Gill Sav. Ass'n v. Chair King, Inc., C14-88-0351-CV

• Citation: 783 S.W.2d 674
• Decision Date: 21 December 1989
• Docket Number: No. C14-88-0351-CV,C14-88-0351-CV
• Parties: GILL SAVINGS ASSOCIATION, Appellant, v. CHAIR KING, INC., Appellee. (14th Dist.)
• Court: Court of Appeals of Texas

Page 674

783 S.W.2d 674

GILL SAVINGS ASSOCIATION, Appellant, v. CHAIR KING, INC., Appellee.

No. C14-88-0351-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Dec. 21, 1989.

Rehearing Denied Jan. 18, 1990.

Paul Curl, San Antonio, Joanne Vorpahl, Houston, Thomas B. Black, San Antonio, for appellant.

Dennis G. Herlong, Houston, for appellee.

Before PAUL PRESSLER, CANNON and ELLIS, JJ.

OPINION

PAUL PRESSLER, Justice.

Appellee sued for damages resulting from its eviction from the West Oaks Central Shopping Center. Following a non-jury trial, the trial court awarded the appellee actual and punitive damages and attorney's fees. We affirm on liability, modify the award of attorney's fees and reverse and remand on damages.

Since the parties disagree as to the facts, they are reconstructed allowing for both versions. Chair King sells pool, patio, dinette and bar furniture. In May 1985 the company opened its fourth Houston store in West Oaks Central Shopping Center, which was owned by Westoaks Central, Ltd. and financed by Gill Savings Association. N.B.C. Bank-Heights had financed Chair King's inventory and signed an agreement with Westoaks subordinating its landlord lien to N.B.C. Bank-Heights' first lien on all of the inventory and fixtures. This subordination agreement required that the bank be given a copy of any notice of lease default by Chair King in order to give the bank the option of curing the default.

West Oaks Central was newly constructed, and there were difficulties resulting from construction defects, the maintenance and the dearth of tenants. In January 1986 Westoaks defaulted on its loan and assigned the rents to Gill Savings. Gill Savings essentially took over the management of the center and foreclosed on it in October 1987. Shortly after moving into the center, Chair King submitted a "punch list" of defects, most of which it claims were never remedied. After repeated requests for repairs, particularly a ladder allowing access to the roof in order to service the air conditioners, Chair King notified Gill Savings and Westoaks that it considered the lease to have been breached and that it would, therefore, withhold rent. Chair King offered to place the rent into an escrow account. Gill Savings did not then demand the rent or evict Chair King but, instead, agreed to the escrow arrangement. For reasons that are disputed, the escrow account was never opened.

Meanwhile, Gill Savings was negotiating to rent space in the center to Toys 'R' Us, a national toy store chain, which evidently had specific requirements that could be met only by Chair King's space. Gill Savings contacted Chair King's president, Marvin Barish, to see if he were interested in moving the store to a comparable space in the center. Discussions were continuing when, on April 8, 1987, Westoaks sent a demand letter for the delinquent rent to Chair King. Gill Savings allegedly instigated the letter, and its counsel prepared it. Westoaks did not send a copy to N.B.C. Bank-Heights as required by the subordination agreement. Barish claims he was told by Gill Savings not to worry about the letter. On April 20th, representatives from Gill Savings met with Barish and his son to discuss the terms of the proposed move, which would include the abatement of the delinquent rent, a rental rate of fifty cents per square foot, and payment of both moving expenses and finishing costs. Given a choice between spaces previously occupied by W. Bell and Denhome, Chair King chose the W. Bell space.

The Gill Savings' representatives, Jae Carpenter and Jonathan Shapiro, discussed the proposed terms with their loan committee. They then called Barish and told him their "best deal" was the Denhome space at sixty-five cents per square foot and a slightly lower amount than requested for the tenant finish. Barish rejected those terms. As he was leaving town for a week, he understood that Carpenter would continue talking with the loan committee. Carpenter maintains, however, that his final comment to Barish was that if the offer were unacceptable, other alternatives would have to be considered. Gill Savings then hired a moving company and evicted Chair King during the early morning hours of May 3rd, the day before Barish's return.

Upon his return, Barish obtained a temporary injunction requiring that his company be reinstated in its old space and that its inventory be returned. The inventory was not returned until May 26th, and some of it was lost or damaged. The store did not reopen until the 30th. Under the terms of the injunction, Chair King was ordered to move out permanently by September 1987. It has since been unable to open another store in the west Houston market.

Chair King thereupon sued Gill Savings for fraud, breach of contract and numerous other torts. The trial court found for Chair King and made extensive findings of fact and conclusions of law. Gill Savings' liability was assessed at $144,309 actual damages and $355,277 punitive damages. Gill Savings appeals the judgment on twelve points of error.

Many of Gill Savings' points of error challenge the trial court's findings of fact and conclusions of law. The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence by the same standards which are applied in reviewing the legal or factual sufficiency of the evidence supporting a jury's answer to a jury question. Okon v. Levy, 612 S.W.2d 938, 941 (Tex.Civ.App.--Dallas 1981, writ ref'd n.r.e.). In a no evidence point of error, only the evidence and inferences that support the challenged finding will be considered, and all contrary evidence and inferences will be disregarded. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988). In a factual sufficiency point of error, all of the evidence will be considered and the finding will be set aside only if the evidence is so weak or the finding so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). Conclusions of law drawn from the findings of fact are reviewed to determine their correctness. Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App.--Houston [1st Dist.] 1986, writ ref'd n.r.e.).

In its first point of error, Gill Savings argues that the eviction was valid, the alleged defects did not justify the withholding of rent, the eviction was not tainted with fraud or barred by estoppel and the related findings of fact and conclusions of law are not supported by the evidence.

This case began as a landlord/tenant dispute over certain alleged defects. The trial court found that there were numerous material defects in the leased premises and that these unrepaired defects made the "lease unsuitable for its intended purpose." Marvin Barish testified that after moving into the store, he submitted a list of fifteen problems, two of which were fixed during the next two years. He also identified several photos, taken two years after the store opened, of roof leaks, fallen ceiling tiles and roofing materials that had come through the ceiling. Continued lack of access to the air conditioning equipment on the roof as required by the Uniform Building Code was the last straw, and Barish notified West Oaks in May of 1986 that Chair King considered this a breach of the lease and would withhold rent until the ladder was provided. Late in May he wrote the management company, listing nine defects, including the access problem and leaks in the roof, air conditioners, side door and patio doors. Only the access problem was ever resolved. Chair King placed into evidence a Gill Savings internal memorandum dated January 27, 1987, in which someone sent to inspect the property detailed numerous problems with the center and stated that the general atmosphere was one of disaster. A February 11, 1987, market research report from an independent company, introduced to contradict the memorandum, stated only that the center was clean and had good eye appeal.

The manager of the West Oaks store corroborated Barish's testimony. He added that he was the one who cleaned up any water damage or tile that had fallen. At times it was quite messy because the tile would get saturated and fall "all over the place." He also stated that some furniture got "waterlogged" from the water upstairs.

Barish's decision to stop paying rent brought matters to a head. It was also the basis for Chair King's estoppel and fraud claims. The requisites of promissory estoppel are: (1) a promise, (2) forseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983). The elements of fraud are: (1) that a material representation was made; (2) that it was false; (3) that when the speaker made it he knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the other party; (5) that the other party acted in reliance upon it; and (6) that he thereby suffered injury. Stone v. Lawyers Title Ins. Co., 554 S.W.2d 183, 185 (Tex.1977).

Instead of repairing the defects (although Gill Savings asserts some repairs were made and others were not the landlord's responsibility), demanding the rent or evicting Chair King according to the terms of the lease, Jae Carpenter agreed to an offer to escrow the rent until the repairs were made. A signature card for an escrow account was mailed to the parties for signatures. However, the account was never opened. Barish maintained the card was incorrectly signed by the Gill Savings people and was supposed to be corrected. Jae Carpenter testified that Barish did not want to put the entire amount of money due into the escrow account.

Negotiations then began over the proposed move to another space in the center. Those were continuing when Chair King received the demand letter for the...