, and Tea Cake appeals the trial court's directed verdict on the issue of constructive eviction on one point of error.

DISCUSSION AND HOLDINGS

HCA's first point of error raises a statute of frauds defense concerning what Tea Cake alleged was a contract for the surrender or termination of Tea Cake's lease. The trial court apparently found that a fact issue existed as to whether a contract existed and submitted the issue to the jury, which found in favor of a contract. HCA attempted to have this finding set aside and contends the trial court erred in entering judgment and denying its motions for judgment n.o.v. and new trial because the alleged contract for the surrender or termination of Tea Cake's lease fails to satisfy the statute of frauds.

This point of error, and, the outcome of the trial, is contingent on the existence of a binding agreement. When Myers met with the tenants in August of 1995, he made it clear that, in exchange for the termination of their leases, HCA would pay reasonable relocation costs. What HCA wanted was an agreement from each of the tenants to terminate or modify their leases. In this point of error, HCA makes two points. First, it asserts that the modification or early termination of the lease would have to be in writing to be binding under the statute of frauds. Second, it claims that this record contains no document satisfying the statute of frauds. We agree on both points. We address first the issue of whether any agreement would have to be in writing.

The statute of frauds requires that a promise or an agreement about the lease of real estate must be in writing. See TEX. BUS. & COM. CODE ANN. 26.01 (Vernon 1987). The same written requirement is true for any terminations, modifications, cancellations, transfers, or assumptions of a lease. See Givens v. Dougherty, 671 S.W.2d 877, 878 (Tex. 1984) (stating that a recission of a written contract falls within the statute of frauds); Ertel v. O'Brien, 852 S.W.2d 17, 22 (Tex. App.-Waco 1993, writ denied) (stating that a promise or an agreement to assume the debt of another is not enforceable unless the promise is in writing); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 389 (Tex. App.-San Antonio 1990, writ denied) (stating that a modification of a lease required to...