Carolyn Bowen Lewis and Carolyn Bowen Lewis Inc. v. Pearland Plaza Partners ( 2006 )

Opinion issued August 17, 2006

  In The

Court of Appeals

For The

First District of Texas

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NO. 01-04-00419-CV

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CAROLYN BOWEN LEWIS AND CAROLYN BOWEN LEWIS, INC. D/B/A BETTER HOMES AND GARDENS, Appellants

V.

PEARLAND PLAZA PARTNERS, Appellee

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On Appeal from

County Court at Law No. 1

Brazoria County, Texas

Trial Court Cause No. 28949

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MEMORANDUM OPINION

          In this landlord–tenant dispute, the trial court rendered judgment in favor of appellee, Pearland Plaza Partners (Pearland), and awarded it $56,465.83 for unpaid rent, attorney’s fees, interest, and costs of court. The judgment was entered against appellants, Carolyn Bowen Lewis (Lewis), individually, and Carolyn Bowen Lewis, Inc. D/B/A Better Homes and Gardens (the Corporation). In their fourth issue, Lewis and the Corporation challenge the trial court’s rendition of summary judgment against them concerning their defense of breach of the implied warranty of suitability for intended purposes and assert further that the trial court erred in denying their summary judgment motion. We conclude that the trial court erred by rendering summary judgment against Lewis and the Corporation and therefore reverse the judgment and remand the cause.

Factual and Procedural Background

          Pearland was the developer of a new shopping center in Pearland, Texas. On May 1, 1998, before the construction was complete and the spaces within the center had been assigned street addresses, Lewis entered into a lease for the Corporation. Lewis personally guaranteed the Corporation’s obligations under the terms of the lease. The lease had a term of 60 months, commencing June 1, 1998.

          While negotiating the lease, Lewis and the realtor listing the property thought that the space would carry the address of “7111 West Broadway,” and a lease was signed for the address. After the lease was signed, however, the premises that Lewis had agreed to lease was assigned the number 7109, rather than 7111.

          About seven months after Lewis had moved into the premises at 7109 West Broadway, Lewis signed a Tenant Estoppel Certificate, which stated that 7109 West Broadway was the property leased, that it had been delivered by Pearland “pursuant to the terms of the lease,” and that there was no existing default. Lewis and the Corporation occupied the premises for over three years and paid rent until approximately September 1, 2001, when they abandoned the premises and declined to pay rent from August 2001 through the end of the lease term.

          Pearland filed suit against Lewis and the Corporation for breach of contract. Lewis and the Corporation answered Pearland’s lawsuit by general denial and by asserting defenses that Pearland’s claims were barred by (1) failure of consideration, (2) failure to mitigate any alleged damages, (3) the statute of frauds, and (4) Pearland’s breach of its implied warranty of suitability for intended purposes in a commercial lease. Additionally, in Lewis’s answer, she denied that she was indebted to Pearland for the debt.

          Pearland sought a traditional summary judgment on its breach of contract claim through a motion entitled “First Amended Motion for Summary Judgment.” See Tex. R. Civ. P. 166a(c). Pearland also moved to reform the lease agreement to reflect the proper address, on the basis of mutual mistake of the parties. In that same motion, Pearland also asserted a no-evidence motion for summary judgment on Lewis and the Corporation’s affirmative defenses of statute of frauds, failure of consideration, failure to mitigate, and breach of implied warranty of suitability for intended purposes in a commercial lease. See Tex. R. Civ. P. 166(a)(i).

           Lewis and the Corporation responded by filing a “Response to Plaintiff’s Motion for Summary Judgment and Cross-Motion for Summary Judgment,” which asserted that Pearland’s breach of contract claim was barred by (1) the statute of frauds and (2) Pearland’s breach of the implied warranty of suitability for intended purposes. Additionally, Lewis objected to Pearland’s summary judgment evidence. Lewis and the Corporation filed a “First Supplemental Response to Plaintiff’s First Amended Motion for Summary Judgment,” which asserted that (1) Pearland’s no-evidence motion for summary judgment fails because it did not specify which element or elements of appellants’ defenses were being challenged and (2) Pearland is not entitled to the equitable remedy of reformation, which Pearland asserted to attempt to defeat the statute of frauds affirmative defense.

          The trial court’s judgment does not specify the grounds on which summary judgment was rendered. The judgment orders that all relief requested by Pearland be granted and that all relief requested and not expressly granted be denied.

Implied Warranty of Suitability for Intended Purposes   

          In their fourth issue, Lewis and the Corporation assert that the trial court erred (1) by granting Pearland’s no-evidence motion for summary judgment because they produced more than a scintilla of evidence regarding Pearland’s alleged breach of the implied warranty of suitability and (2) by failing to grant their traditional summary judgment motion on the defense that Pearland breached its implied warranty of suitability for intended purposes.

          The implied warranty of suitability for intended purposes “means that at the inception of the lease there are no latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition.” Davidow v. Innwood N. Prof’l Group–Phase 1, 747 S.W.2d 373, 377 (Tex. 1988). However, the parties to a lease may expressly agree that the tenant will repair certain defects. Id. The question of whether a breach of this warranty has occurred is ordinarily one of fact, with a number of factors to be considered. Id. These factors include the nature of the defect, the effect that the defect had on the tenant’s use, the amount of the rent, and whether the tenant waived any defects. Id.

The No-Evidence Motion for Summary Judgment Filed by Pearland

          After adequate time for discovery, a party may move for summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense on which the opposing party has the burden of proof. Tex. R. Civ. P. 166a(i). In a no-evidence motion for summary judgment, the movant must specifically state the elements as to which there is no evidence. Id. The trial court must grant the motion unless the nonmovant produces summary judgment evidence raising a genuine issue of material fact. Id. We review a no-evidence summary judgment by construing the record in the light most favorable to the nonmovant and disregarding all contrary evidence and inferences. Patriacca v. Frost, 98 S.W.3d 303, 306 (Tex. App.—Houston [1st Dist.] 2003, no pet.). A trial court improperly renders a no-evidence summary judgment if the nonmovant presents more than a scintilla of probative evidence to raise a genuine issue of material fact. Greathouse v. Alvin Indep. Sch. Dist., 17 S.W.3d 419, 423 (Tex. App.—Houston [1st Dist.] 2000, no pet.). More than a scintilla of evidence exists when the evidence “would allow reasonable and fair-minded people to differ in their conclusions.” Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). We review summary judgments de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).          Pearland filed a motion for summary judgment that asserted that there was no evidence that it had breached the implied warranty of suitability, which was a defense asserted by Lewis and the Corporation. In response to the no-evidence motion for summary judgment, Lewis and the Corporation contended that the Corporation encountered numerous problems with the property that caused problems for its employees and customers. In support of that contention, Lewis and the Corporation presented summary judgment evidence that

•heavy smoke entered the premises from a shared attic and a poor ventilation system, which made the air odorous, stained the carpet, and made it undesirable for employees to work on the premises;

•an ongoing insect and rodent infestation resulted in the Corporation’s (1) being unable to keep food in the premises, (2) having to constantly set out traps and baits, and (3) closing the business when a secretary employed by the Corporation was so terrified of the rodents that she locked up the office and left;

•the air conditioning and heating system was inadequate and under-sized for the office space, which resulted in high utility bills, ongoing service expenses, significant discomfort to employees and customers of the Corporation, and numerous occasions when the heat would not work during freezes and the air conditioning would not work when it was hot;

•a portion of the premises that were near the back wall were unusable because the concrete wall “sweated when it rained,” causing the formation of mold, dampening the carpet, wetting the sheetrock, causing the sink in the bathroom to fall off the wall, causing paint to run down the wall, and causing everything around the wall to become soggy.

          Pearland asserts that Lewis’s testimony “is a farce” and is also “wholly conclusory.” However, the evidence as outlined above is not conclusory. Moreover, when the evidence is viewed in favor of the nonmovants, Lewis and the Corporation, more than a scintilla of evidence shows that Pearland breached the implied warranty of suitability by providing premises that had an ongoing insect and rodent infestation, had inadequate air conditioning and heating, had problems with moisture penetrating a wall when it rained, and allowed the entry of smoke into the premises. We therefore hold that the trial court erred by granting Pearland’s no-evidence motion for summary judgment. We sustain this portion of Lewis and the Corporation’s fourth issue.

Traditional Motion for Summary Judgment Filed by Lewis and the Corporation

          Although we have determined that there is more than a scintilla of evidence that Pearland breached the implied warranty of suitability, Lewis and the Corporation contend that we should further hold that they presented conclusive summary judgment evidence proving that Pearland breached the implied warranty of suitability. Where parties have filed cross-motions for summary judgment and the trial court grants one motion and denies the other, “we can consider both motions, their evidence, and their issues and may render the judgment that the trial court should have rendered.” See Malcomson Road Util. Dist. v. Newsom, 171 S.W.3d 257, 263 (Tex. App.—Houston [1st Dist.] 2005, pet. filed) (citing CU Lloyd’s of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998)). Thus, we next address whether the trial court erroneously denied Lewis and the Corporation’s rule 166a(c) motion for summary judgment.

          Summary judgment is proper only when the movant establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). The motion must state the specific grounds relied upon for summary judgment. Id. In reviewing a traditional summary judgment, we must indulge every reasonable inference in favor of the nonmovant, take all evidence favorable to the nonmovant as true, and resolve any doubts in favor of the nonmovant. Valence, 164 S.W.3d at 661.

          Lewis and the Corporation’s traditional motion for summary judgment asserted that they were entitled to judgment in their favor because Pearland had breached the implied warranty of suitability in a commercial lease by providing inadequate air conditioning, providing walls and ceilings between leased spaces that were inadequate to keep out smoke from neighboring tenants’ premises, allowing insect and rodent infestation, and allowing moisture and mold on the premises. Although Lewis and the Corporation have introduced more than a scintilla of evidence to show that Pearland breached the implied warranty of suitability, they have not established their complaints as a matter of law, and thus the trial court did not err by denying the traditional motion for summary judgment. See Tex. R. Civ. P. 166a(c).

           Pearland’s evidence shows that Lewis signed the Tenant Estoppel Certificate on March 30, 1999, seven months after she had moved into the premises. The Tenant Estoppel Certificate states that, as of that time, there was no existing default on the lease on the part of the landlord or tenant; that all duties of an inducement nature required of the landlord in the lease had been fulfilled; that the improvements and space required to be furnished by the terms of the lease had been completed in all respects to Lewis’s satisfaction; and that the premises were open for use by Lewis, her customers, employees and invitees. Pearland also contends that Lewis is fabricating problems that never existed or that were so minor that she never complained about the condition of the premises until she stopped paying rent.   

          Taking as true all evidence favorable to Pearland, the nonmovant of the motion, indulging every reasonable inference in Pearland’s favor, and resolving any doubts in Pearland’s favor, we conclude that there is a fact issue regarding whether there was a breach by Pearland of the implied warranty of suitability. See Davidow, 747 S.W.2d at 377 (noting that breach of implied warranty of suitability is ordinarily one of fact, dependent upon several factors). We therefore hold that the trial court did not err by denying Lewis and the Corporation’s traditional motion for summary judgment that alleged that Pearland had breached the implied warranty of suitability. We overrule this portion of Lewis and the Corporation’s fourth issue.

Conclusion

          Having held that a fact issue regarding Lewis and the Corporations’s affirmative defense of breach of the implied warranty of suitability precludes summary judgment, we need not address their other issues. We reverse the judgment of the trial court and remand this cause for proceedings not inconsistent with this opinion.

                                                             Elsa Alcala

                                                             Justice

Panel consists of Chief Justice Radack and Justices Jennings and Alcala.