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STAPEL, LP v. SCOTT AND WHITE MEMORIAL HOSPITAL, 03-16-00750-CV. (2018)

Court: Court of Appeals of Texas Number: intxco20180103535 Visitors: 15
Filed: Jan. 03, 2018
Latest Update: Jan. 03, 2018
Summary: MEMORANDUM OPINION DAVID PURYEAR , Justice . Appellant Stapel, LP sued appellee Scott and White Memorial Hospital, asserting that Scott and White had breached its lease with Stapel. Scott and White filed counterclaims for breach of the lease's maintenance obligations, constructive eviction, and breach of the implied warranty of suitability. Following a bench trial, the trial court determined that Stapel had breached the lease, violated the implied warranty of suitability, and constructivel
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MEMORANDUM OPINION

Appellant Stapel, LP sued appellee Scott and White Memorial Hospital, asserting that Scott and White had breached its lease with Stapel. Scott and White filed counterclaims for breach of the lease's maintenance obligations, constructive eviction, and breach of the implied warranty of suitability. Following a bench trial, the trial court determined that Stapel had breached the lease, violated the implied warranty of suitability, and constructively evicted Scott and White. The court signed a judgment awarding Scott and White $155,000 in actual damages and $120,000 in attorney's fees through trial with conditional attorney's fees in the event of post-trial motions and appeal. Stapel argues on appeal that the trial court should have granted its motion for a corrected and amended judgment in Stapel's favor and that the court erred in awarding Scott and White damages and attorney's fees. We reverse the judgment and remand to the trial court for further proceedings.

Standard of Review

We give a trial court's findings of fact the same weight as we do a jury's verdict and review them under the same standards applied to a jury verdict. Carson v. State, 117 S.W.3d 63, 66 (Tex. App.-Austin 2003, no pet.). In considering whether a finding is supported by legally sufficient evidence, we credit all evidence that supports the finding, if a reasonable factfinder could have done so, and disregard contrary evidence, unless a reasonable factfinder could not have done so. 4Front Engineered Sols., Inc. v. Rosales, 505 S.W.3d 905, 908 (Tex. 2016); Dallas Nat'l Ins. Co. v. De La Cruz, 470 S.W.3d 56, 58 (Tex. 2015) (quoting Graham Cent. Station, Inc. v. Pena, 442 S.W.3d 261, 263 (Tex. 2014)). We will sustain a legal-sufficiency challenge only if the evidence that supports the finding amounts to no more than a scintilla. Rosales, 505 S.W.3d at 909. In reviewing for factual sufficiency, we consider and weigh all of the relevant evidence and set aside a finding only if the credible supporting evidence is so weak or so contrary to the overwhelming weight of all the evidence as to be manifestly unjust. See Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 615 (Tex. 2016). Although we defer to a trial court's determinations of historical facts, we do not defer to the trial court's determination of what the law is or its application of the law to the facts. Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 523 (Tex. 2014); Gulf Chem. & Metallurgical Corp. v. Hegar, 460 S.W.3d 743, 747-48 (Tex. App.-Austin 2015, no pet.). When a trial court makes findings of fact on some elements supporting its judgment but omits findings of other elements, we will presume the court made omitted findings in support of its judgment if they are supported by the evidence. Buxani v. Nussbaum, 940 S.W.2d 350, 352 (Tex. App.-San Antonio 1997, no writ); Teague v. Bandy, 793 S.W.2d 50, 57 (Tex. App.-Austin 1990, writ denied); see also Tex. R. Civ. P. 299 (explaining when reviewing court may imply omitted element of claim supporting judgment); Davey v. Shaw, 225 S.W.3d 843, 857 (Tex. App.-Dallas 2007, no pet.) (appellate court will not presume finding that was requested and refused).

"Absent ambiguity, contracts are construed as a matter of law." Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015). "An unambiguous document will be enforced as written," In re Davenport, 522 S.W.3d 452, 457 (Tex. 2017) (orig. proceeding), and when a contract is unambiguous, our task on appeal is to determine the parties' intentions as expressed in the contract, taking a "holistic" approach and considering the entire contract "`in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless,'" Apache Deepwater, LLC v. McDaniel Partners, Ltd., 485 S.W.3d 900, 906 (Tex. 2016) (quoting J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)). "No single provision taken alone is controlling, but rather all provisions are `considered with reference to the whole instrument.'" Id. (quoting Webster, 128 S.W.3d at 229). "We also give words their plain, common, or generally accepted meaning unless the contract shows that the parties used words in a technical or different sense." Plains Expl. & Prod., 473 S.W.3d at 305. "A contract's plain language controls, not `what one side or the other alleges they intended to say but did not.'" Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 893 (Tex. 2017) (quoting Gilbert Tex. Const., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 127 (Tex. 2010)).

Factual and Procedural Summary

The evidence presented at trial shows that in late 2006, Scott and White leased space in a shopping center owned by Stapel for the purpose of "[o]ffices for health care professionals or businesses" for a term of three years and three months, with rent of almost $4,000 a month. Scott and White agreed to maintain the property "in a first-class condition," to keep in good repair its leased premises, and to "make all other repairs . . . made necessary by Tenant's failure to comply with its obligations" to keep the property in good repair. Stapel was responsible for maintaining and operating the common areas and "the Property[,] to include land and building, parking areas and all exterior building components." Stapel was not required "to make any improvements, replacements or repairs of any kind of character" to the leased premises except for maintaining and repairing the roof, foundation, parking and common areas, and "the structural soundness of the exterior walls," and Stapel's costs in maintaining those areas were "subject to the additional rent provisions of this Lease." Pest control was mentioned only once, in the provision governing "Common Area Costs" passed along to Scott and White and the other tenants, which defined those costs as "all expenses of Landlord with respect to the maintenance, servicing, repairing and operation of the Property, land and all building components, including but not limited to" costs of repair and maintenance, utilities, security, janitorial and trash services, "landscaping and pest control." Elsewhere in the contract, in the provision governing "Utilities and Service," Stapel agreed to provide the facilities necessary for utilities and to "provide routine maintenance, painting, and electrical lighting service for all Common Areas and special service areas of the Property in the manner and to the extent deemed by Landlord to be standard." Stapel could also, "in its sole discretion, provide[] additional services not enumerated herein," and "[f]ailure by Landlord to any extent to provide any services of Landlord specified herein or any other services not specified . . . shall not render Landlord liable in any respect for damages to either person or property, be construed as an eviction of Tenant, warrant an abatement of rent or relieve Tenant from fulfillment of any covenant in this Lease."

In the case of a default by Stapel, the contract provided that Scott and White's "recourse against [Stapel] for monetary damages will be limited to [Scott and White's] interest in the Lease premises." The contract further provided that "[t]he captions appearing in this Lease are for convenience only and in no way define, limit, construe or describe the scope or intent of any Section" and that "[e]ach covenant and agreement contained in this Lease shall be construed to be a separate and independent covenant and agreement, and the breach of any such covenant or agreement by Landlord shall not discharge or relieve Tenant from Tenant's obligation to perform each and every covenant and agreement of this lease to be performed by Tenant."

In the two clauses that are central to our analysis, the parties agreed as follows:

12.14 Limitation of Warranties. LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TENANT EXPRESSLY ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES OR REPRESENTATIONS CONCERNING ANY HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS AFFECTING ANY PART OF THE PROPERTY, AND LANDLORD HEREBY EXPRESSLY DISCLAIMS AND TENANT WAIVES ANY EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY SUCH MATTERS. 12.15 Waiver And Releases. TENANT SHALL NOT HAVE THE RIGHT TO WITHHOLD OR TO OFFSET RENT OR TO TERMINATE THIS LEASE EXCEPT AS EXPRESSLY PROVIDED HEREIN. TENANT WAIVES AND RELEASES ANY AND ALL STATUTORY LIENS AND OFFSET RIGHTS.

In 2010, Scott and White wanted to expand, so it and Stapel signed two amendments that governed the expansion, extending the lease into 2015 and providing for a rent increase to more than $10,000 a month.1 Paragraph 11 of the first amendment stated that:

Landlord, to the best of its knowledge, warrants and represents that the shell, building, and common areas including landscaping are delivered to Tenant in compliance with all laws, rules, regulations and ordinances, including all environmental laws and including the American[s] with Disabilities Act of 1990, (ADA) and shall be responsible thereafter for any legal requirements pursuant to these laws, rules, regulations or ordinances applicable to the shell building or common areas. Tenant and its architect will ensure that the tenant improvements within the Premises are constructed to comply with any ADA requirements.

Paragraph 18 stated that Stapel would "continually keep and maintain the shopping center improvements in good condition, consistent with similar properties in the area." Stapel agreed to a "Tenant Improvement Allowance" of about $113,000 and $80,000 in "Additional Allowance" "towards the further improvement and expansion of the Leased Premises by Tenant," with Scott and White repaying the $80,000 in sixty equal installments payable at the same time as its rent payments. Under the first amendment, Scott and White was responsible for the expansion and improvement work and agreed that its "construction activities will comply with all applicable codes and regulations" and that it would hold Stapel "harmless for said work." The amendments provided that the lease continued in full force and effect except as amended and that the amendments would control over any conflicting provisions in the original lease. Scott and White started work on its remodel and expansion in about January 2010 and finished in about May 2010.

In the spring of 2012, Scott and White began noticing evidence of rodents in the ceiling of the expanded area. Chris Kriczky, clinical operations director for Scott and White, testified that shortly before rats were noticed in Scott and White's premises in 2012, a neighboring tenant "came through and laid some conduit through our space" running east to west. Kriczky testified that starting in the spring, he smelled urine and dead rats in the Scott and White space. Scott and White reported the presence of rats to Jean Pelissero, who owned Stapel, signed the lease on Stapel's behalf, and was the contact for Scott and White.

In April 2012, Pelissero contacted Lee McIntosh, who was the original owner of the shopping center before selling the property to Stapel and whose company did significant construction work for Stapel's properties.2 Pelissero told McIntosh that there was a rodent problem in a restaurant in the shopping center and asked McIntosh to "check on it and see if I could help out." McIntosh inspected the restaurant and said that it "did have a rat infestation." A pest control company had been hired to trap "on a regular basis" and had told the restaurant owners how to address the rat problem, and McIntosh told the restaurant owners to seal all penetrations in the firewall and to keep food properly sealed. At that time, McIntosh believed that the restaurant was "moving forward and making progress" because "if they sealed up the firewalls, that isolated the problem," and trapping and eliminating food and water sources would eliminate the presence of rodents inside. Through the spring and fall of 2012, according to McIntosh, his personnel went through the shopping center, found and sealed "numerous penetrations between spaces caused by tenants," and sealed several penetrations on exterior walls.

In July 2012, Pelissero told McIntosh that Scott and White was noticing rats. Pelissero told McIntosh that Stapel would pay for Scott and White to remove and replace the ceiling and insulation and to seal all holes in its space. In September 2012, McIntosh went to Scott and White's space while the ceiling work was being done and noticed "two or three minor penetrations through the firewall." The ceiling work was completed by late September,3 and Ralph Owen, who owns the company hired by Scott and White to replace the ceiling, testified that his company sealed all holes and that when they were done, there were no entry points into the clinic.

However, Scott and White again noticed rat activity in late 2012, and in mid-December 2012, Scott and White informed Pelissero that "our folks found a 17 inch rat above the ceiling tiles today." Through the spring of 2013, Scott and White personnel reported increasing signs of rat activity, including smelling urine, finding dead rats, and hearing rats running overhead. Richard Bickling, who was senior supervisor of clinic operations, testified that in April 2013, he saw signs of rat activity and smelled a "very powerful pungent odor throughout the building." In April and May 2013, Scott and White told Pelissero that the rats might be entering its space through a storage room adjacent to Scott and White's leased space, and in April 2013, Kriczky and Pelissero went into that storage space and saw that it was in "complete disarray" and showed signs of significant rat activity in the room. Pelissero agreed to seal the room off and close it securely.

In May 2013, after the storage room was sealed, a rat chewed through the wall between that room and Scott and White's sterile processing room. At that time, Kriczky testified, he spoke to Pelissero and did not believe Pelissero had a "good plan in place to remedy this"—Kriczky believed "we weren't going to get to the end of this problem." Kriczky testified that from Scott and White's perspective, Stapel had not kept the structure sound and free from rodent penetration, maintained appropriate pest control measures, or "done everything necessary to assure that all codes and regulations were met."

In July 2013, Bickling spoke to Pelissero and told him there were still problems with rats in the premises, and according to Bickling, Pelissero seemed surprised and told Bickling he did not want to lose Scott and White as a tenant. In mid-July 2013, Bickling walked through the shopping center with a representative of the pest-control company hired by Stapel, who identified multiple entry points and gave Scott and White a report explaining that sealing the openings and trapping the rats currently in the space would control the problem. Scott and White did not hire the company, otherwise arrange to seal the identified penetrations or any interior holes made when the other tenant ran conduit through the premises, or provide the company's report to Stapel.

Instead, on August 20, 2013, Scott and White sent a letter informing Stapel that Scott and White was terminating its lease because of an "uncontrolled rat infestation." The letter stated that patients and employees had complained of "rat feces, urine smells, dead rodent odors, sounds of live rats running on ceiling tiles and in the walls, and the strong odor of poisons used unsuccessfully to try and control the infestation." Scott and White asserted that the "condition of the Premises" breached the provision of the lease that required Stapel to keep the property in good condition and stated that the conditions had constructively evicted Scott and White. Pelissero responded by letter that he was "shocked" to receive the letter of termination and that the "last time I heard of a rat in your suite was after a meeting with [a Scott and White representative] in early April," in which, he stated, the parties discussed "the issue of remaining penetrations that your contractor was supposed to address during the work performed last year, but that they did not close." Pelissero asserted that he "closed the roll up door, so that there would be no penetration," and also closed a side door. Pelissero also opined that the chemical smells were due to Scott and White's air conditioner's fresh air handler being too close to a neighboring nail salon's exhaust vent. Two witnesses who worked for Scott and White testified in their depositions that before sending the August 20, 2013 letter, they had not informed Pelissero or Stapel that Scott and White would move out if the rodent situation was not abated. They further testified that Pelissero was cooperative and responsive and seemed to be trying to remedy the problem. One witness testified, "I believe the landlord to have been really cooperative and good to deal with. I believe Scott & White's position was that it was a problem no one could remedy, as opposed to the landlord specifically."

Scott and White moved out at the end of September 2013, twenty-six months before the end of the lease. In late September and early October 2013, Stapel received three letters from another tenant in the space, complaining about a rat problem in its space, and in mid-September 2013, Stapel hired TruTech Exterminators, which found several entry points on the exterior. Those entries were sealed, and TruTech did extermination work on the interior. The last time a rodent was trapped in the shopping center was mid-October 2013.

McIntosh inspected Scott and White's space in mid-October and found and repaired several penetrations on three walls—some around pipes, "some improper sheetrock work," and "conduit that hadn't been properly sealed." McIntosh testified that it appeared that at least some of those penetrations had occurred when Scott and White remodeled and expanded in 2010, explaining, "There were two or three new pieces of conduit that had been installed when they rebuilt their electrical system, and those had not been sealed properly." Pelissero testified that after the holes in the Scott and White space were sealed, only one more rat was ever caught in the premises.

McIntosh said that the rats originally got into the shopping center through penetrations in the restaurant's firewalls and that if Scott and White had sealed all the penetrations into its firewalls between its space and its neighbor, rodents would not have been able to get into the Scott and White premises. He explained, "I think Scott & White did what they thought they were supposed to do, the landlord did what he thought he was supposed to do. But . . . the Scott & White [contractor] didn't do what they were supposed to do, and there were ongoing penetrations in the space. And with that being the case, it was going to make it difficult to get rid of the rats." He admitted that he did not inspect the work done by Scott and White's contractors after the 2012 remediation work but said, "What I know is that [the penetrations] were there when I went in the space after they had left. So the assumption I make is that they weren't dealt with then." He further testified that Pelissero "went above and beyond his obligation" and "did everything he could do to solve the problem." Donald Dunagan, a commercial real-estate broker called as an expert by Scott and White, on the other hand, testified that he did not believe Stapel had maintained the property in good condition because it had taken a "piecemeal approach" to the rat problem. He testified that Stapel instead should have hired one pest-control company to take a "comprehensive" approach for the entire shopping center using technology such as UV cameras and fluorescent dust to find penetrations, rather than merely a visual inspection. He was asked about several companies hired by Stapel, Scott and White, and other tenants, however, and admitted that none of those pest-control companies use the technology he had mentioned.

Stapel sued Scott and White for breach of the lease agreement, seeking unpaid rent through the extended term of the lease. Scott and White answered, asserting as an affirmative defense that Stapel's claim was barred by Stapel's breach of the implied warranty of suitability. Scott and White asserted counterclaims for breach of contract, constructive eviction, and breach of the implied warranty of suitability. Following a bench trial, the trial court signed a judgment awarding Scott and White attorney's fees and $155,000 in actual damages for its relocation costs. The court also signed findings of fact and conclusions of law, finding, among other things, that: Stapel was responsible for pest control in the common areas, including exterior walls; Stapel failed to fulfill that responsibility; Stapel did not properly supervise construction in other tenants' spaces and the common areas, which allowed for rodent penetration; and Stapel did not maintain the improvements in good condition.

Discussion

In its first issue, Stapel asserts that Scott and White was contractually barred from refusing to pay rent because the lease provided that each covenant is independent and that Scott and White could not withhold or offset rent or to terminate the lease and that Scott and White could not assert claims for breach of a warranty of suitability because the original lease explicitly disclaimed all implied warranties. We agree.

In general, "[a] fundamental principle of contract law is that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from any obligation to perform." Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994). However, the courts have "long recognized Texas' strong public policy in favor of preserving the freedom of contract." Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 664 (Tex. 2008). As long as the contract does not violate the law or public policy, we will enforce a contract's unambiguous language. Id. at 664-65; Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 281 (Tex. App.-Houston [1st Dist.] 2004, pet. dism'd) ("Unless a statute or fundamental public policy precludes waiver . . ., one may generally waive even constitutional or statutory rights, present or future, by contract."). Unambiguous contracts "are presumed to reflect the intent of the contracting parties and are generally enforced as written `regardless of whether one or more of the parties contracted wisely or foolishly, or created a hardship for himself.'" Venture Cotton Coop. v. Freeman, 435 S.W.3d 222, 228 (Tex. 2014) (quoting Wooten Props., Inc. v. Smith, 368 S.W.2d 707, 709 (Tex. Civ. App.-El Paso 1963, writ ref'd)).

The original lease stated that "[e]ach covenant and agreement contained in this Lease shall be construed to be a separate and independent covenant and agreement, and the breach of any such covenant or agreement by Landlord shall not discharge or relieve Tenant from Tenant's obligation to perform each and every covenant and agreement of this lease to be performed by Tenant." (Emphasis added.) The contract emphasized Scott and White's ongoing rent obligation, stating that Scott and White "SHALL NOT HAVE THE RIGHT TO WITHHOLD OR OFFSET RENT OR TO TERMINATE THE LEASE EXCEPT AS EXPRESSLY PROVIDED HEREIN."

The amendments require Stapel to keep "the shopping center improvement in good condition" and shifts some of the compliance responsibilities to Stapel. But as we read the documents, those provisions would appear merely to modify or implicate paragraphs 3.3 ("Compliance with Laws, Rules and Regulations"), which required the tenant to comply with all laws and ordinances and made no mention of who was responsible for compliance in common areas, and 5.1 ("Repairs and Maintenance"), which stated that Stapel was not required to make any improvements or repairs to anything other than the roof, foundation, parking, common areas, and the structural soundness of the exterior walls. More critically, the new provisions do not purport to alter, nor conflict with, the original contract's "separate and independent covenant" provision, which includes one of the contract's references to Scott and White's ongoing rent obligation, or the explicit statement that Scott and White cannot withhold rent "except as expressly provided herein." Because the terms of the amendments do not countermand or conflict with the original provisions explaining Scott and White's obligation to pay rent through the term of the contract, so as to allow the amendments to control, regardless of whether it was Stapel's responsibility to control the rat infestation in Scott and White's leased premises and whether Stapel was negligent in its attempts to fulfill that responsibility, under the principles applied in construing contracts, Scott and White was contractually bound to its obligation to pay rent through the end of the lease term.4

As for whether the condition of the premises violated an implied warranty of suitability, the original lease explicitly disclaimed all implied warranties, including a warranty of suitability, an arrangement to which the parties were free to agree. See Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912 (Tex. 2007) (commercial tenant may waive implied warranty of suitability by express disclaimer). Scott and White argues that the first amendment modified the lease so as to allow for an implied warranty of suitability or of fitness for a particular purpose, contending that the requirement that Stapel would maintain the improvements in good condition "supplanted" the waiver of all implied warranties contained in the original lease. We disagree.

The first amendment provided that Stapel would "continually keep and maintain the shopping center improvements in good condition, consistent with similar properties in the area." It also provided that Stapel "warrant[ed] and represent[ed] that the shell, building, and common areas" were in compliance with all laws, regulations, and ordinances and that Stapel would "be responsible thereafter for any legal requirements pursuant to these laws, rules, regulations or ordinances applicable to the shell building or common areas," a shifting of compliance responsibility from Scott and White to Stapel. However, those new terms, particularly the amorphous agreement that Stapel would keep the improvements "in good condition," cannot be read as overriding the original lease's express disclaimer of any implied warranty of suitability.5 And, as noted above, the amendments did not override the original lease's provision that each covenant was a separate and independent agreement and that Scott and White was obliged to pay rent even if Stapel breached one of the contract's other covenants. Scott and White agreed to the terms of the contract, which disclaimed any implied warranty, and thus relieved Stapel from liability for any breach of such a warranty. See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 340 (Tex. 2011) (when lease expressly disclaims implied warranty of suitability, "by accepting responsibility to repair [certain latent defects for which lessor would be responsible under warranty of suitability], a lessee relieves the lessor from liability for breach of the implied warranty of suitability as to those defects"). The trial court erred in determining that the first amendment modified or was in conflict with the original contract's disclaimer of warranties and that Stapel breached an implied warranty of suitability.

Scott and White further argues that the "as-is" provision in the original lease6 limited the original waiver of implied warranties to the leased premises and that there was an implied warranty related to the common areas of the property. Considering the plain language of the original lease, read as a whole and in conjunction with the amendments, we cannot agree. The original lease was unambiguous in its utter repudiation of any and all warranties, in its limiting Scott and White's remedies in the case of any breach by Stapel, in making each covenant separate and independent from each other covenant, and in requiring Scott and White to pay rent through the end of the term, regardless of any breach by Stapel. "The role of the courts is not to protect parties from their own agreements, but to enforce contracts that parties enter into freely and voluntarily." El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 810-11 (Tex. 2012). We cannot strain the plain contractual language agreed to by Scott and White in order to reach what would seem a more equitable outcome. The trial court erred in concluding that the first amendment conflicted with or modified the original lease's requirement that Scott and White pay its rent obligation regardless of any breach, its disclaimer of a warranty of suitability or other warranties, or its "separate and independent covenant" provision.

We now turn to Scott and White's argument that Stapel's breaches of the lease were of such a magnitude so as to constructively evict Scott and White from the premises.

The essential elements of constructive eviction are (1) an intention on the part of the landlord that the tenant shall no longer enjoy the premises, (2) a material act by the landlord that substantially interferes with the tenant's intended use and enjoyment of the premises, (3) an act that permanently deprives the tenant of the use and enjoyment of the premises, and (4) abandonment of the premises by the tenant within a reasonable time after the commission of the act.

Lazell v. Stone, 123 S.W.3d 6, 11-12 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). Even if we decide that under the lease, Scott and White did not waive the right to assert constructive eviction, see Davidow v. Inwood N. Prof'l Grp.-Phase I, 747 S.W.2d 373, 377 (Tex. 1988) ("The tenant's obligation to pay rent and the landlord's implied warranty of suitability are therefore mutually dependent."), Scott and White did not present legally sufficient evidence that Stapel intended to deprive Scott and White of the use and enjoyment of the leased premises or that Stapel acted with an intent to deprive Scott and White of the use of the premises, see Lazell, 123 S.W.3d at 11-12. Instead, the evidence was that Stapel sought to retain Scott and White as a tenant, sending McIntosh or other personnel numerous times to inspect and seal any penetrations he found. Stapel paid for the ceiling work done by Scott and White in September 2012, and arranged for a pest-control company at the shopping center. Moreover, two Scott and White representatives testified that they believed Stapel and Pelissero were doing everything they could to alleviate the rat problem, and there was no evidence that Stapel sought to exclude Scott and White from the premises. Although there were disputes as to the effectiveness of the approach taken by Stapel, such evidence falls short of supporting a reasonable inference that Stapel intended to deprive Scott and White of its use and enjoyment of the space.

Conclusion

Scott and White entered into and is thus bound by this contract, under which it waived all implied warranties and agreed to pay rent regardless of any breaches by Stapel. Further, Scott and White did not present legally sufficient evidence that it was constructively evicted from the premises. Accordingly, we reverse the trial court's judgment in favor of Scott and White and remand for further proceedings consistent with this opinion.

FootNotes


1. The first amendment, signed by the parties in late January and early February 2010, is the relevant document in this dispute; the second amendment, signed in May 2010, explained that there had been delays in Scott and White's expansion, delayed the rent increase to August 2010, and extended the lease to November 30, 2015.
2. McIntosh was called by Stapel to testify as an expert on commercial rental properties and said he had dealt with similar rodent issues three or four times before and felt he could testify about the issues in this case. McIntosh testified that when he did construction work on the shopping center while he owned it, he never left openings in firewalls or exterior walls because it would be a code violation. He also testified that in leases for shopping centers such as this one, tenants are generally "responsible for all interior maintenance and a share of the expense of the exterior."
3. In November 2012, the parties agreed that Scott and White's monthly rent would be reduced to about $3,000 for three months in exchange for Scott and White having paid $22,700 for "remediation work . . . to eliminate the presence of rodents."
4. Scott Liles, Scott and White's "vice-president of real estate over project management," answered "Correct" when asked in his deposition whether the terms of the contract meant that the fact "that there were rats in there does not give you the right to stop paying rent" and that "Scott & White could move out, no one is going to hold them there, but they've still got to pay rent." Liles was also asked, "[L]ook at the first amendment again, paragraph 18. There's nothing in that paragraph that says that if the landlord doesn't honor this warranty, you can stop paying rent and move out, terminate the lease. It doesn't say that, does it?" Liles answered, "There's nothing in 18." At trial, Liles testified that the amendments were an effort to make the contract, which he described as "a little more landlord-friendly than we would typically sign," "more balanced."
5. The original lease stated "THERE ARE AND SHALL BE" no implied warranties.
6. The contract stated, "The taking of possession of the lease property by the Tenant shall be conclusive evidence that the Tenant accepts the same `as is' and that the Lease Premises was in good condition at the time possession was taken."
Source:  Leagle

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