Encore International Investment Funds, LLC v. 2608 Inwood, Ltd. ( 2019 )

ACCEPTED
05-19-00070-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
6/20/2019 11:59 PM
LISA MATZ
CLERK
ORAL ARGUMENT REQUESTED
FILED IN
NO. 05-19-00070-CV 5th COURT OF APPEALS
DALLAS, TEXAS
6/20/2019 11:59:16 PM
IN THE FIFTH COURT OF APPEALS OF TEXAS LISA MATZ
AT DALLAS Clerk
ENCORE INTERNATIONAL INVESTMENT FUNDS, LLC,
Appellant,
v.
2608 INWOOD, LTD.,
Appellee.
Appealed from the 162nd Judicial District Court
Dallas County, Texas
Cause No. DC-17-13285
APPELLANT’S REPLY BRIEF
William S. Richmond
Texas Bar No. 24066800
brichmond@pcrfirm.com
PLATT CHEEMA RICHMOND PLLC
1201 N. Riverfront Blvd., Suite 150
Dallas, Texas 75207
Direct: 214.559.2700
Fax: 214.559.4390
COUNSEL FOR APPELLANT
TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................... i
INDEX OF AUTHORITIES..................................................................................... ii
REPLY .......................................................................................................................1
A. Whether Attached or Unattached, the General Rule Controls
Because the Lease Terms Do Not Expressly Forfeit the Generator
to Landlord.......................................................................................................1
B. Trial Court Erred by Declaring “The Generator is an attached trade
fixture.” ............................................................................................................6
1. No Evidence in the Summary Judgment Record of
Attachment ............................................................................................6
2. Genuine Issues of Material Fact Exist on the Issue of Attachment ..7
3. No Actual Judicial Notice Occurred; Regardless, Judicial Notice
is Improper for Specific Facts on the Generator’s Status ...................11
C. The Lease is Ambiguous if Landlord’s Interpretation is Deemed
Reasonable .....................................................................................................14
D. Landlord Cannot Prevail on its “Generator as Improvement”
Argument .......................................................................................................14
E. Improper Declaratory Judgment ...............................................................17
PRAYER ..................................................................................................................18
CERTIFICATE OF COMPLIANCE .......................................................................19
CERTIFICATE OF SERVICE ................................................................................19
i
INDEX OF AUTHORITIES
Capitol Aggregates Inc. v. Walker, 448 S.W.2d 830, 832-33 (Tex.
App.—Austin 1969)............................................................................................13
CKB & Assocs. v. Moore McCormack Petroleum, Inc., 734 S.W.2d
653, 655 (Tex. 1987)......................................................................................... 2-3
Connelly v. Art & Gary Inc., 630 S.W.2d 514, 514-15 (Tex. App.—
Corpus Christi 1982) .............................................................................................8
Cremers v. Hallman, 403 S.W.3d 878 (Tex App.—Texarkana 2013,
pet. denied)........................................................................................................ 4-6
Eckstine v. Webb Walker Jewelry Co., 178 S.W.2d 532, 534-544 (Tex.
Civ. App.—Fort Worth 1944) ..........................................................................4, 9
English v. Miller, 43 S.W.2d 642, 644 (Tex. Civ. App.—Amarillo
1931) ...................................................................................................................12
Gonzalez v. Mission American Ins. Co., 795 S.W.2d 734, 736 (Tex.
1990) ...................................................................................................................15
Harper v. Killion, 348 S.W.2d 521, 523 (Tex. 1961) ..............................................12
Neely v. Jacobs, 673 S.W.2d 705 (Tex. App.—Fort Worth 1984)............................ 9
Nine Hundred Main, Inc. v. Houston, 150 S.W.2d 468, 471-472 (Tex.
Civ. App.—Galveston) .........................................................................................8
Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987) ............................ 6
Schumann v. Jenkins, 40S.W.2d 214 (Tex. Civ. App.—San Antonio
1931) .....................................................................................................................9
Van Valkenburgh v. Ford, 207 S.W. 405, 420 (Tex. Civ. App.—
Galveston 1918) ....................................................................................................8
ii
APPELLANT’S REPLY
Appellant Encore International Investment Funds, LLC (“Encore”)
respectfully requests that this Court reverse the trial court’s summary judgment
orders and final judgment that, inter alia, (1) declared the Generator an attached
trade fixture owned by Appellee 2608 Inwood Ltd. (“Landlord”) and (2) found
against Encore on its claims for theft and conversion.
A. Whether Attached or Unattached, the General Rule Controls Because the
Lease Terms Do Not Expressly Forfeit the Generator to Landlord
The plain language of the Lease does not grant any interest in the Generator
to Landlord, whether that interest is one of ownership or possession. 1 Section 21 of
the Lease contemplates only three potentially-relevant circumstances regarding
fixtures, improvements, and the like, and none of them grants ownership or
possession of the Generator to Landlord in this case, regardless of whether it is
attached or unattached. Instead, Landlord is forced to twist the general rule to keep
it from applying to the circumstances here, which are not specifically addressed in
the Lease.
Section 21, Sentence #2: “At the expiration or termination of this Lease,
Tenant shall deliver to Landlord the Premises with all improvements located
1
This distinction drawn by Landlord, however, is at best irrelevant. Possession is effectively
ownership when it comes to the Generator, and the cases cited by both parties confirm that when
improvements or fixtures are granted to one party or the other, the successful party has both
possession and ownership.
1
therein in good repair and condition….” [CR323]. Given there is no legitimate
argument that the Generator is an improvement (much less any evidence) as that
term is used in the Lease, this sentence does not grant the Generator to Landlord.
See Section D, infra (detailed rebuttal on this issue).
Section 21, Sentence #3: “Provided that Tenant has performed all of its
obligations hereunder, Tenant may remove all unattached trade fixtures,
furniture, and personal property placed in the Premises or elsewhere in the
Building by Tenant (but Tenant may not remove any such item which was paid
for, in whole or in part, by Landlord or any wiring or cabling unless Landlord
requires such removal).” [CR323]. The plain reading of this section is that Encore
has the option to remove unattached trade fixtures, but Encore cannot remove (a)
any unattached trade fixtures that were paid for by Landlord or (b) any wiring or
cabling unless Landlord opts for their removal. This section puts the decision for
removal of unattached trade fixtures solely in Encore’s hands as Tenant—nothing in
this provision specifically or implicitly speaks to Landlord’s right to keep unattached
trade fixtures except where Landlord paid for them (it is undisputed that Encore paid
for the entirety of the Generator). Under the contract interpretation rule of expresio
unius est exclusion alterus, the expression of the former scenario without the latter
necessarily excludes the unmentioned latter. See, e.g., CKB & Assocs. v. Moore
McCormack Petroleum, Inc., 734 S.W.2d 653, 655 (Tex. 1987) (“the naming of one
2
thing excludes another”). Furthermore, this sentence does not address the scenario
of whether a Tenant may remove an attached trade fixture, thus requiring a look at
the next sentence in Section 21.
Section 21, Sentence #4: “Additionally, at Landlord’s option, Tenant
shall remove such alterations, additions, improvements, trade fixtures,
personal property…and furniture…as Landlord may request….”[CR323]. The
plain reading of this section is that Landlord can require Tenant to remove trade
fixtures, whether attached or unattached. This section does not say, as Landlord
hopes, that Tenant must leave all trade fixtures, or that Landlord can bar Tenant from
removing trade fixtures. Literally, this provision only contemplates one option for
Landlord (forced removal) while leaving the other option (barred removal)
unaddressed. Including one option but not the other excluded the other. See also
CKB, 734 S.W.2d at 655 (“the naming of one thing excludes another”).
It is in the gap of scenarios regarding trade fixtures not specifically addressed
by Sentence #3 and Sentence #4 that the general rule on trade fixtures properly sits
and requires reversal. To the extent the Generator is an unattached trade fixture,
Sentence #3 applies and allowed Encore to remove the Generator. To the extent
Landlord argues the Generator is an attached trade fixture, Sentence #3 is
inapplicable, while Sentence #4 only allows Landlord to force removal. With no
statement in Sentence #4 (or anywhere else in the Lease) authorizing Landlord to
3
bard removal of an attached trade fixture, the general rule applies: Encore as Tenant
remained the owner of the Generator and fully within its rights to remove the
Generator upon termination of the Lease. See, e.g. Cremers v. Hallman, 403 S.W.3d
878, 884 (Tex. App.—Texarkana 2013).
Landlord’s Response cites authorities that support Encore’s interpretation and
the application of the general rule. In Eckstine, the lease set out a specific process
for landlord to acquire the tenant’s improvement, which was a metal shed installed
by poles in concrete bases poured by the tenant: landlord could buy the improvement
at a discount at the end of the lease, but if landlord declined to buy them, tenant
could take them. Eckstine v. Webb Walker Jewelry Co., 178 S.W.2d 532, 534-544
(Tex. Civ. App.—Fort Worth 1944). The key questions were (a) when title for the
improvements passed from tenant to landlord and (b) did the termination/buy
circumstances in the lease occur such as to prevent tenant from taking its shed. Id.
The appellate court determined that the lease did not prevent tenant from taking its
shed because the specific termination/buy circumstances did not occur, and thus the
presumption of a tenant’s rights to its installed improvement controlled to prevent a
forfeiture given forfeitures are disfavored under Texas law. Id.
Like in Eckstine, even if the Generator is an attached trade fixture as Landlord
argues, the Lease does not contain specific language as to what happens to an
unattached trade fixture when the Tenant wants to remove it—the Lease only
4
specifically contemplates in Sentence #4 that the Landlord can force removal, not
that Landlord can bar removal. Having not addressed that scenario, Texas law fills
the gap: forfeitures are disfavored, and tenants may remove their trade fixtures.
Likewise, in Cremers, the court of appeals found that a lease’s failure to
specifically address the scenario at issue led to application of the general rule.
Cremers v. Hallman, 403 S.W.3d 878, 888 (Tex. App.—Texarkana 2013). The
landlord in Cremers sought to keep the tenant’s trade fixtures, arguing that the lease
provided landlord the option to pay no more than “$25,000 at the conclusion of the
lease ‘for all monies spent on concrete and dirt work for expansion, building
expansion, and/or HVAC’….” Id. at 887. The appellate court held that “this
provision does not say the money was to be paid for the building expansion and trade
fixtures (which are categorically different from concrete and dirt work)” and
concluded that because the lease did not specifically address the scenario of handing
over trade fixtures to Landlord, the trade fixtures remained with Tenant:
Because paragraph twenty-eight does not specifically address ownership of
the building expansion and trade fixtures, it does not support the trial court’s
conclusion that “the parties expressly agreed that at the expiration of the
lease, improvements to the property made by lessee…belonged to
lessor….”
Id. at 888.
In this case, even taking as true Landlord’s argument that the Generator is an
attached trade fixture, the Lease does not specifically address who gets attached
5
fixtures. In that vacuum, Cremers requires application of the general rule: “on
termination of a lease, trade fixtures are presumed to be the tenant’s property and
are thus removable by the tenant.” Id. at 884. Texas “[c]ourts will not declare a
forfeiture unless they are compelled to do so by language which can be construed in
no other way.” Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).
Without a lease that specifically states that trade fixtures go to Landlord, this Court
must not permit the forfeiture of Encore’s Generator to Landlord.
B. Trial Court Erred by Declaring “The Generator is an attached trade
fixture.”
Even if this Court determines that Tenant was not permitted to take the
generator as a trade fixture (regardless of whether it was attached or unattached), the
trial court’s declaration of a factual matter (“The Generator is an attached trade
fixture”; [CR741]) was legally and factually erroneous.
1. No Evidence in the Summary Judgment Record of Attachment
Landlord as movant carried the burden to prove as a matter of law that no
genuine issues of material fact existed on any elements of its counterclaim. See TEX.
R. CIV. P. 166a(c). Landlord premised its awarded declaratory relief on a factual
determination of whether the Generator was attached or unattached. Landlord,
however, did not submit any evidence of attachment at all—not in its original motion
[CR73], amended motion [CR292], or supplemental brief specifically on the issue
of attachment [CR717].
6
Apparently realizing that it did not have any evidence in the summary
judgment record to support factual determinations on whether the Generator was
attached or not, filed a Motion for Leave to File the Declaration of Steven M. David.
[CR726-40]. Despite the need for leave, Landlord failed, however, to obtain any
ruling on the Motion and the trial court did not grant leave to add this declaration to
the summary judgment record, rendering it immaterial to this Court’s decision on
appeal.
Given Landlord’s failure to meet its summary judgment burden, the trial court
erred by declaring into existence a factual premise (“The Generator is an attached
trade fixture”) upon which rests the trial court’s ultimate legal conclusion (“Tenant
may remove the Generator only with the Landlord’s permission.”).
2. Genuine Issues of Material Fact Exist on the Issue of Attachment
Even if the Court considers the Davis affidavit for which leave was never
granted, the competing evidence of attachment shows that genuine issues of material
fact existed to prevent the trial court’s declaration that “The Generator is an attached
trade fixture.”
In addition to the Davis affidavit, Landlord points to purported admission of
Encore that the Generator is “connected” to the premises. [Resp., p. 21 (citing
CR351)]. Landlord then combines this single verb with the affidavit to conclude that
the Generator is attached as a matter of law because of an electrical connection to
7
the building, that the Generator is bolted to the parking lot, and a purported non-
specific purpose for the Generator’s existence. Not only is Landlord wrong on its
facts, but the facts are disputed, and the conclusion itself runs contrary to the cases
cited by Landlord.
Merely being “connected” does not an attachment make. Rather, Texas law
shows that a high level of integration and unusual modifications to the property
unique to the improvement or fixture are required to find attachment. Each of the
following cases cited by Landlord in its Response Brief either (a) show a
substantially higher level of integration and unique modifications than exists with
the Generator or (b) show the absence of evidence indicating attachment for the
Generator:
Attached
- Nine Hundred Main, Inc. v. Houston, 150 S.W.2d 468, 471-472 (Tex.
Civ. App.—Galveston): 40,000-pound, building-wide HVAC system built
into the walls and ceilings of each floor of a five-story building that
required tearing out the walls to remove the piping and included numerous
separate parts throughout the building, such as vent fans, eleven cooling
units, large humidifier, cooling tower on I-beams enclosed in plaster,
electrical starter, electrical panel, and a vent fan.
- Van Valkenburgh v. Ford, 207 S.W. 405, 420 (Tex. Civ. App.—
Galveston 1918): 30,000-pound engine attached by 4-foot-long bolts to a
special concrete foundation specifically laid to hold the engine and set out
of the ground so as to make that the only use of the concrete foundation
- Connelly v. Art & Gary Inc., 630 S.W.2d 514, 514-15 (Tex. App.—
Corpus Christi 1982): 16’ wide auto parts sign 46’ high and sunk 12’ deep
into the ground, secured by concrete poured specifically to surround the
12’ of sunk pole, and whose removal required leaving the concrete in the
ground 12’ deep
8
Not Attached
- Neely v. Jacobs, 673 S.W.2d 705, 708 (Tex. Civ. App.—Fort Worth 1984):
hydraulic lifts set in a 9-foot deep concrete pit were considered trade
fixtures despite their removal requiring concrete collars to be broken, a
hole dug around the base of the lifts, and they be pulled out with a tow
truck because replacing a small amount of broken concrete did not make it
a permanent fixture
- Eckstein v. Webb Walker, 178 S.W.2d 532, 535 (Tex. Civ. App.—Fort
Worth 1944): an iron 30x100 foot shed supported by four-inch iron
columns placed into newly added concrete poured into holes in the
property that, when removed, merely left the property with the same holes
that existed before the improvement
- Schumann v. Jenkins, 40 S.W.2d 214, 215 (Tex. Civ. App.—San Antonio
1931): Small wooden frame house built on a specially constructed raised-
base concrete floor (2 ft high) with three protruding bolts for gas generator,
with metal conduit; constructed as suggestion and knowledge to be a
fixture
These opinions highlight the factually intensive analysis for determining whether an
item is attached or unattached to real property. Even the sparse facts of the Davis
affidavit and the “admission” of “connection” to the premises do not rise to the level
of satisfying Landlord’s burden to prove attachment. This is especially the case
considering Encore’s rebuttal evidence on these points.
The record below contains evidence rebutting the assertion of attachment that
confirm the existence of genuine issues of material fact. Verified facts submitted by
Encore address both the physical evidence and Encore’s intent that the Generator is
a trade fixture:
2. Encore and Landlord entered into a lease dated December 9, 2011. After
the lease commenced, Encore requested and was given permission by
Landlord to place a generator outside the leased premises but out in the
parking lot of the property. The generator was for Encore’s exclusive use in
its business, and it was paid for exclusively by Encore. Landlord did not
9
participate in the purchase of the generator. Encore, in cooperation with
Landlord, placed the generator on the property and connected it to the leased
premises only.
3. At all times, Encore fully intended that the generator would be and remain
unaffixed to the property, easily removable, and solely the personal property
of Encore. Encore never intended that the generator was or would become
a permanent feature of Landlord’s property. In fact, the generator has
always been easily removable from its location on Landlord’s property.
4. At the conclusion of Encore’s lease, however, Landlord had the audacity
to refuse Encore’s effort to remove the generator. To date, Landlord has
maintained illicit possession and control over the generator and refused all
of Encore’s requests that Encore be allowed to recover the generator, which
is Encore’s personal property. Removal of the generator would not cause
material or permanent injury to Landlord’s property, and Encore has
repeatedly offered to restore the parking spaces on which the generator sits
to their original condition. Encore has reasonably attempted in good faith to
secure the release of the generator from Landlord, to no avail. As a result,
Encore has been damaged, at the very least, in the value of the generator.
[CR12-13 (factual assertions); CR16 (verification of the factual assertions)]. 2
Thus, even when considering the Davis affidavit, the trial court was faced with
competing evidence on the factual issue of whether the Generator was attached or
unattached. For example, unlike the concrete pits (Neely), holes (Connelly), and
raised unique platforms (Ford; Schumann), the Davis affidavit shows the concrete
under the Generator is level with and consistent with the existing parking lot.
[CR738]. One example of a fact countering attachment the electrical connection to
the building. Section 21, Sentence #3 specifically allows Tenant to take unattached
2
Not only were the factual assertions and verification part of the record on their own [CR12-13,
CR16], but Landlord’s Amended Motion for Summary Judgment attached them as well [CR351-
355], further confirming their existence in the summary judgment record and applicability to the
trial court’s summary judgment decision.
10
trade fixtures that have cabling/wiring connections. [CR323]. Thus, the contract
requires discounting such connections when determining attached versus
unattached.
Pursuant to black letter law on summary judgment, the factual determination
that the Generator was attached and subsequent summary judgment rulings were
error given the competing evidence and should have been left for discovery and
resolution on the merits.
3. No Actual Judicial Notice Occurred; Regardless, Judicial Notice is
Improper for Specific Facts on the Generator’s Status
Landlord tacitly admits to the paucity of evidence in the record below by
newly arguing on appeal that the trial court might have based its factual declaration
of attachment by simply taking judicial notice of the mere “general characteristics”
of generators. [Resp., p. 22-23]. Landlord erroneously relies on the principle of
judicial notice to meet its evidentiary burden.
There is no evidence that the trial court took judicial notice of any facts, much
less what facts were or should be considered in the record. Landlord does not cite to
any request for the trial court to take judicial notice of any facts, and the trial court’s
summary judgment order references no reliance on judicial notice. [See CR741].
Rather, the trial court’s summary judgment order sets out what was considered, to
the exclusion of any judicially-noticed facts now relied on by Landlord: “Upon
review of the record and the pleadings, including the Amended Motion for Summary
11
Judgment and the Exhibits thereto, the Response and all supplemental briefs; and all
evidence properly before it, the Court hereby grants in part 2608 Inwood, Ltd.’s
Amended Motion for Summary Judgment.” [CR741]. Landlord’s belated attempt to
find some evidence to support the trial court’s order runs counter to the record below
and the proper use of judicial notice.
Even if this Court were to consider the unproven taking of judicial notice as a
basis for the trial court’s summary judgment order, applying it here as requested by
Landlord would be error. A “judicially noticed fact must be one not subject to
reasonable dispute in that it is . . . capable of accurate and ready determination by
resort to sources whose accuracy cannot reasonably be questioned.” See TEX. R.
EVID. 201(b). A fact of which judicial notice can be taken is “a matter of evidence
and knowledge on the part of courts which requires no formal proof.” Harper v.
Killion, 348 S.W.2d 521, 523 (Tex. 1961) (quoting Burtis v. Butler Bros., 226
S.W.2d 825, 830 (Tex. 1950)).
Landlord first relies on the 1931 opinion of English v. Miller, where an
“aeroplane” pilot was sued for negligence after a crash while doing loops low to the
ground. 43 S.W.2d 642, 644 (Tex. App.—Amarillo 1931). The trial court felt it
necessary to take judicial notice of what an “aeroplane” was and its general
characteristics. Id. The case, however, did not turn on any details of the “aeroplane”
because it was undisputed that the “aeroplane” was not defective and in good
12
condition—the only question was whether the low loops were negligent. Id.
English is simply irrelevant to this case. Recognizing the mere existence of a
plane and its ability to do loops is certainly a matter for judicial notice where those
general characteristics are not in dispute (much less any specific characteristics or
defects). By comparison, Landlord seeks to supply specific facts about the Generator
to prove that it is an attached fixture. If anything, generators are commonly known
to span a wide spectrum of sizes, installation methods, connection types, and
removability options. Landlord does not rely on mere general characteristics
tangentially related to the underling issues but instead belatedly adds specific facts
on an assortment of variable characteristics that it otherwise failed to supply to meet
its burden. This is far outside the permissible spectrum of a trial court’s ability to
take judicial notice.
Landlord’s reliance on Capitol Aggregates Inc. v. Walker is even less
supportive of its position. 448 S.W.2d 830, 832-33 (Tex. App.—Austin 1969). The
trial court was tasked with determining whether a lien against real property also
impacted a mobile home mounted on cement blocks on the property, which turned
on whether the mobile home was affixed to the land. Id. at 832. The trial court took
judicial notice as follows to protect the mobile home from the lien: “I take judicial
notice of the law of gravity and frictional adhesion and find that such structure was
thereupon affixed by the plaintiffs to the lot of land….” Id. That court’s recognition
13
of the universally accepted scientific principle of gravity does not allow Landlord to
now add specific facts about the Generator to the record to meet its burden. In sum,
Landlord cannot rely on an assumption of judicially noticed, specific characteristics
of the Generator to support its motion for summary judgment.
C. The Lease is Ambiguous if Landlord’s Interpretation is Deemed
Reasonable
Encore’s interpretation of the Lease as set forth in Section A above is
reasonable and consistent with Texas law on contract interpretation. As Encore also
shows above, Landlord’s interpretation requires reading into Section 21 the option
of Landlord to bar Tenant’s removal of attached trade fixtures under Sentence #4
where none exists given the term only expressly grants the option of Landlord to
force removal. If that interpretation is also found to be reasonable, then an ambiguity
exists that must be resolved on the merits (and that was not resolved by the trial
court’s order and judgment).
D. Landlord Cannot Prevail on its “Generator as Improvement” Argument
Landlord errs in multiple ways by asserting that the Generator is an
improvement. Sentence #2 of Section 21 reads: “At the expiration or termination of
this Lease, Tenant shall deliver to Landlord the Premises with all improvements
located therein in good repair and conditions….”
First, Landlord did not file a notice of appeal to challenge the trial court’s
judgment, which declared that “the Generator is an attached trade fixture.” [CR741].
14
See TEX. R. APP. P. 25.1(c). Having failed to file a notice of appeal challenging the
trial court’s determination that the Generator is a trade fixture, as opposed to an
improvement, Landlord is barred from doing so in is Response Brief.
Second, “improvements” is not defined in the Lease to include trade fixtures.
To add a definition to the Lease violates Texas law on construing contracts,
particularly given that the Lease expressly mentioned “improvements” in Section 21
separately from the various references to “trade fixtures.” See, e.g., Gonzalez v.
Mission American Ins. Co., 795 S.W.2d 734, 736 (Tex. 1990) (a word has the same
meaning throughout a contract, and different words will not be read superfluously
to have the same meaning). Rather, “improvements” is used elsewhere in the Lease
in a way that shows its means items like adding drywall or painting, and which
plainly separates it from trade fixtures. Section 8(a) of the Lease is entitled
“Improvements; Alterations.” [CR376]. It explains improvements are something
that would be “constructed,” which is not the case with a trade fixture. Section 9 on
“Use” speaks to “improvement work” having to comply with the ADA act, which
only applies to construction items. [CR377]. Section 10(d) also speaks of
“improvements” in the vein of construction items by requiring “Tenant shall pay for
the cost of any demising walls or other improvements necessitated by a proposed
subletting or assignment.” [CR378].
15
The best example are Sections 11(c) and 21. Section 11(c) requires that
insurance “covers … Landlord’s or Tenant’s fixtures, personal property, leasehold
improvements, or business….” [CR380]. This plainly distinguishes, in the express
Lease language, improvements from fixtures. This is the same in Section 21, which
says “Tenant shall remove such alterations, additions, improvements, trade
fixtures…as Landlord may request….” [CR386]. It is a bedrock of Texas contract
interpretation that separately identified items in the same list cannot refer to each
other. See, e.g., Gonzalez, 795 S.W.2d at 736. Because the parties expressly did not
include “trade fixtures” under the term “improvements,” Sentence #2 of Section 21
does not provide any support to Landlord’s interpretation of the Lease.
Third, Landlord errs in asserting that the Generator is an improvement and
not a trade fixture because it “has no specific trade-related connection to Encore’s
‘call center’[.]” Not only does Landlord fail to point to any evidence supporting this
factual contention, but Encore’s evidence in the summary judgment record expressly
rebuts this claim and creates a genuine issue of material fact: “The generator was for
Encore’s exclusive use in its business, and it was paid for exclusively by Encore.
Landlord did not participate in the purchase of the generator. Encore, in cooperation
with Landlord, placed the generator on the property and connected it to the leased
premises only.” [CR12-13, 16]. The fact that the Generator was connected to
16
Encore’s leased space only further confirms the intent that this was for Encore’s
trade use only.
On this record, Landlord is legally barred from challenging the trial court’s
judgment and has factually failed to eliminate the existence of genuine issues of
material fact. Accordingly, the “improvements” angle does not support affirming the
trial court’s judgment.
D. Improper Declaratory Judgment
Landlord improperly expands the single requested declaration to a list of four
declarations to create issues and relief beyond those raised by Encore’s claims. In its
live pleading, Landlord sought a single declaration:
Defendant/Counter-Plaintiff seeks a declaratory judgment under Chapter 37 of the
Texas Civil Practice and Remedies Code, the Texas Declaratory Judgments Act,
declaring that Inwood/Landlord has not given approval (via exercising its option to
allow Encore/Tenant to remove the Generator, requesting that Encore/Tenant.
remove the Generator, or otherwise) to Encore/Tenant to remove the Generator
from the Project.
[CR20-21, para. 16]. By comparison, Landlord’s Response brief states that
Inwood[/Landlord] requests the following declarations pursuant to the parties’
contractual rights and obligations:
• It is undisputed that Inwood/Landlord has not given approval (via
exercising its option to allow Encore/Tenant to remove the Generator,
requesting that Encore/Tenant remove the Generator, or otherwise) to
Encore/Tenant to remove the Generator from the Project.
• The Lease, a valid contract, provides that the Generator shall remain on the
Project unless Inwood/Landlord gives approval to Encore/Tenant to remove
it from the Project.
• Encore/Tenant will be in breach of the Lease, a valid contract, if it removes
the Generator from the Project.
17
• Pursuant to the Lease, as an item attached to the real property, the Generator
is the property of Inwood/Landlord.
[Resp., at 39-40]. But simply because Encore’s claims sound in tort while Landlord’s
sound in contract does not render Landlord’s single requested declaration greater or
different.
Viewed in their substance, Encore’s claims are premised on contractual rights
to ownership and possession—i.e., the ability to retain ownership and possession of
the Generator under the terms of the Lease and Texas law without any restriction,
such as Landlord’s approval. Mirroring that is Landlord’s single declaration that
Landlord has not given approval for removal, which would be a contractual
restriction rebutting the right of possession/ownership element of Encore’s tort
claims. Nowhere in Landlord’s actual pleading are the three additional declarations
Landlord has newly added to the appeal. Even viewed generously, Landlord’s
pleaded declarations do not seek any decision on breach upon removal or that the
Generator is attached and property of Landlord. [See CR20-21, para. 16].
Accordingly, the trial court’s grant of summary judgment on Landlord’s declaratory
judgment claim was reversible error.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Appellant/Plaintiff/Tenant
Encore International Investment Funds, LLC respectfully requests that this Court
reverse the trial court’s grant of summary judgment as outlined above, remand for
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further proceedings, and grant to Appellant of all relief at law and equity to which it
is entitled. In the alternative, Appellant requests that this Court determine Section
21 ambiguous and also remand for further proceedings consistent therewith.
Respectfully submitted,
/s/ William S. Richmond
William S. Richmond
Texas Bar No. 24066800
brichmond@pcrfirm.com
PLATT CHEEMA RICHMOND PLLC
1201 N. Riverfront Blvd., Suite 150
Dallas, Texas 75207
T: 214.559.2700
F: 214.559.4390
COUNSEL FOR APPELLANT
CERTIFICATE OF COMPLIANCE
This brief was prepared using Microsoft Word 365 in Times New Roman font.
The font size in the text is 14-point. The font size in the footnotes is 12-point. This
brief contains 4,738 words, not counting the sections excluded by TEX. R. APP. P.
9.4(i)(1).
/s/ William S. Richmond
William S. Richmond
CERTIFICATE OF SERVICE
The undersigned counsel for Appellants certifies that a true and correct copy
of the foregoing instrument was served upon counsel for the Appellee, by way of
electronic mail through e-filing on this 20th day of June 2019.
/s/ William S. Richmond
William S. Richmond
COUNSEL FOR APPELLANT
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