W.W. Laubach Trust v. Georgetown Corp Etc.

• Decision Date: 06 June 2002
• Docket Number: No. 03-01-00037-CV.,03-01-00037-CV.
• Citation: 80 S.W.3d 149
• Parties: W.W. LAUBACH TRUST/THE GEORGETOWN CORPORATION, Appellants, v. THE GEORGETOWN CORPORATION/W.W. LAUBACH TRUST, Appellees.
• Court: Texas Court of Appeals

80 S.W.3d 149

W.W. LAUBACH TRUST/THE GEORGETOWN CORPORATION, Appellants, v. THE GEORGETOWN CORPORATION/W.W. LAUBACH TRUST, Appellees.

No. 03-01-00037-CV.

Court of Appeals of Texas, Austin.

June 6, 2002.

Rehearing Overruled July 26, 2002.

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Leland R. Enochs, Amy McLean, Barkley Enochs & Pick, P.C., Taylor, for appellant.

Matt Dow, Jackson Walker L.L.P., Austin, for appellee.

Before Chief Justice ABOUSSIE, Justices YEAKEL and PURYEAR.

MARILYN ABOUSSIE, Chief Justice.

Appellant W.W. Laubach Trust ("the Trust") appeals the district court's judgment awarding damages and attorney's fees against the Georgetown Corporation ("TGC") for breach of contract and trespass. In four issues, the Trust contends that the district court erred by: (1) granting TGC's motion for partial summary judgment; (2) granting declaratory judgment on the construction of a lease provision; (3) denying the Trust's request for termination of the lease; and (4) awarding a clearly erroneous amount of damages for its breach of contract and trespass claims. In two issues, cross appellant TGC contends that the court erred by failing to find that the Trust's trespass and breach of contract claims were barred by limitations. We will affirm in part and reverse and remand in part the judgment of the district court.

BACKGROUND

In 1965, W.W. Laubach leased property in Williamson County to TGC for the purpose of operating the Inner Space Caverns. Section 301(A) of the ninety-nine-year lease provides for rents in the form of a percentage of three categories of revenue:

Lessee shall pay to the lessor as rent during the term of this lease an annual amount equal to the sum of (1), (2), and (3), viz:

(1) Ten per cent (10%) of the gross amount received by Lessee during such Lease Year from the sale of admissions to the cavern upon the leased premises and from the operation of any concession in connection with such cavern involving the furnishing of services (e.g., pony ride and merry-go-round), computed after deducting from such gross receipts all taxes (exclusive of Lessee's income taxes) paid on account of such receipts; plus

(2) Five per cent (5%) of the gross amount received by Lessee during such Lease Year from the sale of items of food, drink, and merchandise in connection with operation of the cavern, computed after deducting from such gross receipts all taxes (exclusive of Lessee's income taxes) paid on account of such receipts; plus

(3) Fifty per cent (50%) of the net income of Lessee in such Lease Year from any use of the leased premises other than those uses specified in (1) and (2) above, computed in accordance with standard accounting principles and without deduction on account of any income taxes of Lessee or real estate taxes payable by Lessee. In determining such net income, deduction for Lessee's general and administrative expenses shall be an amount equal to ten per cent (10%) of Lessee's gross receipts.

(Emphasis added.) The parties dispute the construction of section 301(A)(3) and therefore disagree over the manner of calculating the rental due for this third category of revenue. Article 8 of the lease agreement grants TGC the option to lease additional parcels of land located across Interstate 35 from the leased property. In 1967, Laubach, as settlor, transferred all the leased and optioned property to the Trust.

In May 1986, one of the Trust's trustees learned of two unauthorized billboards on the property, one on a leased parcel, and one on an option parcel that TGC had not leased from the Trust. TGC had leased both parcels to Pearce Outdoor Display, Inc. ("Pearce") for the purpose of erecting advertising billboards. Four years later in a letter dated June 6, 1990, the Trust notified TGC that it considered the lease to be in default. The Trust itemized four areas of default, two of which are relevant to the present case: (1) failure to pay the proper amount of rent, and (2) failure to provide a true and accurate accounting of revenues and rent. Pursuant to section 701 of the lease, the Trust gave TGC thirty days to correct these deficiencies.

On July 5, 1990, TGC responded to the Trust's notification by requesting clarification and attempting to cure the alleged defaults. TGC tendered accountings and two checks, one in the amount of $1,416.81 for outstanding taxes, and one in the amount of $10,500 for rental revenues it had received on the billboard located on the unleased option parcel. TGC contended that pursuant to section 301(A)(3) of the lease agreement, it owed no rent for the billboard located on the leased property because "10% of [TGC]'s gross receipts exceeded any rental income from the sign."

On October 10, 1990, the Trust filed its original petition seeking declaratory judgment on the parties' disputed construction of section 301(A)(3) of the lease and for conversion. Although both parties claimed that section 301(A)(3) was unambiguous, they asserted conflicting interpretations. On May 14, 1991, TGC filed a motion for partial summary judgment requesting a declaration that in calculating its rental obligation, section 301(A)(3) entitled TGC to deduct from its third category revenue ten percent of its gross receipts from all three revenue sources. On May 31, the Trust filed a motion for partial summary judgment requesting a declaration that section 301(A)(3) only entitled TGC to deduct from its third category revenue ten percent of its gross receipts from those other revenue sources not covered by sections 301(A)(1) and 301(A)(2). On August 26, the trial court rendered an order granting TGC's motion and denying the Trust's motion.

On April 6, 1992, six years after the trustee first discovered the presence of the billboards, the Trust filed its second amended petition. Despite the trial court's order granting TGC's motion for partial summary judgment as to the construction of section 301(A)(3), the Trust sought a declaratory judgment specifically on the meaning of "gross receipts" as found in that provision. In addition, the Trust's second amended petition sought (1) declaratory judgment on past rentals received by TGC and owed to the Trust; (2) rescission of a portion of the lease; (3) actual and punitive damages for conversion of the billboard rentals, (4) damages for trespass¹ resulting from the construction of the billboard on lease-option property or, alternatively, an injunction ordering TGC to remove it; (5) damages for breach of contract; (6) termination of the lease; (7) damages for quantum meruit; and (8) attorney's fees. After a bench trial, the trial court denied the Trust's claims for declaratory judgment, rescission, conversion, termination of the lease, and quantum meruit. The court found that the Trust was entitled to recover damages on its trespass and breach of contract claims and awarded the Trust $7,795.35 in actual damages, $31,000 in attorneys fees, and $100,000 in punitive damages. The court also awarded TGC $7,425.²

DISCUSSION

Summary Judgment

In its first issue, the Trust contends that the district court erred by granting TGC's motion for summary judgment. Because the propriety of a summary judgment is a question of law, we review the trial court's decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex.1994); Texas Dep't of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex.App.-Austin 1999, no pet.). The standards for reviewing a traditional motion for summary judgment are well established: (1) the movant for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The summary judgment is affirmable on appeal if any ground asserted in the motion for summary judgment is a valid ground for rendering summary judgment. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996).

TGC filed its motion for partial summary judgment seeking construction of section 301(A)(3) of the lease agreement. In its motion for summary judgment, TGC requested that

the Court declare that Section 301(A)(3) of the Lease Agreement be construed so that the deduction for general and administrative expenses under such section will be 10% of the gross receipts of the Lessee (as defined in the Lease Agreement) and not limited to gross receipts from activities subject to Section 301(A) (3).

The Trust filed its motion for partial summary judgment requesting that the Court declare that Section 301(A)(3) of the Agreement of lease be construed so that Defendant lessee may deduct ten percent of the gross receipts from activities subject to Section 301(A)(3) before sharing income from such activities equally with Plaintiff lessor; that the Court grant partial summary judgment that all income that has been derived from [the billboard on the property not leased from the Trust] belongs to Plaintiff; [and] that the Court grant partial summary judgment that all income that has been derived from [the billboard on the leased property] shall be allocated to the parties in accordance with Section 301(A)(3).

It contended that the lease was unambiguous, but that if it were ambiguous, the summary judgment proof reflected the parties' intent that this was their agreed construction.

On August 26, the district court granted TGC's motion and denied the Trust's motion. In the order, the district court declared that Section 301(A)(3) of the Lease dated August 27, 1965, between W.W. Laubach and Elsie Laubach, as lessors, and Georgetown Corporation, as Lessee, is unambiguous; and that Section 301(A)(3) of the Lease shall be construed...